According to a new report from Deutsche Bank analysts, rampant U.S. inflation, running at 40-year highs, has passed the point of no return.
John Stepek for Bloomberg News:
If you’re hoping, as many in markets apparently do, that inflation is still basically “transitory,” I have some bad news: we’ve already passed the point of no return.
That’s according to a new report from the Deutsche Bank analysts, led by Jim Reid. The team looked at 318 separate occasions since 1920, across both developed and emerging markets, where inflation had risen above 8%. On average, inflation then took “around two years to even fall beneath 6%, before settling around that level out to five years after the initial 8% shock.”
Given that the analyst consensus currently expects inflation to drop back significantly further and faster than that, there’s room for disappointment, to put it lightly. To make matters worse, the Deutsche team found that post-war and post-1970s inflationary periods have been even stickier. There is essentially no episode in which inflation has dropped back to the extent that analysts are hoping for this time.
The 1970s was admittedly a period of particular severe inflation, but as the report points out, it’s also the most representative of the monetary and fiscal regime we inhabit now. “There’s been no precious metal like gold anchoring the currency and stopping policymakers from embarking on inflationary policies,” the analysts write.
MacDailyNews Take: Yay.
‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021
Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022
Again, when certain quarters, including the Fed, delude themselves and others that “inflation is transitory” and waste at least a year before doing a mere portion of what is necessary (interest rate hikes), the price will be paid for being delusional and late.
Catching up will be difficult. But, hey, good luck on that soft landing. 🙄 – MacDailyNews, September 13, 2022
In January, Interactive Brokers founder Thomas Peterffy said of the U.S. Federal Reserve, “If they really wanted to stop inflation, they would have to raise rates to 4%, 5%, 6%.”
The Fed’s current target interest rate range is 3.00% to 3.25%. Peterffy may have been too conservative. Rates in excess of 6% may be required at this point. – MacDailyNews, October 13, 2022
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The good news is that the MAGA cavalry is coming! First in 2022, Then in 2024.
304 hours until midterms! 😀
And if it does… kiss democracy goodbye. And we would be our own fault.
We can fix the problem with requiring the passing of an IQ test. If you don’t get least a 20. you can’t vote. This will stop libturds from voting altogether.
Buahahaha! You’ve demonstrated you don’t meet that criteria.
Who hasn’t been paying attention the last 2 years?
I’m doing everything I can to stop inflation….
I’ll sell more of the SPR.
Really…no joke.
No, kiss Democrats goodbye.
All for it, but you first. See what I did there?
Unfortunately, Joe (or Kamala) can still do plenty of damage from the WH between November and January 2025. Sad! Then there is the issue of all the RINOs in the Senate. So, even a Republican majority may not be a real majority. Sad again.
Then you should have run a better candidate.
…and only 305 hours until the election denials begin.
Sadly, no “/s” applies.
And the hits just keep on coming. This is one more reason to demand reparations from everyone who voted for Biden.
“Reparations”? For just what, specifically?
Can’t be for inflation, because fiscally these were the consequences of the CoVid Stimulus programs which were known to have this “…or pay me later…” consequence for avoiding an economic depression.
Can’t be for gasoline prices, because (a) Trump traveled to KSA and solicited OPEC+ in 2020 to cut production, plus (b) domestic producers slashed exploration investments through the Trump presidency, plus (c) Russia chose to illegally invade Ukraine, drawing international sanctions.
Can’t be for Rule of Law, because no one is above the law.
Can’t be for SCOTUS ruling which have removed individual rights of US Citizens for the first time ever, because those rulings happened prior to Biden having any bench appointments.
Can’t be for the Infrastructure Law, because even Republicans who voted against it are now bragging about its benefits to their constituents in their reelection campaigns.
SECOND request
You are delusional if you think gas prices are anyone else’s fault except Biden’s. First day in office. Prove me wrong.
Not to mention that Trump insisted that his signature be on the stimulus checks!
“domestic producers slashed exploration investments through the Trump presidency”
Why? B/c prices dropped…decreased incentive to explore. Prices dropped b/c of supply abundance. Trump was addressing the glut… remember, at the time we were an energy EXPORTING country.
Now, prices are higher and there’s little directive from the current admin to recoup our proficiency. It’s apparently, more desirable to obtain our energy from outside the country (even if unfriendly), so we can feel “clean” and pretend we are transitioning to “renewables.” There’s no magic–or personal narrative–here.
“Removed indi right of US Citizens” Please. Put down your cup of juicy narrative with cream…they relay what “rights” you speak of.
“ Can’t be for Rule of Law, because no one is above the law.”
Really? You believe that? Please explain Holder, Strzok, McCabe, Hillary, Hunter.
Holder, Strzok, McCabe, Hillary, Hunter. As always came up empty. Investigated, but not charged. Maybe Hunter.
Meanwhile… pardons granted by Trump, which means guilty:
https://www.justice.gov/pardon/pardons-granted-president-donald-j-trump-2017-2021
‘Rithmetic too woke for you Gomer?
Given how the current economic climate is due to two ‘black swan’ style shocks – CoVid and Putin – I’m not particularly confident that relying on a “business as usual” historical precedent makes much sense.
Particularly since CoVid’s 2020 recession was the shortest ever, as was also the rate of jobs recovery.
Likewise, I’d be analytically interested in seeing an analysis of Fed response in terms of the rate of interest rate hikes in terms of how that curtails inflationary activity too.
FWIW, using my Mk1 eyeball, it appears to me that the rate (rapidity) of the Fed response is much faster than prior historical trends (particularly since ~1982), which would suggest that the market correction response should occur more rapidly as well.
… and that’s without even considering that there’s also the contra-inflationary effects of Quantitative Tightening (QT) that get stacked on top of the official Interest Rate hikes, but isn’t reflected in the numbers for the same.
How can anyone who pretends to have any sense be happy with the way Biden has done…..anything?
Somehow, blame anything on Trump but most won’t buy that anymore than what the Democrats and media pushed while he was in office.
You really just have NO credibility. Do you think if you talk fast enough no one will question what you say? It doesn’t work that way with the printed word.
My God, Putin would’ve never inVADED Ukraine had Trump been allowed to win!
(….but you just gloss over that little fact like so many others)
Unfortunately for TT’s attempt to create a political narrative, this is an economic discussion and the Market could not have really anticipated CoVid or Russia’s invasion of Ukraine.
But TT is IMO correct in claiming that Putin would have never invaded Ukraine had Trump not lost the election…but just not in the way that he thought: Trump would have continued to serve Russian interests by violating Congressional will to send aid to Ukraine and undermine our strategic interests, including possibly a literal pullout out of NATO, which would have fractured that alliance’s response unity. The net result is that Putin would have been able to take over Ukrainian’s natural resources (especially oil & gas fields) in both the east & southwest without needing a literal invasion army and thus, also avoided economic sanctions on Russia.
In the meantime, despite all of this so-called “fast talk”, readers may have noticed that TT never actually discussed my point … namely that the >> rate of change << has been so different this time … let alone actually provided anything material to counter it.
-hh > TT
Slam and dunk.
MDN is wrong. Raising rates “solves” inflation by killing demand. MDN is right in domestic oil/energy production would help. MDN is also right that printing endless free money is causing it to go crazy, inflation that is. Also increasing Bond issuance would have helped with inflation without increasing money supply.
A balanced view pulling all of those levers could have been used way more effectively but the Biden regime wants to destroy the economy/country.
Then the leftists can say, see, capitalism doesn’t work so we need more communism. That’s their evil plan.
@Zombie .. you raise a good point regarding monetary policy to “kill” demand to resolve inflation, and what’s interesting about it (at least to me) is perhaps there’s actually more tools in the toolbox than the Fed’s classical interest rate.
Specifically – – and FYI, I’m spitballing here – – wouldn’t increasing income tax rates also have an effect to kill demand to bring down inflation? Seems to me that if the objective is to take money out of the economy, this is technically another option.
And if this is a viable metric, it is a potentially intriguing & appealing one, because it also a counterbalance / correction on that “printing endless free money” in that increased revenues would stabilize and/or fully reverse budget deficits.
I think I’ll go do some research on the subject, on if this actually could be a good fiscal policy or no…and if tax increases turn out to be a good anti-inflationary tool, because we don’t have flat taxes, the adjustments can be focused on the 1% or whoever is primarily causing the excess demand within a specific industrial segment, which suggests a less “blunt weapon” approach than the Fed’s all interest rates.
One thing of course with all of this is the obvious elephant in the room, namely that raising taxes requires Congress, and they lack the intestinal fortitude to take such an action even if it is a good fiscal policy.
FYI, a quick follow-up:
TL:DR is that “yes” increasing income taxes would have a similar effect to functionally reduce the money supply to rein in inflation.
and…the Zombie downvotes seem to confirm our country is increasingly embracing state-ism. How wonderful.
Not really. They just evince the same folks on here are desperate to use private browsing/VPN to vote multiple times and re-assert how pathetic they are. Notice the big boons in votes for any ones that are not leftist. They can’t stand it. It brings me so much joy to see that I drive them to have to VPN vote over and over like the pathetic losers they are.