If Aaron is right, and the Fed has the balls to say that they expect inflation to moderate (without rate hikes) in the near term (or 'coming months'), I will give up any last ounce of hope that I am reluctantly clinging to that the Federal Reserve has the ability to be anything other than a politically influenced lackey. At least when Carter was in office, which was close to the last time inflation rose to these levels (right after Reagan came into office), Volcker raise rates and kept raising rates to crush inflation, knowing that he was killing Carter's chances of re-election in doing so. If the Federal Reserve can't be apolitical, disband it forever.
FED is non partisan, and they were set up that way on purpose. This is why you always know who the heir apparent is ahead of time, and they don't get fired for policy the administration is not happy with. They would behave the same way no matter who was in office. That said, they have morphed from simply promoting stable prices to trying to have constant growth and no recession. Ever. This has led to some stupid shit. But again, they'd do this regardless of who was in office. They have been fudging inflation numbers since they changed the reporting method in the late 80's. We'd be in double digits now otherwise.
I'm not sure I know where you're coming from. On one hand you post about 60 times a day how weak housing and stocks are and now you're bitching about inflation. Which is it? If housing and stocks do indeed crater (a view I don't entirely share) then you can bet your sweet bippy that wage growth will subside. CB's care little about non-wage inflation. Why? Because if wages stagnate then prices paid will also stagnate. If wages keep growing then attempts to cure commodity inflation are futile (except for spillover dollar strength). But if every CB were to tighten then the dollar wouldn't necessarily rally either. Plus you ignore what real rates are trading at. Consumer, automobile and mortgage borrowers aren't facilitated at the Fed window. Those borrowers are paying sky high rates for money. Don't get me wrong-I think policy is WAY to accommodative but then again I don't see any where near the economic weakness you do.
I'd like to see bond yields tank with institutional selling before its full steam ahead with rate hikes. The FED will err on inflationary discounting to prop financials, if anything. Wage price spiral would be nice to see lest CPI wern't rigged to suppress it for that very reason. M3 growing at 20%, yet inflation at a modest 5%. Thats a curiosity? Where's all that money going?
lol people spending money they don't have..maxing out their credit cards and this causes you to have a better outlook on our economy?
You must be 18 years old because I've been hearing about people "maxing" out their credit cards since around 1979.......
Pabst, you know we have our differences, as well as some common views, too. That's as it should be. But would you take me up on this bet? If you took credit cards away from Americans for one month - just one month - I'd bet consumer spending would fall the most it has in a decade. Obviously, we can't proceed with this experiment, but if we did, it would be my guess that consumer spending would fall off of cliff. And just assuming I'm right, what would that say about the state of the economy in the U.S.?