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Fed's Powell Affirms Need To Act Strongly To Fight Inflation (wsj.com) 86

Posted by msmash from the state-of-things dept.
Federal Reserve Chairman Jerome Powell said the central bank is squarely focused on bringing down high inflation to prevent it from becoming entrenched as it did in the 1970s. From a report: "It is very much our view, and my view, that we need to act now forthrightly, strongly, as we have been doing, and we need to keep at it until the job is done," Mr. Powell said Thursday morning at a virtual conference hosted by the Cato Institute. Mr. Powell repeated the core themes of his speech at an annual central banking symposium in Jackson Hole, Wyo., two weeks ago. He said he had opted to deliver a "concise and focused message" at that event to underscore the Fed's overarching commitment to return inflation to its 2% target.

Mr. Powell said the key lesson from the high inflation of the 1970s and the aggressive steps taken by Fed Chairman Paul Volcker in the early 1980s to bring inflation down was the importance of preventing households and businesses from expecting inflation to rise. "The public had really come to think of higher inflation as the norm and to expect it to continue, and that's what made it so hard to get inflation down in that case," Mr. Powell said. The takeaway for policy makers, he added, is that "the longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm and that has the capacity to really raise the costs of getting inflation down."
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Fed's Powell Affirms Need To Act Strongly To Fight Inflation More

Fed's Powell Affirms Need To Act Strongly To Fight Inflation

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  • cynicism is strong (Score:5, Insightful)

    by roman_mir ( 125474 ) on Thursday September 08, 2022 @12:26PM (#62863649) Homepage Journal

    the institution that is most single-handedly responsible for inflation is going to fight it? Amazing!

    • At least they've moved passed denying that it was a problem. Good luck getting the government to quit spending money it doesn't have though.
    • I didn't see those two coming out to fight inflation, and they're the ones responsible. The fed has done fuck all to fight inflation because there's fuck all they can do. Raising interest rates won't fix the Chinese supply chain and it won't break up the mega-corporation Trusts we allowed to form post Reagan after we stopped enforcing anti-trust laws by switching from "no mergers if it reduces competition" to "everyone can merge unless you _prove_ it will raise consumer prices".

      The real cause of inflati

      • 50% of this inflation is just corporations increasing profits.

        As long as people keep pretending that's not true, they'll keep doing it.

        • That's not a real thing though, you're making that up. Corporations "increase profits" because they can due to many kinds of circumstances. If they could just do it willy nilly they would have done it 5 years ago and we'd be paying $20 for a dozen eggs. It's almost as if there is a whole set of market dynamics and circumstances that lead to the prices we pay.

          And miss me with the dreary, dull "muh corporate profits are up (1pt font disclaimer: compared to cherry-picked artificially low Covid numbers)!" graph

          • That's not a real thing though, you're making that up.

            Look, inflation means prices are rising across the board, that's it. And that's what's happening. And compared to usual, we know what the rise is. And we know corporate profits have increased by half that much. We know where the money is going. It's not a mystery. Don't pretend it is.

            • the meaning of inflation (as opposed to rising prices) is literally the expansion of the money supply. Prices rise as a consequence of inflation, rising prices in themselves are not inflation, nor are they the cause of one. Prices can rise for a number of different reasons, one of those reasons can be the inflation of the money supply.

              • the meaning of inflation (as opposed to rising prices) is literally the expansion of the money supply.

                No it is not. [wikipedia.org] You don't even know what the words we're using mean, what makes you think you get to participate in this conversation?

                • Orwellian approach to language has been used forever to redefine meanings of words, for example can you tell me exactly what you think a woman is?

                  https://en.wikipedia.org/wiki/... [wikipedia.org]

                  In any case, here is a different reference point than the wikipedia for you https://www.newworldencycloped... [newworldencyclopedia.org]

                  Encyclopædia Britannica before 1970s defined inflation as the expansion of the money supply, as the government decided to print more and more money to cover its rising costs, it basically coerced the type of 'econ

                  • Orwellian approach to language has been used forever to redefine meanings of words, for example can you tell me exactly what you think a woman is?

                    You first.

                    In any case, here is a different reference point than the wikipedia for you https://www.newworldencycloped... [www.newwor...ycloped...]
                    EncyclopÃf¦dia Britannica before 1970s defined inflation as the expansion of the money supply

                    So your different reference point is to a definition literally over 52 years old? What a fucking waste of time and space you are. Both are infinite, but not for me, nor is my patience.

                    • You first.

                      - gotcha. A woman is a human adult female, just FYI.

                      So your different reference point is to a definition literally over 52 years old? What a fucking waste of time and space you are. Both are infinite, but not for me, nor is my patience.

                      - you chose to answer to my comments here, please leave.

          • We're still nominally a democracy. They're afraid of a 1940s style New deal being demanded by voters. This is also why they're clamping down hard on voter suppression. Ron DeSantis just arrested 20 people for voting by mistake. The people in question were convicted of various crimes but were allowed to register to vote. It was a giant message to anyone who's convicted of a crime that if you try to vote we're going to throw you in jail for 4 or 5 years. Meanwhile he sends his police around arresting anyone w

            • USA is literally not a democracy, it is a republic. The idea that USA is a democracy is in your mind only.

              • USA is literally an oligarchy, and it was designed to be one, that's why they gave the vote only to landed white males. Created equal, my ass. We are not created by anyone in that sense, and they explicitly did not intend for us to be equal either.

                • Most people shouldn't be voting. AFAIC there should be requirements for someone to be allowed to vote, such as intelligence, understanding, knowledge, work experience, all sorts of things.

                  https://www.youtube.com/watch?... [youtube.com]

                  • Most people shouldn't be voting.

                    Wrong. Most people should be better educated. But the Republicans under Reagan literally and explicitly chose to compromise education [theintercept.com] in order to secure future votes.

                    • I don't understand how anything you said makes my comment wrong though. Most people shouldn't be voting, people should be voting if they can prove they can tell time, they can multiply 3x3x3, they can divide 33 by 3, they can figure out 15% of a 100, they can name 5 States in the USA, they understand that there are other countries and what countries border the USA, they can at least approximately name some continents and understand what continent they are on, they explain what form of government USA is (ex

                    • I don't understand how anything you said makes my comment wrong though. Most people shouldn't be voting

                      No. Letting uneducated people vote is the punishment for letting people be uneducated. If you don't want uneducated people voting, then make sure people are educated, by improving access to education. Taking away their vote only takes away their motivation to play your game, and will lead directly to civil war between the voters and non-voters. Voting tests are also always used prejudicially. If you know anything about voting tests, and you suggest they should be used anyway, you're clearly racist (because

                    • No. Letting uneducated people vote is the punishment for letting people be uneducated.

                      - that is stupid, that's pretty much the concoction of 'ideas' that lead towards dumbing down of the society at large, by passing laws that destroy the economy and the society and create enormous corruption.

                      you're clearly racist

                      - that's stupid, anything today can be called a 'racist' or a 'bigot' or a 'misogynist' without having to justify the position of the one casting such an aspersion, I don't care what you call me, you have no evidence to call me anything, yet here we are, so this proves the point that you are not actual

                    • that is stupid

                      No, that is democracy, which we don't actually have, but which works better than the oligarchy we do have. Too bad you hate democracy.

                      anything today can be called a 'racist' or a 'bigot' or a 'misogynist' without having to justify the position

                      I already justified it. Learn to read.

                      I don't care if I get to vote, my vote doesn't count for anything anyway

                      Well then fuck right off and let the people who care have a conversation for adults without your ignorant fuckery.

                    • No, that is democracy, which we don't actually have, but which works better than the oligarchy we do have. Too bad you hate democracy.

                      - USA is not a democracy, it is a republic.

                      I already justified it. Learn to read.

                      - no you didn't, you feel it because of 'reasons' but you don't have any evidence to support an accusation of any kind.

                      Well then fuck right off and let the people who care have a conversation for adults without your ignorant fuckery.

                      - you are quite a character, I believe you were the one replying to my comments to get some sort of a jerk off satisfaction from it. I don't care if I don't get to vote personally if the system is based on merit and I don't have merit to vote in it. I do care however that the system that exists is not based on merit and so the votes of the mor

                    • The USA is a democracy. You should try to learn what words actually mean instead of making up your own definitions and pretending to catch someone in a gotcha.

                      Again, the USA is a Constitutional Republic, which is a form of a Democracy meaning the people vote to decide their laws and regulations in some cases directly and in other cases by voting in representatives. That's what a Democracy is. It's not this thing you weirdos made up where people vote for everything directly.

              • Oooh, that's a yikes. You lot need to stop using that talking point, it makes you sound silly and stupid.

                The US is a democracy. The US is also a Constitutional Republic. A Constitutional Republic falls under the umbrella of "Democracy".

                Really. Just stop, you sound like an idiot with this "ackshually" when you're flat out wrong. You guys made up this thing that doesn't exist called "Pure Democracy" where people vote on everything directly, then use that to claim "ackshually we're not a democracy guise!"

        • Corporations can't just increase profits, because if they demand too much profit then some other corporation will come in to take the market at a lower profit margin. If there's a monopoly that allows corporations to hoard profits then the most likely cause is a government entity stepping in to disrupt the flow of information that is in profits.

          If you want to claim that everyone is "pretending" that the problem is not in increasing profits then how do you explain that corporations are able to demand these

          • There is a fuckton of competition in the energy market even in the USA, for example Exxonmobil is the largest energy producer in USA and only has 3% market share in energy production.

            Inflation is the expansion of the money supply, which is what the Fed does - creates currency on paper and electronically and allows it into circulation, energy production has nothing to do with this.

            • The problem isn't a lack of companies producing energy, the problem is a lack of competition among the different energy sources. Those producing energy from wind and solar can demand a high price because there's no competition from hydro, nuclear, or fossil fuels. Because there's not all that many people producing the PV cells that go inside a solar panel there's not much competition to keep solar PV prices down. It takes a long time to build a factory that makes any semiconductor, therefore we can expec

        • They took all the money we gave them from our taxpayer dollars and used it to go on the spending spree buying up companies and apartment buildings and single family homes. Because we don't enforce zoning laws and antitrust laws they were able to buy all that stuff and use it to jack up prices. Ask yourself how many grocery stores you have nearby that aren't owned by one of two major parent companies. Go look and see how many apartment complexes aren't owned by a single company.

          We gave them the rope to h

      • Re: (Score:3, Funny)

        by DarkOx ( 621550 )

        The real cause of inflation is the $3 trillion Congress gave the 1% during COVID, but if they hadn't the 1% were going to collapse the entire world economy. We had a gun to our heads.

        What fucking planet do you actually live on? The 1% forced them to do it? Hell no they didnt they were for the most part the people shouting loudest to stay open. They were the first ask everyone to come back to work in the office etc.

        Or did you mean the %1 of the population that are employed as union-leader parasites, Marxist activists on one stripe or another and left-wing politicians?

        • We could have just as easily done watch Vietnam did and instead of giving money to the 1%, we could have given it to individuals so that they had food and housing. Europe did much the same as did Canada. Had we not locked down our hospital system would have collapsed. Donald Trump didn't care and he was more than happy to let tens of millions die if it meant getting reelected president. Your life and the lives of your families are forfeit next to his glory.

          So the 1% wouldn't let us do what needed to be

          • Donald Trump didn't care and he was more than happy to let tens of millions die if it meant getting reelected president.

            How does anyone get reelected to anything by letting tens of millions of people die? Your Trump Derangement Syndrome is showing.

            So the 1% wouldn't let us do what needed to be done and so the only option we had because they're in charge of you because you're a slave remember that you're a slave is we had to bribe them with trillions of dollars to not kill us all.

            So it would have been preferable to keep everyone from going to work, then allowing all the businesses that depended on those employees go out of business, so when the lock down was lifted there was no place to go to work? This was a fucked up situation with no way to win. Maybe it was a bad idea to hand out money from the federal treasury, but the ability for POTUS to spend mon

    • Re: (Score:1)

      by Tablizer ( 95088 )

      How is it their fault? They don't have a functioning crystal ball? Nobody does.

  • The Fed should have started last October...

    Instead, they told us that the inflation was transient...

    And now, here we are...

    • I think you mean about a dollar and ten cents short.

    • Exponential function (Score:5, Interesting)

      by Okian Warrior ( 537106 ) on Thursday September 08, 2022 @01:04PM (#62863877) Homepage Journal

      The Fed should have started last October...

      Instead, they told us that the inflation was transient...

      And now, here we are...

      It appears that the economy is essentially an exponential function. If you look at US GDP, it has a doubling period of about 17 years.

      Changes to bring inflation under control have a lagging effect; meaning that anything you do to adjust the economy will not take effect until several months after you make the change.

      Also, any measurements you make have a similar lag - you never know what the current inflation index actually *is*, but you can tell what it was on average last month - after you're 2 weeks into the next month.

      These features combined (exponential function and lagged control/measurement) make it incredibly difficult to control the outcome with any degree of accuracy; it's roughly equivalent to controlling a nuclear reactor: the fission reaction is an exponential function, while moving the control rods takes a finite amount of time.

      High inflation has been going on for over a year now, and why the Fed didn't put the brakes on in October, when inflation had been raging for 4 months, is a mystery.

      You can find estimates of the outcome all over the map, but the general consensus is that the Fed waited too long, and is now pulling back on the economy too hard. The fed was trying to bring the economy into a "soft landing" (meaning: reduce inflation without going into a recession), but few pundits believe that this is now possible. The fed's actions will likely result in a recession, likely in the early part of 2023.

      Just about everyone is now expecting a recession (something like 84% of survey respondents), and of course recessions are partly driven by sentiment, so it seems pretty likely that we're coming up on one.

      • Re: (Score:2)

        by DarkOx ( 621550 )

        The fed's actions will likely result in a recession, likely in the early part of 2023.

        You answered your question as to why the did not start in October. The Fed wanted to insulate the resurgent globalist agenda politicians form the consequences of their actions - if they had responded to the crisis (and it is a crisis) there would have NOTHING that could have stopped a nationalist populist movement from retaking the legislature.

    • Re: (Score:1)

      by Tablizer ( 95088 )

      > The Fed should have started last October...

      They wanted to wait for covid to cool off first for at least a few months. If they had cranked up rates and another lock-down surge happened, they'd have egg on their face, risking triggering a recession. Inflation is probably "less evil" than a big recession.

      More armchair hindsight. Yawn.

      > Instead, they told us that the inflation was transient...

      Well, they were wrong. It happens in the prediction business. If they were that good at it, they'd be golfing w

  • That worked so well in 2008 it hasn't happened again, until now.

  • The Republican base wants lower taxes while not having its spending oxes gored.

    The Democrat base wants higher taxes, but only on "rich people" who are always defined as "people who make more money than I do" while not having their spending oxes gored.

    Ross Perot was the only realist in presidential politics besides Ron Paul in the last several decades when it came to understanding that either everyone (yes, including "the poor") pay taxes until revenues match spending or we cut spending until it matches tax

    • Re: (Score:1)

      by Anonymous Coward

      Buy precious metals, real estate that can sustain your family and tools needed to do your job because this won't end until reality steps in and overthrows the electoral majority.

      I hear they have some good deals on Kool Aid these days.

    • Buy precious metals

      Brass, Lead, Copper?

      "Are you from the bank?" *ka-chkk* "Well, are you?"

      Let's hope it doesn't come to that. Watch / read Grapes of Wrath -- (film version directed by a rabid conservative, no less)

    • Re: (Score:1)

      by Tablizer ( 95088 )

      Politicians are judged by the here and now, not by what happens a decade or two down the road. We need a way to change the incentive structure, but I'm not sure how.

      Maybe force via legislation for them to wear chicken suits if the deficit reaches a threshold during a non-slump? Embarrassment is a powerful tool.

  • The important part to learn from the 70s ... (Score:3)

    by Pinky's Brain ( 1158667 ) on Thursday September 08, 2022 @01:55PM (#62864141)

    The important lesson is that seesawing worked fine and you can just wait till the supply crisis is over till you start raising rates consistently.

    Volcker didn't fix inflation with rate increases during the supply crisis, taking the lesson that it's a good idea is non sequitur and stupid. Powell is hardly alone in this stupidity though, hardly anyone calls out these obvious truths.

  • The real problem here is that we have this central authority we let try to manipulate the flow of currency in the free market, because they CLAIM they're able to optimize transactions. When folks like Ron Paul had a rallying cry to "End the Fed", it wasn't just because it was a catchy tagline.

    Strictly speaking, price inflation doesn't really mean a thing, IF wages are going up in parallel with it. It just means that we've got to deal with larger numbers all the way around. To some extent, I think that's wha

    • Wow are you misinformed. Please go research what "The Fed" is. The Federal Reserve is made up of several entities and even includes a federal government representative. I'm unsure why you're trying to argue like Ron Paul that we should do away with "The Fed" and move back to the gold standard while clearly ignoring the whole reason we went off the gold standard in the first place. (Hint: Boom vs Bust)

      Let's also not forget that many of the things that are more expensive now are direct results of tariffs impo

      • Re: (Score:1)

        by King_TJ ( 85913 )

        Misinformed? I don't think so! The Federal Reserve isn't even a Federal entity. (Yeah, that's "nice" they include a Federal govt. representative, so they can keep up that pretense.)

        Ron Paul's argument for eliminating them is due to seeing through the real reason the gold standard was abolished. The government wanted to do the kind of insane deficit spending it does today without a leash on it.We didn't kill off the gold standard until the Vietnam War cost America so much money, it got worried about not be

    • "Strictly speaking, price inflation doesn't really mean a thing, IF wages are going up in parallel with it. "

      I can count on one finger the number of times this has happened in my lifetime, and I was born in the 1960's. The rest of the time, the working classes got screwed, and hard.

      • Re: (Score:2)

        by King_TJ ( 85913 )

        Yep! No doubt. But if you went back in time to before you were born, you'd probably find many more instances of it.

        By the 1960's, this was already becoming a real problem.

  • Get a clue. BOTH POLITICAL PARTIES SUPPORT OUT OF CONTROL BORROWING. Both of them. It's not the other team that's causing the downfall of America, it's yours and also theirs. Stop it. Stop it! Call YOUR congress-critter regardless of which brand of overspending he supports and tell him you're okay with not getting YOUR wedge issue supported and not getting YOUR favorite thing paid for. Tell him you don't need a tax cut, but to get the spending under control. This is going to get fixed when one of two things

    • Your statement is not based in reality. Democrats for at least the last 40 years have been far more fiscally responsible. They are willing to raise taxes to pay for their programs. Remember how angry everyone was when Clinton was closing bases?

      Trump in 4 years raised the national deficit by way more than Obama did in 8 years. It is not a valid argument to say they are both the same. You can argue they should still do more to bring it under control but that would require raising taxes as cutting programs is

  • There's a better way of slowing monetary velocity without the Fed risking crashing the economy into the ground. Let's just make billionaires and billionaire corporations pay their taxes for once. Most of the excess money sloshing around is going towards the 0.1% crowd anyway. Of course, it's the American Way to subsidize the rich with money taken from the poor, so this isn't even being suggested.

  • Powell is fighting the monetary inflation of the 1980s. This is NOT monetary inflation. It's all about the supply side being choked off by Covid19. It took a few months for the petroleum refineries to get back online so now the pipelines are full. So what happens, the price drops dramatically. The same is happening with the price of chicken.

    The problem is that by Christmas the pipes will be overflowing and businesses will start laying off again and because of the FED's interference, we'll see a crash into a

  • #Inflation

    Fed overestimated the demand for US$ and underestimated the impact of COVID https://en.wikipedia.org/wiki/... [wikipedia.org]
    bloom.bg/1O04ymn

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