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Thread: There Is A Shortage Of Everything & Prices Are Soaring: What Happens Next

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    There Is A Shortage Of Everything & Prices Are Soaring: What Happens Next

    The Fed confirmed in its March 17th press conference that it will allow inflation to continue for an indefinite period with the assumption that the market will correct it on its own. The article goes into more detail and includes a chart to explain this. What gets me, is the Fed thinks it can keep the interest rate at or near zero at the same time.

    There Is A Shortage Of Everything & Prices Are Soaring: What Happens Next

    In Wednesday’s press conference, Jay Powell confirmed that the Fed is setting off on a historic experiment: welcoming a conflagration of red-hot inflation for an indefinite period of time in an overheating economy, with the underlying assumption that it’s all “transitory” and that inflation will return to normal in a few years, and certainly before 2023 when the Fed’s rates will still be at zero.


    There is a big problem with that assumption: while FOMC members, most of whom are independently wealthy and can just charge their Fed card for any day to day purchases of “non-core” CPI basket items, the vast majority of the population does not have the luxury of having someone else pay for their purchases or looking beyond the current period of runaway inflation, which will certainly crush the purchasing power of the American consumer, especially once producers of intermediate goods start hiking prices even more and passing through inflation.


    Many readers may not recall, but one such instance of “transitory” inflation that proved to be anything but and led to the infamous Volcker Fed and its double digit rate hikes, was the price of oil which took off in the Arab oil embargo and then refused to come back for over a decade.



    The Powell Fed, however, is eager to brush aside any analogues to previous episodes of runaway inflation which it sees as having a demand component, and merely ascribes what is taking place to unprecedented supply chain disruptions – i.e., collapse in supply – as a result of both the trade war with China and, more recently, the covid pandemic, which have unleashed chaos among traditional supply-chain intermediaries.


    The article doesn't get into interest rates other than repeating the Fed's claim that they will keep them at or near zero through 2023. Remember, if you are a saver, low interest rates are a killer.

    Your retirement funds are not growing as they should. Your bank accounts are not making you any money- and will lose money if they go to negative interest rates.

    It encourages debt spending, and we have a debt crisis in the US (and globally) in public, private and corporate sectors.
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    Quote Originally Posted by Peter1469 View Post
    The Fed confirmed in its March 17th press conference that it will allow inflation to continue for an indefinite period with the assumption that the market will correct it on its own. The article goes into more detail and includes a chart to explain this. What gets me, is the Fed thinks it can keep the interest rate at or near zero at the same time.

    There Is A Shortage Of Everything & Prices Are Soaring: What Happens Next



    The article doesn't get into interest rates other than repeating the Fed's claim that they will keep them at or near zero through 2023. Remember, if you are a saver, low interest rates are a killer.

    Your retirement funds are not growing as they should. Your bank accounts are not making you any money- and will lose money if they go to negative interest rates.

    It encourages debt spending, and we have a debt crisis in the US (and globally) in public, private and corporate sectors.
    Not true, one of my checking accounts makes two or three cents a month, lol.
    Cutesy Time is OVER

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    Quote Originally Posted by countryboy View Post
    Not true, one of my checking accounts makes two or three cents a month, lol.
    I remember the 1990s when I made enough interest on bank accounts for it to be reported to the IRS. After my mother died in 2016 I had six figures in a bank account while I decided how to invest it. That didn't even make enough interest to get reported.
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    Quote Originally Posted by Peter1469 View Post
    I remember the 1990s when I made enough interest on bank accounts for it to be reported to the IRS. After my mother died in 2016 I had six figures in a bank account while I decided how to invest it. That didn't even make enough interest to get reported.
    Yup, when they add the penny here and there, it pisses me off more than anything.
    Cutesy Time is OVER

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