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Thread: Why Inflation Is A Real Threat To The U.S. Economy

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    Why Inflation Is A Real Threat To The U.S. Economy

    I bring this up here from time to time. With the recent rise in the CPI it is time to cover inflation again.

    Why Inflation Is A Real Threat To The U.S. Economy

    Judging by Fed Chief Jerome Powell’s recent pronouncements, today’s slightly higher than expected consumer price inflation numbers are almost certain to be dismissed by the Federal Reserve as a temporary rise in prices about which no sleep should be lost.

    That could be a big policy mistake.


    Indeed, all the clues are now pointing to an unwelcome acceleration in inflation later this year that the Fed is choosing to ignore at its peril.


    According to the Labor Department, the 12-month inflation rate accelerated in March to 2.6 percent or somewhat above the market’s expectation. At the same time, inflation, excluding volatile items like oil and food prices, accelerated to 1.6 percent suggesting that inflation is now clearly on the rise.


    The Fed would be correct not to attach too much weight to any single month’s inflation numbers particularly after prices might have been suppressed during the pandemic’s lockdown phase. However, where the Fed seems to be overly sanguine is about the future price increases to which today’s overly expansive monetary and budget policies are all too likely to give rise.


    The most obvious clue that inflation will soon accelerate to well above the Fed’s 2 percent inflation target is the fact that the U.S. economy is now receiving its largest peace-time budget stimulus. It is doing so at a time that the economy is already showing signs of a strong economic recovery from the pandemic’s ravages.


    It has to be of particular concern that, at a time that the Congressional Budget Office estimates that U.S. output is only some 3 percent below its potential level and that the economy is well on the mend, the Biden budget stimulus coupled with an early bipartisan stimulus will result in the U.S. economy receiving around 13 percent of GDP in budget stimulus during 2021. This amount of budget stimulus alone is bound to lead to considerable economic overheating later this year that must be expected to result in an unwelcome acceleration in inflation as aggregate demand well outstrips aggregate supply.


    Another troubling inflation clue closer to home to which the Fed is choosing to turn a blind eye is today’s unusually easy monetary policy stance. Particularly troubling has to be the fact that the Fed’s massive bond-buying program in the wake of the pandemic has given rise to a 30 percent increase in the broad money supply. That pace of increase is by far the fastest pace of monetary increase in the past sixty years and has to be amplifying the inflationary effects of today’s unusually easy budget policy stance.


    It is also troubling that, despite the recent money supply explosion, the Fed is showing no signs of an early termination to its $120 billion a month Treasury bond and mortgage-backed securities buying program. Such future bond-buying will only add further to the money supply.
    Read the rest of the article at the link.
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    We are going the way of Greece and Venezuela.
    Call your state legislators and insist they approve the Article V convention of States to propose amendments.


    I pledge allegiance to the Constitution as written and understood by this nation's founders, and to the Republic it created, an indivisible union of sovereign States, with liberty and justice for all.

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    Well... at least there's no more mean tweets.
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    Everyone is raising prices. Prices for materials are going from a minimum of 6% to 50% increases.
    We are increasing prices accordingly with an original 6% increase and an additional 4% that is now unavoidable. Shortages of labor, due to the idiots that pay people to stay home is limiting capacity. Some people are happy to just collect a check and do not care if you offer them more to work.
    I can see prices being 20% higher by year end.

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    Quote Originally Posted by carolina73 View Post
    Everyone is raising prices. Prices for materials are going from a minimum of 6% to 50% increases.
    We are increasing prices accordingly with an original 6% increase and an additional 4% that is now unavoidable. Shortages of labor, due to the idiots that pay people to stay home is limiting capacity. Some people are happy to just collect a check and do not care if you offer them more to work.
    I can see prices being 20% higher by year end.
    I saw an article that the IRS was having trouble staffing its help desks because people would rather collect unemployment.
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    I was on this since the idiot Biden took Office:


    Biden Economics and Inflation (thepoliticalforums.com)


    Young people who have never experienced rapid inflation do not understand that once you have it there is nothing you can do other than prevent it from getting even worse.

    Your savings eroded and your income reduced in value just like that!

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    Quote Originally Posted by RMNIXON View Post
    I was on this since the idiot Biden took Office:


    Biden Economics and Inflation (thepoliticalforums.com)


    Young people who have never experienced rapid inflation do not understand that once you have it there is nothing you can do other than prevent it from getting even worse.

    Your savings eroded and your income reduced in value just like that!
    Inflation is the easiest way for government to steal the savings of retirees.

    They print the money and retirees loose purchasing power.

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    Quote Originally Posted by carolina73 View Post
    Everyone is raising prices. Prices for materials are going from a minimum of 6% to 50% increases.
    We are increasing prices accordingly with an original 6% increase and an additional 4% that is now unavoidable. Shortages of labor, due to the idiots that pay people to stay home is limiting capacity. Some people are happy to just collect a check and do not care if you offer them more to work.
    I can see prices being 20% higher by year end.

    You can't get away with throwing trillions into the economy while at the same time continuing incentives for people not to work. The whole point of recovery is getting people back to work so they become productive and pay taxes.

    This is typical leftist economics that pretends consumerism is the driving force not productivity. At best stimulus is a very temporary solution that should be applied with caution.

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    Quote Originally Posted by RMNIXON View Post
    You can't get away with throwing trillions into the economy while at the same time continuing incentives for people not to work. The whole point of recovery is getting people back to work so they become productive and pay taxes.

    This is typical leftist economics that pretends consumerism is the driving force not productivity. At best stimulus is a very temporary solution that should be applied with caution.
    Democrats always have things bass ackwards.

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    Quote Originally Posted by carolina73 View Post
    Inflation is the easiest way for government to steal the savings of retirees.

    They print the money and retirees loose purchasing power.
    True. Combined with the idea of a wealth tax to steal even more of what we have saved it is a killer.
    Call your state legislators and insist they approve the Article V convention of States to propose amendments.


    I pledge allegiance to the Constitution as written and understood by this nation's founders, and to the Republic it created, an indivisible union of sovereign States, with liberty and justice for all.

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