U.S. inflation reached a new four-decade high of 8.6% in May

And more gasoline is produced.

> They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates.

This is exactly why the easy-money economy should never have been allowed to occur and persist for so long.

If Energy prices are driving it we are in for a long haul. Electricity costs in California is up 50% in the last five years. Efforts to on Shore manufacturing will drive it up higher

https://www.paloaltoonline.com/blogs/p/2022/03/06/when-will-...

I find it hard to believe people running large retail operations believed the fed and whitehouse when they uttered the word "transitory" when everyone else pointed to the money printer still going full throttle.

It's their fault for going along with the narrative the fed/whitehouse + media were pushing.

I'm not sure that's right. Let's say energy (specifically oil and gas) is driving this. And so everything goes up, because everything depends on oil and gas. But there it stops, because the price of oil and gas isn't going to go up because of inflation in, say, wheat or Nikes. Oil and gas are going up primarily because of the loss of supply from Russia.

Volcker was appointed by Carter, not Reagan.

Deflation being much much worse is a nice joke. You telling me that if gas and food and rent lowered in price over time, I will be worse off? Stuff are supposed to become cheaper as technology advances yet we only either get high or low price increases, all to fund the rich in the government.

Yeah I think that’s the important part to understand, deflation is so much worse and can cause an equity trap which could send us into a severe depression.

Inflation sucks but let’s not be drastic

This is not what is going to happen.

The government is likely to be locked up pretty hard if the Republicans take either the House or the Senate in the fall, and while we might not see hard austerity, we certainly won't see any stimulus.

Meanwhile, the Fed has been talking consistently very tough on inflation and is bumping 0.50 basis points every meeting and signalling that they'll do that until inflation is contained. They're talking positively about Paul Volker and keeping rates significantly above what is considered to be neutral.

And what they're worried about is the broad wage increases that are being seen (and the whole backlash against shitty jobs and pay and unionization drives).

They absolutely will raise rates this time pretty fast -- much faster than the 0.25 basis point tightening and calming reassurances every meeting under Greenspan. They're talking tougher than I've seen them ever talk in the 21st Century.

If you believe the economy is a huge bubble, they're talking like they're going to pop it. And they always overshoot and they're talking and looking like they're going to overshoot. That means that meaningfully large areas of the economy are likely to detonate (probably CMBS). Crypto will also probably melt down.

And with a Republican congress and a Democratic President the thing to worry about is that if the system needs rescuing that a chunk of the Republicans may be happy to watch it burn and blame it on Biden. Of course that will hurt them, too, but they may realize too late that the Leopards will also eat their face as well.

They're going to proceed with waging class war and crash the economy into an iceberg to get wages back under control. And everyone who is screaming at them about inflation is going to cheer them on to do it. Then when the economy hits the wall the people who would put out the fire are going to be paralyzed into inaction.

This time it is actually different because the Boomers are retiring, COVID and long COVID has taken people out of the workforce, the pandemic itself has made people very uppity and demanding and there's a huge overhang of jobs compared to job-seekers and we're seeing wage inflation. That's novel compared to the past 30+ years. And they're pretty much freaking out over it. And there's no political pushback, they have a blank check right now politically to get inflation under control. When I try to suggest that a wage-price inflation cycle would be useful to reprice debt and assets like housing people and that "stagflation" is the less-painful path to repricing people act like I should be locked up in the loony bin. QED, the Fed currently has a single political mandate to get inflation under control. We're gonna see deflation. Yield curve is going to be pushed into inverting until something breaks.

None of that matters. "current situation bad = vote different color" for some.

> If Republicans control congress what will be different?

Um, well, a lot will be different, but nothing with regards to gas prices or inflation. And this is coming from somebody with a passionate bordering on maniacal hate for democrats.

Guessing you get all your GOP news from democrat news sources.

Listen to Ben Shapiro or other view points for awhile to a better perspective. He has been screaming about inflation for awhile now. Really go out on on a limb and read up on Thomas Sowell.

Cheap (fossil fuel) energy.

> If Republicans control congress what will be different? I don't know, but anything is better than what we're looking at now, so I'm excited about all the protest votes we're going to see. Biden's disapproval rating is about 56% [1], near or worse Trumps was around the same time. That's when Democrats got the majority in the House and Senate, from protest votes against Trump. Since Democrats and the "Biden-Harris administration" are NOT handling control of congress very well, or anything at that matter, the pendulum will swing the other way, as it always has throughout American political history.

[1]: https://projects.fivethirtyeight.com/biden-approval-rating/

Let's elect fiscal conservatives into power. Remember when the Ukraine aid bill was $30B, and then Democrats raised it to $40B? Rand Paul questioned the purpose of this spending, and MSNBC smeared him as a Russia sympathizer. Republicans tend to sometimes care about getting spending under control. But with the state of the economy being directly impacted by inflation, I have more confidence in Republicans to take on this challenge.

Well, if a single additional R senator had won in 2020, the ARP wouldn't have passed and inflation at these levels largely wouldn't have occurred to begin with.

Gridlock is the best thing we can get right now. They are still pitching BBB among all of this, which is frankly amazing.

Despite inflation being a horrible political anchor for the Democrats, they have yet to pitch any economically sound policy to combat it. They keep talking about proven to fail economic policies such as price controls, or blaming Russia/Corporate Greed.

The economy is goods and services produced.

Money is an exchange medium to facilitate exchanging goods and services. Before money, we exchanged things without that medium, I'll give you a goat and you'll give me a haircut. Money is a symbol, a record of sorts, and a grease of sorts, a means to an end (to make it easier to exchange things).

When the government locks the economy down, and prints money, this creates a huge demand (the money given to people and low interest rates handed out, mostly in trickle-down fashion from the top), but the demand doesn't match the goods and services that weren't being produced. Suddenly it's become obvious that things cost more, because there's more money and less things.

The fact that our President just this week called it "Putin's price increases" tells you all you need to do know about the quality of our leadership. Lo and behold, it was not better than the previous leadership, which said equally stupid things.

It might just be that the government (Republican or Democrat) should be legally limited from doing certain things, like racking up debt.

The economy should have failed during the 2020 crisis. That's the point. Government intervention not only prolongs the pain but inevitability increases it as it tries to save.