Ignore the stagflation hysteria. Last week's inflation reports were not "hot." March CPI Inflation was 2.6% (not 3.5%); PCE Inflation 1.9%, (not 2.5%).
I agree with your assessment, but I feel like you're missing the bigger picture. So OK, let's assume everything you said is right. Now let's say the Fed reduces rates. Prices will continue to rise, no? As you show, the CPI is still positive even with rates at the present historically moderate levels.
Look at the bigger picture and ask yourself what the long term economic consequences of lowering rates would be. Will lower rates promote long term economic growth, or will they merely act as a speed bump along the current path to national economic insolvency we are headed down?
Right now, people cannot afford to feed themselves. Credit card debt is at historic levels and it's only a matter of time until we see defaults and bank failures begin to spiral out of control. Wages have not kept up with inflation, and now people are unable to afford basic living expenses. What people want is deflation. They want to see prices come back down to the levels they were pre-pandemic.
Of course, MMT doesn't allow economists to even contemplate advocacy for deflation because that means the entire economic Ponzi scheme collapses in on itself, so I understand your position here, but reducing rates doesn't strike me as a viable long term solution. At least with rates high, people are incentivized to put money into savings, which will provide a better economic foundation long term. I would argue for keeping the current rates, let the defaults happen, wipe trillions of debt off the books through bankruptcies and get the prices back down.
John- Thanks for sharing these reports. I hope you're well in your neck of the woods?
Thank you Thalia! All good here (Newport Beach CA). Hope you are well and enjoy your writing very much. John
I agree with your assessment, but I feel like you're missing the bigger picture. So OK, let's assume everything you said is right. Now let's say the Fed reduces rates. Prices will continue to rise, no? As you show, the CPI is still positive even with rates at the present historically moderate levels.
Look at the bigger picture and ask yourself what the long term economic consequences of lowering rates would be. Will lower rates promote long term economic growth, or will they merely act as a speed bump along the current path to national economic insolvency we are headed down?
Right now, people cannot afford to feed themselves. Credit card debt is at historic levels and it's only a matter of time until we see defaults and bank failures begin to spiral out of control. Wages have not kept up with inflation, and now people are unable to afford basic living expenses. What people want is deflation. They want to see prices come back down to the levels they were pre-pandemic.
Of course, MMT doesn't allow economists to even contemplate advocacy for deflation because that means the entire economic Ponzi scheme collapses in on itself, so I understand your position here, but reducing rates doesn't strike me as a viable long term solution. At least with rates high, people are incentivized to put money into savings, which will provide a better economic foundation long term. I would argue for keeping the current rates, let the defaults happen, wipe trillions of debt off the books through bankruptcies and get the prices back down.
thank you John, appreciate it!