And recently, the firmness of the 2% target has changed.
Flexible Average Inflation Targeting (FAIT) allows for the Fed to let inflation to run above 2%, with the hopeful expectation of bringing it down below it at some point.
The Fed will always fix it as _thats what the fed does_. Debt, spending, interest payments are all treasury- The stability of the system is the fed. They often work together but I'm willing to bet the fed is very unhappy with the level of debt and unable to do anything about it. Fed just controls the money supply and interest rates in an extremely technocratic way, divorced from the government or policy making.
> Cumulative inflation of 66.3% over the last 20 years (based on CPI, it's probably actually worse).
While this is bad, if you check the cumulative inflation from 1999-2019 where inflation had essentially been "missing" in the 1-2% range the cumulative inflation is 55%. Regardless though looking at inflation numbers is only half the picture, if you look wage growth in the same period, comes out to several percentage points above inflation/price growth. Even with all the big numbers we are doing pretty well!
On the other hand it is genuinely hilarious that what it took to crater tech stocks was someone going "Hey are you guys ever going to make money with any of this AI crap?" "I mean, if you keep giving us billions of dollars, maybe in like a decade. But uh keep doing it, they're totally going to think any day now."
Isn't that every bubble? The 2022 tech bubble was basically this but without the AI narrative. The 2008 GFC was partially caused by giving mortgages to increasingly flaky borrowers. The dotcom bubble was basically the AI bubble but with "the internet" instead of AI.
>"Hey are you guys ever going to make money with any of this AI crap?"
The most common answer I have heard for that question has been, so far, "AI brand ambassadors".
The thought is that by sucking up every scrap of personal data on you, a company can pay an AI brand ambassador firm to create an avatar to relentlessly pummel you in every plane of your existence with marketing and very carefully obfuscated conversation in order to make you buy something.
Think: autoplaying ads on every website and in every app with a "person" who starts talking to you like they know you, friend requests from strangers on every social media site you frequent who appear human and then once they trick you into engaging with them steer the conversation towards how awesome a product is, and comments and replies in media you consume that use every trick in the book to appear organic while namedropping a product or service.
There are only two ways to pay for the billions of dollars all of this AI nonsense has cost and will continue to cost: making end-users pay to use it (unlikely) or bombarding end users with ads and skimming off a sliver of any sales.
I would hope that the Fed President would say this, even if they don't believe it. Imagine the reverse, "hey folks, basically if the economy gets any worse we're cooked, but please keep spending money and investing and shit thank you"
>I would hope that the Fed President would say this, even if they don't believe it.
Completely disagree. It's an incredibly irresponsible thing to say.
Experts know that saying that the Fed can "fix" the economy (with this one simple trick, presumably) is ridiculous.
Ordinary people ... also know that that is ridiculous. They aren't stupid. They know there isn't a dial in Washington that Jerome Powell or ~~Biden~~ Harris can twist to "fix" things and, voilà, it's all better. People don't like being talked down to and do respond accordingly.
This seems like a very run of the mill statement, is there something noteworthy here other than an opportunity for folks to riff off this on some related topics?
And is it my imagination or is most of the OPs activity just cnbc submissions?
And you'll see in that the "ok, it's going in the right direction, cut the rate, and inflation spikes again ... " and doing this again and again. My crystal ball says that this will be a slow backing off rather than trying to revisit what the 80s had.
That said, with monetary policy, there are very few knobs to turn. Fiscal policy has as many knobs to turn as they want, but is mired in politics and (not infrequently) goals that work out of alignment with the central bank's goals.
Quantitative easing was the high speed drag fuel used to propel us to "these uncertain times." doubling down on QE for covid turned the housing market into a bulletproof bubble. Cranking interest to clinton-era levels basically tapped the brakes on inflation so a food crisis didnt threaten to dissolve the union, but it also didnt translate into a personal savings gain.
return-to-work mandates have failed, so we still have the looming corporate real estate crisis with over a trillion due in the next 40 months.
the average US auto loan is now somewhere beyond 80 months, and auto lending defaults have spiked as of 2023, so theres that bubble.
the education lending bubble was getting some assistance until loan forgiveness was basically cancelled. theres another 1.73 trillion dollar bubble.
We ended up as an economy that survived COVID lockdowns, the supply shock, the outbreak of a de-facto war against a superpower, trade cutoff to one of the largest energy suppliers in the world, most of our trading partners tipping into recession without tipping into recession ourselves.
We've got miracle makers in the Fed and White House and you all think that they're incompetent.
Might it be overly generous to attribute these outcomes to recent actions by people in these instituions vs. the USD still being the world reserve currency?
Biden deserves credit for not screwing things up. "First do no harm", "a steady hand at the tiller". Trump has promised to meddle a lot more -- massive border tariffs, taking political control of the Fed, taking political control of the bureaucracy, etc.
It's sad that not screwing things up is high praise, but it is.
LOL! I mean, I actually agree with your first comment a bit since the Fed has been reduced to a "jaw boning" organization, and they're not fixing anything. Hopefully, they don't cause a crisis.
However, you both miss the goals of the Fed (yes they want long term inflation to be 2-3% without interest rates at the zero bound) and the causes of the recent "inflation". The rapid disinflation we've seen while wages increase is not a typical inflationary spiral, and neither were the supply chain disruptions that ripped through the entire world (I hear there was a pandemic). The dollar has been by far the strongest international currency for the entire run so monetary inflation this is NOT (Gold was flat from July 2020 until Feb 2024). Even then the Fed's intervention in both expanding/contracting balance sheets, and in bank regulation has had a miniscule effect relative to the pandemic spending at $4T (under Trump) and $2T (under Biden) of the US Treasury (and congress) in issuing more debt.
I mean, if we've painted ourselves into a corner, then it's the biggest corner in the world (you certainly don't want to look to Asia or Europe for low debt/gdp numbers - only India seems relatively low). When geopolitical and environmental risks appear more immediate than fiscal, that's a strange and concerning place to be, and it should focus attention from the usual boogiemen. Don't talk about oil prices since it was more expensive in 2008 than any time in the last decade.
$35 trillion of national debt.
$1 trillion in annual interest payments alone to service that debt.
Cumulative inflation of 66.3% over the last 20 years (based on CPI, it's probably actually worse).
Highest "Home Price to Median Household Income" ratio in the last 70 years, currently higher than the last housing bubble.