“A reasonable question is whether the Fed will remain sufficiently independent after Powell’s term is up in May,” Zandi wrote.
Like watching a slow moving train wreck. We all know the brakes are broken, and people are still asking whether there will be a crash.
Yep. There is no question. Economists are giving Trump’s appointee the benefit of the doubt when there is absolutely no reason to do so.
If the news was worth its salt, they would weigh the option that once J.Pow is out, rates will get cut at the worst possible time, stoking inflation even more. But they won’t do that, because it is in their benefit to pretend that everything is okay.
At least that’s what I think… I’m not an EcOnOmIsT. I’m sure I’m missing some key components.
People are in denial about a lot of important things right now.
1970s stagflation was bad because economists had no idea such a thing could even happen. If people have jobs, they have money, and that increases demand for goods and prices go up. If people don’t have jobs, demand for goods goes down and prices go down. There shouldn’t be a situation where prices go up and unemployment goes up with it.
Naturally, this was a bad case of the economics of spherical chickens in a vacuum. If the price of a specific, key commodity (like oil) goes up, then that can cause everything else to rise in price at the same time employers are cutting jobs.
Oil went up in the 1970s because OPEC decided it should. It was hard for the US to strongarm them into dropping prices again. What’s different this time is that there’s a very clear answer to what is causing prices to rise, and the US 100% controls it. It’s tariffs. Drop tariffs and it all goes away. At most, you might need to negotiate with other countries to drop reciprocal tariffs once they’re in place, but most of them are going to be receptive because tariffs hurt in both directions.
Which, of course, won’t happen unless Trump goes away.
Meanwhile, headline writers are stoked it’s different enough to be considered “unprecedented” and “once in a lifetime.”
I would have stopped with the first sentence. They are all trying to apologize to Trump for any bad news.
Great Depression! Part Deux
