Topic: Inflation will not fall to 2% target for two years, Fed's Mester says - page 2. (Read 521 times)

It was the Fed who just admitted that THEY currently now understand that they have little understanding about the current inflation, and how to fix it. Because, they did the necessary steps, but inflation keeps going higher and higher.

BUT this is what EVERYONE of plebs should understand. The Federal Reserve doesn't care about our investments in stocks, in commodities, or in Bitcoin. They're main concern is to fight inflation, and maintain the U.S. Dollar's value AND its status as a Global Reserve Currency. Because if hyperinflation happens, it will END the U.S. Dollar's status as a Global Reserve Currency, and END the United States' global dominance over the world. I believe the Fed will crash the economy through more tightening and rate hikes if they need to, to save the Dollar.

We do have a fucking clue to be fair . We have a high inflation because we have a lot of money. Just in the past 3 years, USA printed nearly half of all the money they ever printed. Yes that is right, I do not know when was the first time they printed dollars, but it must be over 200 years now, so for the first 197 years, they printed as much as they printed for the past 3 years. If that doesn't tell you a good reason why inflation is high, then nothing would.

Same happened in many countries, and maybe the numbers wouldn't be similar but that is all about what's going on right now, the amount of money printed all around the world is too high and that's causing all this trouble.

It's actually not. In the context of how he said it, I believe he was trying to give everyone the thought that the might not have no other choice but to let the economy go have a "hard landing", because in his words it was something like, "their options in how to fix inflation without causing a recession is narrowing".


Ser, it's either raise the interest rate, or hyperinflation. Save the Dollar, or the economy? History has taught us that since 2008, the Fed always tightened after QE, and went to QE again.

America's economy has a strong influence globally, if inflation occurs in the USA then the direct impact is that many countries that export to the USA will get a new policy, I work in a food raw material company with customers from the USA, and the impact is felt because they reduce imports more than 50% since the end of 2021.

So, you read 6854754 books of economy, know for experiences in 812231237 times, that INFLATION ITS A MONETARY THING. And know if you print 89123182738172387123 ton of dolars obviusly in a short time you have inflation but, after doing all the things bad and making the things you dont have to do say " Ohhhhh i dont know why its the inflation coming, its multicausal" or "its because the war in Ukrayne" pure shit.

And being for a country with 60% annual inflation all the years i can say tou you the goverment say pure lies about it, because they print to cover their bad administration, the print to keep the wheel rolling, they print to re-buy his own state bonds.

I know in some times of emergency you need to print without respalding (some extremes circunstances) but after that not say "ohhh i dont know where its this coming from".

Remember when the fed said inflation was transitory? Also, isn't it absurd that the U.S. government admits to its currency holders that their purchasing power will not go down to the luxury of 2% year over year reduction until 2024, rather they must suffer with triple that amount and more until then. After all the suffering, then only are you rewarded with a 2% yearly reduction in spending power.

Anyone that understood the ramifications of endless money printing recognized there wasn't a way to lower inflation without effecting the interest rates severely and slowing the economy into a recession, the fed are years behind.

If he had said this statement, it is a good step forward, as the lack of knowledge of the nature of inflation suggests that they will not continue with a single monetary policy, but that policies may change according to the variables, and therefore we may not witness more interest rate hikes in the coming months.

Continuing to raise interest rates would be disastrous.

I believe it's true. Inflation might not fall to 2% in two years. Probably longer. Jerome Powell released a statement yesterday during an FOMC meeting and said that they ave started to understand that they now have no understanding about the current inflation.

What? It's a joke by me? NO, he actually said something like that!

Yeah, 2% right now doesn't look like a lot, great also if someone is optimistic. But then again, we now have the looming of war and its a burden on our economy. Food and energy shortage are also in effect. Seem like a tough time is ahead for both the US and the world economy. Guess the statement from FED is too good to be true.

Of course it has the power. As odolvlobo says:



I doubt this. The most recent precedent is the Reagan era. It came from the term of Jimmy Carter who with his policies left an economic situation very similar to now. With Reagan the interest rates went up a lot and a recession was provoked, but it was necessary, as if you had to pull someone's tooth so that it would not get infected. It will hurt, but not pulling it out will be worse:

Reaganomics

"The inflation rate, 13.5% in 1980, fell to 4.1% in 1988, in part because the Federal Reserve increased interest rates (prime rate peaking at 20.5% in August 1981). The latter contributed to a recession from July 1981 to November 1982 during which unemployment rose to 9.7% and GDP fell by 1.9%."

What followed was an era of economic growth, low energy prices and moderate inflation.

The Federal Reserve has the power to control inflation by 2% over the next two years(like by increasing the interest rate,money supply, other monetary tools). However, it is not clear if the Federal Reserve will be able to achieve this goal. Inflation has been increasing recently and there is a risk that it will continue to do so. If it continues to increase then it makes the Federal reserve impotent    Which will make it difficult for the Federal Reserve to reduce inflation to 2%.

Impossible.
The Federal Reserve is tasked with maintaining price stability and maximum employment. In order to achieve these goals, the Fed uses monetary policy tools such as interest rates to manage the economy. Raising interest rates is a way to slow down the economy and reduce inflation. However, it also risks causing a recession. Fed policymakers are aware of this risk and believe that the current rate increase is warranted given the current economic conditions. The recession is here to stay for a long time 

You have to question the intelligence and long term planning of central banks if history is anything to go by. At best when everything is going steady and things look all rosey then they have no issues predicting more of the same. However they always seem to be stung and very inaccurately forecast big problems before they happen, often simply reacting to events that you'd imagine they are paid to manage in advance. Apparently nobody could have predicted the runaway inflation that we're seeing now and the policymakers are struggling to catch up to current events, raising interest rates by large amounts in an effort to tame inflation but it also looks like they're acting too slowly again.

That is correct, rapid deflation isn't healthy for the economy either. I highly doubt that it'll happen in 2 years as OP mentioned, a couple could possibly mean more than 3-4, which is a more realistic approach. As long as the war continues, we're going to have a huge burden on the economy, which is also susceptible to worsen in the future if action isn't taken with oil, wheat and electricity.

It is normal to not fall to those levels that quickly. In fact, it could even hurt you if it hurts that quickly, meaning if the prices stay that way and do not go up, the growth would be stopped and that would hurt the economy as well, nobody would make a profit.

Definitely 2% is great, but it is great when it is there forever, if you could lock it for the next 100 years that would be insanely great. But if you go to 7%+ and your gas prices increase to a whole new record levels, then making the inflation 2% again could hurt more than it helps. This is why it needs to be dropping small by small, lower and lower, which will make sure that eventually it will be there but since it has been a while, everyone will be ready.

I, to be honest, thought that 5% inflation rate was considered pretty good, so is 2% even a desirable target? Maybe it won't get there, but if it gets below 5%, isn't it alright? I mean, not in general, because money devaluating is basically a hidden tax, but in terms of how fiat works and how it's argued that some inflation is good to motivate people to spend money instead of hodling. And also, I think the focus should not be on inflation and decreasing rate of economic growth, but things like redistribution of goods, better social policies etc.

They can do whatever they want, for the common man they are the gods on the throne who decide in which direction their nation will go, but unfortunately also the direction in which most of the world will go. From all that can be read, such measures inevitably lead to a recession, and it seems that this is their goal - and not only for them but also for other governments in the world that are making almost identical moves.

When you say that the recession could last for several years, I think its consequences will be felt at least until the end of this decade - because the war on the Eastern European border and the statements coming from the aggressors clearly indicate that they want much more than they have now. The EU without cheap oil and gas and with green ideologies will not do well in all this, which will probably bring to power various radical and anti-EU politicians.

The example of the recently concluded parliamentary elections in France speaks volumes about how things are changing - the Macron party lost an absolute majority, and Marine le Pen won as many as ten times more MPs than in the last elections.

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Covid will not be a problem for at least another 2-3 months in the northern hemisphere during the summer, and restrictions and new vaccinations will probably start again in the fall. As for Russia and its intentions in Ukraine, not everything is as it seems - because the Russians have almost everything they really wanted - everything else was a smokescreen and a tactical stretching of Ukrainian forces.

Of course, all these measures taken up to counter the rising inflation won't be effective overnight. It will take time. The effects will slowly trickle down to the bottom. Not to mention that even if there are efforts for recovery, the problems are not yet gone. They're still here. COVID is still around, with new variants still forming. The Russian invasion isn't over yet even if the Russian army is already pushed back. And the global effects of these two are still felt by the world.

But I don't think there will be a recession even if the Fed fails to pull down inflation to 2% within the next couple of years. Perhaps there'll be very low growth as compared to the target. At most, there'll probably be a slight decrease in GDP, but will just be temporary to be considered recession.

Two weeks of lockdowns to flatten the curve (COVID).

Two years of inflation to flatten the debt cycle.

I think we've all heard this before.

They say history repeats itself due to people refusing to learn from past history.

Is it more astonishing that people believe they're better off not knowing history. Or is it more astonishing that governments and politicians have used many of the same tactics and strategies for thousands of years, without the majority of people learning to recognize and adapt to them?

Voltaire is famous for saying fiat currency always returns to its intrinsic value of zero. There was a considerable historical precedent behind him making these claims. So it appears history may repeat itself again. And people will be taken by surprise if it happens. Despite it occurring frequently throughout history.

Roughly 1,500 years ago the roman empire suffered from a hyperinflating denarius. And it seems today people may experience similar conditions. Without connecting the dots between past and present.

Why?
It is exactly that thing that goes against the usual current that needs to be analyzed, especially since it's the one case where inflation is not happening, just when it comes to a disease, you're looking at why this guy survived or did not get infected for clues.

And culture, school of thought, things that can apply to only a country, the mentality of a population, those things are just on paper, one week of fasting after one month of two loaves of bread a day menu and you will see how easily people can suddenly forget everything, from religion to the name of their ancestors. It's quite funny actually, you dismiss the case of Japan because well, not everyone can change their way like that,  while at the same time we're here on Bitcointalk where we talk about changing the whole way the economy works, in the whole world, isn't that contradictory much?


I see it as a valid reason, I mention it, simple as that!
People can stop inflation themselves, it only needs a gentle push and the FED won't be able to do a thing about it, if everyone would simply cut their expenses you're going to see prices and inflation going down, deflation can be triggered easily if the absolute majority wants it and are prepared for it.

I think that inflation in Japan and the nature of the market there needs a separate school of thought because it is not subject to most of the current investment laws, so we cannot consider it an example that we can rely on.

The culture of thrift in Japan (Secondhand Tokyo https://savvytokyo.com/thrift-like-a-local-the-tokyo-west-edition/) is not just a habit that occurs when the economic situation becomes deteriorating, but it has become a culture of the people.

Therefore, there is no reason to mention the issue that some inflation factors are outside the Fed's control.