It would be really helpful if the media giva as much attention and effort ro explaining what stagflation is and the dangers it poses as they did in the run up to the election to the price of eggs and fake crime waves. Maybe then people wouldn’t go to the polls as badly misinformed as they were last November. Contrary to the media’s excuse their bs still reaches, and misleads, a large percentage of the public. Media critic Dan Froomkin crunched the numbers that clealry show this:
I thought of an economic factor regarding inflation and unemployment. If I could write it up into an academic paper, maybe I could win a Nobel. :) I call the factor the "hate factor". People really hate inflation but they hate unemployment even more. Having experienced both I definitely agree. When there is a period of high inflation, everybody experiences it. There is a lot of hate. When there is a period of high unemployment, the hate felt by those affected directly is greater, but only a relatively small percentage of people experience it. Which situation generates more hate? As always, degrees matter. This question could be important in a stagflationary environment. And it could affect the outcome of elections as much as inflation affected the 2024 election.
We’re headed for a recession if the orange man hold continues playing with tariffs for the homage companies and countries and individuals pay him in cash to lower the tariff on their products. He’s so corrupt it can’t be stated loudly enough.
The only data point that actually impacts to John and Jane citizens is the stock market, a thousand point dive in the Dow Jones is a NY Times headline and the bears start growling… the market seers are beginning to recommend “safer” strategies, as long as the market keeping “bulling” to new highs all is fine in MAGAland.
Food prices are where the rubber meets the road for John and Jane, and the prices are going up, up, up. Fresh veggies way up, 30 oz. container of our favorite ground coffee was a little over $22 a month ago, now it's $28.99. A "bubbly" stock price doesn't help at the checkout register.
The mechanism of an interest rate cut is still primarily reducing mortgage interest rates and thus boosting housing construction, right? A 0.25% cut in fed funds is not going to do much of that by itself. Might it lead to more than a 0.25% reduction in the mortgage rate, though?
If inflation is expected to rise, thanks to tariffs and deportations, the real interest rate is already dropping. Should that make house-buying and housing construction more attractive?
The "transmission mechanism" of Fed rate cuts is a bit of a Talmudic topic these days. But as you suggest, the Fed funds rate does influence other important interest rates, including mortgages (less than 1-for-1) but also car loans and bank loans.
Good point re real interest rate, but for home buyers, the nominal mortgage rate is a lot more influential.
Thank you. I'm old enough to remember the high-inflation 70s, when smarter folks than I held their noses and bought at high interest rates, figuring both home prices and their pay would rise quickly enough to make it all work out. That game was disastrous more recently in the 2000s sub-prime debacle, of course. And currently, inflation is nowhere close to the 1970s and not likely to be, so perhaps a useless analogy.
Stagflation, here we come.
It would be really helpful if the media giva as much attention and effort ro explaining what stagflation is and the dangers it poses as they did in the run up to the election to the price of eggs and fake crime waves. Maybe then people wouldn’t go to the polls as badly misinformed as they were last November. Contrary to the media’s excuse their bs still reaches, and misleads, a large percentage of the public. Media critic Dan Froomkin crunched the numbers that clealry show this:
“I blame the media”
https://criticalread.substack.com/p/i-blame-the-media
What will cuts in Medicaid and Medicare do to health care employment, a key driver of employment growth?
this: https://www.beckershospitalreview.com/finance/760-hospitals-at-risk-of-closure-state-by-state/
I thought of an economic factor regarding inflation and unemployment. If I could write it up into an academic paper, maybe I could win a Nobel. :) I call the factor the "hate factor". People really hate inflation but they hate unemployment even more. Having experienced both I definitely agree. When there is a period of high inflation, everybody experiences it. There is a lot of hate. When there is a period of high unemployment, the hate felt by those affected directly is greater, but only a relatively small percentage of people experience it. Which situation generates more hate? As always, degrees matter. This question could be important in a stagflationary environment. And it could affect the outcome of elections as much as inflation affected the 2024 election.
Thank you for the analysis. Very helpful.
We’re headed for a recession if the orange man hold continues playing with tariffs for the homage companies and countries and individuals pay him in cash to lower the tariff on their products. He’s so corrupt it can’t be stated loudly enough.
The economy is weakening because of Administration policies. Interest rate cuts cannot counteract that.
The only data point that actually impacts to John and Jane citizens is the stock market, a thousand point dive in the Dow Jones is a NY Times headline and the bears start growling… the market seers are beginning to recommend “safer” strategies, as long as the market keeping “bulling” to new highs all is fine in MAGAland.
Food prices are where the rubber meets the road for John and Jane, and the prices are going up, up, up. Fresh veggies way up, 30 oz. container of our favorite ground coffee was a little over $22 a month ago, now it's $28.99. A "bubbly" stock price doesn't help at the checkout register.
I wonder what price will be reported for your coffee by the “ Ministry of Truth “ next month?
The mechanism of an interest rate cut is still primarily reducing mortgage interest rates and thus boosting housing construction, right? A 0.25% cut in fed funds is not going to do much of that by itself. Might it lead to more than a 0.25% reduction in the mortgage rate, though?
If inflation is expected to rise, thanks to tariffs and deportations, the real interest rate is already dropping. Should that make house-buying and housing construction more attractive?
The "transmission mechanism" of Fed rate cuts is a bit of a Talmudic topic these days. But as you suggest, the Fed funds rate does influence other important interest rates, including mortgages (less than 1-for-1) but also car loans and bank loans.
Good point re real interest rate, but for home buyers, the nominal mortgage rate is a lot more influential.
Thank you. I'm old enough to remember the high-inflation 70s, when smarter folks than I held their noses and bought at high interest rates, figuring both home prices and their pay would rise quickly enough to make it all work out. That game was disastrous more recently in the 2000s sub-prime debacle, of course. And currently, inflation is nowhere close to the 1970s and not likely to be, so perhaps a useless analogy.