The defeat of inflation and the predicted decline in interest rates in September is very bad news for Donald Trump. Inflation has fallen from 9.1% in 2022 to 2.9% now, with a six-month average of 2.4%, while employment remains steady. So he's railing against FED Chair Jerome Powell, who he appointed, accusing him of trying to help Harris win. He's making ridiculous claims that inflation is the worst it has ever been, that the economy is a "nightmare" and a "cesspool."
Most people do not know where the Fed’s 2% inflation target came from. It was not written on a stone tablet and handed down from on high. The Fed’s inflation target was about 4% before the mid-1990s. In the mid-1990s, the New Zealand central bank set their inflation target to 2% and most other industrialized nations, including the USA, followed suit. Thus, a country with about 5 million people and 25 million sheep is basically responsible for our current inflation target. Economists will tell you that the reason the inflation target was lowered to 2% was that it allowed more “headroom” for the Fed to start raising the Federal Funds Rate if the economy should start to heat up, causing inflation to rise. This is true, but in order to maintain inflation at 2%, the Federal Funds Rate needs to be set at a higher level than if the inflation target was, say, 4%. The result is that the economy is more suppressed with fewer jobs and less growth - this is the cost of lowering the inflation target. Therefore, we are giving up some of the potential of our economy to keep inflation low. I don’t want to get started on how poor financial journalism has become, as I could almost write a book on the subject, but I will note that even in the NYT over past months, I have seen descriptions of the CPI or PCE index at 3% or 4% as “being dangerously high”. No. Inflation in Turkey just recently came down from 75% to 71.6% and inflation in Venezuela, which peaked out at 130,000%, has fallen to 51.4% in June. Those are dangerously-high levels of inflation.
Thank you for helping me/us understand a bit more about what these terms mean & how Pres Biden has worked to make the economy work for average folks, that’s what I think I understand after reading and listening to your post this evening. Thank you!
Thanks for this, Don- if Americans even began to look up and get a global perspective, we'd understand what a great economic comeback Biden & Harris etc al created for us.
The unfortunate truth is the Trumplicans (they are no longer Republicans, I was a moderate Republican - no longer) no longer understand fact from fantasy and truth from lie. That is my biggest disappointment in our citizens. And should Ms. Harris prevail the outcry from the Chumplicans will only fuel a radical dystopian response.
Thanks Heather. I don’t know where to begin tonight so I won’t except to say thank you for your heavy handed reporting tonight knowing full well that somehow we are going to get through this together 🇺🇸🗽🗳️🥁🕯️🕊️💙
Hi Heather, I read you every morning with my first cup of coffee. I came across this fascinating commentary on how Deuteronomy influenced our Founding Fathers and has been referred to in many presidents’ inaugural speeches. Were you aware of this? You can listen or click on a transcript of Rabbi Jonathan Sachs’ commentary here: https://rabbisacks.org/covenant-conversation/vaetchanan/the-idea-that-changed-the-world/
Solid economic data is where the truth lands
The defeat of inflation and the predicted decline in interest rates in September is very bad news for Donald Trump. Inflation has fallen from 9.1% in 2022 to 2.9% now, with a six-month average of 2.4%, while employment remains steady. So he's railing against FED Chair Jerome Powell, who he appointed, accusing him of trying to help Harris win. He's making ridiculous claims that inflation is the worst it has ever been, that the economy is a "nightmare" and a "cesspool."
https://jimbuie.substack.com/p/us-inflation-looks-defeated-soft
Most people do not know where the Fed’s 2% inflation target came from. It was not written on a stone tablet and handed down from on high. The Fed’s inflation target was about 4% before the mid-1990s. In the mid-1990s, the New Zealand central bank set their inflation target to 2% and most other industrialized nations, including the USA, followed suit. Thus, a country with about 5 million people and 25 million sheep is basically responsible for our current inflation target. Economists will tell you that the reason the inflation target was lowered to 2% was that it allowed more “headroom” for the Fed to start raising the Federal Funds Rate if the economy should start to heat up, causing inflation to rise. This is true, but in order to maintain inflation at 2%, the Federal Funds Rate needs to be set at a higher level than if the inflation target was, say, 4%. The result is that the economy is more suppressed with fewer jobs and less growth - this is the cost of lowering the inflation target. Therefore, we are giving up some of the potential of our economy to keep inflation low. I don’t want to get started on how poor financial journalism has become, as I could almost write a book on the subject, but I will note that even in the NYT over past months, I have seen descriptions of the CPI or PCE index at 3% or 4% as “being dangerously high”. No. Inflation in Turkey just recently came down from 75% to 71.6% and inflation in Venezuela, which peaked out at 130,000%, has fallen to 51.4% in June. Those are dangerously-high levels of inflation.
Thank you for helping me/us understand a bit more about what these terms mean & how Pres Biden has worked to make the economy work for average folks, that’s what I think I understand after reading and listening to your post this evening. Thank you!
Thanks for this, Don- if Americans even began to look up and get a global perspective, we'd understand what a great economic comeback Biden & Harris etc al created for us.
The unfortunate truth is the Trumplicans (they are no longer Republicans, I was a moderate Republican - no longer) no longer understand fact from fantasy and truth from lie. That is my biggest disappointment in our citizens. And should Ms. Harris prevail the outcry from the Chumplicans will only fuel a radical dystopian response.
Thanks Heather. I don’t know where to begin tonight so I won’t except to say thank you for your heavy handed reporting tonight knowing full well that somehow we are going to get through this together 🇺🇸🗽🗳️🥁🕯️🕊️💙
Hi Heather, I read you every morning with my first cup of coffee. I came across this fascinating commentary on how Deuteronomy influenced our Founding Fathers and has been referred to in many presidents’ inaugural speeches. Were you aware of this? You can listen or click on a transcript of Rabbi Jonathan Sachs’ commentary here: https://rabbisacks.org/covenant-conversation/vaetchanan/the-idea-that-changed-the-world/