quote:
Everyone seems to agree that inflation is high and continued to climb, but few on here seem to agree with the jobs numbers being strong. People need to understand they’re pretty correlated.

We lost a big chunk of the labor force in 2020 when things were ripping. The "job loss" has already happened... you can't find people now for more specialized roles in my experience. So if you're the fed do you keep pushing at the risk of going overboard and causing a huge crisis, or do you start to lower rates for some shorter term relief and hope everything else catches up?

The current situation is unlike any other in our lifetimes and everyone should be wary of anyone claiming to know what is going to happen over the next couple of years.

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Posted by Bard

Definitely NOT an admin

Member since Oct 2008

52912 posts

Posted on 4/10/24 at 12:41 pm to VolSquatch

quote:
So if you're the fed do you keep pushing at the risk of going overboard and causing a huge crisis, or do you start to lower rates for some shorter term relief and hope everything else catches up?

I don't think that's really the choices. I think it's more "do you keep pushing at the risk of going overboard and causing a huge crisis or do you start to lower rates and bring back even higher inflation?"

You don't lower rates in a strong GDP scenario. Regardless of the foundation, GDP is still expanding at a brisk pace. Lowering rates in that scenario adds more liquidity to the economy, thus driving up inflation (which is already starting to sneak back up because rates weren't brought up enough).

There's no way to get out of this economic calamity without significant pain (thus why a "soft landing" was more wishful thinking than achievable reality), it's just a matter of determining which vector the pain comes from, how much of it there will be and how long it will last.

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