re: Core inflation rate INCREASED +.2% in the month of August coming in at 2.9% year-over-year

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Cutting rates helps on the supply end, but it's not going to outweigh the constant creation of extra money. As such, at best it's a placebo that allows the inflationary can to be kicked down the road.

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Bard, explain this.

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Bard, explain this.

Cutting rates helps on the supply end

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When money becomes cheaper to borrow, businesses (ideally) are going to use that cheaper money to expand goods and services thus creating more supply. More supply leads to lower prices.

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but it's not going to outweigh the constant creation of extra money.

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While not QE, the constant creation of debt by the federal government is essentially the creation of money (at least when people buy that debt in auction), especially when that debt is only being serviced. We can tell this by the rise in inflation (and, especially, its resistance to going to/below the Fed's target) despite the higher rates and the Fed's balance sheet coming down consistently since 2023. GDP has been solid, while M2 continues to increase (because of debt spending).

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As such, at best it's a placebo that allows the inflationary can to be kicked down the road.

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Here's where we are:

-GDP is solid
-Inflation has been growing
-M2 has been growing
-Unemployment has been growing but it's so gradual as to be hard to notice

All this while rates have been held at a higher than recently normal point.

Cutting rates will likely spur more job growth and more production, but at the price of making inflation grow even faster. The average YoY inflation growth so far for this year has been 3.13%, the average YoY GDP growth has been 2.25%. In other words inflation has already been growing more than GDP thus far this year.

Using IS-LM, VAR and Okun's (which, unlike the other two, takes unemployment into account) we get a range of a possible increases to GDP of .13% - .2% which still puts GDP growth significantly below inflation's even if inflation were to remain at current levels (which it won't, without a recession we'll likely be over 3% for the rest of the year and into some point of at least Q1 2026).

It was less than expected

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Probably for similar reasons they cut rates 75BPS last year?

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Last year when the Fed reduced rates inflation was falling steadily.

It's not falling now but has increased a wee bit.

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if the Fed was truly concerned with inflation, why would it not be maintaining M1/M2 at level rather than expanding the money supply?

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I'm a little curious about that myself...

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But I guarantee you that if a Dem was in office they’d be cut.

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Dems are historically fine with inflation. Republicans claim to be against inflation and are fine with slightly higher unemployment,

Of course, historically Republicans were more hawkish on budget/spending. All that changed drastically under Bush II, though, and now Republicans are fine with massive overspending, too.

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This is 100% fact.

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Jeebus please make the stupid stop.

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Most people are trying to wrap their minds around the new economy. This is not what they grew up on anymore.

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WTF is this stupid gobblygook? New economy? Trump isn’t doing anything any different that hasn’t been don’t before. He raised taxes and increased spending. He did shift the tax burden, but the bottom line is that tax and spend has been an economic policy ain’t some 3-D “new economic” paradigm.

And the projected economic metrics have panned out pretty much as predicted.

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I expect inflation to start rising pretty quickly in Q4 2025. Most price increases were delayed because of the tariff uncertainty and customers often require 60-90 day notice periods with suppliers.

For example, Sony just raised the prices of almost all their cameras and lenses. Varies by model, but they are up 10-30% versus beginning of year.

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Agree.

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Inflating our way out ends only one way:

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In reality, what are the other options? - particularly given there is zero appetite by anyone to do something about spending/debt.

Sounds like we have the government we deserve. Idiots electing idiots.

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Sounds like we have the government we deserve. Idiots electing idiots.

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I think it goes a bit deeper than that. Our political class has become our de facto royalty, just with very limited biological lineage. If you can be a courtesan long enough, you can possibly reach a rank of royalty which shields you from some low level prosecutions.

Be good enough at playing the game of court at that level and you can move your way up to creating NGOs or other types of organizations which give you stroke and potentially money.

If you get REALLY good at it, you can create an NGO that gains international power and prestige, taking money in from not just the US government, but others as well and then spending it on vastly over-priced projects which never deliver even half of their promise (with a decent chunk of that money being kicked back to allied courtesans and members of royalty).

If you are (or your family is) REALLY, REALLY good at it, you can kill people and never face trial.

Power attracts the power-hungry. When the power-hungry are put in charge of policing themselves (see: STOCK Act, for example), that's when the corruption really digs in.

Politics will always involve getting next to dogs with fleas. Over the last 20-30 years though DC has been so awash in flea-ridden dogs that even the cleanest winds up not staying long or becomes just another of the flea-ridden pack.