re: 65 months of CPI over 2%

Good.

I hate to see people lose their homes, but the housing market was being manipulated and it caused problems. Maybe the increase in inventory will improve affordability.

Apple extended their back to school sale that usually ends in late August but now ends late September.

Demand must be soft. Consumer debt is exploding and costs are up. They entered a deal with Klarna to create a broad hardware leasing program this past week.

I think we will have a bearish reaction and pullback to weak holiday quarters across retail.

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The economy for most americans has improved, view it through a silo and say my gas and latte went up......and forget your 401 rose well beyond any daily costs.

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And that 401k will correct if the pullback and recession happens in 2027. Can't predict the future but that is a silly thing to trumpet. Costs are up and consumer debt is out of control. The fundamentals of the economy are screwy.

Yep, when the banker calls to let you know how proud he is of me and wants me to find some props and create some more entitiies to absorb them, I know exactly what he is really trying to say.

"Help a banker out, bruh."

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Q2 2020 —> 23,860
Q2 2021 —> 8,100
Q2 2022 —> 35,000

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These numbers are irrelevant due to all the ridiculous Covid era protections for mortgages etc.

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has me thinking we will revert back to levels not seen since the mid 2010s

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Your dream will finally come true!! After years of hinting at and predicting a housing 'crash' your day will finally come! Congrats! You might be finally right

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1. The rates must go even higher and force a recession with mass layoffs to curtail demand as much as possible

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Trump will have an aneurysm if that happens

We should have raised rates faster a few years ago and dealt with the pain. We might be on the tail end of it by now, but instead we are just floating along in a never-ending inflationary period.

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off their asking prices

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Who cares....they can ASK whatever they want, and artificially inflate once market is decent. Market comes down to normal, and they act like they had to come off the true value of the home.

End the Fed.

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I wonder about student loan debt as well. I have seen that repayment has started after several years of most loans being in forbearance and deferred, but still accumulating interest. Now monthly payments are much higher than the borrowers were paying before the “gap” in repayments.

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Many debts can be discharged through bankruptcy, but student loans isn't always one of them. Courts generally use one of two tests to determine this (and it's all-or-nothing, either the debt is fully discharged or none is discharged):

The Brunner Test:
-This test is used to determine what qualifies as an undue hardship. Under this test, a person is capable of discharging a debt if certain factors are met.
---First, a person must establish that they are incapable of maintaining a minimal standard of living if they are required to repay loans.
---Second, a person must establish that their current financial situation is likely to continue for a substantial portion of the repayment period.
---Third, a person must show a good faith effort was made to repay the student loans.

The Totality of the Circumstances Test:
-This test evaluates all factors in a case to determine if a person is unable to face an undue hardship that leaves him or her unable to repay student loans.

It may be that we see those with higher balances getting those discharged as part of their bankruptcy, if they get that far into debt. How many people that will impact is anyone's guess at this point though.

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Another thing:

I think we may be in a scenario where monetary policy cannot fix the inflationary trend. Something other than cashflow may be causing inflation.

The general rule is raise rates when inflation is high, cut rates when unemployment is high. However you have to caution raising rates too highly because it will lead to layoffs. We've seen that in tech where they were hiring like rates would always been in the mid 2010s through COVID historical lows. Once the rates began rising, you saw that big tech did not have an appetite for their payrolls anymore. That's not the only example but it is a high profile one.

There are two possibilities now that higher rates have not resolved inflation:

1. The rates must go even higher and force a recession with mass layoffs to curtail demand as much as possible

2. The inflation is caused by reasons monetary policy cannot resolve

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You are pretty much dead-center on the scenario.

The biggest issue we have is deficit spending and that causes two primary problems:

-Inflation as long as we keep creating so much debt
-Increasing economic dependency on deficit spending remaining at least as high as it has been post-COVID (and that spending is quite a bit higher than the GFC to pre-COVID period, which was higher than the pre-GFC period).

Rates can be Volker'd, with the jump in Unemployment following, but as long as annual deficits remain higher than giraffe pussy then we're just fighting the symptom (thus the "cure" may make things worse).

On the other hand, just balancing the budget would mean cutting federal spending by ~1/3 (that's for everything except debt servicing). Cutting that much from Social Security, the VA, soldier pay, Medicare, etc. would almost immediately cause a strong recession (and a frickton of voter outrage which would almost guarantee Congress would reverse course asap).

What's happening is that the can keeps getting kicked down the road in the hope some miracle happens. There is no miracle for this, math is simply gonna math and the longer and deeper we lean into this pro-debt mindset instead of a pro-credit one, the worse it's going to be when the consumer debt bubble pops and then again when the weight of the federal debt crushes the value of the USD.