I was going to write a piece about how private equity has signficantly changed the landscape of private businesses in the United States with their voaracious appetite for leverged buyouts. The majority of American workers are employed by these companies and a change in these companies fortunes could have a catostrophic effect on employment. I don’t think the Fed realizes just how deep in debt many of the companies that make up the backbone of the American economy are. To some degree, the Fed is as oblivious to this risk the same way they were oblivious to just how big the Housing Crisis was in 2007.
Freaking Ben Bernanke said in a NYT op Ed that the Fed has no role in dealing with this current inflation bc it’s not demand from too much dollars causing this but a supply problem ie supply chains and price gouging done under cover of darkness. Yeah the decision in 2018 for the Fed to stop raising rates every time inflation approaches 2% caused some inflation but it mostly benefitted workers and allowed them to benefit from productivity gains.
Yeah….if they had managed this better American workers could be getting better wages that ARE keeping up with inflation. Instead workers get screwed now with inflation outpacing any wage gains and then when the economy crashes they lose their job.
I agree. This new supply inflation is how they’re sucking up all those productivity gains. And they don’t care about inflation sanctions bc they’re asset owners and can just borrow money and pay down the reduced cost of debt later.
I wonder if Powell will raise rates until something breaks, and then begin QE then. I suspect that we'd see inflation get a little hot, but the market would react and go up, and then the FED could say they "fixed" everything.
I'm not sure I've got it right, but the market is crazy no matter which way you look at it.
Freaking Ben Bernanke said in a NYT op Ed that the Fed has no role in dealing with this current inflation bc it’s not demand from too much dollars causing this but a supply problem ie supply chains and price gouging done under cover of darkness. Yeah the decision in 2018 for the Fed to stop raising rates every time inflation approaches 2% caused some inflation but it mostly benefitted workers and allowed them to benefit from productivity gains.
Yeah….if they had managed this better American workers could be getting better wages that ARE keeping up with inflation. Instead workers get screwed now with inflation outpacing any wage gains and then when the economy crashes they lose their job.
I agree. This new supply inflation is how they’re sucking up all those productivity gains. And they don’t care about inflation sanctions bc they’re asset owners and can just borrow money and pay down the reduced cost of debt later.
I wonder if Powell will raise rates until something breaks, and then begin QE then. I suspect that we'd see inflation get a little hot, but the market would react and go up, and then the FED could say they "fixed" everything.
I'm not sure I've got it right, but the market is crazy no matter which way you look at it.
The 'bust out' comparison is perfect.