Interest rate hikes will not fix inflation caused by supply
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Started by TimNew - May 4, 2022, 2:46 p.m.

I think I've said this before, and maybe it should be TR,  but it's a subject that's not likely to remain TR.

Our Employment Participation rate has not returned to prepandemic levels.

Prices are not up due to over heated demand, they are up due to limited availability. We have more money chasing fewer goods,  but that is from all the artificial liquidity the gov has injected.   Not from too many people working.

So, the only way interest rate hikes will lower inflation is by hastening a recession.   That will bring inflation down, perhaps into negative territory, in a hurry.

Is that the plan?

Comments
By metmike - May 4, 2022, 3:34 p.m.
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Thanks Tim, good points. 

It's perfect to leave it in the NTR section as you suggested, also so we can have threads going in both places.

                Food inflation           

                            7 responses |                       

                                            Started by wglassfo - April 30, 2022, 10:59 a.m

https://www.marketforum.com/forum/topic/83827/



By bear - May 6, 2022, 5:51 p.m.
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eventually, supply issues sort themselves out in a free market.  but... in the big picture, inflation is the result of govts and central banks printing and spending too much money. 

if politicians and central bankers were not so reckless,  then prices would go all the wat back down where they were 4-5 years ago once the supply issues get solved.  

here is an example... in the 1800's prices went up during the civil war (and we printed too much money).  but after the war, we went back to our gold standard, and things like copper and silver went all the way back down to where they had been in the 1850's.  

By wglassfo - May 7, 2022, 4:20 p.m.
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Don't think supply will return to normal any time soon

With china lock downs, much of our supply parts come from china

Have you looked at new cars lately

New cars being sold with missing chips to be replaced later, most come from china or off shore supply

Not very many cars for sale and the few available with missing chips

Order a car and wait, it will come with missing chips. Says so in the sale contract. I know because we went truck shopping. Nothing to choose from, most order what they want, missing chips and all.

Port congestion shows no signs of going back to normal. It should if we buy less but so far, not happening

Try to remodel your house kitchen. What a pain with no supplies. 6 months minimum or longer

Russia stealing and destroying Ukraine grain supplies. Some body will come up short in the demand for  food supplies

Black Sea exports not happening any time soon

Biden determined to go green and discourage fossil fuel means fuel shortages as price tells us what the situation is today

EV won't save us as what powers the electricity at the other end of the EV charging system Automotive thinks EV is the future. They must know some thing I don't

Power grid is not able to handle the demand for EV if electricity was available with out massive up grades and money spent doing upgrades

Have you tried to buy new tires for your car and want specific tires. Well you just have to buy what is available

The list is endless

I really don't see a return to normal supplies any time soon, as every where I look I see shortages

The reason is we don't produce any thing domestic in  quantity

The Fed can't print commodities or goods. They can print debt which won't help us, or monkey around with int rates, which is a fools errand

Higher int rates won't encourage us to want less fertilizer

Higher int rates on non existent supplies will not work

Can you provide some reason why I am wrong