{"id":59603,"date":"2021-09-30T17:43:53","date_gmt":"2021-09-30T22:43:53","guid":{"rendered":"https:\/\/olduvai.ca\/?p=59603"},"modified":"2021-09-30T17:43:53","modified_gmt":"2021-09-30T22:43:53","slug":"transitory-is-the-new-spandex-powell-admits-it-still-denies-its-cause-why-this-inflation-wont-go-away-on-its-own","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=59603","title":{"rendered":"\u201cTransitory\u201d is the New Spandex: Powell Admits it, Still Denies its Cause. Why this Inflation Won\u2019t Go Away on its Own"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2021\/09\/29\/transitory-inflation-is-new-spandex-powell-admits-it-denies-the-cause\/\">\u201cTransitory\u201d is the New Spandex: Powell Admits it, Still Denies its Cause. Why this Inflation Won\u2019t Go Away on its Own<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Blames tangled-up supply chains but not what\u2019s causing supply chains to get tangled up in the first place: The most grotesquely overstimulated economy ever.<\/strong><\/p>\n<p>Fed Chair Jerome Powell, during a panel discussion hosted by the ECB today, admitted again that inflation pressures would run into 2022 and blamed \u201cbottlenecks and supply chain problems not getting better\u201d and admitted they are \u201cin fact at the margins apparently getting a little bit worse.\u201d<\/p>\n<p>\u201cThe current inflation spike is really a consequence of supply constraints meeting very strong demand, and that is all associated with the reopening of the economy, which is a process that will have a beginning, a middle and an end,\u201d he said.<\/p>\n<p>OK, good, he almost gets it: \u201cvery strong demand\u201d is causing this. But where the heck does this \u201cvery strong demand\u201d come from?<\/p>\n<p>Here\u2019s where: The most grotesquely overstimulated economy ever.<\/p>\n<p>The Fed has handed out $4.5 trillion to investors in 18 months, and repressed short-term interest rates to near 0%, and long-term interest rates (via the $120 billion a month in bond purchases) to ridiculously low levels, and this has inflated asset prices, including home prices, and beneficiaries are feeling rich and flush, and they\u2019re going out and borrowing against their assets and buying $70,000 pickup trucks, electronic devices, yachts, second and third homes, and a million other things. That\u2019s where much of the demand comes from.<\/p>\n<p>The other part of the demand comes from the government, which spread $5 trillion in borrowed money around over the past 18 months \u2013 stimulus checks, forgivable PPP loans (over $800 billion), extra unemployment benefits, funds sent to states to spend how they see fit, to airlines and other big companies to bail them out, which then used this money to buy out their employees that then spent this money.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>\u201cTransitory\u201d is the New Spandex: Powell Admits it, Still Denies its Cause. Why this Inflation Won\u2019t Go Away on its Own Blames tangled-up supply chains but not what\u2019s causing supply chains to get tangled up in the first place: The most grotesquely overstimulated economy ever. Fed Chair Jerome Powell, during a panel discussion hosted by [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[233,282,303,426,534,31091,3237,31374,3650,4254,4255],"class_list":["post-59603","post","type-post","status-publish","format-standard","hentry","category-economics","tag-ecb","tag-european-central-bank","tag-fed","tag-inflation","tag-monetary-policy","tag-supply-chain-disruptions","tag-supply-chains","tag-transitory-inflation","tag-us-federal-reserve","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59603","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=59603"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59603\/revisions"}],"predecessor-version":[{"id":59604,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59603\/revisions\/59604"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=59603"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=59603"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=59603"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}