I sure hope not, because stagflation would be extremely unpleasant for everyone. Central banks like the Federal Reserve would be forced to raise interest rates, to put stress on businesses and consumers, so businesses find themselves unable to raise prices further and consumers find themselves unable to demand greater pay at work.
Raising rates to put stress on businesses and consumers is the only method known to work for ending self-reinforcing high inflation. It's what Paul Volcker did at the Federal Reserve in response to the stagflation that started in the early 1970's in the US and other countries, after OPEC raised oil prices. Volcker raised the federal funds rate in fits and starts to a high of 20% in 1981:
The good news is that these economic problems are entirely the result of bad policies and can be reversed.
If we were to also raise broad based taxes, it would allow the Fed to cut interest rates, stoking long term investment, loosen up the housing market (which would allow more people to move), lower the Federal deficit, and improve the trade balance (as if that actually mattered).
The effect of a bad policy doesn't necessarily end when the policy does. The economy has inertia so some effects, such as inflation, are self-reinforcing and need active undoing even when the policy is relaxed.
At least on the US tariffs thing, congress can put Trump back in his box and revert to normalcy any time it wants to; the threat of stagflation might make it do that. The previous stagflation incident was more driven by outside forces.
I've honestly wondered this too. But we cannot obey in advance. If they're going to try and take it from us, then there should be a fight every step of the way. That means our cynical perspectives, as right as they may be, could lead us into a self-fulfilling prophecy.
I tell myself if there weren’t going to be elections or if the admin had a sure fire way to compromise them, they wouldn’t be trying so hard to push through redistricting in every single state there’s a Republican-controlled state house/senate.
I think it's likely that if there was a rapid reversal, with Congress taking away the power to mess with tariffs and making it clear that it was permanently gone, there'd be some damage, but things would largely go back to normal. Not enough time has really passed for things to change _that_ much; many of the tariffs aren't _actually_ in place yet.
I have some bad news. It's already some 8 months too late for "rapid".
> Not enough time has really passed for things to change _that_ much
Here in Brazil we are in a mini economic boom because every single country is willing to pay a premium on anything that didn't come from the US. The EU is shutting up internal racist and protectionist dissidents (strong on their 2 largest economies) so that they can diversify from you. Most of the world is discussing independent payment systems... Nato countries are organizing to defend against the US and China and Russia are promising military protection to Latin America.
I wonder if things changed that fast when WWI started, but it absolutely never changed that fast in my lifetime.
I'm European, not American. I think that if given strong guarantees that Trump had been declawed, the EC would be happy enough to return to prior arrangements (though probably move ahead with the Mercosur deal and other trade treaties at an accelerated pace, granted).
The world has seen how unreliable the US is. Its not even just the tarrifs, its the tarrifs applied at random, based on how happy the Don is. The world has seen the "checks and balances" don't exist, a populist leader can do whatever they want for any reason and has no accountability.
In this case, there are laws which he claims allow him to do what he's doing (some disagree, and that's moving through the courts, though with the current Supreme Court who knows). Those laws _can be revoked_, though. The meme that congress is powerless against him is not really entirely correct.
The supereme court seems quite happy to do whatever the president wants through the one-two punch of fake emergency declarations and shadow docket decisions...
And then we have Japan, which has spent 30+ years in the economic doldrums.
What I'm saying is that these types of systems have "inertia" and can be exceptionally long lived in their 'bad' state, regardless of the policies used to try to get them out of that state.
I want you to think about, for a minute, the notion that you can have a number bigger than all of the atoms in the universe :-). From that, you can see that its possible to have more 'dollars' than there are atoms in the universe. Specifically, without defining 'growth' you can't reason about the limits on that growth.
The other point that simplified analysis fails to consider is that you are inside the system so as it "grows", it also "changes". If you lived in the 70's with the tales of how we're going to run out of fossil fuels by 2000, looking back you can see how things changed (cars got more efficient, other sources were discovered, etc).
My macroeconomics professor had a funny saying that you could take any segment of a sinusoid and use that to extrapolate forward and get the wrong answer about what the waveform was going to do. In my differential equations class we got to see how you could predict some things if you new both the initial conditions and you continued to refine your model. But to predict all things your model needed to take into account all variables and their impact, and it was the unknown variable problem that messed up predictions using that method.
> its possible to have more 'dollars' than there are atoms in the universe
We are absolutely not printing money fast enough to realize this dream, unfortunately. I propose we mint a new bill, the 100 trillion non-Zimbabwe dollar, and 10x our printing speed.
Yeah, that would do it. Actually though it's important to remember that 'dollars' and 'currency' are two related but very different things. :-) I'm gonna guess you already know that too.
The Trillion Dollar Coin[1] was a real thing oddly. And I have always wondered if was the inspiration for Sam Bankman-frieid's crypto scam with FTX to mint your own crypto token that you could claim was worth billions so that your ledgers added up "in theory."
That implies that economic activity is confined to this planet. Even today we can see this doesn't hold true as we already have activity in orbit. Also, economic activity is less and less tied to physical constraints as technology progresses and digitization spreads.
If I sell you a banana for $1, and you sell it back to me for $1, we have just created $2 of GDP. The trick is we need to repeat this process faster and faster over time. Luckily computers also get faster every year due to Moore’s law, so growth shouldn’t be an issue.
In fact, every person in the country could take turns with the banana for a brief period of time (provided they quickly sell it to the next person) which should enable broad prosperity for all.
Yeah but there is no actual value generated by passing the banana through the population. It's fictional growth, backed by nothing, the same sort of swindle that shitcoin creators do to pump up their shitcoin's value ("wash trading").
There will be no broad prosperity for all from that banana trading, all it serves is to further pump the inflatable house, and it will eventually pop and leave people to realize they've been conned by "financial engineers". And then, the pitchforks will come out.
I agree. And if landlords decide to hike rents by 10% this year and people pay it, the GDP contribution from rent rises 10% despite the actual quality of the housing stock being worse due to being a year older. So you can see why GDP is a kind of silly metric of productivity or well-being.
I understand this set of comments is a digression but there is an interesting subtlety here. There is a structural connection between economic activity (in particular 'innovation') and wealth inequality. Economies that are 'stable' and 'unchanging' become stratified and people living in those economies find themselves getting slotted into 'classes' from which they cannot change.
Since I tend to be interested in systems, especially emergent ones, this is something I find interesting but recognize that the world generally considers economists more boring than accountants :-). When one discusses the 'graph going up' or 'growth' is that prices? GDP? Employment? Opportunity? I've been in conversations where several different definitions of 'growth' were being used that got confusing because there wasn't an agreement on what the y axis was measuring.
Most boomers I know don’t deny the climate is changing — they can (quite literally) feel it in their bones.
What they’re less convinced about is what to do about it. I agree with those who say we need to do practical preparation for the inevitable consequences rather than try to turn back the clock in a fit of fear and futility.
Norway can exit oil today and return its entire population to pre-WW2 poverty and last time I checked the effect on the world’s climate would be a .1% reduction in Co2 emissions, rounded up.
Meanwhile nobody, and least not a western country, is going to tell India and China to reverse course back into the obscurity of underdevelopment.
So any sane conclusion is that oil will eventually run out, so let’s use it as efficiently as possible to prepare for the inevitable change in climate we’re already seeing, regardless of its cause because it’s an unstoppable object.
And a lot of other things that are never going to happen
It will take a decade to dig out of this hole
And then there will be 11 million people "disappeared" from labor market
They are on a crime-spree, you don't do this much damage without malice
Look at what they are doing to the WhiteHouse Oval Office, Rose Garden, ballroom, look at the BILLION dollars stolen from nuclear missile maintenance for a personal jumbo jet, etc. etc.
> This means people are okay with whatever is happening
Or it means the game has been rigged which is exactly the point of all the gerrymandering going on right now. Tons of people are not okay with what is happening but their power to replace their government representative has been or is currently being effectively stolen from them.
We survived with 30% inflation ok key goods during the Biden years due to endless spending, we’ll survive this one too. You’re welcome to short the market though if you feel strongly otherwise
"Biden years" is doing even more work. The suicide cultists generally ignore the trillions in helicopter money that was dumped into the economy under Trump's "watch", right when we were also dealing with supply shortages. It took a few years for the economy to start moving and that new money to go from asset prices into consumer prices, right in time for short memories to blame JOEBIDEN.
If a new face can reverse policy on a dime, then that reversal can be reversed a couple of years later.
It's amazing how few people seem to understand this. Countries are oil tankers, they take years to turn even a little - and that's a good thing. In 2000 the world broadly knew what was going to happen, Gore and BushII would implement pretty much the same policies. Same thing in 2008 when it was McCain and Obama.
Sure you get some minor tweaks to policies which don't really affect much in aggregate.
Even in 2016 Trump was unable to make massive changes, because the state is built to prevent that from happening. The US does not elect a monarch. Things take forever by design, and it's really frustrating when you want it, but it also means one person or one administration can't make a major impact, it takes a generation of pushing the overton window in the direction.
Once you break that, you have a jetski zipping around, then you can't rely on stability, it becomes riskier to invest than investing in a country with a dictator.
It is a constitutional monarchy with an elected, time-limited king.
Monarchies generally have (and had) lots of checks on the king's power. Not necessarily the kinds of checks we would like, of course. The rights of the nobility were well-protected, the rights of landless commoners were not.
No, it's really not. The Executive does not have these powers in the constitution. They made it up and assigned it to themselves by loosely interpreting things how they wanted.
Executive orders are memos, not laws. The President has no power for legislation or budget or tariffing. We're supposed to require legislative review of any emergency actions, like using the military.
This is what’s so dangerous about the game the Republicans are playing. They are perpetuating a belief that American society is broken by breaking it themselves. If the blinders ever come off their base the violent impulses will be directed at them the same way they were directed at Mike Pence. It’s phenomenally stupid to wind up an ignorant mob and think you can control it. The only way to maintain control is to make the mob angrier and angrier but there’s always a breaking point.
Somehow you’re wrong somewhere between two and 3 times in one sentence.
> It is a constitutional monarchy with an elected, time-limited king.
> Constitutional monarchy, also known as limited monarchy, parliamentary monarchy or democratic monarchy, is a form of monarchy in which the monarch exercises their authority in accordance with a constitution and is not alone in making decisions.[1][2][3] Constitutional monarchies differ from absolute monarchies (in which a monarch is the only decision-maker) in that they are bound to exercise powers and authorities within limits prescribed by an established legal framework. A constitutional monarch in a parliamentary democracy is a hereditary symbolic head of state (who may be an emperor, king or queen, prince or grand duke) who mainly performs representative and civic roles but does not exercise executive or policy-making power.[4]
> but does not exercise executive or policy-making power
This is largely but not entirely true. It's also largely true by convention/Realpolitik ("try and exercise your powers and see how long you stay king!") and not by law.
> absolute monarchies (in which a monarch is the only decision-maker)
The monarch was essentially never the only decision maker in absolute monarchies. Nominally, yes. In practice, not at all. Going against too many established interested was seriously bad for the monarch's health.
Zoning is the bigger issue than interest rates with the housing market. Most hand over fist growth happened in our cities when there were higher interest rates but also plenty of zoned capacity. Zoned capacity is barely ahead of present population in cities with exorbitant housing prices today.
For starters we have cancelling and ripping up clean energy projects, introducing serious uncertainty about tarrifs, increasing unease for any immigrant (and even non-white citizens).
Avg monthly "clean energy" jobs so far:
- 2023: ~3.38M
- 2024: ~3.45M
- 2025: ~3.42M
Any impact to the economy due to "green job project cancellations" wouldn't have surfaced yet.
Uncertainty about tariffs: it was already on the books to earn $2.3T (conventional) / $1.5T (dynamic) over the next 10yrs, and inflation is far more under control than it was last year despite the tariffs. Of course legal challenges have disrupted it now. This is also completely ignoring the massive investment foreign countries/companies are making on US Soil to employ US employees.
Edit: having said that, "these economic problems are ENTIRELY the result of bad policies". That's a very bold claim, which warrants some strong evidence. No one has provided any strong evidence that it's ENTIRELY from bad policies.
I don't the current economy is "entirely" the result of bad policy, but I do think it is the primary contributor. I read/listen to a lot of economic commentators as an interest of mine, and there is pretty broad agreement that tariffs are the main cause of inflation failing to tick down to target this year. There also seems to be consensus that the manufacturing sector has been harmed by tariffs and immigration policy rather than helped.
In my opinion, the AI hype cycle has temporarily buoyed the economy from more serious pain. If significant economic gains aren't realized from it soon I think we'll begin to see that pull back.
I do, however, think a return to ZIRP by the Fed would result in a significant economic boost. Psychologically, everyone remembers how advantageous low interest rates are and I think it could result in real investor/borrower optimism, temporarily, if we go back to that. Unfortunately, that would likely mainly stimulate the demand side of the economy, and not as much supply. I don't have high hopes for how that would affect inflation.
Yes, no major disagreement here. You can also point to the Us debt/deficit as another major storm cloud on the horizon. Trump is the worst offender on that, but far from the only one.
I'm as anti-trump as anyone. He's doing tremendous harm to our economy and our society. Your anger is making you see things that aren't there. All I did was question the assumption that our economic problems are ENTIRELY the result of bad policy. Some how you jumped to some very wrong conclusions based on that tiny shred of information which wasn't even about Trump.
You coyly suggested that there were other contributors at play to multiple people who suggested what bad policies are causing the economic issues and then didn’t provide them until called out.
You’re running partisan defense when you act that way
> The good news is that these economic problems are entirely the result of bad policies and can be reversed.
I think one danger for western countries is having governments that just move from one bad policy of one kind to a bad policy from the other end of the political spectrum. Look at what’s happened recently with resignations at the highest levels of government in multiple countries. And in America, if Trump gets replaced by someone who is put forth as a reaction to him, are they going to really do any good? Even if they had great policies, they’d be in danger of being undone a few years later. There isn’t the same guarantee of consistent forward progress that a country of China seems to be enjoying.
There will be no "reaction" to Trump, because all such policies would be struck down by the SCOTUS. This version of America is the one we're going to live in for a while.
Strictly speaking, Volcker caused two recessions (the first of which likely ended Carter's re-election prospects).
Although raising interest rates tamped down inflation on the demand side, we don't give enough credit to Carter for attacking the supply side by deregulating energy markets.
Carter typically doesn't get credit because prices didn't really ease until he was out of office. However, it looks like energy prices wouldn't have decreased if Carter hadn't deregulated the oil and gas industry, which allowed domestic producers to become competitive. (Ironically, Carter thought deregulation would raise prices and foster a move to alternative energy. Instead we got shale oil and fracking. Unintended consequences.)
This post is right about some things, including the general solution to staglation, and wrong about others. Paul Volker was Fed Chair between 1979 and 1987, not 1973. The 1973 crash and recession were not caused by his actions, if you had to pick a single cause, I think Opec would be it.
The interest rates were wild in 1982. My dad said that no one would lend for a mortgage, and we ended up doing seller financing to buy my childhood home.
Also, not enough people talk about housing prices in high interest rate environments. Mortgage payments are the thing that tether housing prices, and act as a lever. We see it today with just an extra 4% with low housing volume and people reluctant to sell, because then they’d need a new mortgage at the new rate. People who would like to downsize don’t since their mortgage payments often ends up similar.
I remember my parents being excited about the opportunity to refinance their mortgage to something in the high teens. And now these days headlines act like the apocalypse is occurring when mortgage rates are in the 6-7 range.
They really aren't. To pay off a 30yr 300k at 4% you pay $17350 a year.
If you pay $17350 on a 100k 16% mortgage you pay it off in under 18 years and have saving of 222k (even at 0% returns) + 100k house by the time 30yrs is up.
The argument would be that after 30 years of 2.3%/yr inflation, the 300k house would be worth 600k in future dollars, and the 100k house would be worth 200k.
However as 15% interest rates implies an inflation rate far higher than 2.3% that argument breaks. With 7% inflation on a 100k house it's worth 760k after 30 years, more than the 600k in the 300k range.
Of course what that means in terms of big macs you can buy is different.
Not only that but if your salary keeps up with inflation, and you overpay the mortgage, you'll have cleared the 100k/7% inflation mortgage in 10 years but it will take 18 years to clear the 300k mortgage.
Sure, having your wage not decrease in real terms is a different challenge, but if that does happen then you're far better off with the 15% interest rate situation.
If inflation is lower than the rate the federal reserve hikes rates to, you can ride out stagflation in money market funds and other types of income-generating investments. The real pain is when it doesn't. Stocks decline, cash declines, and there really is nowhere to hide. TIPS? I-bonds? Both are indexed to the CPI, which policymakers have loudly signaled they are okay gaming and manipulating for political favour.
You’re vastly underestimating the income and political effects of stagflation. Historically speaking, one doesn’t ride it out. It’s fixed fast or the system collapses.
I heard Volcker speak once, you could still see him remembering how hated he was for those years of the Volcker Shock on his face. Strained and a little sad.
As he raised the federal fund rate to 20%, Volcker became widely hated indeed. Businesses and consumers suffered because of his actions.
Politicians of course tried to take control of the Fed. They also tried to fire him. At one point he needed Secret Service protection. Here's an article from the 1980's about it:
Today's economy is all about politics. There are people who still hold out hope or confuse economic data with economist. Populism >>>> good policy. No one wants to be the next Volcker. So, this is likely going to stagflation. I hope I am wrong because this can be ripple effects all over the world.
There's a theory that changing regulation Q to uncap interest rates on savings accounts had more to do with ending stagflation than the fed funds rate hikes.
I'm not smart enough to fully evaluate if that's true, but it was an interesting theory to me at least.
So uh, I'm the first person in my family to break the cycle of poverty. I have nobody I trust to follow advise with money. I do all the 'standard' boring investment strategies (401, index funds, roth, etc). I don't bother with crypto (scams). What does one do if stagflation is coming? Float more cash? Buy real estate?
He goes completely off the rails in the very first sentence: It is no longer a secret that stocks, like bonds, do poorly in an inflationary environment.
He's talking about a time period when the stock market was in the doldrums and inflation was high. Right now inflation is considered high (even though it isn't really, historically) and the stock market is berserk.
And why wouldn't the stock market be considered a valid investment in the presence of inflation? Where else are you supposed to park your cash if you want to outperform TIPS? Remember that in the 1970s there basically was no retail stock market compared to what we have now, where everyone and their dog has a 401(k) and trading is basically free.
Even if valid, his point doesn't seem relevant. It is going to be hard to apply any lessons from the 1970s to what we're facing now, when incompetent and erratic policymakers are driving the US economic picture rather than external influences like OPEC and Viet Nam. (And if we thought OPEC was a malevolent cartel, just wait'll the rest of the world starts forging its own trade agreements without inviting us to participate.)
You acknowledge inflation isn't high by historical standards yet went on to argue he's wrong because stocks went up when inflation wasn't high by historical standards?
The last time we had sudden unexpected high inflation was 2022 and stocks crashed did they not?
Bear market, temporary downturn, whatever. It was not a "crash" by any sane definition of the word, and it had little or nothing to do with inflation. Otherwise we'd see the same correlation at other times when inflation has spiked.
U.S. dollar loses value, property depreciates (no one can afford payments) and equities have their P/E ratios slammed (and we are at all-time historic highs...)
So the solution historically has been stable goods. Gold is the historic standard, but probably Bitcoin now as well. Possibly foreign stocks/currencies. But since everything is so interlinked now with pensions and 401ks that the financial world is far different place than the 70s. If you really want a safe bet, it's that there will be a fair bit of volatility and every asset class will have more risk with spikes up and down. All of this depends heavily on how the U.S. responds along the way.
Basically anything but hold cash, at least until interest rates are forcibly pushed to the moon to try to break out of stagflation. Assuming you can avoid selling whatever you've bought until the other side.
[EDIT] If you think we're in for a long period (decades) in which nobody will do what's needed to break out of stagflation and we're going to head the way of various inflationary South American economies over the past century, I guess look at Europe? IDK, it'll be bad everywhere if that happens.
This time won’t be like the last. The point of such episodes is to destroy capital. A rational response would be to de-lever before everyone else. Focus on the meaningful and the productive in the near-term, disregard promises about the future.
If you’re aggressive, issue long-term, fixed rate debt and buy whatever you think everyone else will view as personally meaningful or currently-productive, provided someone didn’t beat you to it.
Arguably we’re 40 years into the “cash is trash” trade so everyone is in a little bit of suspense what happens next.
Bogleheads [1] gives better financial advice than HN. Every time I peruse some threads there, I learn something new about personal finance I didn't know about.
Gold, make sure your debts are low, trim expenses now. Start thinking long term, what things will you need 5-10 years from now that will only be much more expensive or hard to get.
If we are heading into a period of high inflation and interest rates, holding debt now is great. High unexpected inflation means that the dollars that you use to pay off the debt are worth less, and you are locked in to a low interest rate.
The ideal circumstance would be to take out a loan you can’t really afford immediately before a round of hyperinflation. Bad time to have $100K in a savings account. Great time to owe that bank $2M.
Outside of the standard theme park with blackjack and hookers, you could pick up a race horse. Those can start in the low six figures up to tens of millions. Although if you want to race, do not blow the entire amount on just the horse, because the training + food + maintenance is also going to have some hefty bills.
That depends - if you are good at timing the market you would sell your stocks at the peak, put it into cash for a year or two and then buy long term low risk, high interest rates bonds that cannot be called... Too bad I don't know anyone who can time the market. (I'm not confident that stocks will start falling before the bond rate peaks, even though that is my guess).
My guess is that real estate will not do well in general. However there are always exceptions, but I don't know if the exception is in Dallas Texas (random big city), or Chaseley North Dakota (random place not even a town, cannot support even one store)
Real assets like precious metals, commodities, real estate should do well during stagflation. I think crypto (mainstream ones, not fringe) should be doing well too IMHO, despite the skeptics.
If people can't afford the rents then they'll just cram more people in. Currently have a "Joey/Chandler" style apartment form friends with 2 people in for $4k/month? Now you get 4. Or 6. Price increases to $6k/month but it's down on a per-person basis.
In some cities you get time-sharing beds. In 2003 I lived (for 3 weeks) in a house in London, I had my own room - the largest in the house. A smaller room had a couple with a baby, the loft had 3 mattresses in it but 4 people living there, time-sharing with the mattresses like you have in a nuclear submarine.
There's plenty of opportunity for landlords to increases costs even if peoples incomes can't support an increase.
Well there is another issue: trust in the dollar is waning, so central banks have been buying gold. If Trump messes too much with the fed's independence, this can only get worse.. One source theorizes that his admin. is doing this not so much to lower interest rates, but to get the fed to reduce interest it pays to banks for money they keep at the fed (a thing that started after the GFC). The idea is that then the banks would buy treasuries instead, which might reduce the debt payment burden on the government.
Anyway... gold is all about wealth preservation, not growth, so I don't know what to tell you. But it is up 44% over the last year.
Well if you were following sound financial advice and understand the economics from an Austrian perspective you'd likely be diversified into several equal buckets with one of those buckets designed to offset the losses. You do this when it doesn't matter because you can never time the market. No one can.
In the case of inflation/stagflation it would be physical assets that increase in value under such circumstances. Gold/Silver meet this, as do many other assets. Under such environments counterparty-risk must be carefully evaluated.
All of your mentioned standard strategies have opaque and significant banking counter-party risk. There are also details such as the YTM loophole where the assets you hold may not have been marked to market (when interest rates go up).
This is particularly true of any bonds, or bond backed securities, and the leverage involved in many such markets is next to impossible to discern, and as a result the average advice of passive investment breaks down towards losses in the near term but not long-term.
None of this is financial advice, just reiterating things people should already know about. The stock market's synthetic share problem coupled with dark pools, and the commodity market's (COMEX) fail to delivers and failure to loadout (physical delivery), are things to know about. Unspecified risk from bad actors.
Its all paper with substantial counter-party risk until you hold it in your hands.
Markets currently don't expect significantly higher inflation in the long term, as the "10 year breakeven inflation rate" ("The latest value implies what market participants expect inflation to be in the next 10 years, on average.") is fairly stable: https://fred.stlouisfed.org/series/T10YIE By my understanding, this is supposed to trend towards 2.0% when everything is hunky-dory; things are not perfect, but they look fine to me in historical perspective. Similarly for e.g. this 5-year forward chart: https://fred.stlouisfed.org/series/T5YIFR
> Raising rates to put stress on businesses and consumers is the only method known to work for ending self-reinforcing high inflation
Yes, and that's how we made sure that the inflation peak in 2022 didn't become self-reinforcing. And as far as anyone seems to be able to tell, it worked.
> It's what Paul Volcker did at the Federal Reserve in response to the stagflation that started in the early 1970's in the US and other countries, after OPEC raised oil prices. Volcker raised the federal funds rate in fits and starts to a high of 20% in 1981:
Right. Current circumstances are very different. Posting this much about what you "hope doesn't happen" comes across as fear-mongering, given the lack of reason to expect it to happen. The tariff discourse allows people to throw around large, scary-sounding percentages, but in practice the corresponding price increases are on average much smaller. And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.)
> And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.)
I should add: historically, increases in the unemployment rate have a tendency to accelerate and then produce a spike, which is then brought under control by some other mechanism, and tends to correspond with a recession. But this is just the normal boom-bust cycle, and seems rather unavoidable. The rate can't keep going down forever, and having it level out doesn't seem feasible, either. The magnitude of such a spike doesn't necessarily indicate the severity of economic downturn, either.
To the extent I come across as doubtful and concerned, it is only due to recent firsthand experiences buying food, clothes, and electronics. My perception is that prices are still rising in many product categories. Anecdotal evidence is not data, so I can't and won't make a prediction, but I think it's fair for me to express doubt and concern.
All I know for certain is that we'll find out as more data becomes available.
> the Federal Reserve would be forced to raise interest rates
That's just not happening, no matter what happens.
The President is obsessed with lowering rates, because it personally enriches him, regardless of how it affects the economy. The cronies he has in line to replace Powell and the SCOTUS seeming like they'll back his unlawful removal of the Fed governors he doesn't like, means the independence of the Fed is guaranteed dead in, at most, 2026.
The businesses that should be pushing back just... Aren't? 5 billionaires just had a foot-kissing session with Trump. Law firms are capitulating. Most education institutions are capitulating. Companies would rather bribe Trump with gold statues (Apple) for their own short-term kickback than speak up even a tiny bit to prevent a mid-term economic collapse.
I genuinely don't see the US avoiding a self-inflicted (global) depression anymore.
I've been saying this same thing for awhile, the problem is a lot of sentiment bots have been downvoting it out of view within 24 hours, taking karma as they go. Yesterday lost 10 points for a single post same subject, basically the same as yours.
There are a number of subjects now where its almost to the point where any discussion is fruitless because anyone talking is getting punished by third-parties, and moderation aint doing a thing about them.
Your right it will be real bad, much worse than before because most of the Volcker recovery was on the back of the global adoption of the petrodollar. The situation is the exact opposite today where you not only have petrodollar pools of money coming back domestically but also runaway government spending.
If you compare our modern economics with that of Argentina over the past 100 years, we seem to be following the same policy pitfalls. These things largely only happen because of excessive money-printing under fiat, certain government policy and regulation can cause it as well.
Its hard to ascribe individual responsibility in that way when the only two choices were existentially awful.
"You elected an idiot president...", the choices were Communism, or Fascism; which is recoverable and better for people. Certainly not the former, but to be clear neither are a real choice when you vote for democracy, and not voting is a vote for both fascism/communism at the same time.
Such was a similar failure and rise of demagogues that ruined Rome.
First-passed-the-post voting is fundamentally flawed, and so is ranked choice...
> First-passed-the-post voting is fundamentally flawed, and so is ranked choice...
What voting system so you think is best? None are perfect but IMO ranked choice is the best as it keeps the good attributes of FPTP without suffering from the spoiler effect
When most people say "ranked choice" they seem to refer to IRV, which is broken in multiple ways, but most notably that it has the property that ranking someone higher can make them lose and ranking someone lower can make them win. That happens because IRV ignores all of someone's preferences except their top choice, until their top choice is thrown out, at which point IRV looks at their next preference.
There are much better systems: approval (for simplicity, at the expense of more accurate preference information) and Condorcet (for accuracy, at the expense of making it more difficult to explain tie-breaker corner cases to the average person).
Ranked Choice Voting (aka Instant Runoff Voting) is the single worst of the very many seriously proposed ranked ballots method; it retains most of what is bad about FPTP. It is somewhat easier to tally than the best (in terms of the logic of who wins) ranked ballots methods (methods satisfying the Condorcet criterion), but not particularly good even on that among all ranked ballots methods, e.g., it can be improved in that dimension by just adding all preferences of the next rank until a candidate crosses the maiority threshold without elimination, which also reduces the degree to which the system is prone to paradoxical effects (promoting a candidate causing them to lose by changing the order others are eliminated.)
Harris wasn’t anything. She said what the writers of her script wrote just like Biden. This is the dems fault for failure to build a next generation of leadership.
Well, you should stop being evil and rather be specific and unambiguous in what you are communicating instead of the vile sort of things you are doing; that is only if you want to demonstrate you are operating from a place of good faith and earnest sincerity.
The absence of such specificity in general correspondence following such is both admission and confession.
Most of what was said is strongly supported by established facts. What you say is just your hollow-opinion and downvote power to muzzle.
As far as I can tell you are simply play-acting and utilizing common tactics found in political warfare, what most people call "Identity Politics" or political nullification, where you label someone as part of a group falsely, and then use that group as false justification to disregard/nullify anything they may say in their defense while continuing to criticize and gaslight through distorted reflected appraisal you create in a purposeful trauma loop.
Just so you know, if you haven't figured it out yet I'm at a point where downvotes aren't going to muzzle me because you don't muzzle truth and rational thought and remain a good person.
The circumstance described is ironically distinctly different though seemingly similar from risk management in existential situations given the absence of information but presence of strong indicators supporting a likelihood (children often are just like their parents). There are many places where recognizing nuance is important.
While I conveyed a risk assessment, you are doing so with the effect to attack the person exercising their rights to convey truths through speech and idea. I find that morally bankrupt and reprehensible.
Be specific about what you call people, and the things you call insane, most would say this reasoning is quite conservative given the risk, known knowns and known unknowns that directly go to character, and by extension outcome.
We live in a world of mutually assured destruction, what happens when crazy people call the rational people crazy, purge them, and get themselves into a position to push that proverbial button. MAD doesn't work under the irrational and insane. Its far easier to destroy than to create, and evil people don't even realize that is what they are doing through small, mindless but iterative action ever marching forward to a single unthinkable outcome. Extinction is a very real possibility that few deeply consider the ramifications of.
Discerning people fact check for credibility both with words and in context, and liars of the most vile kind eventually must pay the piper in the consequences they set in motion through their own choices and action. The same goes for platforms that through design choice of systems, emerge outcomes that discard truth/reason promoting disunity, falsehoods and deception. There's a reason there's a growing movement of people leaving HN.
The crazies often don't recognize that they are crazy unfortunately, and they certainly don't base their communications or reasoning on objective measurable support or established facts.
I am legitimately surprised that someone who can write complete and cogent sentences believes that a vote for one of the two presidential candidates was a vote for communism.
Last administration cooked the books on BLS numbers for nearly 2 years, issuing corrections and all that nobody paid attention to. They also redefined what a recession is during the last administration.
Because of debt spending, everyone wants to act like we did something amazing. We didn’t, we just pumped in more debt and the economy went up. We are now even more in the red as a nation
Trump is incompetent at best (a crony at worst), a bull in the legislative China shop, and revels in drawing attention to himself... so it shouldn't be too surprising people are on high alert during his tenure and news headlines get more attention.
Last administration cooked the books on BLS numbers for nearly 2 years
I'm going to need to see a citation for such a claim...
Not the GP, but here is an analysis of the BLS data arguing the opposite[0]. Short answer, BLS data gets revised all the time and the supposedly smoking gun revision that was used to justify firing the BLS head was not even in the top 50 most extreme corrections.
Incentivize our basic necessities and come down hard on fraud. If a bridge needs to be rebuilt pay to have it done. If shipping infrastructure needs to be modernized pay to have it done. If we need more mining get it done. Get it done and get it done fast. If bids are won but they go and fuck all the money away send them to jail. This is how stuff worked before people became obsessed with metrics.
So just for one example, the Bureau of Labor Statistics started publishing jobs reports in 1915. But having monthly jobs reports on the cotton sector lead to increased fraud and stopped bridges from being built?
What's the mechanism? People are distracted by the amount of cotton production, which is the perfect time to falsify an earnings report?
How long were supply chains back then? 2-5 nodes in a typical case?
I'm not saying publishing of statistics is what caused this shit to happen dingus. I'm saying focusing on it exclusively is dumb and it is wiser to look at a granular level. We can't look at this level because once you have a 150 node supply chain how trustworthy are the receipts?
What if your body had a metric as dumb as our high level economic metrics. We'd all be doing our best to get fat as fuck.
I think you have a point, at the resolution of personal liability shit is and has been cooked. Without being able to hold people to account for their misdeeds, misdeeds are de facto allowed and especially when you can obfuscate information. It's Goodhart's law in action, the sector looks good because we're shooting for targets in a heuristic measure but the reality is glum.
Worse is when fundamentals are [effectively] meaningless and everyone is a betting and hoping to pass it on to the greatest fool, even worse when that greater fool is the general public who are too with their own lives to fixate on the intractable nuances of the effects that Algerian hornet slayers are having on the price of tangerines which is buoying banana prices in Rwanada because legislation was passed last week in Kentucky.
Paradoxically, scale and complexity, but also psuedocomplexity (read:obscurantism) drive us towards these heuristics and effectively incentivise deeper cycles of Goodhart derangement. I expect this is a peculiar aspect of America's largess, though. The American cultural diaspora is actually pretty diverse from my experience.
Thank you. I don't know if my point is any good but you understood what I was trying to get across with my general frustration with how our economy is managed and discussed.
> If a bridge needs to be rebuilt pay to have it done. If shipping infrastructure needs to be modernized pay to have it done
This is what they did in Weimar Germany, Erdogan’s Turkey and Argentina. You’re describing massive deficit spending and inflation.
> If bids are won but they go and fuck all the money away send them to jail
Add in Ba’athist Iraq.
Also, guess what you do to fuck over your competitors in this system? You sabotage their supply chains. The politically connected wind up with all the tenders because they’re the only ones who can build.
> This is how stuff worked before people became obsessed with metrics
Literally never how it has worked in any functioning society. When you see this sort of strong arming, it describes a society in decline. The Late Roman Empire. The British in Suez. The French in Indochine. The Russians in Ukraine.
How do you sabotage your competitors supply line without sabotaging your own? Seems like it would be mitigated quite effectively by strong anti-trust enforcement. If a corporate empire is so diversified then it should be broken up in separate entities.
How was it done in the US during WWII and in the following few decades? I guess that was just command done therightway(TM) like China does today?
Is jailing fraudsters really the equivalent of some failed Iragi regime? I think you could make a better argument.
What do you think should be done about the state of the USA economy? Do you even see any problems that need addressing? I have a feeling venture capitalists see wildly different incentives from the laborers.
You do know economic data is not used only by "economists", right? Given that you seem to dislike the word "economic" data, focus only on the data part. Tell us how politicians/policy makers run the country without data? How do they know rates have to be increased/decreased if they don't have such numbers? Through wishful and magical thinking about focusing on the basics?
My point is that it should be more granular. I only ever hear it described in one of three things in tension with each other: markets, jobs, inflation. Do you think you can just watch those three things and guide a country/world into a prosperous one or could there be pitfalls?
https://en.wikipedia.org/wiki/Stagflation
I sure hope not, because stagflation would be extremely unpleasant for everyone. Central banks like the Federal Reserve would be forced to raise interest rates, to put stress on businesses and consumers, so businesses find themselves unable to raise prices further and consumers find themselves unable to demand greater pay at work.
Raising rates to put stress on businesses and consumers is the only method known to work for ending self-reinforcing high inflation. It's what Paul Volcker did at the Federal Reserve in response to the stagflation that started in the early 1970's in the US and other countries, after OPEC raised oil prices. Volcker raised the federal funds rate in fits and starts to a high of 20% in 1981:
https://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_F...
It worked. Volcker's actions are widely credited with ending self-reinforcing high inflation. His actions also triggered a recession.
Stagflation itself triggered a stock market crash in 1973-1974. It took over 20 years, until 1993, for the US stock market to recover:
https://en.wikipedia.org/wiki/1973%E2%80%931974_stock_market...
Like I said, it would be extremely unpleasant, for everyone. I hope we don't end up with stagflation.