[sleepysysadmin]

>I would love to understand why the fed hasn't increased interest rates to counter the rapid increase of inflation..?

Collapse of the underlying assets that they hold. Bailing out the housing market during the pandemic means the fed holds lots of housing market. The theory is that they will let the assets mature and then pull the money back out to come back to a balance. I'll tell you now, if you believe that's about to happen I've got a bridge to sell you. The US still hadn't done this the day before covid started. Covid is far worse.

>I remember learning some basic economics in 2019 about how the U.S. learned a valuable lesson from 2008.

The irony is that the financial crisis at least help the USA today. Compare this to other countries like Canada and we are far worse off than the USA during the financial crisis.

>How they will never make the same mistakes of letting inflation go unchecked because they have tools to work against it.

Those tools are maxed out.

> Yet inflation has rapidly scaled to 6.8% (reported).

The fed made the claim that they would run inflation hotter because they didnt hit target of 2% during covid. The problem? They had to act by now. They've past that threshold of coming to parity.

>Also, I am keeping supply chain demand in mind but I don't think it excuses the fed's decision to not immediately start curbing high inflation rates. My guess is that people with money are profiting and want to continue profiting until it is no longer sustainable.

The metric to look at was GDP. When GDP was 6.7%, inflation was at 5.4% or so. The big problem is that gdp dropped to 2.1% and recession metrics spiked.

If the fed increases rates while gdp is dropping. recession is certain. It's too late for them to undo what they did bailing out the housing market. It would seem counterproductive to spend all this money to prevent housing from crashing just to let it crash anyway.

So we're stuck. Inflation is going sky high. It looks to be about 40% locked in right now over the next few years.

You thought minimum wage wasnt keeping up? This is literally everyone except the rich getting much poorer soon.

[long_time_gone]

Other data points worth noting:

- Wages in the US increased 9.8% in October of 2021 over the same month in the previous year. https://tradingeconomics.com/united-states/wage-growth

- The Estimate for Q4 GDP growth is 8.7%. https://www.atlantafed.org/cqer/research/gdpnow

[greedo]

Wait, you're predicting 40% inflation in the US over the next few years?

[hermitdev]

Not the person you're responding to, but 6.8% compounded over 4 years is 30%, at 5 years, you're at 39%...

[greedo]

Yes, but that's not what the parent was saying. They were clearly implying 40% YoY, which is beyond even zero hedge nonsense.

[sleepysysadmin]

>Wait, you're predicting 40% inflation in the US over the next few years?

So is many others. It's possible to look at the numbers and make the assumption the central banks won't reverse this. Afterall that basically never happens in history.

M0 money supply was increased about 100%. M1 was increased by about 400% Those arent direct relationships, M2 on the otherhand... the bump from covid and increase in rate clearly denotes about 40% inflation locked in. It wont show up all in 2022. It'll spread out over time. But worse yet, what happens in between?

[XIVMagnus]

Thanks a lot for the explanation! I greatly appreciate you taking the time to break things down for me.

[sleepysysadmin]

>Thanks a lot for the explanation! I greatly appreciate you taking the time to break things down for me.

It's a super complex issue that even the Fed probably has yet to understand. So I certainly don't as well. Many consequences could happen instead.

Flipside, what just happened? The government effectively owns a huge portion of land again. Sure someone else is holding the title but really the government owns it. The banks/funds sold it to the government because they know they dont want to hold it.

What does communism look like? The government owns everything.