Another article warning of future bond #inflation. Sigh. #ArtCashin has said collateral demand keeps bond yields low, and that he is a yield bear. So far Cashin has been right.
As we should all know, erecting trade barriers among close trading partners has an adverse effect on the economy. Sadly, many of these effects occur long term. This means the one implementing them may only have to deal with the #inflation caused by their actions and not the disfigurement of their economy and the gradual shift of trade away from the country implementing one sided trade barriers which are usually illogical because they usually do more harm than good and cause massive unforeseen results because they let he opposing side do one sided actions as well.
There should be a basic economic test the Republican party requires before a candidate is elected because #Trump's position on this is more liberal than even Clinton's which is depressingly sad coming from a person who's suppose to be a businessman.
Inflation is currently more about oil price increases, global trade tariffs, and potential trade wars. The only way for the Federal Reserve to fight this is to raise rates substantially enough to cool these effects which would be disastrous because the causes are globally focused. For instance oil is rising because of growing demand in Asia, India, and SE Asia.
Trade #inflation caused by #tariffs and actions overseas really can't be reversed unless monetary action substantially decreases demand which would impact the whole economy, not just the items being affected. The best way to calm this tide is to get rid of the factors causing global trade tensions, not monetary action.
There are reasons for gradual rate increases. These are to give the Federal Reserve breathing room to fight a future downturn, keep policy roughly in line with rising rates which were happening even before the Federal Reserve moved the ball, and to enable the US to sell its growing debt load and thus support the dollar. These things should be more of a concern than inflation.
Agree. I think it is also worth looking at the Cleveland Fed's unique estimates of #inflation expectations. I like them because they try to break out the risk premium factor in the TIPS spreads data to get a cleaner read on pure expectations. Look at their charts ( www.clevelandfed.org/.../...tion-expectations.aspx ) and notice how the yield curve on inflation expectations is flattening. IMO that may be the strongest point in support of the view that the case for rapid rate hikes is weakening.
I agree, #inflation is the evil of the masses, benefits the spenders and borrowers at the expense of the frugal and savers. But how does one protect their investment from the ravages of inflation? #Gold and #silver are not proven to be a source of wealth in inflationary times and also do not provide any income?
#Inflation to bankers doesn't mean growth, it means they can charge a greater spread. They could care less about growth and TBTF banks have been actively inhibiting it because they want zirp and since they can't have it now want a higher interest rate and bigger spread.
Smart move sort of. #Bonds are bad in rising rates and #inflation. Strangely, stocks are even worse if this gets worse. In the meantime though, stocks look a bit better if things rates and inflation don't get worse, especially commodity related stocks.
The interesting thing to see is techs and high growth stocks not doing so well. This is usually a bearish sign on growth. The market is quite strange recently and not clear on real growth going forward, only very firm on a belief of rising rates.
Alan #Greenspan was masterful in his monetary policies. Yes, you could say that I am seeing the possibility of #stagflation. There is #inflation potential but not much output potential. Yet, I tend to see it not lasting very long, before a contraction takes hold. And Gary, you make a great point about the risk of killing the collateral, which is a headwind against output growth as interests rise.
Great article, Gary! Hope is that a little #inflation and reflation would cause banks to lend, but if Trump wants massive inflation and a housing #bubble he could hurt the economy and make the coming recession far worse.
Without wage inflation there is not much #inflation, Moon, only a tax on workers. Asset inflation is just a #tax on people who work and who are on fixed incomes. It doesn't impact massive demand for #bonds as collateral and bank capital.
And real #HelicopterMoney should have nothing to do with credit as it should be in the form of a gift of base money to all the people equally. And it should not be repeated once off the negative. 2 percent #inflation is never reached, and really declining GDP and declining inflation along with new demand for #bonds sets the stage for deflation, not inflation. But libertarians don't fear #deflation because they think it was what caused the 1921 depression. But there never was a credit crisis in 1921. Real deflation is bad, very bad. So far growth is slow, perhaps that is what gold bugs have always wanted, but it gives rise to a demagogue running for president.
Markets Are All About Flows
Another article warning of future bond #inflation. Sigh. #ArtCashin has said collateral demand keeps bond yields low, and that he is a yield bear. So far Cashin has been right.
Will Canadian Boycott Start With Kentucky Whiskey?
As we should all know, erecting trade barriers among close trading partners has an adverse effect on the economy. Sadly, many of these effects occur long term. This means the one implementing them may only have to deal with the #inflation caused by their actions and not the disfigurement of their economy and the gradual shift of trade away from the country implementing one sided trade barriers which are usually illogical because they usually do more harm than good and cause massive unforeseen results because they let he opposing side do one sided actions as well.
There should be a basic economic test the Republican party requires before a candidate is elected because #Trump's position on this is more liberal than even Clinton's which is depressingly sad coming from a person who's suppose to be a businessman.
Rate Hike Expected As Fed Signals It Will Allow Higher Inflation
Inflation is currently more about oil price increases, global trade tariffs, and potential trade wars. The only way for the Federal Reserve to fight this is to raise rates substantially enough to cool these effects which would be disastrous because the causes are globally focused. For instance oil is rising because of growing demand in Asia, India, and SE Asia.
Trade #inflation caused by #tariffs and actions overseas really can't be reversed unless monetary action substantially decreases demand which would impact the whole economy, not just the items being affected. The best way to calm this tide is to get rid of the factors causing global trade tensions, not monetary action.
There are reasons for gradual rate increases. These are to give the Federal Reserve breathing room to fight a future downturn, keep policy roughly in line with rising rates which were happening even before the Federal Reserve moved the ball, and to enable the US to sell its growing debt load and thus support the dollar. These things should be more of a concern than inflation.
Will Low Inflation Delay Fed Rate Hikes?
Agree. I think it is also worth looking at the Cleveland Fed's unique estimates of #inflation expectations. I like them because they try to break out the risk premium factor in the TIPS spreads data to get a cleaner read on pure expectations. Look at their charts ( www.clevelandfed.org/.../...tion-expectations.aspx ) and notice how the yield curve on inflation expectations is flattening. IMO that may be the strongest point in support of the view that the case for rapid rate hikes is weakening.
Drawing A Bead On Inflation
I agree, #inflation is the evil of the masses, benefits the spenders and borrowers at the expense of the frugal and savers. But how does one protect their investment from the ravages of inflation? #Gold and #silver are not proven to be a source of wealth in inflationary times and also do not provide any income?
Inflation Has Been Rising
#Inflation to bankers doesn't mean growth, it means they can charge a greater spread. They could care less about growth and TBTF banks have been actively inhibiting it because they want zirp and since they can't have it now want a higher interest rate and bigger spread.
Investors Continue To Sell Bonds Buy Stocks
Smart move sort of. #Bonds are bad in rising rates and #inflation. Strangely, stocks are even worse if this gets worse. In the meantime though, stocks look a bit better if things rates and inflation don't get worse, especially commodity related stocks.
The interesting thing to see is techs and high growth stocks not doing so well. This is usually a bearish sign on growth. The market is quite strange recently and not clear on real growth going forward, only very firm on a belief of rising rates.
Will The Fed initiate a (Mini) Crisis?
I would be surprised if the #Fed would let the #inflation genie out of the bottle.
Projecting A Fed Rate Path
Alan #Greenspan was masterful in his monetary policies. Yes, you could say that I am seeing the possibility of #stagflation. There is #inflation potential but not much output potential. Yet, I tend to see it not lasting very long, before a contraction takes hold. And Gary, you make a great point about the risk of killing the collateral, which is a headwind against output growth as interests rise.
US Market Update: Trump Towers
Agree. #Inflation is a tricky underpinning at best.
US Market Update: Trump Towers
Great article, Gary! Hope is that a little #inflation and reflation would cause banks to lend, but if Trump wants massive inflation and a housing #bubble he could hurt the economy and make the coming recession far worse.
Who Really Sets Interest Rates
This must be what #Yellen says when she says #inflation will run hot. Lol, hot compared to temps on the darkside of the moon isn't that hot.
Greenspan Gets One Right: Here Comes Stagflation
Without wage inflation there is not much #inflation, Moon, only a tax on workers. Asset inflation is just a #tax on people who work and who are on fixed incomes. It doesn't impact massive demand for #bonds as collateral and bank capital.
Four Stages Of Monetary Madness
And real #HelicopterMoney should have nothing to do with credit as it should be in the form of a gift of base money to all the people equally. And it should not be repeated once off the negative. 2 percent #inflation is never reached, and really declining GDP and declining inflation along with new demand for #bonds sets the stage for deflation, not inflation. But libertarians don't fear #deflation because they think it was what caused the 1921 depression. But there never was a credit crisis in 1921. Real deflation is bad, very bad. So far growth is slow, perhaps that is what gold bugs have always wanted, but it gives rise to a demagogue running for president.