New Inflation Records put Pressure on Fed to Raise Rates

The Federal Reserve is beginning to engage in monetary policy that is at least disinflationary and may reach deflationary. This is at a time when inflation expectations are at all time highs, after a year of prices reacting to previous money supply growth. If the lag time between monetary policy and economic impact is about a year, this means the fed is building an air gap underneath the economy right as it is slowing down. When the gap hits in a year, things could get ugly fast.

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#fed #inflation #crash

[HeresyFinancial]

Thanks for everyone pointing out I said "2021" multiple times when I meant "2022"! My bad 🤣😂

[mustbsavdbyjesus]

Hey, Joe, thanks for all your hard work! Great video, but are you stuck in 2021? You referenced 2021 a number of times and I think you really meant 2022. Am I missing something?

[pepleatherlab]

Agree with the intellectual assertions, but disagree on Joe's time scale. What we're seeing now is the result of the Fed being behind the curve since 2016. It's taken this long to see the result of currency production they conjured back then, which is only just *now* arriving at 7%(+) CPI. By the year 2030 price inflation will be 30% and the U.S. will be pent houses and tent cities. No middle class. Unless we can purge cancerous bad actors from the economy with bankruptcies and capital realignment, the system will become a Cronyists wet dream.

[robertmiller]

"it takes time..." That's something so many people don't seem to understand. People seem to imagine that the economy works like a light switch. That is, people seem to imagine that the way it works is that you implement a policy and the full effect is manifest the next day. If a consequence doesn't manifest in the first 24 hours, well, that just proves the theory or principle is wrong and the consequence will never happen.

All those people who had been saying, "nuh, uh, money printing doesn't cause inflation, where's the inflation?!" How about now? Believe us now?

And the same thing when they say, "nuh uh, socialism doesn't cause economic collapse - it's working in country X!" (like when they would say that about Venezuela) Just because it didn't cause a collapse in the first 5, 10 years doesn't prove the collapse won't manifest in another 10, 20, 30 years.

And they say that about debt, "nuh ih, debt doesn't cause economic collapse. The economy hasn't collapsed yet from debt" as if that proves the collapse won't manifest yet in the future.
See also: This Time Is Different: Eight Centuries of Financial Folly - Carmen M. Reinhart and Kenneth S. Rogoff

[saddlebag]

The money supply is still growing ~13%/yr. That is not deflationary. The growth may be slowing, but the money supply is still expanding.

[philgee]

Disagree on the last part. M2 is still growing over double the historical rate of about 5% as of this video (about 11%), in line with the great inflation of the 70s when M2 grew between 10-11% per year. Just because of this development, inflation won't get back down naturally in 2022. The only thing that will stop inflation is when demand evaporates due to a recession. We can already observe psychological changes in people's behavior that will feed inflation if left unchecked (i.e. cash is trash, BTD, TINA). The FED doesn't yet realize the destruction that will ensue by not acting decisively. And if they step back in with easy money policies right away when the economy rolls over, we'll see the biggest inflation spike in US history. And I guarantee you, they learned nothing from this episode, because they are clueless when it comes down to inflation.

[Deeperondown]

Great video Joe - you make complex problems easy to understand. Thanks for your work!

[sokolmihajlovic]

Nice plan,
but rising oil price could spoil this kind of plan.

[kbbb]

I am overwhelmed by all of this, how would you say, "burnt out on all the bad news" I have had to stop listening to the news, but the bad still leaks in. Oh what to do?

[dag]

Hey, Joe where are you going with that cup in your hand! Argentina?

[jonathanabq]

Thank you for saying nobody knows. However, your trying to give us warning and I really appreciate your insight. I went through and deleted half of my subscriptions because nobody really knows. Kept people who I think are grounded. Have a good day.

[SolzhenitsynBoogie]

No fertilizer for the spring crop and none is forthcoming. Buy storable food, water filtration and ammunition.

[fudbob]

Thank you Canadian and American Truckers

[blackduk]

(Here's one for the algorithm) What happened to your usual intro? threw me for a loop!!! 🙃 "Let's dive in"! 👍

[andrewaustin]

Listened to this video twice now because I think it is 100% spot on for predicting next 2-3 years out. Geo Political and ask other factors considered out makes the most sense. Great video.

[antthomas]

Hi Joe. Love your channel and analysis. Would like to see your take on what we've seen the past 2 years in regards to MMT. Cheers

[joeshmoe]

Great content but your terminology is a little confusing and being more precise might change the analysis a little. First off, the fed will not be tightening, they are pursuing less loosening. They are slowing the unprecedented increases to money supply. They are not reducing money supply at all. Next, they are not seeking deflationary pressures. Nobody is expecting any reduction in prices at their present inflated levels. The acceleration rate of price increase is hoped to slow but prices will continue to rise. The “correction” in the markets is the already priced in, leading indicator of where inflation may be a year out. I’d say they hit the mark by sharply tapering the money printing and promising rate increases. A relatively soft landing in the overall economy is possible if the fed doesn’t overcorrect. A crash is not inevitable, in my opinion. We may just return to the (by now) familiar government endorsed “new normal” of flat markets (at least when viewed over a reasonable period o time) and essentially zero growth for a very long period of time. I’ve heard this song before and it’s not pleasant music. But the tears of short term traders will carry me through.

[lserranov]

Please make a video with your opinion if houses prices and car prices will drop or will stay high

[lentilreflection]

A few times you said 2021 when I think you meant to say 2022.

[FinDDYouTube]

How can a bank calapse today like they did in 2008 for example if they are now required to keep a certain amount of cash specifically for harsh times and even undergo periodic stress tests by the Fed?. It seems like the system is prepared for a shock to me. This might make a good video topic.
'How prepared are the banks, really?'.