저자: FINANCE TIMES YT · 외국인
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we have so much more debt now than we had in the past it's a whole different world just because the economy could survive 5% interest rates when we had a relatively small amount of debt to service doesn't mean the economy can also survive 5% interest rates when we have a mountain of debt to service both in the private and public sector but nonetheless this 75 basis point rate hike is the biggest interest rate hike in 28 years so it's very rare that the moves by 75 basis points but the key Benchmark rate is now between 1 and 1/2 and 1 and 3/4 so after all these rate hikes we're still below 2% and in a world where you have 8.6% inflation interest rates below 2% are still highly inflationary and so the FED remains behind the curve despite this rate hike inflation is going to get worse it's not going to get better although pal is prepared to pretend that it will but I think both consumers and investors are wrong with these expectations what was neutral in the past when inflation was under 2% is not neutral in the present when it's over 8% because neutrality is supposed to be an interest rate that is neither stimulative to the economy nor sedative to the economy it's supposed to have no effect well clearly an interest rate in a 2% inflation environment is going to have a very different effect if you have the same interest rate in an 8% inflation environment and so clearly if 2% was neutral in the past at a minimum 8% would be neutral now and we're not going to get anywhere near 8% and so the FED is not going to get anywhere near neutral and if it's not even going to get neutral let alone restrictive what hope does it have of actually solving the inflation problem and returning the annual rate back down to 2% If the Fed really was determined to make sure it eradicated inflation for good it wouldn't be talking about any Victory claims simply because inflation was headed down they want to make sure that it is down and that it stays down so what pal should have said is we will not back off until not only inflation has returned to 2% but that it stayed at 2% long enough so that we're convinced that it's going to stay down there and not go right back up because what happens if inflation's 82% and then goes down to 5 or 4% and the FED is okay great it's going to go to two and it never hits two and you next thing you know it goes up to 10 the FED can't take any chances but I think the FED is already setting the markets up for a premature Victory claim because I think the FED knows it can't actually beat inflation but it's hoping that maybe it can fool the markets into thinking that it beat it and it can pretend that It Beat It by declaring Victory even though a victory hadn't been won you just got this inflation it just came around and now we're going to get rid of it and the public doesn't expect it to continue because it's so new and all of that is simply not true and again we have had inflation for a long time it's just that the public wasn't complaining about it for a long time because it wasn't this extreme but we still had it and of course when inflation was predominantly in financial assets nobody complained and of course in the early days of this inflation if you go back to 2008 9 10 the FED created a lot of inflation but what that did was prevent price from falling not really pushing prices up if it wasn't for qe1 and QE2 the Great Recession would have been much greater and we actually would have seen a healthy decline in the cost of living in consumer prices why didn't that happen well because the Federal Reserve printed all this money so yes there's an inflation problem in Europe yes there's an inflation problem in Japan there's inflation problems all around the world because central banks all around the world made the same mistakes as the Federal Reserve in fact the Federal Reserve may have been the leader and and all the other central banks were following in their misguided footsteps there's signs everywhere that consumers are tightening their belts first of all look at all the stuff that is collapsing starting with all the macroeconomic data that is abysmal and I'm going to get into some of that in a little bit and consumer confidence which has collapsed to an all-time record low savings that have collapsed to near record lows GDP forecasts that keep ratcheting lower and person wealth that is evaporating look what's happened to the stock market we were now in a bare Market in the S&P we had a collapse in cryptocurrencies a lot of wealth has evaporated and maybe the FED doesn't remember the goal of quantitative easing was to create economic growth through a wealth effect the idea was If the Fed could make asset prices go up well people would be wealthier and would spend more well it must work in Reverse if asset prices are collapsing and people are less wealthy doesn't it stand a reason that they're going to spend less L but not only are some aspects of personal finance collapsing other aspects are surging like the cost of food the cost of energy the cost of shelter what about interest rates which just got ratcheted up again credit card debt is at an all-time record high as credit card interest is surging so consumers have seen their wealth wiped out at the same time their cost of living is going up how could you say there's no evidence that consumers are going to be impacted by any of that and that they're not going to adjust their spending in consideration for what has just happened to their wealth and their cost of living but pal claims no there is no signs anywhere there's no indication that anything bad is happening to the consumer and the consumer is going to change his habits at all based on what's happened so number one that is a lie I mean why even tell that lie why not just admit the obvious especially since and here is the bigger problem the very goal of raising interest rates to fight inflation is to influence consumer Behavior you're trying to stop consumers from spending you're trying to encourage them to save you're trying to diminish demand along with Supply so that prices would come down so the very reason that pal is raising rates is to influence consumer Behavior yet pal is claiming that there's absolutely no signs that any of the rate hikes have done anything to influence consumer behavior that they're behaving exactly the same now as they were before rates were increased which is an admission that the entire policy is a failure because he's not going to reduce inflation unless he reduces demand and he's not going to do that unless he changes consumer behavior and he claimed that he's doing no such thing he said the economy is in great shape he said there were no signs of a broader slowdown which also means there's no signs that inflation is going to slow down either double digit core year-over-year inflation in producer prices that is a hot number and again all this shows is consumer prices have more room to increase because the producers are yet to pass on the full extent of their Rising costs to their customers those price hikes are already baked into the cake and pretty soon the customers are going to be eating it in fact it's going to be rubbed all over their faces and this is more bad news for the fed and the economy but we got more bad news on the economy itself in q1 GDP contracted by 1.5% and of course nobody thinks the recession is anywhere in sight I mean maybe some people think that we might get a recession in 2023 but pretty much nobody believes that we're already in recession other than me despite the fact that we had a negative print for one quarter and all we needed was a second quarter well the Atlanta fed as I expected revised its estimate down for that second quarter I thought they would revise it to below 0.5 and they did they revised it down to zero so now the Atlanta fed is predicting absolutely zero growth a goose egg for the second quarter so technically if they're right it won't be a recession we would have dropped by 1 a 12% in one quarter and then had zero growth in the next quarter but that's going to feel like a recession especially if you average the two quarters together and you get a negative number but if you look at the rate with which their projections are being downwardly revised not only does it look like Q2 could be a negative quarter but it actually may be a bigger negative number than the one we got in q1 and that means of course that we are in a recession right now we've been in a recession since the beginning of q1 and if we're already in a recession imagine how much worse that recession is going to get as the FED continues to raise interest rates as rising prices continue to exact a toll on the consumer who now has to deal with the reverse wealth effect of watching their stock portfolios and their crypto portfolios crash of course everybody is so convinced that we can't possibly have a recession now because unemployment is so low setting aside the fact that unemployment is a lagging indicator and a lot of these jobs can disappear very quickly the reason that unemployment is typically associated with recession is because when people lose their jobs they tend to cut back on their spending and that's normally because their unemployment checks are not nearly as high as their paychecks now that wasn't the case during Co and that was one of the problems so many people receive more in unemployment than they earned in salary but setting that aside unemployed people spend less and that bleeds into the GDP and that leads to recession well what's happening right now even though people are still employed they have to cut back on their spending because prices have risen so much effectively inflation has given almost every American a huge pay cut because the actual cost of living is probably up 15 to 20% now maybe your job you got to raise and you're making 5 to 10% more but you still have a huge pay cut and there are a lot of people who aren't employed they're retired they're living on a fixed income so they didn't get a raise at all but they had a big increase in their cost of living so everybody has a pay cut so now everybody has to cut back on their spending think about it this way let's say that 10% of the people lose their jobs and don't spend anything but what happens if 100% of the people get a 10% pay cut that decline in spending is the same thing as 10% of the people spending nothing 100% of the people spending 10% less so because inflation is effectively giving every worker a huge pay cut even though these workers still have jobs they're going to spend a lot less in real terms than they used to and that can cause a recession even though unemployment is still low spending can contract and you're in a recession it's the fact that many of those people have now seen a big reduction in the value of their retirement savings because of the big drop in the stock market or maybe cryptocurrencies and so now these people feel that since they've had such a big drop in the value of their retirement accounts they now have to start making larger contributions to those accounts to make up for what they lost well if they're going to contribute more that means they have to save more and that means they have to spend less so that's another reason that a lot of people are going to cut back on their spending to rebuild their savings and that also pushes the economy into recession of course pal isn't the only one making excuses for inflation and trying to blame it on other people President Biden is doing the same thing as our other Democratic members of Congress only they're not just blaming it on Putin anymore they're really trying to blame domestic oil companies Exxon Mobile in particular the president accused Exxon of making more profits than God I mean I don't even know that God makes any profits but what's wrong with oil companies making a profit I mean it's a lot better than oil companies losing money because if you want more oil we're where's it going to come from it comes out of profits now the Democrats want to increase taxes they want a new version of a windfall profit tax well what is a profit tax going to do it's going to diminish the money that oil companies have available to invest in more exploration and more Drilling and of course if you threaten to take profits away anytime you reap them then why take the risk cuz after all there are times when the oil industry is losing a lot of money you know we never have calls to subsidize them hey these companies are having these big losses maybe we should give them some government bailout money how many people want to bailout Exon Mobile when oil prices were negative I mean how can you have a situation where it's heads you lose tails the government wins when oil prices are low you get stuck with the losses but the minute they're high the government wants to take away the profits I mean why does the government never want to take away the profits of the tech companies Apple makes a lot more money than Exon Mobile why don't they ever want to take Apple's profits why don't they talk about how apple is gouging the customer customers by overcharging them for their iPhones no for some reason Apple can charge whatever the market will bear for its products
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