저자: Plain Finance Reborn · 외국인
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but if you remember the Great Recession started in 2007 but I was doing interviews on popular shows in mid 2008 and they were saying there's no recession so what happened was all these economists went backwards and revised down all the data and then they said okay I guess we were in recession they didn't even think a recession was coming but the fact of the matter is we were actually in one at the time and they couldn't even see that and I think this is the same situation today you know we actually had negative quarters the first two quarters were negative the third quarter in fact you know we got some numbers out on that today I mean it was up maybe 3% or so but all of that was due to the Improvement in the trade deficit during that quarter and a lot of that resulted from the fact that we were able to export a lot of the oil that we were pulling out of the Strategic petroleum Reserve uh but we're going to exhaust that Reserve sometime next year so that's not going to be able to offset our trade deficits but also we had the big rise in the dollar well in the fourth quarter we've had a big fall in the dollar it hasn't lost all of its gains yet but as the dollar weakens that's also going to push up our trade deficits because it increases the cost of all of our Imports so I think the help that we got in Q3 was a one-off quarter uh we may end up with a negative print for Q4 we'll see and then I think it's going to be very hard for the recession deniers to continue uh to you know put a positive spin on this economy they're going to have to admit that we're in recession the question is is the Fed going to change course as a result of that admission or is it going to continue uh with the rate hikes and quantitative tightening uh making a bad situation worse which you know is what it should do but the question is will it do that well I think the real reason that the dollar Rose was not just that rates Rose okay but that the markets believed that these rate hikes going to work in that they were going to bring down the inflation rate the FED said that we're going to return inflation to 2% and we're going to do whatever it takes to make that happen and the markets basically took the FED at its word so they bought the Dollar on the idea that you know these high rates were going to produce positive real returns for dollars but I think as the markets come to terms with reality that despite the rate hikes inflation is not going down to 2% in fact it's more likely to head higher after this you know brief dip that we've had and so that e even though the FED has raised rates rates are still negative from a a real term and if you have negative real interest rates that is not a uh incentive to hold dollars that's an incentive to sell dollars because the interest that you earn is not high enough to compensate you for the purchasing power that you lose and and so when uh investors figure this out I think the dollar is going to fall sharply and that's going to exacerbate the the problem that the FED is dealing with because the strength of the dollar limited the rise in consumer prices in the United States in 2022 so even though prices were up a lot they would have been up even more had the dollar not been strong relative to other currencies well remember all these countries were experiencing inflation most of the Euro zones their inflation rates were higher than ours I mean they're still looking at you know over 10% uh year-over-year inflation rates uh in many European countries so all currencies were losing value it's just that on a relative basis you know it's like if if I'm going backwards at 10 miles an hour and the car next to me is going backwards at 20 mes an hour relative to the car going backwards at 20 miles an hour I'm I'm moving forwards but I'm not moving forwards in in reality I'm still I'm still going backwards and so even though the dollar was strengthening relative to the Euro or the yen it was still losing value in real terms just it was losing value more slowly than the Euro or the Yen so the Euro and the Yen will continue to lose value but the dollar will go from losing value slower to losing value faster so on the headline number we we got some relief but of course on the core not so much a lot of the prices continued to rise even as some of the headline numbers were coming down but also remember prices continue to go up it's not like they're coming down they're just going up a little more slowly than they were going up before but if prices were too high even a little increase is still a problem what we need is for prices to go down you know we need to you know for prices to uh recover uh or for consumers to recover some of their lost purchasing power by having consumer prices actually fall but that ain't going to happen right all we can hope for is that they rise more slowly in fact that's what the fed's goal is the fed's goal isn't to reduce prices the fed's saying that we're hoping to reduce the annual increase to 2% but those 2% increases are going to come on top of all the increases that preceded them so if prices go up I think over the last two years they're up better than 15% even the way the government measures them in reality they're probably up closer to 30% but even if they start going up 2% from here we're going up 2% from a much higher level you know than we were at before but of course we're not going down to 2% we're we're we're we're not even getting anywhere near 2% before we get close to 2% we'll be above 10% I don't know that the rate hikes had much to do with it other than maybe they had something to do with the break in commodity prices temporarily because remember those R Rising interest rates actually feed into higher consumer prices because people forget that well interest rates are prices right and and so like any other price they get factored in to finish Goods like if if I am a business I have labor costs I have raw material costs well I also have interest rate costs maybe I borrow some money uh to build a plant or whatever I'm doing and and so I I have to I have to pay interest on my debt well if interest rates go up well that's a cost of doing business I might have to raise prices to cover that same thing if you're a landlord what if I own a bunch of apartment buildings and I have debt on those apartment buildings yes I have costs that I need to recover but one of those costs is the interest on the money I borrowed so I may have to raise rents on my tenants to cover the higher cost of servicing the money I borrowed uh to to buy the apartment complex in the first place so as the FED is Raising interest rates that is also working to raise prices well no they they're not going to suck up the lower margins they'll go out of business business you know and and and then the ones that remain will have less competition and then they'll be able to raise prices but take a look at the example of houses yes higher mortgage rates mean that house prices are going to come down they've already started to come down but the cost of owning a home is not going down the cost of owning a home is going up the cost of buying a home is going up even if the price is down because when you buy a house the price is not even that important for most people because they mortgage the they don't have the money they have to borrow it and even if the price goes down 10 or 20% based on how much higher the mortgage rates are it's actually more expensive to buy a cheaper house today because of your monthly payments but your monthly mortgage payment is not it what about your maintenance what about your utilities what about your insurance these costs are going through the roof so it's more and more expensive to own a home to live in a home these costs are going up even if the price of the house goes down and remember during all these years where we supposedly had no inflation real estate prices were going up well during the the the rest of this decade when we have high inflation real estate prices are probably going to be going down and and of course the other thing that has to happen is that interest rates have to rise to a level that exceeds the inflation rate by a comfortable margin yes I heard because what what needs to happen in order to bring down inflation is we need people to stop spending and start saving and so why would people save well if they can earn a yield that exceeds the inflation rate then they're going to get paid to save then they'll do it but if you still hold interest rates below the inflation rate nobody's going to be dumb enough to save everyone's going to spend their money as soon as they get their hands on it and that is going to make the inflation problem worse also when you look at prices you have two things going on you have demand but then you also have Supply and so demand is being fueled by money Printing and spending but we need more Supply well if we have less spending and more savings you kill two birds with one stone because that reduces this the demand but it increases Supply because the money that is saved is then loaned out to businesses to make investments in capital that can increase productivity so by encouraging savings and discouraging spending we get less demand and more Supply and that helps reduce prices but we're not doing that we're not getting extra savings so we're not getting additional Supply yeah and we're just and consumers are are running up their credit cards their all-time record highs maxed out on Mortgage Debt maxed out on on on auto loans everybody is borrowing and spending so prices have got nowhere to go but up
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