The latest inflation data, as helpfully fedsplained to us by Janet Yellen, is "meaningfully coming down." Annualized, it's at 3.1%, which is a marked decrease from the June 2022 peak of 9.1% annualized, but still higher than the Fed's target of 2.0%.
There's an alternative. We could significantly increase our revenue by turning the armed forces into a profit center. After all, it worked pretty well for the Roman Empire with all the booty they got from their conquests. Send the troops into Iran and we could bring back the days where gas was twenty five cents a gallon. 😄
We sort of did that in 1953. The US and UK engineered a coup that overthrew a democratic Iranian government (left leaning, driving a hard bargain on oil) and put the Shah in power.
The Shah joined OPEC and screwed us on oil prices anyway, and also wiped out moderate democratic opposition, leaving the hardened religious crazies to exploit popular discontent and eventually take power.
“That target may seem low, but the power of compound interest means that, even if the Fed could miraculously keep inflation at that level in the long term, your dollars would still lose half their value every 35 years.”
The problem with the Laffer Curve is that Republicans use it as an excuse to ignore spending. “Dynamic Scoring! We cut taxes, raise revenue and balance the budget!”
If the Democrats wanted to raise taxes on The Rich (tm) they've certainly had the opportunity. During most of the Obama presidency and over 2 of the last 3 years. The fact is The Rich (tm) give overwhelmingly to the Dems - so this whole "eat the rich" trope is just a rhetorical flourish they use to whip up their base. And the The Rich (tm) know it.
As for spending, I'm not worried - each new trillion takes us that much closer to the realization of Herb Stein's Law. It will stop - if for no other reason, it cannot continue.
From, I think, the early 2000's until a couple of years ago, we huge budget deficits, but low interest rates ("quantitative easing"), and low inflation, at least as measured by CPI. I think part of the answer is that we had asset inflation - stocks and real estate. But what was the difference between then and now? What causes inflation to manifest itself through assets vs. CPI?
The driver, at least per Milton Friedman, is the differential between the growth of the money supply and the growth of the economy. And, yes, certainly some of the past inflation was "buried" in asset inflation. The economy has been propped up by deficit spending and borrowing, kinda how WWII's big spending transformed the Depression into debt.
The offset, and it's only an offset for as long as it lasts, is the ability to borrow in our own currency. MMT advocates see this as a feature, and think it can go on forever. But, the only thing keeping this going is the "relative" matter. If others' currencies are seen as less strong than ours, then we can continue to debauch ours and pile up debt. I fear, however, that when the tide turns, it will turn fast, and we will be in for a world of hurt.
Pols don't care, because they'll be set for life even after they lose their jobs, simply because of their rolodexes. Many criticize Wall Street for short term fixation, but it's Washington that institutionally lacks long-term vision.
There's an alternative. We could significantly increase our revenue by turning the armed forces into a profit center. After all, it worked pretty well for the Roman Empire with all the booty they got from their conquests. Send the troops into Iran and we could bring back the days where gas was twenty five cents a gallon. 😄
I get the gag, but plundering your neighbors is what autocratic states do when their statism inevitably fails.
I think we're going down that road unfortunately.
We sort of did that in 1953. The US and UK engineered a coup that overthrew a democratic Iranian government (left leaning, driving a hard bargain on oil) and put the Shah in power.
The Shah joined OPEC and screwed us on oil prices anyway, and also wiped out moderate democratic opposition, leaving the hardened religious crazies to exploit popular discontent and eventually take power.
“That target may seem low, but the power of compound interest means that, even if the Fed could miraculously keep inflation at that level in the long term, your dollars would still lose half their value every 35 years.”
The problem with the Laffer Curve is that Republicans use it as an excuse to ignore spending. “Dynamic Scoring! We cut taxes, raise revenue and balance the budget!”
Republicans don't actually care about spending. They only care about Democrats' spending. They want to spend on their own priorities.
If the Democrats wanted to raise taxes on The Rich (tm) they've certainly had the opportunity. During most of the Obama presidency and over 2 of the last 3 years. The fact is The Rich (tm) give overwhelmingly to the Dems - so this whole "eat the rich" trope is just a rhetorical flourish they use to whip up their base. And the The Rich (tm) know it.
As for spending, I'm not worried - each new trillion takes us that much closer to the realization of Herb Stein's Law. It will stop - if for no other reason, it cannot continue.
From, I think, the early 2000's until a couple of years ago, we huge budget deficits, but low interest rates ("quantitative easing"), and low inflation, at least as measured by CPI. I think part of the answer is that we had asset inflation - stocks and real estate. But what was the difference between then and now? What causes inflation to manifest itself through assets vs. CPI?
The driver, at least per Milton Friedman, is the differential between the growth of the money supply and the growth of the economy. And, yes, certainly some of the past inflation was "buried" in asset inflation. The economy has been propped up by deficit spending and borrowing, kinda how WWII's big spending transformed the Depression into debt.
The offset, and it's only an offset for as long as it lasts, is the ability to borrow in our own currency. MMT advocates see this as a feature, and think it can go on forever. But, the only thing keeping this going is the "relative" matter. If others' currencies are seen as less strong than ours, then we can continue to debauch ours and pile up debt. I fear, however, that when the tide turns, it will turn fast, and we will be in for a world of hurt.
Pols don't care, because they'll be set for life even after they lose their jobs, simply because of their rolodexes. Many criticize Wall Street for short term fixation, but it's Washington that institutionally lacks long-term vision.