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Housing bubble 2021 usa11/27/2023 ![]() In the past accelerating inflation would set off alarm bells at the Fed to raise interest rates to dampen inflationary pressure and expectations. At the most recent meeting of the Federal Open Market Committee (FOMC), it was decided to reduce monthly purchases from $120 billion to $105 billion. In other words, the Fed will continue to have its foot on the monetary pedal even as the inflation rate recently topped 6% year over year. Now the economy is in another cyclical upswing because the Federal Reserve injected $4 trillion of liquidity to “simulate” the economy. In 1982, prices rose 6.1%, 3.2% in 1983, and (miracle of miracles) only 1.9% in 1986, a year before Volcker stepped down as Fed chairman and was replaced by Alan Greenspan. Consumer prices rose 10.3% in 1981, revealing how inflation momentum can continue for a while before the Fed’s tight money policies slay the inflation dragon. ![]() Treasury official, in 1979 to halt the multiyear price spiral. Talk about being right on the money!Īs inflation was galloping throughout his presidency, Jimmy Carter appointed Paul Volcker, a former banker and U.S. If a dog can have a crypto, why can’t a retired finance professor who warned the public that prices were about to accelerate due to the Fed’s inflationary policies in the spring of 1976 have one?Ĭonsumer prices rose 5.7% in 1976, 6.5% in 1977, 7.6% in 1978, 11.3% in 1979 and 13.5% in 1980. Maybe the next cryptocurrency is on the horizon: My 10 Cents. The Fed’s inflationary policies have increased my two cents fivefold. As physicist Niels Bohr exclaimed, “Prediction is very difficult, especially if it’s about the future.” Nevertheless, I will weigh in fearlessly with my 10 cents.
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