In other words, Mercedes and BMW dealerships will be flush with realtor lease returns in about 12 months?
Ha!! 12 months?? Probably already starting.
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In other words, Mercedes and BMW dealerships will be flush with realtor lease returns in about 12 months?
A recession is when unprofitable (aka wealth destroying) businesses go out of business. This is a Good Thing™.Why is fighting inflation the main goal above everything else? I simply don’t understand why taking steps to put our country into a recession, with all the resulting job loss and negative spinoff effects, is better than letting inflation work itself out.
I am not going to say the Fed is wrong - way smarter than me. But what does increasing the interest rate do to curb inflation?
It seems to me that this inflation is being caused primarily by demand exceeding supply. Supply is short because of a labor shortage and problems in the supply chain.
Higher rates means it's more expensive for banks to borrow money. Banks are already struggling with their investment portfolios and deposit rates are being repriced as we speak. All this means loans to businesses and consumers will become more expensive.
That, in turn, will make it harder for businesses to expand capacity to meet demand. Harder for them to invest in infrastructure to become more efficient - also to meet demand.
Yes, housing prices are coming down, but they are actually more expensive to buy with higher rates.
Also, interest rates may encourage savings instead of spending - that can cool inflation I suppose. But raising rates certainly creates headwind for the stock market, so maybe less incentive to save.
So, again, what does increasing the interest rate do to slow inflation?
I’ve said before, I’m not even knowledgeable enough to say I’m no expert, but it feels like the Fed is a new driver steering on snow for the first time. Powell made a point to basically say he wasn’t rooting for mass unemployment but then spent all his time focusing on moderating demand by creating conditions that result in lower wages and higher unemployment.You know, this is a good question. The really short answer is stagflation.
Doesn’t that minimize the economic damage a recession has on the entire economy? You say people need to be employed in more productive activities but are those employers even hiring in a recession?A recession is when unprofitable (aka wealth destroying) businesses go out of business. This is a Good Thing™.
It sucks for the individuals who worked at those firms or owned them, but the wealth destruction has to be stopped. Those people need to be employed in activities that produce more wealth, not destroy it.
Inflation doesn’t provide the net benefit that shutting down unprofitable businesses does.
Disrespect for Covid 19 social distancing/mask precautions made the largest negative impact on our economy.While yea the government COVID response is part of the issue with flooding the market and consumers with money they didn’t need let’s not forget the supply chain issues due to Covid as well. We are still seeing issues due to that currently. Kind of a perfect storm of once in a lifetime global pandemic shutting everything down and a horrible government response.
I’ve said before, I’m not even knowledgeable enough to say I’m no expert, but it feels like the Fed is a new driver steering on snow for the first time. Powell made a point to basically say he wasn’t rooting for mass unemployment but then spent all his time focusing on moderating demand by creating conditions that result in lower wages and higher unemployment.
None of the guest commentators I heard on CNBC said they had any confidence in what the Fed was doing and they all thought they were minimizing the lag issues and their bullheadedness would result in an overcorrection.
Please explain.It almost seemed as though you were answering your own question as you continued to type this out.
How does it do that, specifically?Higher rates slows down an economy from over heating.
You're funny.Disrespect for Covid 19 social distancing/mask precautions made the largest negative impact on our economy.
The government was dealing with a novel virus and its inconceivable that some Americans think their response to it was horrible.
Horrible was purposely downplaying Covid 19, there's no way around that.
The coronavirus recession is unlike any economic downturn in US history
Economists now predict GDP growth will plummet in the first and second quarters of the year as businesses shutter and hundreds of millions of Americans are locked down.www.google.com
Yes, profitable, growing firms hire. They can’t do that as well when unprofitable firms are tying up workers and destroying capital.Doesn’t that minimize the economic damage a recession has on the entire economy? You say people need to be employed in more productive activities but are those employers even hiring in a recession?
You're funny.
Are you still hiding in your mother's basement? IT's A VIRUS.
You're funny.
Are you still hiding in your mother's basement? IT's A VIRUS.
Because wage gains are washed out by inflation....becomes a spiral. Need to get it under control. Can't have a healthy economy with inflation this high...Why is fighting inflation the main goal above everything else? I simply don’t understand why taking steps to put our country into a recession, with all the resulting job loss and negative spinoff effects, is better than letting inflation work itself out.
So we overcorrect and end up with millions of unemployed? That’s not a healthy economy.Because wage gains are washed out by inflation....becomes a spiral. Need to get it under control. Can't have a healthy economy with inflation this high...
GoldI have zero confidence in this fed. They are about as incompetent as any group I can remember. This recession will fall squarely on their shoulders.
The policy makers sending out that last bunch of checks in early 2021 is what put the nail in the coffin. Everyone warned them that it was too much, too fast. They went for being popular instead of prudent and now here we are. They were warned. Not only by the GOP, but by economists on CNBC and other non-political sources. This one is on the current leadership. Not a good move.That’s one side of the coin, the other is that we are in this situation because our politicians at the state and federal levels were tripping over themselves to print and hand out money to pretend that shutting down the economy due to an Act of God would have no impact on peoples lives. We were either going to pay for it in 2020 or afterwords, now we have the worst of both worlds of paying for it and having inflation
Yet companies like Google and FB are profitable and are already announcing job cuts to reduce costs before the anticipated recession.Yes, profitable, growing firms hire. They can’t do that as well when unprofitable firms are tying up workers and destroying capital.
They did that because they told everyone to stay home. Seemed like the humane thing to do and was supported by both political parties at the time. I think that was a choice HAD to accompany the shut-down that was being strongly recommended by the CDC and Fauci.So we overcorrect and end up with millions of unemployed? That’s not a healthy economy.
As an aside, if you are correct, why did we bother stimulating the economy in 2020? We had low inflation, if that was the primary goal. I’m half joking, but seems like we are chasing our tail.
Exactly what I thought reading this lolIt almost seemed as though you were answering your own question as you continued to type this out.
Yet companies like Google and FB are profitable and are already announcing job cuts to reduce costs before the anticipated recession.
When you raise rates you are discouraging consumers from spending and Businesses from investing and expanding. Basically they are slowing the flow of cash into the economy to help fight inflationHow does it do that, specifically?
Also, it doesn't seem like the economy over heating.
Yeah, but this particular inflationary period is due, I believe, to businesses inability to even meet the current demand. Making it harder for a business to expand seems counterintuitive to me.When you raise rates you are discouraging consumers from spending and Businesses from investing and expanding. Basically they are slowing the flow of cash into the economy to help fight inflation
The policy makers sending out that last bunch of checks in early 2021 is what put the nail in the coffin. Everyone warned them that it was too much, too fast. They went for being popular instead of prudent and now here we are. They were warned. Not only by the GOP, but by economists on CNBC and other non-political sources. This one is on the current leadership. Not a good move.
Bingo on your last point.Yeah, but this particular inflationary period is due, I believe, to businesses inability to even meet the current demand. Making it harder for a business to expand seems counterintuitive to me.
I agree that rising rates will curb demand - I guess that it the key. Reduce demand to better match the supply.
But won’t demand always naturally reduce to match supply?Bingo on your last point.
Well when the demand is due to some fed and government policies which is in turn creating this inflation the fed is there to help minimize and hopefully*** correct it.But won’t demand always naturally reduce to match supply?
There's no easy fix.....there's going to be pain somewhere. An endless inflationary cycle isn't sustainable.So we overcorrect and end up with millions of unemployed? That’s not a healthy economy.
As an aside, if you are correct, why did we bother stimulating the economy in 2020? We had low inflation, if that was the primary goal. I’m half joking, but seems like we are chasing our tail.
I don’t know, I’m sure you’re right. I just think it’s messed up the Fed is trying to depress wages and increase unemployment because things cost a bit more right now.Well when the demand is due to some fed and government policies which is in turn creating this inflation the fed is there to help minimize and hopefully*** correct it.
But if we have to the tools to help fight inflation wouldn’t you want us to act compare to wait and see what happens on the inflation front? Especiallly with recent government and federal policy?
Every business is cutting back on labor hours (labor costs) somehow. That's what business does when costs soar, and the consumer is forced to cut back. They have to adapt with what they have under their control. Labor is one of the only costs they are controlling right now. But here's why the job market is really, really tough for everyone. The hourly pay for employees has gone up (which theoretically is good for the populous). But, the increase in wages at such a fast pace is responsible for childcare costs going through the roof, cost of food, transportation of goods, housing, rents, home heating/cooling costs etc.... which is also accompanying a very, very low employee pool. With the cost the goods going up, accompanied with material shortages and labor facts mentioned previously, it has caused the circle which is inflation (have to pay more to get employees, goods, etc.... which causes prices to go through the roof for the end product at consumer). Employees do NOT want to come back to work because daycare costs, free money that boosted their savings/debt reduction, gas prices that are now way out of control.... those items make the financial part of the going back to work decision not as good for the employee. But the prices are NOT going to go down until more labor comes back into the employee pool which will decrease the hourly wage that is being forced to be paid. Therefore, the fed is going to do whatever they need to burn off the excess money so people are forced to go back to work at a lower wage rate.How many quarters in a row before we can drop ‘anticipated’ from describing the recession?
My brother is hiring.
Job cuts are usually net negative during a recession.
Google and FB will tell you they have over expanded some units in their business.
If those staff were making them money instead of costing them money they wouldn’t get cut.
Job cuts at even a large firm don’t change the fact there are always profitable firms trying to expand to meet demand. Some of them will need more workers to expand production.
It sucks to say but economies need a good ole recession every once in awhile. Hopefully not like 08 but just a small recession where, unfortunately, some of us will go through some financial #painI don’t know, I’m sure you’re right. I just think it’s messed up the Fed is trying to depress wages and increase unemployment because things cost a bit more right now.
I think people are honestly forgetting the supply chain issues that, to some extent, still linger.Bingo on your last point.
Yeah I agree but it’s election year. Politicians and pundits will always spin it to get points for their team.I think people are honestly forgetting the supply chain issues that, to some extent, still linger.
I am a big believer that the supply chain issues and supply shortage is what started all this. Obviously, to get to this point it wasn't just one issue. However, supply shortages caused demand to exceed supply. And when that happens, prices go up. I don't understand how that isn't obvious.
I think people are honestly forgetting the supply chain issues that, to some extent, still linger.
I am a big believer that the supply chain issues and supply shortage is what started all this. Obviously, to get to this point it wasn't just one issue. However, supply shortages caused demand to exceed supply. And when that happens, prices go up. I don't understand how that isn't obvious.
Fair enough.I don't think anyone forgets about it unless completely playing politics. Just some, .like myself will disagree that supply was what started all of this. Excessive demand is the culprit making supply virtually impossible to catch up. The federal reserve has even said as much.
If demand is measured by completed orders, then demand always matches the supply, because you can't buy something until it is there for you to buy it.But won’t demand always naturally reduce to match supply?
This is a huge part of it. What I don't understand is why is there so much anger about families getting cash as if it was the only money supply expansion, but nothing about banks having their reserve requirements reduced to zero or propping up the stock market with a $2 trillion injection? Nothing about record profits for energy companies when gas prices were through the roof?I think people are honestly forgetting the supply chain issues that, to some extent, still linger.
I am a big believer that the supply chain issues and supply shortage is what started all this. Obviously, to get to this point it wasn't just one issue. However, supply shortages caused demand to exceed supply. And when that happens, prices go up. I don't understand how that isn't obvious.
Pure gold.How many quarters in a row before we can drop ‘anticipated’ from describing the recession?
My brother is hiring.
Job cuts are usually net negative during a recession.
Google and FB will tell you they have over expanded some units in their business.
If those staff were making them money instead of costing them money they wouldn’t get cut.
Job cuts at even a large firm don’t change the fact there are always profitable firms trying to expand to meet demand. Some of them will need more workers to expand production.