from Al Jazeera English
Fed Rate Cuts: Better Late Than Never
by William J. Luther
The American Institute for Economic Research
The Federal Reserve’s Federal Open Market Committee (FOMC) announced a 50 basis point cut in its federal funds rate target on Wednesday. The move marks a reversal at the Fed, which had held its target rate range at 5.25 to 5.5 percent since July 2023. FOMC members previously worried high inflation might become entrenched. They now believe inflation is on a path back to 2 percent, thereby warranting a gradual transition from tight to neutral monetary policy.
At the post-meeting press conference, Fed Chair Jerome Powell described the decision as “a process of recalibrating our policy stance away from where we had it a year ago when inflation was high and unemployment low to a place that’s more appropriate given where we are now and where we expect to be.”
Five Reasons Why Inflation and the Supply Chain is Affecting People Everywhere
by Paul Sanders
Forbes
After decades of living in London, Los Angeles, New York, and Dallas, my wife and I decided to settle down in the Scottish countryside. The “middle of nowhere” is a happening place compared to where we live. On a busy day, we may see a couple of cars (one of which is normally lost tourists looking for where they film “Outlander”), a tractor, and an ATV with a border collie hanging off the back.
The nearest town – which is five miles away – contains a pub, petrol station, convenience store, and a post office that closes for lunch, half-days on Wednesday, and, really, any other time they feel like it.
The world doesn’t interfere here. And we like it that way… until recently.
Wages, Adjusted for Inflation, Are Falling for New Hires in Sign of Slowing Job Market
by Paul Davidson
USA Today
If you need further proof that the nation’s formerly sizzling job market has gone cold, look to what had been perhaps the hottest part of the post-pandemic hiring frenzy: pay for newly hired workers.
After adjusting for inflation, average wages for new hires fell 1.5% over the 12 months ending in July – from $23.85 an hour to $23.51– the largest such decline in a decade, according to an analysis of Labor Department figures by the W.E. Upjohn Institute for Employment Research.
By contrast, inflation-adjusted earnings for typical workers staying in their jobs rose 2.3% during the same period, the Upjohn Institute study shows.
When the economy is accelerating, pay increases for new hires tend to outstrip those of existing employees as companies rapidly add positions and compete for a limited pool of job candidates, says Brad Hershbein, a senior economist at the Upjohn Institute.
Trump’s Tariffs Would Be Worse Than Biden’s Inflation
by Rick Newman
Yahoo! Finance
Anybody stinging from the sticker shock of inflation during Joe Biden’s presidency should be alarmed at what might be coming if Donald Trump becomes the next president: tariffs on imports that could be even more painful.
Trump wants to impose new tariffs of 20% on most imports, with a 60% tariff on products from China. That’s on top of more modest tariffs Trump already imposed during his presidency. Americans buy $3.8 billion worth of imports every year, more than any other nation. That’s nearly as much as Americans spend on healthcare, and you’ll never hear a presidential candidate promising to raise healthcare costs by adding new taxes.
An Unprecedented Monetary Destruction is Coming
by Daniel Lacalle
Mises.org
Global money supply has soared by $20.6 trillion since 2019, according to Bloomberg.
Additionally, global debt surged by over $15 trillion in 2023, reaching a new record high of $313 trillion. Around 55% of this rise came from developed economies, mainly the U.S., France, and Germany. Unfunded liabilities in the United States amount to $72 trillion, almost 300% of GDP. This may seem high until you look at Spain with 500% of GDP, France with close to 400%, or Germany with close to 350% of GDP.
There is no escape from debt. Paying for the government’s fictitious promises in paper money will result in a constantly depreciating currency, thereby impoverishing those who earn a wage or have savings. Inflation is the hidden tax, and it is very convenient for governments because they always blame shops or businesses and present themselves as the solution by printing even more currency.
Tim Walz Stumped By Question On Inflation; Repeats Lie About Trump ‘Sales Tax’
by Joel B. Pollak
Breitbart.com
Minnesota Gov. Tim Walz, the Democratic nominee for vice president, was stumped Tuesday when asked by a reporter to explain what he and Vice President Kamala Harris would do for families struggling financially.
In an interview with local Macon, Georgia, CBS affiliate WMAZ, Walz first said that he and Harris understood the problem because they are “middle class.”
[…] He then offered a series of her proposals unrelated to inflation:
I tell them Kamala Harris and I know something about it being middle-class folks. Our family sit at the table trying to pay the bill. We know coming out of the COVID pandemic with prices where they were, that people need to see some relief.
And I think that’s why Kamala Harris has put out a plan — especially around home ownership — making sure we’re building 3 million more affordable homes, making sure we’re making the down payment assistance there.
‘The Worst Outcome’ – JPMorgan CEO Issues Stark U.S. Dollar Fed Inflation Warning as the Bitcoin Price Suddenly Crashes Under $60,000
by Billy Bambrough
Forbes
Bitcoin has dived over the last 24 hours, with the price crashing under $60,000 per bitcoin as the market braces for an “inevitable” bitcoin price crash.
The bitcoin price has swung between highs of $65,000 and lows of almost $50,000 over the last month, with the world’s largest asset manager BlackRock issuing a serious volatility warning.
Now, as Tesla billionaire Elon Musk stokes fears of a U.S. dollar “total collapse,” the chief executive of Wall Street giant JPMorgan, Jamie Dimon, has warned the Federal Reserve and the U.S. dollar aren’t “out of the woods” yet.
How Inflation Fooled Almost Everybody
With the Fed poised to cut rates for the first time in years, what have we learned about the economic disruptions of the pandemic era?
by John Cassidy
The New Yorker
It was easy to miss in all the hubbub over the Presidential debate and Donald Trump chickening out of a rematch, but there was some significant economic news last week. The Labor Department announced that the rate of inflation fell to 2.5 per cent in August, the lowest level since February, 2021. After this positive development, Jerome Powell and his colleagues at the Federal Reserve are set to cut interest rates on Wednesday.
Assuming the rate reduction goes ahead, it will be the first one since March, 2020, when, amid the outbreak of the COVID-19 pandemic, the Fed tried to cushion the economy by slashing the federal-funds rate all the way to zero. Two years later, the central bank reversed course to head off rising inflation. It ended up hiking rates no fewer than eleven times. On Wall Street, analysts are busy debating whether this week’s cut will be a quarter point or half a point, but that’s a bit like squabbling about whether Aaron Judge will hit the next pitch over the left-field fence or the right-field fence at Yankee Stadium.
Kamala Harris, Inflation, and Rip-Offs
by David Lanza
American Thinker
Kamala Harris’s recent ad on social media tries — and fails — to explain how she would stop inflation. Harris would somehow fight big corporations that “rip us off.” We are to believe that these unexplained rip-offs somehow cause inflation instead of the federal government printing trillions of dollars. Democrat Senator Bob Casey of Pennsylvania uses the same phrase in his ads, thus indicating that the references to rip-offs have been conceived, vetted, approved, and coordinated at the highest Democrat levels. “Rip-off” threatens to overtake “joy” as the leading coordinated Democrat buzzword. “Rip-off” has apparently overtaken COVID, Putin, the “supply chain,” “greed,” and cereal box tampering as the leading cause of inflation.
Calling something a “rip-off” amounts to an accusation of actual criminal conduct. Yet the Justice Department of the Biden/Harris administration has failed to prosecute any such crimes.
Apollo’s Kleinman Says Wage, Housing Inflation to Limit Fed Cuts
by Harry Brumpton
BNN Bloomberg
(Bloomberg) — Investors are placing overly high expectations on multiple rate cuts by the Federal Reserve over the next 12 months, Apollo Global Management Inc. Co-President Scott Kleinman said.
Futures traders are pricing in 10 quarter-point cuts to the cash rate over the coming year by US monetary policymakers. Kleinman said that would be unlikely without a recession, and yet markets more broadly aren’t explicitly pricing in an economic contraction, he said.
The New York-based firm’s own central view is that the country will avoid such a fate and that brewing wage inflation and housing inflation will limit how much the Fed will be able to reduce its rates settings, he said.