from David Lin
Saving the U.S. Dollar Will Require More Carrot. Less Stick.
by James Hickman
Schiff Sovereign
At a campaign rally earlier this month, President Trump promised that if he is elected, “We will keep the US dollar as the world’s reserve currency. It is currently under major siege. Many countries are leaving the dollar.”
What he’s referring to is the extreme privilege that the US has, i.e. that central banks around the world hold the US dollar in reserve as form of savings.
The entire world also conducts trade in US dollars. Since World War II, the vast majority of cross-border transactions among international businesses have been settled using US dollars.
Today, US dollars account for 54.8% of central bank holdings around the world. That’s still a lot, but it’s down from around 70% in the late 1990s, according to the latest IMF data.
And the US dollar is currently used for 42% of international trade, down from 52% in 2014, according to SWIFT, the Society for Worldwide Interbank Financial Telecommunication.
Half of a Percent Rate Cut? It’s Worse Than We Thought.
by Dave Kranzler
Investment Research Dynamics
“The US economy is in a good place and our decision today is designed to keep it there.” – Jay Powell at his post-FOMC press conference
Here’s the opening sentence to the latest FOMC policy statement: “Recent indicators suggest that economic activity has continued to expand at a solid pace.” Think about it for a moment: why does the Fed need to cut rates at all given that the alleged unemployment rate is low relative to history, the stock market is at a record high and housing prices are at all-time highs? As the global head of Deutsche Bank’s economic research (Jim Reid) wrote: “the interest rate cut of a half-percentage-point to kick off its easing cycle looks harder to justify than those in 2001 and 2007.” I qualify that by saying “at least on the surface.”
The Fed only cuts 50 basis points at the start of a rate cut cycle as it did in 2001 and 2007 after there’s been a severe deterioration in the markets or the economy. We know the economy is not expanding at a “solid pace,” unless the Fed’s definition of “solid” is the opposite of the dictionary definition.
Darn Facts On the Economy
by Jack Hellner
American Thinker
One of the biggest lies of all from the Democrats and the media is that Biden-Harris inherited an economic disaster—but in reality, they inherited a soaring economy.
Another lie we are told is how much better Biden-Harris policies have been for minorities and manufacturing, but facts are stubborn things.
The following are a set of facts from the Bureau of Labor Statistics from February of 2020, three years into Trump’s term and before COVID, and for August 2024, three years and seven months into the Biden-Harris term.
Teenage unemployment
Trump’s Big Ideas Would Stunt U.S. Growth and Spur Inflation
The damage he would do is much worse than anything an “anti-business” liberal might offer.
[Ed. Note: And you know that you can trust Fareed Zakaria, because he’s not just another World Economic Forum stooge… Oh… Oops. Nevermind.]
by Fareed Zakaria
Washington Post
From the start of his entry into political life, Donald Trump has had one enduring advantage. Many see him as a man who knows a lot about how to generate economic growth for the country. After all, he’s a rich businessman and he played a super successful one on prime-time television for years. The feeling is, he must know what creates growth. In fact, almost everything Trump proposes would have the opposite effect.
Take his most important proposals, ones that he repeats constantly: sweeping tariffs on all imported goods and mass deportations of undocumented workers. It is rare to find topics on which economists agree as strongly as they do that both would be bad for growth and cause inflation to spike.
Core Inflation Ticks Up to 2.7%, Stuck at High Level Since May
by John Carney
Breitbart.com
A key measure of inflation appears to be stuck significantly higher than levels consistent with the Federal Reserve’s price stability goal.
The so-called core personal consumption expenditures (PCE) price index, which excludes food and energy prices, rose 0.1 percent from July, the Bureau of Economic Analysis said Friday. That was in-line with expectations and below the 0.2 percent increase in the prior month.
Compared with a year ago, core prices are up 2.7 percent, a bit higher than the 2.6 percent recorded last month. Before rounding, the change was even smaller: from 2.64941 percent to 2.67847 percent.
Trump and Harris On Food Prices: Promises vs. Reality
Both candidates have shared plans to lower food prices
by Rich Johnson
News Nation
(NewsNation) — A long-held political truism has been that when the U.S. economy is going well, the president generally gets too much credit, and when things aren’t going well, the president gets too much blame.
But that hasn’t stopped presidents and presidential candidates from claiming that their policies will quickly and effectively turn around bad times. And the 2024 presidential election is no exception.
Both former President Donald Trump and Vice President Kamala Harris have made promises and released proposals to improve the U.S. economy, especially when it comes to food prices. Here’s a look at some of their most prominent positions, and how experts view the chances of those stands becoming reality.
Fed Favored Annual Core PCE Price Index Accelerates to 2.7%, Highest Since April, On Higher Core Services Inflation (+3.8%). Durable Goods -2.2%, Energy -10%
by Wolf Richter
Wolf Street
Housing costs jumped. Stubbornly high housing inflation has frustrated Powell for a long time.
The “Core” PCE price index, the Fed’s primary yardstick for its 2% inflation target, rose by 2.7% from a year ago in August, the second slight acceleration in a row, and the biggest increase since April (red in the chart below). This “core” index attempts to show underlying inflation by excluding the components of food and energy as they can jump and drop with commodity prices.
The overall PCE price index, which includes the food and energy components, rose by 2.2% year-over-year in August, a deceleration, on plunging energy prices (-10.1%) and slower rising food prices (+1.1%).
Inflation Remained Below Target in August
by William J. Luther
The American Institute for Economic Research
When the Federal Reserve’s Federal Open Market Committee (FOMC) voted to lower its federal funds rate target last week and thereby begin the process of un-tightening monetary policy, it said FOMC members had “gained greater confidence that inflation is moving sustainably toward 2 percent.” In fact, inflation appears to have already moved to 2 percent. If anything, inflation appears to be somewhat below target today.
The Bureau of Economic Analysis (BEA) reports that the Personal Consumption Expenditures Price Index (PCEPI), which is the Fed’s preferred measure of inflation, grew at a continuously compounding annual rate of 2.2 percent over the last year. However, it has slowed considerably in recent months. PCEPI inflation has averaged 1.9 percent over the last six months and 1.4 percent over the last three months. In August 2024, it was just 1.1 percent.
The Real Inflation Rate? It’s a Mystery
by Martin Holzbauer
Terrace Standard
To the editor:
How does the actual cost of living actually work in relation to the Consumer Price Index (CPI)?
Several things are part of that index such as food from almond butter to yogurt. Why are zucchinis missing?
For shelter costs, 25 items, including mortgage and insurance costs. There are about 100 items for household operations from accounting to wine glass sets. Clothing and footwear are included from baby stuff to youth snow pants and then there is transportation from air travel to used vehicle purchases, including, of course, gas costs.
Then we come to health and personal care products, recreation, education and
reading from ‘A’ as in admission to hockey games to ‘V’ as in video on demand. That section also includes alcohol, tobacco, cannabis and vaping products.
The Greed Theory of Inflation and the Cowardice of Economists
by David C. Rose
The American Institute for Economic Research
The inflation outlook has improved, but it is still very much in the news. Although the rate of increase has slowed, prices remain more than 20 percent above what they were four years ago. At the same time, most analysts understand that the slow and at times negative growth of the money supply, which has tamed inflation somewhat for now, cannot be sustained.
Now that the Fed has announced its 50-basis-point cut in the federal funds rate, it will be opening the money spigot again. To be fair, the increase in the rate of growth of the money supply needed to achieve this reduction in the federal funds rate is modest. But as the Fed continues to reduce rates, the rate of money growth will increase, and so the likelihood of future inflation will rise. Since the Fed has given every indication that many more rate cuts are coming, what either presidential candidate has to say about inflation has never been more important.