The hottest Inflation Substack posts right now

And their main takeaways
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The "worst possible outcome" for the Fed is an unnecessary recession, not reversing a cut

Stay-At-Home Macro (SAHM) • 1238 implied HN points • 24 Jan 24
💰 Finance Monetary Policy Inflation Interest Rates Unemployment Economy
  1. The Fed's main concern is avoiding an unnecessary recession, not reversing a rate cut.
  2. Inflation has decreased, but the Fed is hesitant to cut rates due to fears of inflation resurgence.
  3. The Fed should balance its mandate of stable prices and maximum employment to avoid causing an unnecessary recession.

Hedging Inflation with Real Assets

In My Tribe • 622 implied HN points • 12 Dec 24
💰 Finance Investments Inflation Bonds Real Estate Commodities
  1. Investing in real assets like real estate, gold, and commodities can help protect against inflation. These assets are expected to appreciate more when inflation rises.
  2. Understanding profitability is key when investing. It combines rental income, appreciation, and interest rates to determine if an investment is worth it.
  3. Inflation-indexed bonds (like i-bonds) can be a good hedge but have limits on how much you can buy. They provide some safety against inflation, even though their performance can vary.

Easing Into Expansion

The Last Bear Standing • 24 implied HN points • 17 Jan 25
💰 Finance Monetary Policy Inflation Economic data Market Trends
  1. Inflation is complex and influenced by many factors, making it hard to pinpoint why prices change. It often feels like a guessing game without clear answers.
  2. The market reacts strongly to data on inflation, analyzing numbers intensely, but sometimes it loses sight of the bigger picture, like underlying economic trends.
  3. Current monetary policies have shifted, and while they initially helped reduce inflation, signs suggest that prices may be climbing again as the economy changes.

The Houthis, A Disappointing Wage Report, and the Tumbling Yen

Japan Economy Watch • 1098 implied HN points • 17 Jan 24
💰 Finance Markets Interest Rates Inflation Economy Wages
  1. The yen has weakened due to external factors like the Houthi attack, impacting Japanese economy and inflation, and market anticipation of interest rate changes. The disappointing wage report for November dampened expectations for a rise in interest rates by the Bank of Japan, leading to a weaker yen.
  2. An accurate model for predicting the yen's strength has a standard error of about 3.4 yen. A sizeable discrepancy between the model's forecast and the actual yen value could either indicate a correction back to expected levels or suggest a long-term trend change.
  3. The growth in nominal wages in Japan has consistently fallen short of the 3% goal needed for sustained inflation. This has influenced market expectations regarding the Bank of Japan's monetary policy decisions and consequently impacted the yen's valuation.
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Media Notes

The Lens • 982 implied HN points • 22 Jan 24
💰 Finance Economics Monetary Policy Inflation Interest Rates Debt
  1. Stephanie Kelton discusses alternative ways to handle inflationary pressures globally
  2. Central banks turning to rate hikes may not be the most effective solution for managing inflation
  3. Raising interest rates can have unintended consequences and may not always lead to desired outcomes

Case-Shiller and Filtering

Erdmann Housing Tracker • 189 implied HN points • 18 Nov 24
💰 Finance Housing Market Economic Trends Inflation Supply and Demand
  1. The Case-Shiller index, which tracks home prices, historically suggested a housing bubble. However, it may actually reflect a housing shortage rather than a bubble bursting.
  2. When adjusting home prices for inflation using rent instead of general CPI, the index shows that home prices are still significantly elevated due to high rents driving prices up.
  3. Today's housing market struggles with a lack of new homes, leading to increased prices for existing homes. This lack of building capacity has made it harder for younger generations to have the same homeownership opportunities as their grandparents.

Sacred Cows

The Lens • 904 implied HN points • 27 Jan 24
🇺🇸 U.S. Politics Economics Federal Reserve Inflation Monetary Policy Public Perception
  1. Economists, market participants, pundits, and policymakers got some big things wrong in recent years, like the transitory nature of inflation.
  2. The public perception of elites may be that they often know nothing, even elites admit to being wrong on significant matters.
  3. There was a discussion on the impact of rate hikes on inflation, challenging the traditional narrative and the idea that monetary policy has no effect.

The Fed is only looking to past inflation, and that's a problem.

Stay-At-Home Macro (SAHM) • 805 implied HN points • 09 Feb 24
💰 Finance Monetary Policy Inflation Economy Federal Reserve Data-driven
  1. The Fed is focusing only on past inflation, and this approach may lead to problems with monetary policy decisions.
  2. Recent data shows a rapid decrease in inflation over the past six months, suggesting a return towards the 2% target.
  3. Despite strong economic growth and high interest rates, the Fed continues to rely heavily on backward-looking inflation data for its decision-making.

December 2024 Inflation

Erdmann Housing Tracker • 42 implied HN points • 15 Jan 25
💰 Finance Economics Investments Markets Inflation Housing
  1. December 2024 saw important updates about inflation. This is something people need to keep an eye on for their finances.
  2. There's a focus on housing data, which is crucial as it can greatly affect the economy and people's living situations.
  3. Subscribing to this housing tracker gives access to ongoing insights. This can help people stay informed about market changes.

Market Misreads Services Inflation And the BOJ

Japan Economy Watch • 1018 implied HN points • 04 Jan 24
💰 Finance Market Analysis Inflation Central Banks Economic data Monetary Policy
  1. Market players and forecasters may be misreading the intentions of the Bank of Japan (BOJ) about inflation and wage data.
  2. The BOJ's ambiguous messages and contradictory statements are causing confusion in the market.
  3. Evaluating services inflation and wage hikes requires careful consideration of data and not jumping to conclusions.

Just So We're Clear on the 2024 Election....

Drezner’s World • 963 implied HN points • 10 Jan 24
🇺🇸 U.S. Politics Election Trade policy Inflation Authoritarianism
  1. The author has issues with both Biden and Trump, but views Trump's economic policies as far worse.
  2. The author emphasizes the difference between the economic policies of Biden and Trump, particularly in relation to inflation.
  3. The author highlights the authoritarian tendencies and disastrous economic policies of Donald Trump, leading to a preference for Biden in the 2024 election.

Could the USD Hyperinflate?

The Informationist • 1592 implied HN points • 07 May 23
💰 Finance Inflation Markets Currency Investments Assets
  1. Hyperinflation is when a currency loses value rapidly due to extreme inflation.
  2. Some currencies have hyperinflated in the past, like those of Yugoslavia, Zimbabwe, and Hungary.
  3. While there is a chance the USD could hyperinflate, it is likely one of the last currencies to do so and owning hard assets can help protect against hyperinflation.

Fischer Black vs. Monetarism

In My Tribe • 455 implied HN points • 14 Dec 24
💰 Finance Monetary Policy Economic Theory Inflation Market Dynamics Financial Systems
  1. Fischer Black believed that both money supply and price levels are based on collective beliefs rather than strict numbers. People accept money because they trust others will accept it too.
  2. Inflation and prices are influenced more by market behavior and expectations rather than solely by money supply. This means prices can change based on what people think will happen in the future.
  3. The relationship between money and prices might be less reliable than before. As people use less cash and more digital forms of payment, traditional ways to predict inflation might not work well anymore.

Economics Links

In My Tribe • 394 implied HN points • 24 Dec 24
💰 Finance Macroeconomics Interest Rates Consumption Inflation Government Policy Economic Theory
  1. Cato's wish list includes ideas for government reform, like raising Social Security retirement ages. Some of these suggestions might not be politically popular, but they show a push for change from a libertarian angle.
  2. There's a big difference in how academics and policymakers view the impact of interest rates on consumption. Academics think higher rates could boost future consumption, while policymakers see them as a negative for the economy.
  3. Scott Sumner highlights the issues with measuring inflation. He argues that inflation numbers are often confusing and imprecise, which also affects how we understand productivity changes.

$10 Trillion Stolen Right Under Our Noses

COVID Reason • 1784 implied HN points • 28 Aug 23
💰 Finance Economy Public Policy Inflation Wealth Inequality Government spending
  1. Over $10 trillion was spent on the COVID-19 pandemic, with $6 trillion from CARES Act and $4 trillion from Biden's administration.
  2. Money was stolen through fraud and embezzlement during COVID relief, with the effects leading to inflation and societal wealth disparity.
  3. The spending spree due to the pandemic led to significant financial losses, missed opportunities, and wealth redistribution, impacting many aspects of people's lives.

Money Supply Growth Accelerates And Hits A 27-Month High

QTR’s Fringe Finance • 24 implied HN points • 16 Jan 25
💰 Finance Economic Policy Interest Rates Government spending Inflation
  1. The money supply in the economy is growing rapidly, reaching a high not seen in over two years. This growth is mainly driven by government spending rather than strong economic conditions.
  2. Interest rates are being pushed down by the Federal Reserve to help manage the government's large debt. This could lead to future inflation as more money is created to handle increasing deficits.
  3. Despite recent economic growth, many believe it isn't based on solid foundations. The reliance on government spending and credit could pose risks for the economy moving forward.

Links to Consider, 11/14/2024

In My Tribe • 394 implied HN points • 14 Nov 24
🇺🇸 U.S. Politics Elections Media Inflation Political trends Social Issues
  1. Social issues are becoming more relaxed, and many activities that were once illegal are now accepted. This change shows a shift in American values, as old social norms are less effective.
  2. The recent elections showed that voters are focused on inflation, which influenced their choices. Many people felt dissatisfied with the Democratic candidates, especially Kamala Harris, leading to a shift towards Republicans.
  3. Traditional media like TV is losing younger audiences, while platforms like podcasts and social media are gaining popularity. This shift reflects a changing media landscape where people seek different ways to get their news.

QE is Coming

The Dollar Endgame • 399 implied HN points • 06 Mar 24
💰 Finance Markets Bitcoin Gold Inflation Central Bank
  1. Markets are anticipating increased liquidity injections from the Fed, with assets like Gold and Bitcoin hitting all-time highs even before the easing cycle starts.
  2. The surge in Bitcoin's value is attributed to significant inflows from U.S.-based Bitcoin ETFs, indicating a historic rally compared to gold ETFs.
  3. The financial markets are preparing for a potential Fed intervention, likely in response to the rising net liquidity despite the seeming balance sheet reductions.

Rent inflation since Covid

Erdmann Housing Tracker • 126 implied HN points • 08 Nov 24
🇺🇸 U.S. Politics Housing policy Inflation Economic Trends Urban Development Migration
  1. Rent prices have risen significantly since Covid, especially in areas with low housing supply. This has caused many families to struggle with housing costs.
  2. After a temporary shift in housing demand during the pandemic, some families moved away from expensive urban areas. However, this has led to rising rents in previously cheaper neighborhoods.
  3. Currently, rent inflation seems to be moderating, which is good news for families. If housing construction continues to grow, it could help families afford better living situations.

Are TIPS and I-Bonds Good Investments?

The Informationist • 963 implied HN points • 28 May 23
💰 Finance Investments Bonds Inflation Government Assets
  1. TIPS are Treasury Inflation-Protected Securities that protect investors from inflation by adjusting principal based on changes in CPI.
  2. I-Bonds are similar to TIPS in protecting from inflation, but have fixed rates and are not tradable in the secondary market.
  3. Both TIPS and I-Bonds are highly dependent on CPI for pricing and may not offer positive real rates of return in the real world.

If We Have a Strong Economy, Why Are Americans Struggling?

QTR’s Fringe Finance • 23 implied HN points • 14 Jan 25
💰 Finance Economic Policy Market Trends Inflation Debt Management Monetary Policy
  1. Many Americans are struggling financially even when the economy seems strong. High inflation and rising costs are making life harder for a lot of people.
  2. Rising treasury yields and mortgage rates are linked to ongoing inflation and economic uncertainty. This means borrowing money is becoming more expensive.
  3. When people feel the pinch of price increases and government spending on foreign issues, they are likely to vote for change. Economic struggles can greatly influence election outcomes.

Inflation Adjusted House Prices 1.3% Below 2022 Peak

CalculatedRisk Newsletter • 33 implied HN points • 03 Jan 25
💰 Finance Housing Inflation Real Estate Market Trends Economic Indicators
  1. Inflation-adjusted house prices are now 1.3% lower than their peak in 2022. This means homes cost less when you account for inflation.
  2. Real house prices, which consider the effects of inflation, are still quite high compared to the past. They are about 11% above the peak during the housing bubble in 2006.
  3. The price-to-rent ratio is also lower than its peak. This suggests that buying homes may be more favorable compared to renting right now.

The U.S. Economy is Roaring. Why Should Rates Come Down?

The Overshoot • 452 implied HN points • 27 Jan 24
💰 Finance Economy Interest Rates Growth Inflation Forecasting
  1. The U.S. Economy is showing strong growth and may not need rate cuts despite controlled inflation.
  2. Traders anticipate interest rates to decrease, but data suggests a period of faster growth akin to past economic booms.
  3. Initial forecasts of a U.S. recession were proven wrong, with the economy growing over 3% and showing resilience against negative predictions.

What's Art Got to Do with It?

System Change • 491 implied HN points • 10 Jan 24
💰 Finance Inflation Deflation China Economic Policy
  1. The art market is experiencing deflation as buyers prioritize debt repayment over new purchases.
  2. Debt deflation and low wages worldwide are driving the fall in prices of goods, services, and assets.
  3. China's economy, as the world's second largest, plays a significant role in global deflationary pressures and may require a drastic shift in economic policy to avoid a crash.

Inflation suddenly reignites

The Bitcoin Layer • 393 implied HN points • 06 Feb 24
💰 Finance Inflation
  1. Inflation is reigniting as prices paid by businesses surge, leading to a spike in Treasury yields.
  2. Loan activity is increasing at banks, indicating economic activity is picking up.
  3. Upstream prices that businesses are paying will likely lead to higher consumer prices with a slight delay.

The BoJ is Trapped

The Dollar Endgame • 279 implied HN points • 19 Mar 24
💰 Finance Monetary Policy Central Bank Inflation Interest Rates
  1. The Bank of Japan raised its rates for the first time in years, adjusting its primary goal for short-term interest rates and marking its first rate hike since 2007.
  2. The Bank of Japan previously used Negative Interest Rate Policy to stimulate borrowing and lending to revitalize Japan's sluggish economy.
  3. The Bank of Japan has ceased certain policies but will continue to print money, maintain low rates, and combat potential inflation, as seen through their recent monetary announcements.

BOJ Finally Pulls the Trigger on Rate Policy, But It’s a Low-Caliber Gun

Japan Economy Watch • 259 implied HN points • 20 Mar 24
💰 Finance Monetary Policy Interest Rates Inflation Economic Forecast Currency Exchange
  1. BOJ's interest rate policy tweak is more about changing the mechanism to keep rates low, gradually raising overnight rates from negative to low positive percentages over time.
  2. Ending Yield Curve Control means BOJ stops directly controlling long-term rates but still aims to keep them low by continuing to buy the same amount of long-term bonds.
  3. BOJ remains focused on low inflation and plans to raise interest rates if it rises too high, but for now, it sees current inflation as temporary due to global factors.

3 Ways out of our "Fiscal Death Spiral."

cryptoeconomy • 707 implied HN points • 08 Jul 23
💰 Finance Debt Inflation Taxation Government spending Economy
  1. There are 3 ways to escape the fiscal crisis: reduce spending, raise taxes heavily, or resort to printing more money.
  2. The increasing debt and interest payments are approaching unsustainable levels, potentially leading to historic inflation rates.
  3. Regardless of the chosen path, the final destination seems to be inflation as the most likely outcome of the fiscal crisis.