The hottest Inflation Substack posts right now

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Dialing Back Restraint

The Transcript • 79 implied HN points • 05 Feb 24
💰 Finance Economy Policy Inflation Labor markets Interest Rates
  1. The Federal Reserve suggested that interest rates may have reached their highest point in this tightening cycle and could start decreasing later this year.
  2. The Fed is cautious about lowering rates too soon and wants to see sustained progress in managing inflation before making any major moves.
  3. Despite some challenges with inflation, the overall economy, especially the job market, remains strong.

Disinflation vs Deflation Explained

Concepts of Finance 🧠 • 159 implied HN points • 01 Aug 23
💰 Finance Economic Policy Inflation Deflation Interest Rates Investment Strategies
  1. Disinflation means prices are still going up, but not as fast as before. It's a slowdown in inflation, which can be seen as a good sign for the economy.
  2. Deflation is when prices actually fall, which can seem good for prices but often leads to negative effects like less spending and economic slowdown.
  3. A balanced approach is crucial. Some inflation is often healthy for the economy because it encourages people to spend and invest, avoiding the risks linked to both disinflation and deflation.
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Is Japan’s Inflation Really At a 40-Year High?

Japan Economy Watch • 259 implied HN points • 21 Nov 22
💰 Finance Inflation Banking Economy Monetary Policy
  1. Japan's inflation trend is not accurately represented by the headline figure of a 40-year high, considering the measure used is specific and not reflective of overall inflation.
  2. Year-to-year comparisons of inflation can be misleading, especially for products with price volatility, potentially skewing the true underlying trend.
  3. The causes and implications of inflation must be carefully analyzed to determine the appropriate monetary policy response, balancing economic growth with the impact of higher interest rates.

Why the market has really rallied following the Fed decision?

Global Markets Investor • 79 implied HN points • 14 Dec 23
💰 Finance Markets Federal Reserve Interest Rates Economic projections Inflation
  1. The market rallied significantly after the Federal Reserve made unexpected decisions, like not pushing back against expected interest rate cuts and adjusting interest rate forecasts significantly.
  2. Investors were surprised by the Fed's dovish shift towards easing and the embrace of soft landing strategies, which resulted in market excitement and continued rallies in stocks and bonds.
  3. While the market is currently optimistic due to the Fed's stance, there are warnings about potential overbought conditions and the need to watch out for sharp corrections.

Accidentally testing NGDP level targeting

Erdmann Housing Tracker • 126 implied HN points • 06 Feb 24
💰 Finance Monetary Policy Inflation Fiscal policy
  1. Accidentally testing market monetarism, particularly nominal GDP targeting, yielded successful results during economic shocks.
  2. Nominal GDP targeting can help stabilize the business cycle by allowing for counter-cyclical inflation and smoothing disruptions in nominal incomes.
  3. Adopting nominal GDP level targeting could lead to improved productivity and reduced reliance on interest rates in monetary policy discussions.

Where inflation comes from

The Works in Progress Newsletter • 12 implied HN points • 14 Nov 24
💰 Finance Inflation Statistics Economic Policy Consumer behavior Labor Economics
  1. Inflation measurement is complex and changes in how we calculate it can significantly impact our understanding of the economy. Small adjustments can make us feel either richer or poorer.
  2. The Consumer Price Index (CPI) is crucial for economic policies, affecting everything from Social Security benefits to tax brackets, which makes its measurement a point of political debate.
  3. Various methods and indexes, like the PCE and the chained CPI, aim to capture price changes accurately, but they each have strengths and weaknesses in addressing real-life consumer experiences.

Inflation: Japan Stands Alone, Part II

Japan Economy Watch • 299 implied HN points • 08 Sep 22
💰 Finance Economy Inflation Interest Rates Currency Government Policy
  1. Bank of Japan faces a dilemma with interest rates and the yen due to the growing gap between Japan and other countries' interest rates.
  2. Japan's weak domestic demand and a very weak yen are impacting consumer spending and business investment negatively.
  3. There is uncertainty around whether speculators will force the Bank of Japan to raise 10-year bond rates above 0.25% in response to the weak yen.

Wall Street is waking up to the inflation problem, but is it enough to turn the trend around

Ecoinometrics • 58 implied HN points • 22 Jan 24
💰 Finance Inflation Market conditions Federal Reserve
  1. Inflation, especially from the services sector, is not returning to pre-COVID levels.
  2. Financial markets are adjusting their expectations for rate cuts in 2024.
  3. Loose financial conditions may benefit Bitcoin and risk assets, but watch for potential reversals signaling a recession or inflation issues.

What Is Inflation?

Economic Forces • 6 implied HN points • 19 Dec 24
💰 Finance Inflation Price theory Monetary Policy Market Dynamics
  1. Inflation is when prices keep going up over time, not just a one-time price hike. This shows that inflation affects the overall economy and not just individual items.
  2. Measuring inflation involves looking at how much purchasing power money loses. When money loses value, prices generally rise, which means inflation is happening.
  3. It's important to consider how supply and demand for money influence inflation. Understanding this can help people assess the real causes behind rising prices and not just blame specific products.

Audio Debate On Japan’s Inflation, Interest Rates, and Low Growth

Japan Economy Watch • 239 implied HN points • 07 Nov 22
💰 Finance Economy Interest Rates Inflation Monetary Policy
  1. Central banks no longer target money supply because the relationship between money growth and inflation became unstable due to changes in financial markets.
  2. In Japan, weak demand for goods and services, not poor monetary policy, has kept interest rates near zero for over a quarter century.
  3. Low aggregate demand in Japan is driven by falling household incomes, lack of competitiveness, and companies hesitating to expand due to weak capacity utilization.

In 2021, Larry Summers Won the Inflation Debate. Now His Victory Is Looking a Little Transitory.

Informer • 98 implied HN points • 16 Feb 23
💼 Business Inflation Economics Policy Labor Market
  1. Larry Summers' victory in the inflation debate of 2021-22 is now appearing transitory as inflation rates have steadily decreased without a spike in unemployment.
  2. Wages play a crucial role in determining inflation levels, with high wage inflation being a reliable predictor of high price inflation.
  3. Keynes and his collaborators emphasized the importance of rising money wages as the essence of inflation, diverging from the Quantity Theory of Money.

Most Inflation Stories Don't Add Up

Economic Forces • 10 implied HN points • 21 Nov 24
💰 Finance Inflation Price theory Economic Policy Market Trends
  1. Understanding whether inflation is caused by supply issues or increased demand is key. Supply-driven inflation leads to less output, while demand-driven inflation increases prices and output together.
  2. Nominal GDP growth is a useful measure to determine the cause of inflation. When nominal GDP increases alongside inflation, it usually indicates demand-driven inflation.
  3. Asking sellers why prices are rising often misses the real cause. Increased demand can look similar to supply issues, so it's important to analyze economic data carefully.

The Forgotten Case Against Milton Friedman

Informer • 98 implied HN points • 14 May 23
🇺🇸 U.S. Politics Economics Policy Inflation Progressives Interest Rates
  1. Milton Friedman's ideas changed economics by challenging the Phillips curve trade-off between inflation and unemployment.
  2. James Tobin provided an alternative theory of inflation focusing on demand shifts between sectors.
  3. Progressives didn't fully embrace Tobin's theory, leading to disagreements on tackling inflation and interest rates.

US Federal Reserve says its goal is 'to get wages down'

Geopolitical Economy Report • 279 implied HN points • 24 May 22
🇺🇸 U.S. Politics Inflation Labor Government Policy Wages Monopolies
  1. The US Federal Reserve chairman aims to bring down wages as a solution to high inflation, believing that workers have too much power in the labor market.
  2. Inflation is outpacing US wages, with the federal minimum wage remaining at $7.25 since 2009, showing that real wages have not kept up with rising prices.
  3. Economist Michael Hudson argues that inflation is primarily driven by corporate monopolies increasing prices, not by rising wages as claimed by the Federal Reserve.

Is Yen’s Decline Over?

Japan Economy Watch • 299 implied HN points • 29 Jul 22
💰 Finance Currency Exchange Interest Rates Inflation Central Bank Market Trends
  1. Traders in currency and bond markets lost big on bets about the weakening yen and rising US interest rates, impacting the yen's value.
  2. The US Federal Reserve's quick actions against inflation caused a change in interest rate outlook, leading to a significant drop in US treasury bond rates.
  3. Market sentiment shifted due to the revised expectations of lower interest rates set by the US Federal Reserve, impacting traders' future predictions.

The Real-World Ravages Of Inflation

Behavioral Value Investor • 111 implied HN points • 28 Jan 24
💰 Finance Economics Investing Inflation Government Policy Revenue management
  1. Inflation can erode purchasing power over time, leading to financial strain for workers like teachers.
  2. Budget constraints due to inflation can create challenges for both employees and employers in reaching fair agreements.
  3. Understanding historical trends can help predict future economic outcomes and guide investment decisions.

The price of health insurance has increased 24% over the last year

HEALTH CARE un-covered • 299 implied HN points • 04 Oct 22
🏥 Health Politics Insurance Costs Policy Healthcare Inflation
  1. Health insurance prices went up by 24% over the last year, which is a much bigger increase than most other expenses like food or gas.
  2. While the cost of medical services only rose by around 5.6%, health insurance continues to climb, indicating issues with insurers' pricing.
  3. Deductibles and out-of-pocket costs have also significantly increased, and future premium hikes are expected, putting more financial pressure on families.

Is Japan’s Inflation As High As It Seems?

Japan Economy Watch • 279 implied HN points • 24 Jun 22
💰 Finance Inflation Banking Policy Economy Market
  1. Japan's inflation rate may not be as high as it seems, with different measures showing varying results.
  2. Central banks like the Bank of Japan use 'core' inflation rates that exclude volatile items to gauge long-term trends.
  3. The challenge for Japan's economy is to achieve healthy inflation driven by domestic demand rather than by high import prices.

Heat Check

The Last Bear Standing • 81 implied HN points • 16 Feb 24
💰 Finance Investing Stock Market Inflation Market Analysis Economy
  1. The market has been experiencing significant growth, especially in sectors like Artificial Intelligence and biotech, leading to exponential value increases in certain stocks.
  2. Despite positive economic indicators and accommodative policies, there are some cautionary signals like delays in rate cuts and unexpected inflation data that may impact the stock market.
  3. Investors should remain aware and prepared for the potential scenarios of inflation re-acceleration and its impact on the market.

Best of Economic Forces: 2024 Edition

Economic Forces • 3 implied HN points • 26 Dec 24
💰 Finance Economics Policy Inflation Tariffs
  1. The author reflected on the past year's posts, sharing which ones were popular and enjoyable to write. This is a great way to highlight important topics for new and old readers.
  2. The popular topics included misunderstandings about tariffs and inflation, showing that basic economics is relevant in understanding current issues.
  3. The author expressed gratitude for the growing support from readers, emphasizing the joy and importance of sharing knowledge about economics.

Note on Monetary Policy and Jackson Hole

Erdmann Housing Tracker • 126 implied HN points • 25 Aug 23
💰 Finance Monetary Policy Inflation Interest Rates Housing Market Economic Analysis
  1. Powell's approach to monetary policy is based on conventional models, which may not fully address current economic issues.
  2. There is a concern that inflation is settling above the 2% target due to trends in goods and services.
  3. Housing supply issues contribute to 'inflation' and can be misleading when analyzing monetary policy impacts.

January 2024 Erdmann Housing Tracker Update

Erdmann Housing Tracker • 63 implied HN points • 18 Feb 24
💰 Finance Housing Market Economic Trends Supply and Demand Inflation
  1. Rising rents are causing rising home prices in the US housing market, with a greater than 1:1 pace.
  2. Density of housing is crucial in impacting housing prices, especially in cities like New York City, where dense neighborhoods are affected by supply shortages and migration trends.
  3. The impact of COVID-19 on housing trends varies across cities, with some areas experiencing temporary relief in housing costs for dense neighborhoods while other cities like New York face complexities in supply conditions.

The Financial System is in a Death Spiral

Anxiety Addiction & Ascension • 59 implied HN points • 09 May 23
💰 Finance Economy Inflation Monetary Policy Central Banks Financial system
  1. The financial system is facing a crisis with inflation rates far exceeding official figures, leading to a significant decrease in purchasing power for individuals.
  2. Central banks are struggling to control inflation through traditional methods like interest rate hikes due to the risk of causing economic turmoil and further financial instability.
  3. There are no easy solutions to the current financial crisis - whether governments keep printing money or raise interest rates, both options have significant downsides that can lead to widespread poverty.

Strange books on the internet distributing words are no basis for a system of finance

featherlessbipeds • 58 implied HN points • 03 Aug 23
💰 Finance Monetary Policy Central Banks Inflation Fiscal policy Quantitative Easing
  1. The book 'The Dollar Endgame' argues that the US Dollar's reserve currency status leads to increasing demand for USD denominated assets like government debt.
  2. The book presents definitions of economic terms like inflation, central banks, and monetary policy, but these definitions are criticized for being inaccurate or misleading.
  3. Fiscal and monetary policies are meant to be somewhat independent but coordinated to prevent economic mismanagement.