tag:blogger.com,1999:blog-8515247115132134144.post7332180854215917344..comments2024-02-17T12:34:01.400-08:00Comments on Illusion of Prosperity: Inflation Can't Create Jobs, Part 2Stagflationary Markhttp://www.blogger.com/profile/04568993350246477976noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-8515247115132134144.post-60628263768870010792012-04-28T07:36:41.732-07:002012-04-28T07:36:41.732-07:00Bonus thought.
Your comment is playing into somet...Bonus thought.<br /><br />Your comment is playing into something I was planning for my next post.<br /><br />I'm going to use hindsight to rate the Fed's performance on its dual mandate. Should be a hoot! Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-11488721456736978452012-04-28T07:33:43.053-07:002012-04-28T07:33:43.053-07:00Mr Slippery,
You might argue that the Fed raising...Mr Slippery,<br /><br /><i>You might argue that the Fed raising rates in 2005 caused the unemployment in 2008, but the reason they raised rates was not to fight inflation (at least not headline CPI). They were trying to cool off the housing bubble without causing a crash IMO. Fail!</i><br /><br />I would!<br /><br />This <a href="http://research.stlouisfed.org/fred2/graph/?g=6NS" rel="nofollow">chart</a> supports your theory.<br /><br />It would not surprise me if they weren't also a bit panicked over <a href="http://research.stlouisfed.org/fred2/graph/?g=6NT" rel="nofollow">oil</a> too though. <a href="http://en.wikipedia.org/wiki/SPECTRE" rel="nofollow">Spectres</a> of the 1970s were certainly filling my head (pun intended).Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-40163998965155338182012-04-28T06:41:58.596-07:002012-04-28T06:41:58.596-07:00Mark,
Solid work in these charts.
Here's my ...Mark,<br /><br />Solid work in these charts.<br /><br /><i>Here's my claim. First the inflation hits, then the unemployment comes as the Fed is forced to fight it. I have circled the relevant pairs that would support this theory.</i><br /><br />I think all of the pairs you highlight support you theory except the most recent one in 2008. Inflation was mild, and instead of big rate hike to fight inflation, the set rates near zero to fight deflation.<br /><br />You might argue that the Fed raising rates in 2005 caused the unemployment in 2008, but the reason they raised rates was not to fight inflation (at least not headline CPI). They were trying to cool off the housing bubble without causing a crash IMO. Fail!<br /><br />For the most part, the Fed doesn't acknowledge asset inflation as real inflation. I don't think there is a stock price component in the CPI.<br /><br />Anyway, my point is that the last recession is unlike all of the others in the chart as far as the dynamic between inflation, Fed action, and unemployment.Mr Slipperynoreply@blogger.com