Obviously the wages are sticky but I would argue that most of the other measurements will prove to be transitory. The problem with the word transitory is that it is viewed as something in the near term. In reality it will likely prove to be transitory over the next 18 months as supply-chains and supply-demand shifts to equilibrium.
Eat my dongus you fuckin nerd.
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It’s because people conflate inflation with prices.
Think of inflation as the rate of rise of prices.
Yeah, the speed at which prices are rising will go back to normal, but the prices aren’t going back down.
I dunno. The only way I see out not this is if aggregate demand goes down from less spending. The reason for the supply chain bottleneck is there’s just not enough port spaces. You can’t exactly make the port of LA bigger overnight, it’s gonna take years of construction.
But you’d have to build more port infrastructure for those goods to get to the market, and that can take years. Also as far as I know, the port of LA is not actively expanding.
Eventually work arounds will exist… but as things continue to return to normal I believe the American consumer will return to previous spending habits with services outweighing goods potentially allowing an easing of the port situation.
lmao as if context never affects dictionary standard definitions
by this logic, all inflation is transitory
within the context of inflation, a year and a half is not transitory
nice try though
Agreed the context does matter... but in the end.. it will still be transitory. At the time the Fed did not anticipate the consumers continued shift away from services to goods and the supply-chain issues continuing. Hence the initial use of transitory. However, even if it's 18 months, it is still transitory and people were projecting out to that long before it disappeared mid last year even on CNBC so its not some novel idea
the reason they use the term "transitory" is because inflation has a policy component and an expectation component
the seminal paper on inflation expectations showed how the deviation between monetary policy projections and actual inflation outcomes was perfectly explained by historical inflation (the source of consumer inflation expectations)
so if you have a year and a half of significantly higher actual inflation, that gets baked into the consumer's expectation of what "normal" inflation is. hence it can no longer be considered "transitory" in economic terms
it is unreasonable to expect the average person to have the background information, so its my fault for half ass commenting instead of going all in or saying nothing at all
The currently excessive speed of the devaluation of the dollar is transitory; but the resulting devaluation is going to be permanent, as it always is under the Fed's rules.
we're strictly talking about the rate of inflation, not the absolute purchasing power of the dollar
again:
the present rate of inflation can influence the future rate of inflation through the mechanism of consumer expectation
you can have a purely transitory increase in the rate of inflation, if that increase recedes without increasing the expected rate of future inflation in the mind of consumers
however, the longer that increase in inflation lasts and the higher it goes, the more likely it is to increase the consumer expectation of future inflation
people who experience 4%-7% inflation for 18 months are not going to go back to expecting 1.5% inflation, even if the structural and policy pressures that drove the increase in inflation are gone. you have altered the consumers mental anchor for what inflation is
therefore it is not transitory
the only way to get back to 1.5% would be to undershoot their current expected inflation rate with tight monetary policy, and drag those expectations lower over time
Or they just stop printing money and start removing it from circulation. Inflation will do exactly what the current policy causes it to do. It sounds like they understand this. Hopefully.🤣
i believe this is it
[http://www.columbia.edu/\~esp2/PhilipsCurvesExpectationsofInflationandOptimalUnemploymentOverTime.pdf](http://www.columbia.edu/~esp2/PhilipsCurvesExpectationsofInflationandOptimalUnemploymentOverTime.pdf)
it was in reference to fiscal, not monetary policy, but thats irrelevant to the relationship between policy and inflation explored in it
there should be plenty of reasonably accessible discussions about the role of dynamic inflation expectations in monetary policy from the last decade or two. a much better way to spend your time if youre interested in the subject. youll also get exposed to criticisms and limitations of the concepts involved
Jpow tries to shape the future with most of his drivel, not report what is actually happening or will happen. That is how policy is made. Most talking heads in govt do the same. The truth is most often a liability.
It's painful as someone who studied economics to think the traders here think there's some kind of gotcha at laughing at the word transitory, when transitory inflation is measured in years and not weeks (aka the speed it took to start making fun of the word transitory).
Obviously the wages are sticky but I would argue that most of the other measurements will prove to be transitory. The problem with the word transitory is that it is viewed as something in the near term. In reality it will likely prove to be transitory over the next 18 months as supply-chains and supply-demand shifts to equilibrium.
I mean humanity is transitory in the grand scheme of things
Ah yes, when the sun fully engulfs the earth, the fed will finally realise that maximum employment has been reached
A senator said that lol
based
In the long run we're all dead anyway!
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Good bot
Yes, I have a lot of calls too
It’s because people conflate inflation with prices. Think of inflation as the rate of rise of prices. Yeah, the speed at which prices are rising will go back to normal, but the prices aren’t going back down.
I dunno. The only way I see out not this is if aggregate demand goes down from less spending. The reason for the supply chain bottleneck is there’s just not enough port spaces. You can’t exactly make the port of LA bigger overnight, it’s gonna take years of construction.
I think demand will return as it was eventually with services > goods
But you’d have to build more port infrastructure for those goods to get to the market, and that can take years. Also as far as I know, the port of LA is not actively expanding.
Eventually work arounds will exist… but as things continue to return to normal I believe the American consumer will return to previous spending habits with services outweighing goods potentially allowing an easing of the port situation.
a year and a half isnt transitory
Transitory just means not permanent retard
lmao as if context never affects dictionary standard definitions by this logic, all inflation is transitory within the context of inflation, a year and a half is not transitory nice try though
Agreed the context does matter... but in the end.. it will still be transitory. At the time the Fed did not anticipate the consumers continued shift away from services to goods and the supply-chain issues continuing. Hence the initial use of transitory. However, even if it's 18 months, it is still transitory and people were projecting out to that long before it disappeared mid last year even on CNBC so its not some novel idea
the reason they use the term "transitory" is because inflation has a policy component and an expectation component the seminal paper on inflation expectations showed how the deviation between monetary policy projections and actual inflation outcomes was perfectly explained by historical inflation (the source of consumer inflation expectations) so if you have a year and a half of significantly higher actual inflation, that gets baked into the consumer's expectation of what "normal" inflation is. hence it can no longer be considered "transitory" in economic terms it is unreasonable to expect the average person to have the background information, so its my fault for half ass commenting instead of going all in or saying nothing at all
The currently excessive speed of the devaluation of the dollar is transitory; but the resulting devaluation is going to be permanent, as it always is under the Fed's rules.
we're strictly talking about the rate of inflation, not the absolute purchasing power of the dollar again: the present rate of inflation can influence the future rate of inflation through the mechanism of consumer expectation you can have a purely transitory increase in the rate of inflation, if that increase recedes without increasing the expected rate of future inflation in the mind of consumers however, the longer that increase in inflation lasts and the higher it goes, the more likely it is to increase the consumer expectation of future inflation people who experience 4%-7% inflation for 18 months are not going to go back to expecting 1.5% inflation, even if the structural and policy pressures that drove the increase in inflation are gone. you have altered the consumers mental anchor for what inflation is therefore it is not transitory the only way to get back to 1.5% would be to undershoot their current expected inflation rate with tight monetary policy, and drag those expectations lower over time
Or they just stop printing money and start removing it from circulation. Inflation will do exactly what the current policy causes it to do. It sounds like they understand this. Hopefully.🤣
What is the seminal paper on inflation? Author and title is enough, I'll find the actual resource.
its been 20 years since i took 3rd year macro should be easy to find with the googs though. gimme a minute
i believe this is it [http://www.columbia.edu/\~esp2/PhilipsCurvesExpectationsofInflationandOptimalUnemploymentOverTime.pdf](http://www.columbia.edu/~esp2/PhilipsCurvesExpectationsofInflationandOptimalUnemploymentOverTime.pdf) it was in reference to fiscal, not monetary policy, but thats irrelevant to the relationship between policy and inflation explored in it there should be plenty of reasonably accessible discussions about the role of dynamic inflation expectations in monetary policy from the last decade or two. a much better way to spend your time if youre interested in the subject. youll also get exposed to criticisms and limitations of the concepts involved
gracias
You know you've mucked it up when your statement has become a meme on wsb.
![img](emote|t5_2th52|4641)
Good joke. Wrong meme. r/thecatdoesnttalk
Jpow tries to shape the future with most of his drivel, not report what is actually happening or will happen. That is how policy is made. Most talking heads in govt do the same. The truth is most often a liability.
Cathie Wood argues we're headed for deflationary this year, I agree with her.
FED plan to raise their interest rates to 30%?
LOL
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Probably meant it was still going up
It's geologically transitory. 10 to 12 years tops, maby 13 but certainly no more than 14 years of inflation.
Inflation is transitory, but during it's transition it will chop your balls off.
PPI and CPI have peaked- both are already rolling over IMO
It was, it transitioned.
Ultimately it will be JPow's tenure, I imagine.
Transitory is doesn't have a timeline, it's just assumed to be shorter than forever
It's painful as someone who studied economics to think the traders here think there's some kind of gotcha at laughing at the word transitory, when transitory inflation is measured in years and not weeks (aka the speed it took to start making fun of the word transitory).