{"id":526666,"date":"2022-12-13T21:41:46","date_gmt":"2022-12-13T18:41:46","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/the-inflation-tide-has-turned-no-thanks-to-the-fed\/"},"modified":"2022-12-13T21:41:46","modified_gmt":"2022-12-13T18:41:46","slug":"the-inflation-tide-has-turned-no-thanks-to-the-fed","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/the-inflation-tide-has-turned-no-thanks-to-the-fed\/","title":{"rendered":"#The inflation tide has turned \u2014 no thanks to the Fed"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a407e294f0fa\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a407e294f0fa\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/the-inflation-tide-has-turned-no-thanks-to-the-fed\/#%E2%80%9CThe_inflation_tide_has_turned_%E2%80%94_no_thanks_to_the_Fed%E2%80%9D\" >&#8220;The inflation tide has turned \u2014 no thanks to the Fed&#8221;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CThe_inflation_tide_has_turned_%E2%80%94_no_thanks_to_the_Fed%E2%80%9D\"><\/span>&#8220;The inflation tide has turned \u2014 no thanks to the Fed&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n<aside class=\"single__inline-module alignleft\">\n        <\/aside>\n<p>Abundant emerging signs show that the inflation war is won \u2014 no thanks to the Fed.<\/p>\n<p>The Federal Reserve rate-hike fixation will run wild on Wednesday, with tongues wagging over what they do and say. That likely stokes short-term volatility \u2014 up, down or both. But the fact is, their words are pretty much worthless.<\/p>\n<p>In May, Fed Chairman Jay Powell said, \u201ca 75-basis-point increase is not something that the Committee is actively considering.\u201d They hiked that much in each of their next four meetings. In July, he disdained \u201cforward guidance\u201d \u2014 yet Fed officials keep jawboning openly.<\/p>\n<p>Ignore the Fed fixation. They don\u2019t know what they will do. How could you?<\/p>\n<p>Instead, think input costs. First, let me note that \u201cwinning\u201d doesn\u2019t mean returning to pre-2022 consumer prices. That would require deflation from here \u2014 consumer prices widely falling. We don\u2019t do that. Ever. \u201cWinning\u201d means inflation slowing to past, tolerable levels.<\/p>\n<p>Indications of that \u2014 yet to show in stores \u2014 abound. Seeing them means fixating on the input costs that competitive commerce turns into final consumer prices.<\/p>\n<p>Take crude oil\u2019s price, an obviously important input. It surged after Russia invaded Ukraine. But after March\u2019s peak, supply channels shifted, production grew and oil prices slowly stumbled \u2014 now off 42% to December 2021 levels. Energy helped drive a spike in consumer prices, but will now nudge us toward stability.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/crude-oil-spot-price-chart.jpg?w=1024\" alt=\"The price of crude oil peaked in March but has steadily fallen after production grew.\" class=\"wp-image-24995534\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/crude-oil-spot-price-chart.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/crude-oil-spot-price-chart.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/crude-oil-spot-price-chart.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>The price of crude oil peaked in March but has steadily fallen after production grew.<\/figcaption><\/figure>\n<p>COVID-era supply chain snafus are abating everywhere. Shanghai freight rates fell 77% from January\u2019s high. America\u2019s logistics managers\u2019 index revealed transportation prices contracting while capacity remains ample.<\/p>\n<p>Recall that used car prices soared earlier this year as chip shortages stalled new car output. But Manheim\u2019s wholesale used car price index is now down 15.6% from January\u2019s record to August 2021 levels. Dealer prices don\u2019t show progress yet. They will.<\/p>\n<p>Food? The Ukraine invasion fueled shortage fears, spiking global prices. Now wheat prices are half March\u2019s highs. November\u2019s UN World Food Price Index rose just 0.3% year-over-year, erasing 2022\u2019s spike.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/grocery-shoppers-07.jpg?w=1024\" alt=\"A supermarket\" class=\"wp-image-24995606\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/grocery-shoppers-07.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/grocery-shoppers-07.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/grocery-shoppers-07.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>The UN World Food Price Index in November rose 0.3% year-over-year after food prices spiked earlier in 2022.<\/figcaption><figcaption><span class=\"credit\">China <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> Service via Getty Ima<\/span><\/figcaption><\/figure>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/pumping-gas-station-inflation-1.jpg?w=1024\" alt=\"Oil prices have slowly dropped.\" class=\"wp-image-24995763\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/pumping-gas-station-inflation-1.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/pumping-gas-station-inflation-1.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/pumping-gas-station-inflation-1.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Oil prices have dropped 42% since December 2021.<\/figcaption><figcaption><span class=\"credit\">REUTERS<\/span><\/figcaption><\/figure>\n<p>Housing is CPI\u2019s biggest component. You know home price gains are cooling. You may not know home prices lead rents by roughly 15 months. Zillow\u2019s data show sharply slowing rent increases. More soon.<\/p>\n<p>Some say spiking government spending drove inflation. Maybe. In the 12 months through October, Uncle Sam spent $5.76 trillion. Huge, but 24% below February 2021\u2019s $7.62 trillion high.<\/p>\n<p>Many claim excess money supply growth causes inflation. I\u2019m sympathetic. But note: US M4 \u2014 the broadest measure of that, including currency, deposit accounts, money funds and cash-like securities \u2014 grew 30.8% year-over-year in June 2020. Now it\u2019s 0.1%.<\/p>\n<p>Others fret that tight labor markets are propelling inflation. Wrong. Nobel laureate Milton Friedman long ago proved wages follow prices \u2014 always \u2014 not the reverse. Regardless, payroll gains have slowed significantly.<\/p>\n<p>These improvements largely stem from supply catching up after COVID-era disruptions. They aren\u2019t signs the Fed is succeeding.<\/p>\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/paying-rent-15.jpg?w=1024\" alt=\"A woman looking at bills\" class=\"wp-image-24995630\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/paying-rent-15.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/paying-rent-15.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/paying-rent-15.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Multiple signs point to inflation finally slowing down.<\/figcaption><figcaption><span class=\"credit\">Getty Images<\/span><\/figcaption><\/figure>\n<p>Monetary policy hits the economy later by affecting lending via nudging banks\u2019 overnight borrowing costs. Banks borrow short-term funds to finance longer-term loans. Fed hikes theoretically make banks\u2019 overnight funding costlier, reducing profitability and volume, slowing the economy.<\/p>\n<p>Not now. Despite the Fed\u2019s hikes, lending accelerated from May\u2019s 5.8% year-over-year to 12.0% now. Why? Banks needn\u2019t borrow overnight reserves. They\u2019re hugely awash in near zero-cost deposits that don\u2019t wiggle with rate hikes. Higher long-term rates make lending more profitable, so more h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ens.<\/p>\n<p>What the Fed does now, despite the hysteria, mostly just hurts mortgage borrowers, home buyers. But inflation\u2019s input costs, as shown, were improving months before the Fed started going gonzo in June.<\/p>\n<p>We\u2019re like a snake that ate a huge inflation rodent, bulging in the middle. But it passes very soon \u2014 unless we eat more.\n                        <\/p><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/nypost.com\/2022\/12\/13\/the-inflation-tide-has-turned-no-thanks-to-the-fed\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;The inflation tide has turned \u2014 no thanks to the Fed&#8221; Abundant emerging signs show that the inflation war is won \u2014 no thanks to the Fed. The Federal Reserve rate-hike fixation will run wild on Wednesday, with tongues wagging over what they do and say. That likely stokes short-term volatility \u2014 up, down or&#8230;<\/p>\n","protected":false},"author":1,"featured_media":526667,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/12\/pumping-gas-crude-oil-price-comp.jpg?quality=75&strip=all&w=1024","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[137159,70550,12156,70551,70552,74489,70359],"class_list":["post-526666","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-12-13-22","tag-federal-reserve","tag-housing","tag-inflation","tag-interest-rates","tag-oil-prices","tag-stocks"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/526666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=526666"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/526666\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/526667"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=526666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=526666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=526666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}