Young person asked me today about inflation.
If prices for things like food, rent etc will be coming down again?
I said no.
Doesn't work that way.
Even if energy price drop heavy. You still have high wages that won't.
Once inflation gets baked into an economy.
It sticks.
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Inflation is a self-feeding loop. When there is expectation of inflation, companies are able to raise prices without backlash, and workers will keep demanding wage hikes. Powell dropped the ball by keeping policies loose for way longer than necessary.
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Supply chain and war was just fuel on the existing fire.
Asset and home price inflation also increases consumption of other goods, as people feel more wealthy ...
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Correct. And they know this. They’ve known it all along. And they also know that it will further marginalize the middle and lower classes. It feels almost intentional.
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