Five takeaways from Biden's inflation plan

[brooklynite]

The Hill

Ahead of a Tuesday meeting with Federal Reserve Chairman Jerome Powell, President Biden laid out a plan in a Wall Street Journal op-ed to fight inflation levels that are topping 8 percent annually and reaching nearly 40-year highs. Biden has said that bringing down inflation is his top economic priority.

The gist of the plan is to get out of the way while the Fed raises interest rates to bolster the purchasing power of the dollar while supporting damaged supply chains to make sure that demand for goods doesn’t outpace their supply.

The plan also talks about bringing down demand by continuing to reduce the federal deficit, which is projected to fall by $1.7 trillion this year, something the White House is happy to show off as a win.

The goal for both Biden and the Fed is a “soft landing” — meaning a drop in prices for American consumers without a drop in overall economic growth. Whether or not they can thread this needle, Biden is emphasizing aspects of the recovery from the pandemic that further his economic agenda. Here are five takeaways from his plan.

[bucolic_frolic]

1. Every high level banker has known this would happen for more than 10 years

and they still didn't get the timing right on backing off loose money. Last August was the time to hit the brakes.

Soft landing? Maybe if you settle for 5% inflation. Supply chains won't be full for 18-24 months.

[TheRealNorth]

2. While I am somewhat in favor of increasing the Fed Rates

As I think the low rates have given institutional investors incentive to buy up housing and drive up home & rent prices, I am also concerned the increased rates will hurt businesses that want to borrow money to increase production or improve their supply chain.

And may not ultimately matter given that there is price gouging going on too (or purposeful decreases in supply to increase prices).

[ck4829]

3. Kick