1) Cancel Trump tariffs and revert to the Trade Agreements previously legislated by Congress.
2) If the Strait of Hormuz is opened to normal traffic, the price of Oil, Fertilizer, Oil derivatives, etc will go down.
3) Have Congress pass an Immigration law that responds to the needs of the economy.
4) Restore the CFBP and give it enforcement teeth.
I figure these measures could reduce our annual inflation rate by 100-200 basis points.
Funny how all of these are self-inflicted wounds. It's perfectly rational for people to have lost faith in their government. ("Prices will grow faster than my income.")
Hello Congressmen, stop gaslighting us and get to work!
Jose, the measures you recommend would reduce inflation but, other than reopening the Strait (which would reduce gas prices), I don't think you would see actual prices drop, nor should want to see actual prices drop. If actual prices were dropping across the board, the US economy would be shrinking and we would be in a bad recession (and many workers would lose jobs). We want inflation to come down and, sure, the price of gas at the pump, but we don't want a recession.
William - things can improve even without prices going down - Jose repeated Justin's observation that people nom are thinking "Prices will grow faster than my income." If oil prices drop + Trump tariffs rolled back (with consequential reductions of retaliatory tariffs some countries imposed on US goods, causing their people to reduce purchase of US goods since they don't want to buy at higher prices) - now, all those price reductions ripple through the economy. Some of that money can slosh into US workers' paychecks as Jason described, or else some workers will quit and go to an employer who IS willing to share the increased profits. Obvi, takes some time, but workers start to see their paychecks grow and prices leveling, feels less like they're falling behind.
One issue Justin didn't cover much here that complicates my rosy possible future is long term bonds & interest rates. Even if inflation eases, our debt remains a growing cloud. Neither party looks willing to compromise - prisoners' dilemma, no one wants to go first. Raising revenue via higher taxes seems inevitable, hard to know what level of pain will finally break the lock on that. The longer it takes, the harder the recovery will be
J AZ, basically agree with you. The obvious (to some) solution is for a political party to promise to hold a line on government spending while saying they will raise taxes only on the wealthiest Americans by rolling back the Bush and Trump tax cuts for the uber-wealthy. But, Democrats and Republicans alike are too dependent on campaign dollars from the uber-wealthy interests to suggest doing what must be done. What must not be done, and what I am sure you will hear Republicans talk about, is to try to get out of this mess with cuts to government spending. As we saw very clearly when Greece was in a crisis a few years back, cutting government spending shrinks the economy, shrinks the tax base, and increases the deficit. Only ways out: economic growth or increased taxes. The first is wishful thinking; the latter should be policy.
Corporate tax rates were also lowered too far. And too many loopholes & giveaways built into the code, like carried interest deduction and incorporation off shore to dodge US taxes altogether. Corporations don’t vote but they do pull strings using tool they have: $$$$
Military spending has been sacred cow but we bought wrong weaponry for wars like Iran or what Russia is seeing in Ukraine. Those two attacked countries spent far less but are fending off superpowers. Do we learn anything from that? You bet China is!
Well, I wrote my previous comment halfway through this episode, and they ended on this very topic. The bastards ARE out to screw us, and it's perfectly clear. Historical data is not going to light the way going forward.
Steven - they're not out to get us, they're out to get the money... we're just in the way. Also, old X-Files line - when Mulder describes some conspiracy and says with a smile to a shadowy source, "...but people say I'm paranoid." The source replies, "you're not paranoid enough."
In other words, the administration is facilitating the use of market power and information assymetry to enable rent seeking, the value of which flows, in large part, to wealthy shareholders who use the proceeds to purchase more political "facilitation."
I understand that cherry-picking prices to drop by importing questionable products from unspecified countries is not a great idea to actually help Americans afford their lives during these fairly challenging times. But when you talk about prices and wages going in lockstep, I *still* have to question it.
Every time prices go up, the companies now are making more profit. When eggs went up *every* step along the egg-to-customer pathway added a few more cents, even if their expenses did not go up, so they made more profit. Every one of them. And I am convinced this is still going on. These companies are seeing record profits, not just record revenue.
So to me, a layperson, this does not look at if we are keeping up with our wages, and I have never seen anyone actually talk about this.
If lowering prices causes inflation then what happens when you raise prices to a level only the rich can afford? If people die from starvation and lack of medical care where does that leave you? This sounds to me like the little dicktator gets what he wants. A smaller more compliant citizenry.
Lowering prices increases demand while reducing supply. When supply cu cuf off, prices rise. IMHO, a solution would be targeted refundable tax credits and a progressive tax code. Subsidies
Thanks for this Steven. What you say makes sense. So it’s the one big thing the little dicktator shouldn’t have cut off. The supply route, for example the Strait of Hormuz? Every one is saying he was dumb not to have considered this, yet what if he did it on purpose because he now controls Venezuelan oil? He is inflating the prices to his benefit like he does with his trade war b.s. He owns the market in his position as controller of the economy.
This American has lost faith in capitalism because: as Generation X, we were told that working harder/smarter would increase productivity and that rising tides lift all boats. That social contract of the past 30+ years looks like a ruse now. In fact, it looks like boomers will be the last generation to receive the full benefit of SS, Medicare, etc. Five mega corporations own everything, they want everyone on life as a subscription model, replace dollars with corrupto currency, AI ingesting all the power, water plus the sum total of human intelligence while enslaving us. Have I forgotten anything?
Bee - well, we boomers also had unions, employers that provided health insurance benefits, some decades of lower interest rates (but also the 1970s-80s so wasn't all roses). What ever happened to those, seemed like they were kinda workin for a lotta folks?
The wage/price dynamic makes perfect sense for the wage earning worker, but that's not the whole picture. Consider the retiree on a more fixed income, or an income tied to investments and interest rates. For the first time in the US history there will be more people older than 50 than younger. That's a noticeable chunk of the population! When your younger it's easy to change careers but it's not when you are in your 50's in a workforce that does not value age. Watching inflation rise and not wanting to rock the boat and ask for a raise does not give you the feeling that things will be ok in the future.
If I understood your podcast, you said that average wage growth over time keeps up with inflation. However, I have read that the wealthiest Americans own far more relative to the bottom half than was true 30 years ago, that income growth is greater for capital than wages, that sales of luxury goods are growing faster than sales of brands like MacDonalds or Walmart, lots of data suggesting that the wealthiest Americans are getting a larger and larger piece of the pie. All this suggests that while average wage growth may keep up with inflation over time, this may not be true for working class Americans. Am I missing something?
There is a way for prices to go down:
1) Cancel Trump tariffs and revert to the Trade Agreements previously legislated by Congress.
2) If the Strait of Hormuz is opened to normal traffic, the price of Oil, Fertilizer, Oil derivatives, etc will go down.
3) Have Congress pass an Immigration law that responds to the needs of the economy.
4) Restore the CFBP and give it enforcement teeth.
I figure these measures could reduce our annual inflation rate by 100-200 basis points.
Funny how all of these are self-inflicted wounds. It's perfectly rational for people to have lost faith in their government. ("Prices will grow faster than my income.")
Hello Congressmen, stop gaslighting us and get to work!
Jose, the measures you recommend would reduce inflation but, other than reopening the Strait (which would reduce gas prices), I don't think you would see actual prices drop, nor should want to see actual prices drop. If actual prices were dropping across the board, the US economy would be shrinking and we would be in a bad recession (and many workers would lose jobs). We want inflation to come down and, sure, the price of gas at the pump, but we don't want a recession.
William - things can improve even without prices going down - Jose repeated Justin's observation that people nom are thinking "Prices will grow faster than my income." If oil prices drop + Trump tariffs rolled back (with consequential reductions of retaliatory tariffs some countries imposed on US goods, causing their people to reduce purchase of US goods since they don't want to buy at higher prices) - now, all those price reductions ripple through the economy. Some of that money can slosh into US workers' paychecks as Jason described, or else some workers will quit and go to an employer who IS willing to share the increased profits. Obvi, takes some time, but workers start to see their paychecks grow and prices leveling, feels less like they're falling behind.
One issue Justin didn't cover much here that complicates my rosy possible future is long term bonds & interest rates. Even if inflation eases, our debt remains a growing cloud. Neither party looks willing to compromise - prisoners' dilemma, no one wants to go first. Raising revenue via higher taxes seems inevitable, hard to know what level of pain will finally break the lock on that. The longer it takes, the harder the recovery will be
J AZ, basically agree with you. The obvious (to some) solution is for a political party to promise to hold a line on government spending while saying they will raise taxes only on the wealthiest Americans by rolling back the Bush and Trump tax cuts for the uber-wealthy. But, Democrats and Republicans alike are too dependent on campaign dollars from the uber-wealthy interests to suggest doing what must be done. What must not be done, and what I am sure you will hear Republicans talk about, is to try to get out of this mess with cuts to government spending. As we saw very clearly when Greece was in a crisis a few years back, cutting government spending shrinks the economy, shrinks the tax base, and increases the deficit. Only ways out: economic growth or increased taxes. The first is wishful thinking; the latter should be policy.
Corporate tax rates were also lowered too far. And too many loopholes & giveaways built into the code, like carried interest deduction and incorporation off shore to dodge US taxes altogether. Corporations don’t vote but they do pull strings using tool they have: $$$$
Military spending has been sacred cow but we bought wrong weaponry for wars like Iran or what Russia is seeing in Ukraine. Those two attacked countries spent far less but are fending off superpowers. Do we learn anything from that? You bet China is!
Well, I wrote my previous comment halfway through this episode, and they ended on this very topic. The bastards ARE out to screw us, and it's perfectly clear. Historical data is not going to light the way going forward.
You're not paranoid, corporate America really is out to get you.
Steven - they're not out to get us, they're out to get the money... we're just in the way. Also, old X-Files line - when Mulder describes some conspiracy and says with a smile to a shadowy source, "...but people say I'm paranoid." The source replies, "you're not paranoid enough."
In other words, the administration is facilitating the use of market power and information assymetry to enable rent seeking, the value of which flows, in large part, to wealthy shareholders who use the proceeds to purchase more political "facilitation."
aka a vicious cycle 😦
I understand that cherry-picking prices to drop by importing questionable products from unspecified countries is not a great idea to actually help Americans afford their lives during these fairly challenging times. But when you talk about prices and wages going in lockstep, I *still* have to question it.
Every time prices go up, the companies now are making more profit. When eggs went up *every* step along the egg-to-customer pathway added a few more cents, even if their expenses did not go up, so they made more profit. Every one of them. And I am convinced this is still going on. These companies are seeing record profits, not just record revenue.
So to me, a layperson, this does not look at if we are keeping up with our wages, and I have never seen anyone actually talk about this.
If lowering prices causes inflation then what happens when you raise prices to a level only the rich can afford? If people die from starvation and lack of medical care where does that leave you? This sounds to me like the little dicktator gets what he wants. A smaller more compliant citizenry.
Lowering prices increases demand while reducing supply. When supply cu cuf off, prices rise. IMHO, a solution would be targeted refundable tax credits and a progressive tax code. Subsidies
Thanks for this Steven. What you say makes sense. So it’s the one big thing the little dicktator shouldn’t have cut off. The supply route, for example the Strait of Hormuz? Every one is saying he was dumb not to have considered this, yet what if he did it on purpose because he now controls Venezuelan oil? He is inflating the prices to his benefit like he does with his trade war b.s. He owns the market in his position as controller of the economy.
This American has lost faith in capitalism because: as Generation X, we were told that working harder/smarter would increase productivity and that rising tides lift all boats. That social contract of the past 30+ years looks like a ruse now. In fact, it looks like boomers will be the last generation to receive the full benefit of SS, Medicare, etc. Five mega corporations own everything, they want everyone on life as a subscription model, replace dollars with corrupto currency, AI ingesting all the power, water plus the sum total of human intelligence while enslaving us. Have I forgotten anything?
Bee - well, we boomers also had unions, employers that provided health insurance benefits, some decades of lower interest rates (but also the 1970s-80s so wasn't all roses). What ever happened to those, seemed like they were kinda workin for a lotta folks?
The Reagan years. We’ve been in P2025 the whole time.
The wage/price dynamic makes perfect sense for the wage earning worker, but that's not the whole picture. Consider the retiree on a more fixed income, or an income tied to investments and interest rates. For the first time in the US history there will be more people older than 50 than younger. That's a noticeable chunk of the population! When your younger it's easy to change careers but it's not when you are in your 50's in a workforce that does not value age. Watching inflation rise and not wanting to rock the boat and ask for a raise does not give you the feeling that things will be ok in the future.
Terrific commentary, as always, Justin. I really appreciate how you explain complex issues.
If I understood your podcast, you said that average wage growth over time keeps up with inflation. However, I have read that the wealthiest Americans own far more relative to the bottom half than was true 30 years ago, that income growth is greater for capital than wages, that sales of luxury goods are growing faster than sales of brands like MacDonalds or Walmart, lots of data suggesting that the wealthiest Americans are getting a larger and larger piece of the pie. All this suggests that while average wage growth may keep up with inflation over time, this may not be true for working class Americans. Am I missing something?