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Rates, Inflation and Congress
by Karl Denninger Market-Ticker.org
Facts:
Inflation will not return to the Fed’s Target, which itself is illegal under the Fed’s mandate for STABLE prices, until and unless Deficit Spending ends.
The current price level for many essential goods and services — including housing, food, medical care, insurance of various sorts that are not optional (e.g. vehicle insurance in order to be able to legally drive or homeowners in order to have a mortgage) are impossible to afford across the general public at the present time; they were generated by artificial and impossible to maintain federal government subsidies such as paying people $600/wk to stay at home and get drunk or not having to pay back student loans.
Therefore even a complete halt to inflation is insufficient; the price level must drop to approximately, in income-adjusted terms, including for those on fixed incomes, to pre-pandemic levels and in fact likely to pre-2006 levels, because the gross subsidies via credit emission at the federal level has been going on and embedded itself into the American psyche for that long or even longer.