Since the Great Recession, the Fed has transformed itself into an entity more and more responsible for asset prices. This was the stated goal since 2009 as the Fed adopted a new philosophy called the "Wealth Effect." The thinking behind it was simple: growth in asset prices would translate to an increase in consumer spending and hence demand itself. It was a 'trickle down' economic philosophy an increasingly financialized economy.
This backdrop has defined our post-2009 era which stirred certain pathologies that were reflected in the greater culture and politics. It was the time when 'finance became a culture' and actual-productivity plummeted across most developed economies, especially the United States. But somehow in spite of the accumulating dysfunction across most key areas, everything kept trudging along, partly thanks to investors being satiated with record returns.
While the near-zero interest rate regime may now be ending, it is worth considering how much of the water we were all swimming in excused poor state capacity, distorted economic fundamentals, and how it even kept a lid on the dysfunction potentially blowing up in our faces. Now that we have to reckon with these realities, it may be wise to ask how many worldviews were simply products of the the cheap money regime - which is now, in a shock to many, coming to a close. Whether or not it will easily be let go, however, is another matter.
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Black swan? Inflation was entirely predictable - right wing economists and even just common sense lay people were screaming warnings about the trillions of money printing that was going on for years. What was the response? Memes about “heh money printer go brrrr”.
Yeah, the administration has no excuse for forgetting basic rules about money and inflation. This could have been entirely avoided
As many have said before me in other contexts, if someone has predicted inflation for years, then they haven't predicted anything. It's like Marxists constantly predicting that revolution is coming.
And, by "black swan" event, I take OP to be referring to the developments -- COVID, etc, that led policymakers to take steps to increase the money supply. Note that M2 steadily increased for years without causing inflation, so those who for years said that those increases would cause inflation appear to have been wrong. OTOH the increase in M2 during COVID was much sharper than in the past but even that did not cause inflation until after personal consumption recovered. Given that drop in consumption and the concomitant risk of recession, anti-recessionary money policy was the correct move. The hard part was, as it always is, figuring out when and how quickly to reverse course, but those who warned of inflation "for years" have nothing to say about that.
They were only predicting it for the last couple of years, and to be fair it was eminently predictable - you print money recklessly and you cut supply then you get inflation. It’s pretty basic stuff.
Aren’t we now in a recession? One we can’t print our way out of due to aforementioned inflation? Seems it wasn’t the right move after all.
The claim was not that they were only predicting it for the last couple of years, and in fact they have been predicting it forever.
No, we are not in a recession, not by the measure used by the popular press nor by unemployment nor by other measures used by the NBER.
As an aside, I never know whether people who say "printing money" (rather than "increasing the money supply") mean that literally or figuratively. Those who mean it literally are, of course, not to be taken seriously, given how little of the money supply is composed of currency.
I disagree. Inflation fears were never a major concern until recently. This is obvious to anyone paying attention.
You mean the leftist media? The one who edited the Wikipedia definition on what counts as a “recession”. Sorry I don’t take this view seriously, I take the conventional view on what counts as recession, no matter how damaging this might be for Biden
They have been a major concern for the "right wing economists" that you referred to in your original post, "for years." (Your emphasis)
No, not the "leftist media," which you would know if you had bothered to click on the link, which was to real GDP, which is precisely "the conventional view on what counts as a recession" to which you refer, and to which I was referring.
Honestly, your references to the "leftist media" and failure to engage with the evidence I presented in response to your query causes me to infer that you are only interested in waging the culture war, which does not interest me. You asked a question, and I answered it, with evidence. If the answer is inconvenient for you, I'm sorry.
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To be fair, Austrian Economists have been harping on it for decades.
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