Why is the inflation rate so painful?

"Why is the inflation rate so painful?"

The Federal Reserve Act of 1913.

 

When I bought my first house - a townhouse - in 1981, my interest rate was 8.25%, if I recall correctly.

 

Actually, the Federal Reserve has done a tremendous amount of damage to the U.S. economy, especially since 2008.

 

Considering that I was just 2.5 years out of college, probably quite a bit. When I started working on June 1, 1978, my monthly salary was $1,100 per month.

 

This is an excellent article in 2022 on inflation. I encourage anyone interested in the why inflation surged after the economy opened back up after the pandemic and then has come back down to read it.

Inflation: What Causes It, and When Will it Subside?

 

It's way too long ago for me to remember the price. If someone asked me to guess what it was, I would guess $42,000.

I will also mention that the 8.25% rate was less than what the market rate was. I got a lower interest rate as it was part of a bond program of some kind back then when inflation in the early 1980s was a much larger problem than it has been in the early 2020s. The Federal Reserve forced the economy into a very deep recession in the early 1980s to get inflation calmed down.

Also, I find rather interesting the commotion in recent days about a 4.3% unemployment rate. During practically my entire adult life, a 4.3% unemployment rate was considered pie-in-the-sky stuff.

 

You did well, the same year I grabbed an adjustable at 11.75% for my townhouse.
I refinanced a year or two later when the rate was adjusted higher.

For a long time I thought that Carter was the worst president the US ever had. Amazed that he was eclipsed by incompetence in foreign policy, domestic policy and economic policy.

Rob

 

I take any rating by anyone about presidents as best or worst with a grain of salt. There have been 46 U.S. presidents and we tend to rate high or rate low only those during our lifetime, especially our adult lifetime. From my birth, there have been 13 presidents. The other 33 presidents I only know by historical records; and I don't remember Eisenhower as I was too young(having been born in November 1955), and barely know much about Kennedy except for the assassination when I was in the second grade. So there are really only 11 presidents that I am familiar with during my lifetime. And I didn't even adopt a political philosophy about the size, reach, and scope of government until I was around 25, when I became a minarchist classical liberal libertarian.

 

President Reagan, in my lifetime, is the only U.S. president that has ever been anywhere near my political philosophy; the others have been so much different than me that they are not even in the same ballpark. If I could pick any U.S. president that has ever held the office to assume office again on January 20, 2025, it would be Grover Cleveland. I greatly admire him.

 

Which started back during the Johnson administration and the attempt to conduct the Vietnam War along with high federal government domestic spending - the "guns and butter" strategy, and then was exacerbated President Nixon cutting the final link of the U.S. dollar to gold in 1971, and then was further exacerbated by the OPEC oil embargo in 1973, and then was further exacerbated by the Federal Reserve's late response to the need to stop the excessive expansion of the money supply.

 

What a rather odd comment.

 

"The United States produced more crude oil than any nation at any time, according to our International Energy Statistics, for the past six years in a row. Crude oil production in the United States, including condensate, averaged 12.9 million barrels per day (b/d) in 2023, breaking the previous U.S. and global record of 12.3 million b/d, set in 2019. Average monthly U.S. crude oil production established a monthly record high in December 2023 at more than 13.3 million b/d.

The crude oil production record in the United States in 2023 is unlikely to be broken in any other country in the near term because no other country has reached production capacity of 13.0 million b/d. Saudi Arabia’s state-owned Saudi Aramco recently scrapped plans to increase production capacity to 13.0 million b/d by 2027.

Together, the United States, Russia, and Saudi Arabia accounted for 40% (32.8 million b/d) of global oil production in 2023. These three countries have produced more oil than any others since 1971 (counting production in the Russian Federation of the Soviet Union prior to 1991), although the top spot has shifted among them over the past five decades. By comparison, the next three largest producing countries—Canada, Iraq, and China—combined produced 13.1 million b/d in 2023, only slightly more than what was produced in the United States alone."

- excerpt from United States produces more crude oil than any country, ever - U.S. Energy Information Administration (EIA)

 

Profligate federal government spending being accommodated by the Federal Reserve by monetarizing it is definitely inflationary.