US economy grows 5.2% in third quarter; higher interest rates eroding momentum

I accumulated about 10K in the 1990s towards college.
I was a member of the National guard. Because they would pay off that amount. It took me 13 yrs of serving the country, but I did it.
I did not use a credit card.

 

Smart. Those 90s cc s were wickedly marketed to us. And I racked mine up. Did a side gig as a mobile and spent probably about a third of that $25k on DJ kit & CDs.

On top of that though I also had student loan debt to the tune of about $70k that I repaid.

Nichts ess loss pulling out your service card, unless of course you served combat or some other actual stuff. I scored $27k for my four years active Army stint all of which was spent on Ft. Sill and had sfa benefit to the service of my country significantly beyond that of just regular folks getting on with their contributions to our country. All of us serve our selves, our families, our neighborhood, our community, etc... and our country, and god-forbid, yep, our one spectacular marble of a planet.

 

True.That isn't what I called an opinion. Better reread my post.

 

The oil chart and production follow the same trends as the overall economy.

 

YES some of their leaders engaged in the same inflationary fiscal and monetary policies as Biden did why do you think that excuses Biden?

Blaming others doesn't work, BIDEN drove our inflation with HIS policies.

We didn't have to worry about it under Trump because we could meet our own needs. Biden's first act in office was to start shutting down our production.

Trump merely adverted the SA's from trying to manipulate the world price by dumping.

But a President with his actions can drive it up by cutting our supply of it.

Me>> Tell me do you complete reject any fiscal or monetary policy as contributing to the inflation we had?

I don't have to be more specific it's a basic economic question do you completely reject any fiscal or monetary policy as contributing to the inflation we had? And the price of oil can be hugely effected by US policy.

 

Economists point out that our inflation was a result of a significant oil price spike combined with supply chain malfunction, mostly due to COVID.

You point this out yourself. When oil prices went through the floor, Trump had to go to countries who own significant oil production and ask them to stop selling so much oil - which is their national revenue! Trump couldn't do squat in America, because in America corporations own oil production, not the government.

The primary tool we have for addressing inflation is interest rates. And, the president doesn't even have control of THAT.

Blaming Biden just doesn't make any sense.

 

To change the price of oil requires affecting the world commodities market.

Oil companies don't have the ability to vary supply by so much that it affects the commodities market within the time frame of a spike such as we had.

Further, oil companies are oriented to maximize profit. Attempting large scale temporary changes in production in favor of American consumers is NOT their objective.

In this last case, the commodities market price went up due to the risk to supply - Russia, the Ukraine war, and actual supply changes. The commodities market does not like seeing the US and Iran face off in the Straight of Hormuz. That is a risk to supply - which causes price to rise.


For the Trump era down spike in oil price, US oil companies couldn't stop producing oil without going bankrupt - which a good number did, since profits dried up.

Oil companies have to manage their investments in drilling in order to not be caught like they were during the Trump era. Plus, developing an oil field takes way too much time to meet a price spike.

 

Good post. Of course it makes no sense to blame Biden. But for some, that is the easy fall back excuse/ blame tactic without considering all the critical factors involved.

 

Wrong. KSA can unilaterally affect the spot price of oil. The company is called Saudi Aramco. It is the only company that can do this due to the quality of the Arabian oil reserves and their production capabilities.

 

Yes, and the Saidis know that which is why they plan to flood the markets with their oil, - to bring down the price, which is designed to hurt US production

 

US oil policy AFFECTS world oil prices along with our own and the best way to insulate ourselves from those global market factors is to DRILL DRILL DRILL which Biden has done everything he could to halt and pledges to end once and for all.

Now again do you completely reject any fiscal or monetary policy as contributing to the inflation we had?

 

True. It's a natural reaction to go up the chain with the serious issues.

But, our system wasn't created to give the president ultimate control of oil production, budget, and various other important factors.

 

Saudi Aramco is state owned.

Trump and Biden can ask the Saudi government to change their volume.

Those presidents can't ask US producers to change their volumes.

 

Yes, calling them our "friends" is a bit of a stretch. Plus, I've heard that they are at least somewhat cash strapped at home.

If true, they would need to be careful with their primary revenue stream, upon which their people depend.

 

Of course, another direction is to move away from oil.

As for drilling the volume of new oil that would be required to change the world market is gigantic.

Oil companies don't "drill drill drill". They are businessmen, and drilling is expensive. As per the Trump administration, over investment can be disastrous.

As for spikes, more total volume doesn't change the fact that events such as Russia, the Ukraine war, shooting between the US and Iran in the straight of Hormuz, etc., change the price of oil due to the evident risk Any commodities market reacts to risk, and the world commodities markets in oil are prime examples. So, we have to expect spikes in price at any volume.

 

Why do you think that excuses Trump? Trump's CARES ACT infused $2 trillion FIAT DOLLARS into the money supply.

So did Biden's ARP, but the inflation is bipartisan. They both did it to fend off a major financial depression caused by the pandemic.

All the nations did something similar, other nations worse than we did.

But, the price we all paid, collectively, to save the country was inflation.

so, quitcherbitchin'

But, inflation is coming down because of Fed policy, so think positive.

Well, you won't do that as long as Biden is president.

Naturally, that wouldn't forward the right wing agenda, right?

Right.

 

Yes, we are part of the world.

But, producing more does not make us any more separate or independent or insulated from the world price of oil. US producers will sell for as much as they can get (outside of US trade sanctions on oil).

There will still be a world commodities market. That is a total of investors, producers, consumers, etc.

On monetary policy, I think you are referring to interest rates. The FED raises interest rates in order to head off inflation. The president does not set FED policy.

 

Correct relative to prices. Prices follow the law of supply and demand and when people start spending after holding back during covid, that demand causes price hikes. But there is more to the story which is true inflation. That is inflation of the money supply which reduces the value of the dollar. That is all on government.

Probably more accurate that he complained that high production was causing lower oil prices. A fairly silly thing to complain about, unless you are an oil company.

The only tool we have to address true inflation is reducing the money supply, something a debtor government will never do. Interest rate hikes reduce demand and with it, prices. However it stifles economic growth. In the current situation the best approach would have been to wait while supply and demand normalized naturally. What government did was OK for small price hikes but overkill of economic growth in the long term for something as big as what I call the covid release. Perhaps you have noticed that while price growth has moderated (probably naturally) there has been no reduction in prices. Hello money supply. The best path forward is less federal government.

 

Definition of a Pent-up demand; A rapid increase in demand for a product or service, usually following a period of subdued spending. The following comparisons are self-explanatory;

1. Trump’s best growth in Personal Consumption Expenditures;

December 2018; PCE at $14.051 Trillion
December 2019; PCE at $14.741 Trillion
PCE increased by $700 billion

2. 2020 PCE…..”subdued spending”

December 2019; PCE at $14.741
December 2020; PCE at $14.801
Nearly no growth

3. 2021’s Pent-up Demand

December 2020; $14.801 Trillion
December 2021; $16.799 Trillion
PCE increased by $2 trillion

Source; FRED Personal Consumption Expenditures

_______

Several Trumpers have claimed; “Stimulus 1 and 2 weren’t inflationary, only Biden’s Stimulus 3 was inflationary”

Partisan manure!

Prior to Stimulus 3/end of March 2021, Covid-related Government transfer payments amounted to approx. $4 trillion, and said payments produced an excess saving well above one trillion dollars.

Sources;

FRED Federal Government Transfer Payments

FRED Personal Saving

Federal Reserve - Excess Savings During The Covid-19 Pandemic, INTRODUCTION; “Over the Pandemic, historic levels of government transfers boosted household income while household spending was severely curtailed by social distancing. This led the personal saving rate to soar, and we estimate that U.S. households accumulated about $2.3 trillion in savings in 2020 and through the Summer of 2021, above and beyond what they would have saved if income and spending components had grown at recent pre-pandemic trends”

fmw, Trump and Biden’s Congresses’ EXCESS COVID PAYMENTS were inflationary, due to the fact that said excess payments/savings were spent between April and December 2021, and during a period when we had lots of disruptions in materials and Labor, both domestically and abroad. In other words, both Republican and Democrat Congresses shot themselves in the foot.

 

No, pent up demand results from not spending. It becomes actual demand when it is finally spent. Think of it as something like potential energy changing to kinetic energy. Your numbers below show no meaningful growth in spending. It indicates pent up demand because there is very little growth. When that spending was released we had a big demand increase and higher prices. That occurred in 2022 and 2023. Your numbers represent only the years in which demand was restrained. Your answer didn't really make a point. It was just a argument, backwardly stated, for a definition. Is there some point you wish to make about this?

The demand release caused the skyrocketing prices, not government. Government only gets credit for a few trillion in "quantitative easing" during that period. It made the dollar less valuable permanently. We had demand driven price increases coupled with devaluation of the value of the dollar through money supply increase. A double whammy. The prices will normalize but a higher levels than during the "pent up" years because of the money supply increase which is effectively permanent.

 

Increasing taxes could also be anti-inflationary, if government uses the additional revenue to pay down debt. Said anti-inflationary measure would actually reduce the money supply.

Agree or disagree?

 

And cheaper to sell it here and of course our dometic supply insulates us world wide fluctuations.

imsaid monetary AND fiscal. Try again.

 

I OPPOSED TRUMP's CARES ACT. Why do you think that makes Bidens even BIGGER and even MORE inflationary spending go away?

 

Disagree but you have to understand that I don't define inflation like the government does. To me inflation is expansion of the money supply. When government pays down debt it doesn't tax to do it. If there aren't unspent dollars available, they print the money (expand the money supply.) It is about a Trillion of true inflation per year of money supply in the past few years. That is inflationary. It reduces the value of the existing dollars. Supply increases result in lower prices in the private economy and supply increases in money supply reduce the value of the dollars. Prices and money supply have different causes, effects and solutions. Adding them together is obfuscation in my opinion.

If you tax to pay down debt there is no change in the money supply. There is just reduction in debt and interest payments. Nothing wrong with that. You haven't changed the value of the dollar. It doesn't affect prices either. They respond to supply and demand and this transaction involves past spending. Government controls the money supply but not the supply and demand and prices. They shouldn't be combined. It is an obfuscation in my view.

Only government can reduce the money supply and the only way it can do it is to remove dollars from circulation. That is deflation and government doesn't deflate. Doing so increases the value of the dollar making it more expensive to pay debt. It benefits from the reduction in the value of the currency. It fears deflation so much that it builds a minimum of 2% inflation in its activities. That adds up over the years. So I disagree.

 

We are not insulated from world wide fluctuations. The reason is that those producing oil in the USA will sell it at the highest price they can get. And, that means buyers around the world. US producers export oil to China, as well as other foreign countries when they are willing to pay.

Let's remember that US buyers of oil paid essentially the world market price. That's why our price of gas shot up, etc.