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Monthly CPI Inflation at???... ZERO!, &
BRIEFLY NOTED: For 2022-08-10 We
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FIRST: Monthly CPI Inflation at???... ZERO!
Excluding shelter, monthly CPI change = -0.3%
Well, that was a surprise!
Given that Jay Powell let himself get panicked out of his forward guidance into a much bigger stomping-on-the-brakes because of a preliminary consumer confidence number that vanished as more data came in, will he now allow himself to be guided back to what he was planning to do before he freaked? Or would that be too humiliating?
What he should, of course, be watching—and what he says he is watching—is core PCE:
which now stands 2%-points below where it would be had the Federal Reserve actually hit its 2%/year inflation target since the Great Recession began. And he should also be watching the 5/5 forward inflation breakeven
which shows no signs of inflationary psychology.
Add in a remarkable tightening of financial conditions from January-May, which will put substantial drag on the economy next year as its effects hit exports and construction:
And the reliable recession indicator that is yield-curve inversion.
So tell me: What is the argument for the Federal Reserve not standing pat, and seeing what the policies it has already undertaken will do to the economy?
Greenspan made his reputation by cutting-short—over the objections of other Fed governors—his interest rate increases in the mid-1990s, and so triggering the high productivity-growth late 1990s of the dot-com boom. Bernanke thought he had done all that he ought to in the early 2010s and presided over a flatlining depression-condition employment level half-decade, followed by continued anæmic recovery. Powell ought to be thinking about how to manage the situation so that he will be able to take a rapid-return-to-full-employment victory lap.
Libby Cantrill & al.: CHIPS & Science Act ‘The Closest We’ve Had to Industrial Policy’ in Decades <https://www.youtube .com/watch?v=pBvxO4WA_aw>:
Very Briefly Noted:
The hope is that most of these right-wing neofascists actually do not have either the organizational chops or the desire to implement “Hungary” here: Dan Nexon: “Hungary” Is the “Denmark” of the American Right. What Does That Mean? <https://www.lawyersgunsmoneyblog.com/2022/07/hungary-is-the-denmark-of-the-american-right-what-does-that-mean>
Third weirdest thing to have recently crossed my desk: Brad DeLong (2005): Unleash Chiang Kai-Shek!: ‘I’m sorry, but this is just too weird… Marco Rubio… Jeb Bush… <https://delong.typepad.com/sdj/2005/10/unleash_chiang_.html>
Worth exploring? Quite probably: Beam: News Release: ‘Beam is a new kind of browser for macOS that aims to make sense of the things users find online… combines web browsing, a note-taking tool, a minimalist user interface and many other nifty features to allow users to build their own knowledge bases… <https://public.beamapp.co/beam/note/c3eeff3d-d747-4825-b0d2-e757efee3645/News-release>
Absolutely gripping; absolutely brilliant: Annie Lowrey: What Counts as the Life of the Mother?<https://www.theatlantic.com/ideas/archive/2022/08/pregnancy-birth-complication-abortion-life-of-mother/671006/>
We were not just ruled by grifters, but by amateur grifters: Scott Lemieux: Treason Never Sleeps: ‘What was up with the lobotomized reincarnation of Carl Schmitt after Biden was inaugurated? Well…. John Eastman… asked for Mr. Giuliani’s help in collecting on a $270,000 invoice he had sent the Trump campaign… <https://www.lawyersgunsmoneyblog.com/2022/08/treason-never-sleeps>
Second weirdest thing I have seen: Justin McElroy: Visiting Canada’s $50 Million 1980s Ghost Town <https://justinmcelroy.com/2022/07/26/visiting-canadas-50-million-1980s-ghost-town/>
If this were to be played upon the stage, I would condemn it as an improbable fiction. Weirdest thing I have seen: Erik Loomis: Cracker Barrel & White Identity Politics: ‘Cracker Barrel… [where] George W. Bush had to intervene to get it to stop segregating its customers, has decided to add fake meat to the menu. The chain’s Trump-loving clientele has freaked out…. What a time to be alive… <https://www.lawyersgunsmoneyblog.com/2022/08/cracker-barrel-and-white-identity-politics>
Twitter & ‘Stack:
Biden has been very lucky, yes. But the Biden administration has a very good team. And Schumer and Pelosi are not chopped liver either: Steven Beschloss: Joe Biden’s Achievements: ‘200 million doses of vaccine in Americans’ arms… 537,000 jobs a month… $1.2 trillion infrastructure bill… a remarkably unified NATO… the killing of… Ayman al-Zawahiri… federal gun legislation…CHIPs… PACT… the Inflation Reduction Act…
I have been on team “organized crime and public corruption” with respect to Mexico’s slow economic development—that it is a bystander casualty in the drug war America’s government wages against drug suppliers and America’s own drug-consuming citizens. But I am far from sure. Noah Smith highlights the puzzles here:
Noah Smith: Mexico: A Development Puzzle: ‘I’ve been writing a series of development economics posts…. A refinement of the industrial policy ideas of Alexander Hamilton… has held up pretty well. The successful countries haven’t followed the Chang/Studwell recommendations to a T. Nor have the industrialists been right in all their policy prescriptions… Poland and Indonesia,… suggest that foreign direct investment is a lot more useful…. There’s one major developing country, however, that bucks this emerging conventional wisdom in a big way. And it’s the country that people ask me to write about most often. So today’s post is about Mexico…. I don’t want to paint Mexico as a total failure or a basket case here. $20,000 (at PPP) is a respectable income, and puts Mexico above the global median. We’re not talking about a country like Pakistan, which has stalled at less than a third of Mexico’s income level. Mexico has had real achievements, like increasing literacy steadily to over 95% and reducing inequality substantially since the ‘90s. But… Mexico has suffered a growth stagnation even while enjoying a ton of natural advantages and using an economic model similar to that of the successful countries. What we’re looking at here is a big development mystery…. Mexico is a technically sophisticated and highly diversified manufacturing nation that makes and exports large volumes of complex, high-value-added goods. That is almost always the description of a rich, industrialized country, or at least a fast-growing near-rich country like Malaysia or Poland. And yet Mexico is a middle-income country that’s growing more like a natural resource exporter…. Organized crime is not the only explanation for Mexico’s slow growth…, Gordon Hanson has a… number of possible factors…. Poor credit supply, Poor infrastructure (especially electricity and telecommunications), Chinese competition, Overregulation, Too many informal businesses…. There’s no obvious, glaring silver bullet…. Mexico’s case presents a puzzle and an anomaly…. It’s just one country, but it’s an uncomfortable exception that should make development theorists question just how much they really know about why countries grow…
Was functional democracy a régime suited only for the Gutenberg Age? I find this very disturbing:
Ezra Klein & Sean Illing: How We Communicate Will Decide Whether Democracy Lives or Dies: ‘Ezra: Zac Gershberg and Sean Illing… write… “It’s better to think of democracy less as a government type and more as an open communicative culture.”… I’ve become almost obsessed in recent years with Marshall McLuhan and Neil Postman, the great mid–20th century media ecologists…. Sean: Wide open, free expression… is a condition of democracy, [but] it can also be hijacked and turned against it…. And that tension or that paradox is baked into the structure of democracy…. Ezra: One of my favorite Postman quotes… “Introduce the alphabet to a culture and you change its cognitive habits, its social relations, its notions of community, history and religion. Introduce the printing press with movable type and you do the same. Introduce speed of light transmission of images, and you make a cultural revolution without a vote, without polemics, without guerrilla resistance. Here is ideology pure if not serene. Here is ideology without words and all the more powerful for their absence. All that is required to make it stick is a population that devoutly believes in the inevitability of progress.”
Was functional democracy a régime suited only for the Gutenberg Age? I find this very disturbing too:
Martin Gurri: The Revolt of the Public: ‘Information technology has categorically reversed the balance of power between the public and the elites who manage the great hierarchical institutions of the industrial age…. [The] updated edition, which includes an extensive analysis of Donald Trump’s improbable rise to the presidency and the electoral triumphs of Brexit… considering whether the current elite class can bring about a reformation of the democratic process, and whether new organizing principles, adapted to a digital world, can arise out of the present political turbulence…
Is this analysis? Or is this just Simon’s hope:
Simon Johnson: Russia’s Looming Defeat in Ukraine: ‘Who exactly is winning from this dreadful conflict?… Russian authorities are behaving as if things are going well for them…. But all of this is just a bizarre delusion. In fact, Russia is losing the war badly in both military and economic terms…. Kherson…. The Russians have positioned an army group on the western side of the Dnipro River, supplied primarily over a big bridge, which long-range Ukrainian missile strikes recently rendered unusable. No supplies, ammunition, or fresh troops can reach the stranded Russian forces…
As I try to figure out how much time to put into this ‘Stack, I find myself listening more and more to the very wise Ben Thompson, as he tries to figure it out:
Ben Thompson: Substack Launches App; Substack & the Four Bens, In-App Purchase & the Substack Bundle: ‘Reader Ben… [For] typical readers, who only subscribe to one or two Substacks… email is ideal…. Writer and Publisher Ben… starting out… being in my readers’ email inbox is really valuable…. [But] Stratechery with its current audience… published on Substack…. My content is being commoditized [by the app]…. Stratechery as an independent publication which can be added to the Substack app by adding the RSS feed. I am pretty happy about this….