Are Interest Rates Way Too Low?

June 24, 2022

Leyendecker Executive Search

June 24, 2022

When change happens in the world, you adjust to it.

THOUGHTS FROM DOUG

Remember, because of the base effect, official inflation data from Washington could fall in the next few months, but prices could still be painfully high to most people.

In 1981, when inflation was 10.8%, President Ronald Reagan deregulated oil and gas. In 1982, the inflation rate was 6.16%. By 1983, the inflation rate was 3.21%. Was it just Fed Chairman Paul Volker’s rate hikes that tamed 1970s inflation? Hmmm…

There have been 46 US presidents. That means today’s president represents a bit more than 2% of the country’s history. Maybe we shouldn’t take our presidents too seriously.

US greenhouse gas emissions have been coming down since 2005. Just sayin’.

The US is a very large country, with population centers all over the place. Getting goods moved across the country requires a large transportation network. Just look at all the 18 wheelers on the road. These truckers are key to the country’s supply chain. And in order for our country to operate efficiently, we need low transportation fuel prices.

Are we in the process of trading financial asset inflation for goods and services inflation? Financial asset inflation has been happening for over twenty years. So how long will goods and services inflation stick around?

Do you think the enormous amount of violence, sex, dysfunctional and dystopian narratives on television and in our movies has desensitized us and influenced our mental state? Is glamorizing deviant behavior and depressing storylines good for society?

Some people think retreating from wide-open globalization is a mistake. It will lead to higher inflation and lower economic growth, they say. Okay, so are we and our allies going to let Russia back into the global system? If not, then countries that choose to make trade alliances with Russia will also then be excluded from globalization, to the effect of shrinking globalization. Conclusion: There’s no going back. Humpty Dumpty fell off the wall and has cracked in too many pieces to be put back together again.

You can figure most anything out. All it takes is a little time and lots of desire.

THE ECONOMIC VIEW

Are housing prices about to drop?
Capital Economics thinks so
Existing home sale prices set record
Yet luxury home sales plunge
While “bubbliest” global housing markets are at risk

Interest rates may be way too low
According to a Fed monetary policy report.
Getting to new normal could be painful

Housing affordability collapses
Housing boom is petering out.
Here are the signs as to why

THE INFLATION BOGEYMAN

Oil market will be tight for several years
Suggests Exxon’s CEO.
Gasoline prices could go much higher
Biden wants gas tax holiday
But Democrats maybe not on board

Producer prices up over 10%
This will trickle down to consumers.

Median rent in Manhattan skyrockets
More people moving there than pre pandemic

South Korean truckers strike
Is global labor wage-price inflation coming?

THE LABOR VIEW

How to get to the top
Wing it, wing it, wing it good.