The inflation rate in the US picked up in February, as prices for petrol and housing pushed higher.
I think we are seeing a death spiral.
Too much money caused by COVID spending caused inflation to jump.
So raised interest rates.
Now debt servicing increased due to higher interest rates.
images.app.goo.gl
So printing more money to cover.
www.businessinsider.com
Can't lower rates as inflation increases again.
How to jump off Merry-go-round?
How under COVID they were financing anyone and everyone which we saw and how repos are surging now.
~ Galaxie
That's because fewer people were buying cars.
www.statista.com
If you have a Credit line as a company now you are paying a lot more for the money.
~ Galaxipixie
Corporations are paying a lot more for everything.
That cost is passed on to consumers and thus rising prices.
This makes it sound like the only reason prices are rising is due to the interest rates of their credit lines, which is false. Its just part of the equation of the overall inflation being experienced..
The reason prices rise (inflation), is because they can do so without losing revenue to competitors. OR the corporation makes and adjustment to the product (shrinkflation) to remain competitive. So long as there is no collusion. Its really that simple.
Prices are rising because there is excess money in the system. All these corporations whom everyone claims are just raising prices and scoring record profits aren't explaining the other side of the equation, where are people getting the money to give to the corporations for rising prices and record profits in dollars. Of course profits are going to rise in dollars.
So where is that excess money coming from? It comes from the Fed buying securities, it increased its holding over COVID, and the M2 money supply went through the roof..
www.statista.com
The Fed was buying more and more securities to stablize the market. This puts money into the system.
The nonlinear jump in the Fed balance sheet is what is causing this inflation, as we are downstream of these purchases, it takes time to get through the system. On top of that you had an "supply chain" issues with JIT manufacturing. But these have been mostly resolved. The spiral of the US debt/fed interplay with the interest rate is a serious one. It can't be ignored.
yet here we are with price gouging continuing and food being overpriced.
so it isnt a talking point.
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