Do you really believe the FED hasn't known this all along??? Of course they do, but they know (with gov pressure) that inflation is needed to wash away run away debt. They are going to let it run for for as long as possible!
Ya think? nailed it! Fed:”Go ahead and drop money from the sky, pay people to never work again, provide infinite credit liquidity by purchasing all crap in existence with no diligence. What could possibly go wrong?”. Fed: “New Alfred E. Newman policy, ‘what, me worry?’”
my friends friend is receiving 3000 a month of child credit just for the food for 3 kids, can you imagine the amount of families receiving 1000s of dollars what a freaking waste of money. Thats why everybody is happy especially people who have kids while we the single people have to pay twice for everything
Neither can Russia neither can China neither can anyone. It’s going to get real, so real. I can’t wait. This is an amazing time to be alive. Everything is going to collapse. To say it will be interesting would be an understatement.
Mohamed, we appreciate the knowledge and ethics you bring to the field. I always enjoy hearing what you have to say about investing. Thanks so much for what you bring to all of us.
@@bigwaidave4865 , respectfully sir, start with Richard Ferri , John Bogel, Larimore, Dr. William Bernstein, surely Schultheis (sp??) (The Coffee House Investor) and maybe Roger Gibson. Mohamed's work is very high level and skewed to the Institutional investor. To keep it simple and probably 95% correct, stick with VTSAX, VSCSX, and a tad of Vanguard's Total International stock fund, maybe 10% of portfolio. Thanks for the reply Sydd.
Powell, Mnuchin and Yellen (aka the 3 idiots), should be banished from DC and any central bank or budgetary discussion. They've become an overwhelming part of the problem.
They should be imprisoned because they've all clearly participated in insider trading. Well, I know Powell and Yellen have. They held and possibly still hold millions of dollars in the very same bonds that their policies are influencing. They are also accepting "speaker fees" to the tune of millions of dollars from wall street.
Peter Schiff quote "If the Fed even tried, it would have to surrender. It would lose. It’s probably just not even going to enter the ring. And inflation will just win the fight by default"
He's been wrong for the last two years with literally everything. He's a historian and uses the past to determine the future. He's a wealth of information about the past, however beyond that I'd not make any decisions based on his predictions.
The Fed does not make people poor. It is the opposite of it by supporting handouts. But of course it does not solve the difficult problem of why people are poor. On the other hand, play the game right, and yes we can get richer than the guy next door. But the stupid remains stupid.
@@Mrbfgray Inflation is a tax that punishes people for working. Inflation makes it harder to build wealth. We need honest money backed by gold rather than paper money that inflates away gigantic government debts.
@@markbrophy5454 Inflation tends to punish all of us. WAGE inflation doesn't hurt the working class but let's be honest, poor ppl don't necessarily work at all. Gold is like any other arbitrary standard, we could just as well have the the *potato standard* . Currency should be based on GDP and yes the reckless, unnecessary shutdowns prompted reckless spending to save us from a depression. Wall St. constantly frets over inflation, I'm not poor but I worry about it too. We should be slashing spending, TONS of pork and waste in government spending as always.
@@Mrbfgray The supply of paper and potatoes is unlimited. The government shouldn't be empowered to issue unlimited amounts of money. In contrast, gold and silver are rare and have unique physical properties and are excellent money.
The FED has had the window since 2008 to avoid this scenario but they got hooked on the heroin monetary stimulus. The pandemic was the black swan they didn’t anticipate. They are now trapped. No significant tapering or rate hikes. Inflation is here until some reset of some type
First of all yes inflation is bad. Second as bad as it is the situation is not as bad as you are implying. The fed will likely need to tapper sooner then later and raise rates but pretty sure the market knows that scneario and is prepared for it.
we cant possibly repay any of the debt back and we sure cant pay any higher interest without taxing. Inflation is another form of taxation. If the fed raises rate, they will bust this bubble economic recovery. inflation or market crash. The fed has no choice but keep on the "transitory" theme. This is a house of cards!
You're missing it slightly; we owe the money to ourselves. we borrowed the money from ourselves. we dictate how much "money" there is. It is literally a game of Monopoly.
@@MP-zf7kg we do have the ability to print more to pay off our debt because the debt is in our own currency. I should make it clear when I said we can’t possibly pay it back I meant in purchasing power and not nominal term. Sure, the federal reserve can make everyone a millionaire and keep on borrowing. Ultimately Americans will suffer the most with the currency devaluation. Our standard of living will go down dramatically.
always was a house of cards this entire life is and thats how you answer all the questions of why are humans so evolved we have internet but ppl accross the ocean still starve it is impossible to make everything work the way we would like enjoy the small things and be kind nothing is promised
Exactly: the lack of awareness of supply side pressures and the stimulation to demand has made me think the people running the show are clueless---at least from my perspective on the economic floor. I glad someone up there gets it.
I think this is just common sense. I personally will not feel too much on a real 6% inflation, but the current real inflation is like between 15% to 30%, therefore I feel it pretty bad.
@@Mrbfgray Inflation used to be defined as money supply growth (probably was back then) M1 dollar supply growth is currently 15.77% it peaked at 356% on Feb 2021 due to pandemic bailouts.
I wonder if developed country investors need to change their mindsets. Currently they assume that they are operating in an environment of stable currencies, fiscally responsible governments and central bankers who prioritise the stability of the long term purchasing power of their currencies. Suppose instead much of the developed world is regressing to that same environment as Latin America of the past - i.e. economically populist governments, outright monetization of fiscal deficits, unstable inflation. So far our central bankers act as if they are blind - their actions are effectively the same as monetization of fiscal deficits yet they claim the sudden resulting growth of the money supply has nothing to do with the higher inflation that is occuring. I wonder why anyone still believes what they say?
As an INFJ, I love Mr. El-Erian's ability to talk credibly about metaphysical processes of the financial system! His insight is much needed at this time.
@@method341 He literally is the first chairman in history to ever testify under oath in front of congress that money supply growth is an irrelevant event untied to inflation. He is incompetent
@@method341 I am sure Milton Friedman and his Nobel prize on the particular topic would agree with you yeah. I can literally plot money supply growth and inflation on a graph and see the cause of every outburst of inflation in US history
I would definitely say real estate at first, and would be the best investment overall. but investing in properties you don’t live in takes physical effort.. where investing in the computer is passive and becoming very lucrative.
@@fredgallag6097 I invest across the top markets but not by myself tho. i follow the trades of "Katherine Rae Lobe' . She is a popular broker you might have heard of. I can correctly say she's worth her salt as a financial adviser as her diversification skils are top notch/ I say because i see that in her results as my portfolio grows by averages of 10 to 15% on a monthly basis,
@@bobbygunz9254 look her up on the internet and leave her a message she's quite popular for her service she was recently featured on Bloomberg business news.
We won’t get High gdp because the entrepreneurial conditions aren’t there. Small biz households will be struggling to keep up with inflation in growing businesses and costs.
I'm sorry. When a family of 3 has to live in cars or a family of 6 has to live in 1 motel room just because they lost their jobs, the WINDOW is gone. It is no longer there. The vulnerable just had inflaton exacerbate their suffering.
@Chip Thomas always and everywhere monetary. You have supply chain problems in Japan and in Europe as well and no inflation it’s a good old politician trick to blame this on everything under the sun by money.
@Chip Thomas Yeah please teach me about QE like I don’t know what it is. And now go and try to reconcile M2 and excess banking reserves during the last 18 months and explain to me where the 3.3 trillions missing are, that might be inflationary. And bizarrely banks didn’t lend but we are getting inflation see, and I got no master degree
@Chip Thomas There is no way there is a Dollar shortage, that's almost certainly impossible. First reason is 10 Trillion+ printed, so last year we were "fine", and then the printing, and now suddenly a few months later a shortage? Come on bro. Secondly, as a business owner myself, raising capital has never been easier in the past 20 years. If there was a shortage, it would be difficult to raise larger amounts of capital than your estimates, and I can tell you that it's easier. Yeah, inflation is real regardless of supply side economics or not.
@Chip Thomas So M2 goes ballistic it is out of the banking system various asset classes suddenly jump 20% on aggregate and deflation is coming? What force on earth could push the stock market the bond market and housing in major bubble territory all of a sudden? What about the mother of all supply chain shocks during the covid lockdowns and we didn’t get a whisper of inflation? Japan also has supply chain problems atm but zero inflation? Like I said where are the 3.3 trillions missing from bank reserves when the FED does this useless accounting trick know as QE, because that would instantly raise money supply ex banking reserves by 24% if it was out in the wild, maybe the money is on Jerome Powell’s account. What about Michael Burry who says the exact opposite as Jeff Sneider?
Although I don't understand it all, Mr. El Erian doesn't dumb down his remarks; I appreciate it. Doesn't take an expert to know that we're in for trouble. Ever read Lord of the Flies?
Has anyone ever considered that the Fed does this on purpose in order to make these corrections as painful possible, whilst insulating their insiders from it, thereby to reinforce the status quo? Does that make sense that a small group of people with power like this would INVARIABLY resort to that?
The FED is stuck fast. They can't stop printing now nor lift interest rates. No such thing as transitory & inflation has gone too high & not stopping as its the monetary excess that causes inflation. The crash will be set to happen as the FED cannot & will not do anything so its just a matter of time....
But here's the important thing.....It wouldn't matter. The fed can't raise interest rates regardless. So even had they called inflation correctly their response wouldn't have been any different. I suppose they would have tapered a few months earlier but it would be meaningless.
interesting. In my view as a financial advisor. The idea of raising interest rates now would be disastrous for the American economy. Raising the interest rate is not the magic wand that will control inflation and price hikes. Because the price hike is on the street and everywhere. The price hike will not stop just because the interest rate is raised. The matter is very complicated and much more than just raising the interest rate. The main problem is the general budget deficit of the US state and the terrible amount of US debt, as well as the problem of printing trillions of dollars continuously and without controls. It is ridiculous and stupid for anyone to think that the solution to the problem of inflation lies in raising the interest rate. The reality is that America suffers from intellectual sterility and even intellectual bankruptcy in managing fiscal policy in a professional manner and developing non-traditional solutions outside the black box, which contains only sterile and outdated ideas.
Wouldn't raising interest rates force much of the liquidity into paying of interest and debts rather than being funnelled into assets? It would also make borrowings and credit more expensive which can also stem the liquidity into the open markets?
@@spaceballs72 The economic problem that America is suffering from now is completely different from all of the above. The main and fundamental reason that caused economic problems for America and the whole world is the deadly Corona virus, and now it is a virus delta, and this means that the problem of the virus continues and has not ended so far. Rather, things are getting worse in the whole world because of the deadly Delta virus, and this simply means that the house of the disease is still continuing and fiercely. Accordingly, America and all countries will be forced to continue the accommodative monetary policy to help citizens face the difficulties of life because of the deadly Delta virus. It is expected that most countries will close down completely to confront the deadly Delta virus. Accordingly, in this bad situation, it would be foolish to talk about tightening monetary policy or raising interest rates. At the present time, and in light of the current conditions of the virus, the mere thought of raising the interest rate would be disastrous for the American economy and would have a very, very bad adverse effect.
@@spaceballs72 What amount of debt? Most Americans have already refinanced their debt 2020 we had negative loan growth. Raising interest wouldn't change a problem that isn't there and even if you did that why would you want monetary destruction in the middle of a struggling economic situation where clearly more investment it needed to clear up supply chain issues. Loans and velocity of money is the chief way money is created. It is why the GFC got so out of hand. As long as people remain fearful about Covid countries and states are going to keep either completely shutting off (China, New Zealand) whole or parts of their economy or they well keep dimming it. That is economic and monetary destruction as velocity is cut off. It is why the back end of the yield curve is flattening into tapering.
@@spaceballs72 Refinancing means everything. It was counted as the main reason why it got to those new highs. That isn't new debt. That is just recycling old debt at a new interest rate. Real growth rate of new loans is stagnant since the GFC and as I said was negative last year. The yield curve also agrees with me. Rates post FED tapering announcement are falling. The long end of the curve is flattening. 30s at the far end are down and continuing their decent. Short end is pricing in current inflation but now are retreating again. That is a signal that the inflation is expected by the market to be short term until the economy catches up.
As a government you SPEND ($ into the economy) when there is threat of DEFLATION and TAX/REDUCE SPENDING (take $ OUT of the economy) when inflation is high. What kind of rationale individual wants to put $3.5 TRILLION MORE into the economy when inflation is at its highest rate in nearly 1/2 of a CENTURY??? You be the judge.
it stretches the middle class. those with enough resources and making the right moves can move up a class. the rest will be brought down or stagnated in class, watching the gap for social mobility grow ever wider in front of their eyes
The problem with the Fed mandate is since 2008 "full sustainable employment" wasn't part of the analysis. Now they want the 2% inflation target but it ignores people who kept their jobs through covid and didn't see wage impulse. Ergo, while they see the employment target as being inclusive and expansive, the problem with asset and consumer price growth is it is tightening financial conditions for a considerable portion of the workforce and creating downward pressure on labour force participation.
The m2 money supply is 39.7 percent larger then before the pandemic. excess cash based spending, and a stagnate GDP will produce price inflation - works every time!
Fed Gov 2020: Let’s completely shut down the economy and all supply chains. Fed Gov 2021: OMG this inflation took up by surprise let’s keep printing money!
@@chrischoir3594 i do ..but its the job of the chair not to get intimidated...if that had been the case Paul Volker could never have brought inflation down from 17 to 2 percent in the 70s and 80s...You realize that despite this amount of inflation , he is still buying bonds...He is the kind of fool that goes to buy a bucket of water when the house catches fire...his motives i question
Revenues of corporations will soon start going down because people will be able to afford less goods and services. They will also have to pay higher wages and increase prices of services and goods even higher which in turn will make the revenues even worse. It's a snowball effect from here that will stop when all wages increase by 40-50% which won't happen soon. The FED messed up
The FED didnt messed up, thats mission accomplished for them, The FED is a private criminal institution designed to create DEBT and charge for it. The more they print the more they own, because thats what they sell fiat money created from nothing.
These guys kill me. All you have to do is ask the average person about inflation and they will give the correct answer. "It's already out of control". Worst i have seen it since the 70s. Groceries? Unbelievable? Housing, buying or renting, unbelievable! Need I go on?
True, the way these idiots calculate economy is completely on stock markets and bank rates, while most of the population can not afford a home to live in.
In the end all he said was: accelerate the “bond buy” tapering in December. Well they’ll (Fed) do that, I think, anyway after seeing the inflation reports for November. And phase in interest rate increases of quarter basis points in the first and second quarters 2022. Expect 4-6 rate increases, the last higher, topping off at 3%. That’s all assuming inflation edges down to under 5% then under 4%. If not, there will be 100 basis point hikes til they get to 5-6%. (They just need to signal their rate hikes way in advance so that it won’t spook the equity markets and punish growth and tech stocks.)
Disagree. They may speed up the taper, but I doubt that. Powell‘s more worried about spooking the markets and destroying the little recovery we had. Rate hikes pretty much impossible during Q1. They’ll be colossally late to the party. Also, just a Single 100 Basis Point hike would kill equities. It didn’t work in 2018, and it won’t work now due to even higher debt loads.
The only spending that works is a conservative normal fiscal policy of investment in the economy. Proves what happen when you try these silly monetarist policies of just spend spend spend, low interest rates and all.
It’s hard not to conclude that this is a deliberate policy from the Fed, to allow inflation, so that we can pay back all this debt with debased dollars.
Exactly, yet these clowns all need to sound special. Debt/currency debasement, agreed by all central banks. They a robbing those not up the risk scale to then give hand outs later on.
Something tells me that the next President of the US will be calling to 'Audit the Fed'. In any case there should be direct consequences (to individuals) who are entrusted to shepherd the national economy and fail as spectacularly as ours will by mid 2022.
you need to wake up !!!! wake up !!! there will never be such president in the US or anywhere else, they are not elected democratically, they are not elected period. they are placed there by those whom they serve and you and I there here to serve them all. that is the reality, so I say to you, wake up cause it's all a nice dream you have.
Only way to deal with the massive US govt debt load is to inflate our way out of it, deflating the debt away and paying it off with "larger" (same value but more currency) tax revenues, devaluing the US dollar until the situation becomes manageable. It is much more palatable to society to create inflation to shrink the debt than raise taxes.
in india the cost of petrol is 100 rupees. few days back it was 110. people are filling up their petrol tanks with 10-20 rupees petrol because they cannot afford 100 rs petrol. its a disaster.
I am with the Fed. interest rates mechanism is not the way to deal with inflation though raising rates can be helpful. Govt debt is not the same as household debt. We have now on record that El-Erian says the Fed made a terrible mistake. Time will tell.
@@LucyTheBichonFrise I take it print digital money. That is the function of central banks, to ensure liquidity in the market place for presumable stable prices and for most advance economies, to stimulate business and hence employment. I commonly say, you have to create a mental model how the world works, or if you cannot, play computer games, you will then understand. Or read enough history with a critical mind. Most of the time if not ALL of the time, the talking CNBC heads, financial news ...or everywhere if there is a doomsday crisis...will talk about liquidity crisis and solvency. How is that possible if you think the world is awash with cash ...? It is not. The Fed holds the ultimate gun on many countries ... not enough dollars. That is right not enough -- because the Fed can easily suck money out of the system. If you read the Fed notes and research, they are transparent about their operations. This trillions and trillions is not out there, how can it be possible that from a mere billions in reserves to BIG number trillions, there is no hyperinflation? Once you understand how the world works, you then plug into the digital world, and go make money. Seriously like the matrix.
The question on most vulnerable, I have to call him on that. Does he realize that these folks are getting free money and subsidized not to work ever again, just to keep voting a certain way? Inflation doesn’t hurt these people in the view of policymakers, it is buying votes, but the policymakers discount how much it harms everyone else-and who also vote. Policymakers also make the mistake of arrogance that they can control inflation once it gets rolling. the, of course, the most vulnerable will be hurt most, but the policymakers will double down on more free money. It’s just getting started, professing to be wise they have become fools-reality is coming.
The correct solution is for the Fed to INSTANTLY stop bond purchases and concurrently raise interest rates to 4-percent or more. This will crash the housing and stock markets, force early retirees back to work, and kill off the speculation. It's ripping off the bandage. I'll wait patiently to watch it happen.
Yeah but then blame for the aftermath will fall squarely on the central bank and the government. There's no way to scapegoat anyone if the fed's actions directly lead to massive unemployment and an economic depression. If the powers that be go the hyperinflation route and let the dollar value collapse, they still have some credibility if they blame external forces or global conspiracies for the aftermath. Hyperinflation is more politically expedient. That's probably how they will play this one.
It's weird cause when it started everyone was saying how we will have problematic and probably long-lasting inflation, and since anyone was saying that (finance background or not), I thought that well, if everybody knows this, than the FED certainly know this and much more, and they should be acting with competence. But now it seems like the average non-finance-JOE was more right than the FED. I mean I still wanna believe that the FED is much more competent than that, but somehow it's a weird territory now. I still back the FED though and hope they have this all under control, (albeit with some slight deviations).
The fed knows what they're doing, they are lying about it. They are backed into a corner: raising rates is a disaster, and not raising rates is slightly less bad... they are pretending that inflation doesn't exist to keep the public from panicking.
![Yuja Wang: Liszt Piano Concerto No. 1 in E-flat major [HD]](http://i.ytimg.com/vi/W_PZ_In3UKg/mqdefault.jpg)
Do you really believe the FED hasn't known this all along??? Of course they do, but they know (with gov pressure) that inflation is needed to wash away run away debt. They are going to let it run for for as long as possible!
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The FED pumped 10 trillion into the market, what did they think would happen 😳
10 trillion is optimistic. How much is off the balance book?
@@pigwigpa good point 👍🏻
10? Want it 3.5?
@@StephenRayner where are you getting 3.5
Ya think? nailed it! Fed:”Go ahead and drop money from the sky, pay people to never work again, provide infinite credit liquidity by purchasing all crap in existence with no diligence. What could possibly go wrong?”. Fed: “New Alfred E. Newman policy, ‘what, me worry?’”
The Fed does not go to the grocery store
The maid and butler do the shopping
@@timc7312 That is why I give them a bonus.
The fed orders online and sends you the bill of goods. Better pay up
Used 2015 F150 with 100K miles for for $35K and up... yeah inflation and shortages in certain areas is crazy.
my friends friend is receiving 3000 a month of child credit just for the food for 3 kids, can you imagine the amount of families receiving 1000s of dollars what a freaking waste of money. Thats why everybody is happy especially people who have kids while we the single people have to pay twice for everything
Strap in because this is going to be one hell of a deleveraging event.
Federal reserve got crazy with the money printer
They just can't pay of all this debt. Clear as day.
Well, hence the inflation. That's the plan. To let the public and the poor pay off the deficit. It's more popular than raising taxes.
Neither can Russia neither can China neither can anyone.
It’s going to get real, so real.
I can’t wait. This is an amazing time to be alive. Everything is going to collapse.
To say it will be interesting would be an understatement.
Anton i think you are right
No intention of paying our debt…..MMT ,leftist globalist grifters
Of course thats obviously not the intention
Mohamed, we appreciate the knowledge and ethics you bring to the field. I always enjoy hearing what you have to say about investing. Thanks so much for what you bring to all of us.
However thank God I never took any of your advice these past 2 years 💰💰💰💰💰💰💰💰👍
@@bigwaidave4865 , respectfully sir, start with Richard Ferri , John Bogel, Larimore, Dr. William Bernstein, surely Schultheis (sp??) (The Coffee House Investor) and maybe Roger Gibson. Mohamed's work is very high level and skewed to the Institutional investor. To keep it simple and probably 95% correct, stick with VTSAX, VSCSX, and a tad of Vanguard's Total International stock fund, maybe
10% of portfolio. Thanks for the reply Sydd.
Powell, Mnuchin and Yellen (aka the 3 idiots), should be banished from DC and any central bank or budgetary discussion. They've become an overwhelming part of the problem.
And minimum wage would be $24/hr. Think of that. Many of the front-line trained and licensed workers in your hospitals make less than that.
I call Joe, Jerome and Janet, J3 the trifecta of doom.
They should be imprisoned because they've all clearly participated in insider trading. Well, I know Powell and Yellen have. They held and possibly still hold millions of dollars in the very same bonds that their policies are influencing. They are also accepting "speaker fees" to the tune of millions of dollars from wall street.
@@timeforachange-i3s Let's hope Joe gets rid of Trump's swamp of Jerome.
There’s three more just like them as replacements
Peter Schiff quote "If the Fed even tried, it would have to surrender. It would lose. It’s probably just not even going to enter the ring. And inflation will just win the fight by default"
yep
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@CosmicDamian unfortunately doing nothing is also creating hardship, they really are stuck between a rock and a hard place.
So true.
Absolutely! Well said!
I hope he’s wrong, but I think he’s right🤦🏻♂️
Hes been so wrong on much CHECK HIS RECORD
He's been wrong for the last two years with literally everything. He's a historian and uses the past to determine the future. He's a wealth of information about the past, however beyond that I'd not make any decisions based on his predictions.
He was dead-on balls accurate.
Congress to give Powell a bonus for exceeding their expectations in making rich, filthy rich and making poor, dirt poor.
Anyone in America can become wealthy today, quit sniveling and get productive.
The Fed does not make people poor. It is the opposite of it by supporting handouts. But of course it does not solve the difficult problem of why people are poor. On the other hand, play the game right, and yes we can get richer than the guy next door. But the stupid remains stupid.
@@Mrbfgray Inflation is a tax that punishes people for working. Inflation makes it harder to build wealth. We need honest money backed by gold rather than paper money that inflates away gigantic government debts.
@@markbrophy5454 Inflation tends to punish all of us. WAGE inflation doesn't hurt the working class but let's be honest, poor ppl don't necessarily work at all. Gold is like any other arbitrary standard, we could just as well have the the *potato standard* .
Currency should be based on GDP and yes the reckless, unnecessary shutdowns prompted reckless spending to save us from a depression. Wall St. constantly frets over inflation, I'm not poor but I worry about it too. We should be slashing spending, TONS of pork and waste in government spending as always.
@@Mrbfgray The supply of paper and potatoes is unlimited. The government shouldn't be empowered to issue unlimited amounts of money. In contrast, gold and silver are rare and have unique physical properties and are excellent money.
The FED has had the window since 2008 to avoid this scenario but they got hooked on the heroin monetary stimulus. The pandemic was the black swan they didn’t anticipate. They are now trapped. No significant tapering or rate hikes. Inflation is here until some reset of some type
Buy Bitcoin
In the March or the middle of the next year, there'll be a reset.
First of all yes inflation is bad. Second as bad as it is the situation is not as bad as you are implying. The fed will likely need to tapper sooner then later and raise rates but pretty sure the market knows that scneario and is prepared for it.
Yup. Bitcoin
Pandemic is a scape goat. Keynesian economics is a failed policy that has no place in a free economy.
we cant possibly repay any of the debt back and we sure cant pay any higher interest without taxing. Inflation is another form of taxation. If the fed raises rate, they will bust this bubble economic recovery. inflation or market crash. The fed has no choice but keep on the "transitory" theme. This is a house of cards!
You're missing it slightly; we owe the money to ourselves. we borrowed the money from ourselves. we dictate how much "money" there is.
It is literally a game of Monopoly.
@@MP-zf7kg we do have the ability to print more to pay off our debt because the debt is in our own currency. I should make it clear when I said we can’t possibly pay it back I meant in purchasing power and not nominal term. Sure, the federal reserve can make everyone a millionaire and keep on borrowing. Ultimately Americans will suffer the most with the currency devaluation. Our standard of living will go down dramatically.
always was a house of cards this entire life is and thats how you answer all the questions of why are humans so evolved we have internet but ppl accross the ocean still starve it is impossible to make everything work the way we would like enjoy the small things and be kind nothing is promised
@@MP-zf7kg i was just thinking that lol
I only watch Bloomberg specifically to watch Jonathan and Mohamed 👍👍
Exactly: the lack of awareness of supply side pressures and the stimulation to demand has made me think the people running the show are clueless---at least from my perspective on the economic floor. I glad someone up there gets it.
Lies again? Battery Inflation
at this point its ignorant to say they are "clueless". This is very deliberately done in order to wash away debt through inflation.
If you calculate today's inflation with the formula they used during 78-82, we'd have a rate of 14% inflation.....
Show us the formula and numbers?
@@Mrbfgray just go to shadow stats
I think this is just common sense. I personally will not feel too much on a real 6% inflation, but the current real inflation is like between 15% to 30%, therefore I feel it pretty bad.
@@Mrbfgray Inflation used to be defined as money supply growth (probably was back then) M1 dollar supply growth is currently 15.77% it peaked at 356% on Feb 2021 due to pandemic bailouts.
@@Mrbfgray Bloomberg TV. Get your own subscription... cheapo
I wonder if developed country investors need to change their mindsets. Currently they assume that they are operating in an environment of stable currencies, fiscally responsible governments and central bankers who prioritise the stability of the long term purchasing power of their currencies. Suppose instead much of the developed world is regressing to that same environment as Latin America of the past - i.e. economically populist governments, outright monetization of fiscal deficits, unstable inflation. So far our central bankers act as if they are blind - their actions are effectively the same as monetization of fiscal deficits yet they claim the sudden resulting growth of the money supply has nothing to do with the higher inflation that is occuring. I wonder why anyone still believes what they say?
Hits the nail right on the head. The next crisis will be a TRUST crisis.
Companies are adding bitcoin to there balance sheets for a reason
SHORT SELLING OF GOLD AND SILVER SEEN IN THIS WEEK... silver will fall to 18$/oz.// GOLD WILL FALL TO 1800$..../
@@benyu8704 most ppl who have struggled in life knew off the bat TRUST is just a pretty word nothing more
As an INFJ, I love Mr. El-Erian's ability to talk credibly about metaphysical processes of the financial system! His insight is much needed at this time.
Myers Briggs test is pseudoscience. It's minimally effective if at all.
Powell will go down as the singular worst fed chairman of all time. 2018 and now this
he's doing great.
@@method341 He literally is the first chairman in history to ever testify under oath in front of congress that money supply growth is an irrelevant event untied to inflation.
He is incompetent
@@StocktonMush there is no evidence that increasing money supply increases inflation. Why hasn't it caused inflation in countries like Japan?
@@method341 if you call great being wrong on inflation the entire year, then yes he’s doing great at that
@@method341 I am sure Milton Friedman and his Nobel prize on the particular topic would agree with you yeah.
I can literally plot money supply growth and inflation on a graph and see the cause of every outburst of inflation in US history
Worthless Fed leadership here in the USA. The $hit has yet to fully hit the fan too...
real estate or the stock market which is the best investment?
I would definitely say real estate at first, and would be the best investment overall. but investing in properties you don’t live in takes physical effort.. where investing in the computer is passive and becoming very lucrative.
stock and its like is becoming really lucrative, but its not lucrative for some people making rookie mistakes and loosing money lol .
@@fredgallag6097 I invest across the top markets but not by myself tho. i follow the trades of "Katherine Rae Lobe' . She is a popular broker you might have heard of. I can correctly say she's worth her salt as a financial adviser as her diversification skils are top notch/ I say because i see that in her results as my portfolio grows by averages of 10 to 15% on a monthly basis,
@@chris-pj7rk please how do i get in touch with her
@@bobbygunz9254 look her up on the internet and leave her a message she's quite popular for her service she was recently featured on Bloomberg business news.
We won’t get High gdp because the entrepreneurial conditions aren’t there. Small biz households will be struggling to keep up with inflation in growing businesses and costs.
Huh, really? If anything the past year or so has seen some incredible entrepreneurial growth, especially in the tech industry and Internet companies.
Good point 👍
@@backwoodsbungalow9674 Thank you.
END THE FED
164 containers cargo vessels waiting for unloading in California sea ports takes one or two vessels per day for unloading
That is a human caused bottleneck, we have operated ports for many years and never had this
the only transitory thing here is the status of dollar as world reserve
Love this dude! So smart
This is the man we need as Fed chair
As long as the car lots are empty and dealers are GOUGING their customers this inflation won't ease
I'm sorry. When a family of 3 has to live in cars or a family of 6 has to live in 1 motel room just because they lost their jobs, the WINDOW is gone. It is no longer there. The vulnerable just had inflaton exacerbate their suffering.
since when was the Fed ever correct on inflation?
With all the tools and data Feb has in their hands, it is a horrible call
They basically release their own data, and their own data says it's a bad call... I can't imagine what the raw data says...
@Chip Thomas always and everywhere monetary.
You have supply chain problems in Japan and in Europe as well and no inflation it’s a good old politician trick to blame this on everything under the sun by money.
@Chip Thomas Yeah please teach me about QE like I don’t know what it is.
And now go and try to reconcile M2 and excess banking reserves during the last 18 months and explain to me where the 3.3 trillions missing are, that might be inflationary.
And bizarrely banks didn’t lend but we are getting inflation see, and I got no master degree
@Chip Thomas There is no way there is a Dollar shortage, that's almost certainly impossible. First reason is 10 Trillion+ printed, so last year we were "fine", and then the printing, and now suddenly a few months later a shortage? Come on bro. Secondly, as a business owner myself, raising capital has never been easier in the past 20 years. If there was a shortage, it would be difficult to raise larger amounts of capital than your estimates, and I can tell you that it's easier. Yeah, inflation is real regardless of supply side economics or not.
@Chip Thomas So M2 goes ballistic it is out of the banking system various asset classes suddenly jump 20% on aggregate and deflation is coming?
What force on earth could push the stock market the bond market and housing in major bubble territory all of a sudden?
What about the mother of all supply chain shocks during the covid lockdowns and we didn’t get a whisper of inflation? Japan also has supply chain problems atm but zero inflation?
Like I said where are the 3.3 trillions missing from bank reserves when the FED does this useless accounting trick know as QE, because that would instantly raise money supply ex banking reserves by 24% if it was out in the wild, maybe the money is on Jerome Powell’s account.
What about Michael Burry who says the exact opposite as Jeff Sneider?
LGB aka FJB The buck stops with him
Although I don't understand it all, Mr. El Erian doesn't dumb down his remarks; I appreciate it. Doesn't take an expert to know that we're in for trouble. Ever read Lord of the Flies?
He’s Correct, As Usual. 100%
Thank you Mr El-Erian
Has anyone ever considered that the Fed does this on purpose in order to make these corrections as painful possible, whilst insulating their insiders from it, thereby to reinforce the status quo? Does that make sense that a small group of people with power like this would INVARIABLY resort to that?
If the last 18 months tells us anything ... the next 18 months will be the same.
No, they will be worse
Peter Schiff has been saying this for decades.
The FED is stuck fast. They can't stop printing now nor lift interest rates. No such thing as transitory & inflation has gone too high & not stopping as its the monetary excess that causes inflation. The crash will be set to happen as the FED cannot & will not do anything so its just a matter of time....
When European banks raise rates faster than you do and they are more heavily in debt; you have a problem.
thats right
but they really aren't doing that though now, are they?
But here's the important thing.....It wouldn't matter. The fed can't raise interest rates regardless. So even had they called inflation correctly their response wouldn't have been any different. I suppose they would have tapered a few months earlier but it would be meaningless.
interesting. In my view as a financial advisor. The idea of raising interest rates now would be disastrous for the American economy. Raising the interest rate is not the magic wand that will control inflation and price hikes. Because the price hike is on the street and everywhere. The price hike will not stop just because the interest rate is raised. The matter is very complicated and much more than just raising the interest rate. The main problem is the general budget deficit of the US state and the terrible amount of US debt, as well as the problem of printing trillions of dollars continuously and without controls. It is ridiculous and stupid for anyone to think that the solution to the problem of inflation lies in raising the interest rate. The reality is that America suffers from intellectual sterility and even intellectual bankruptcy in managing fiscal policy in a professional manner and developing non-traditional solutions outside the black box, which contains only sterile and outdated ideas.
Wouldn't raising interest rates force much of the liquidity into paying of interest and debts rather than being funnelled into assets? It would also make borrowings and credit more expensive which can also stem the liquidity into the open markets?
@@spaceballs72 The economic problem that America is suffering from now is completely different from all of the above. The main and fundamental reason that caused economic problems for America and the whole world is the deadly Corona virus, and now it is a virus delta, and this means that the problem of the virus continues and has not ended so far. Rather, things are getting worse in the whole world because of the deadly Delta virus, and this simply means that the house of the disease is still continuing and fiercely. Accordingly, America and all countries will be forced to continue the accommodative monetary policy to help citizens face the difficulties of life because of the deadly Delta virus. It is expected that most countries will close down completely to confront the deadly Delta virus. Accordingly, in this bad situation, it would be foolish to talk about tightening monetary policy or raising interest rates. At the present time, and in light of the current conditions of the virus, the mere thought of raising the interest rate would be disastrous for the American economy and would have a very, very bad adverse effect.
@@spaceballs72 What amount of debt? Most Americans have already refinanced their debt 2020 we had negative loan growth. Raising interest wouldn't change a problem that isn't there and even if you did that why would you want monetary destruction in the middle of a struggling economic situation where clearly more investment it needed to clear up supply chain issues. Loans and velocity of money is the chief way money is created. It is why the GFC got so out of hand. As long as people remain fearful about Covid countries and states are going to keep either completely shutting off (China, New Zealand) whole or parts of their economy or they well keep dimming it. That is economic and monetary destruction as velocity is cut off. It is why the back end of the yield curve is flattening into tapering.
@@sunnycorax Huh? US household debt is still at all time highs and climbing? Refinancing means nothing.
@@spaceballs72 Refinancing means everything. It was counted as the main reason why it got to those new highs. That isn't new debt. That is just recycling old debt at a new interest rate. Real growth rate of new loans is stagnant since the GFC and as I said was negative last year.
The yield curve also agrees with me. Rates post FED tapering announcement are falling. The long end of the curve is flattening. 30s at the far end are down and continuing their decent. Short end is pricing in current inflation but now are retreating again. That is a signal that the inflation is expected by the market to be short term until the economy catches up.
As a government you SPEND ($ into the economy) when there is threat of DEFLATION and TAX/REDUCE SPENDING (take $ OUT of the economy) when inflation is high. What kind of rationale individual wants to put $3.5 TRILLION MORE into the economy when inflation is at its highest rate in nearly 1/2 of a CENTURY??? You be the judge.
I suspect that the anticipated wage increases will not keep place with inflation.
The 10 trillion ends up benefiting mostly the rich
too late the market has doubled in two years . PLEASE RAISE RATES NOW !!!!
it stretches the middle class. those with enough resources and making the right moves can move up a class. the rest will be brought down or stagnated in class, watching the gap for social mobility grow ever wider in front of their eyes
The problem with the Fed mandate is since 2008 "full sustainable employment" wasn't part of the analysis. Now they want the 2% inflation target but it ignores people who kept their jobs through covid and didn't see wage impulse. Ergo, while they see the employment target as being inclusive and expansive, the problem with asset and consumer price growth is it is tightening financial conditions for a considerable portion of the workforce and creating downward pressure on labour force participation.
If I don’t get at least a 6.2% raise I’m quitting my job
The m2 money supply is 39.7 percent larger then before the pandemic. excess cash based spending, and a stagnate GDP will produce price inflation - works every time!
He was right. And still right.
Fed Gov 2020: Let’s completely shut down the economy and all supply chains.
Fed Gov 2021: OMG this inflation took up by surprise let’s keep printing money!
Powell is a nice guy, but he doesn't deserve to be renominated due to all the policy mistakes he has made.
Powell is indeed the worst we will ever see as Chairman of Fed
Remember he tried to normalize rates but the market bullied him out of it. Recall Dec 2018
@@chrischoir3594 i do ..but its the job of the chair not to get intimidated...if that had been the case Paul Volker could never have brought inflation down from 17 to 2 percent in the 70s and 80s...You realize that despite this amount of inflation , he is still buying bonds...He is the kind of fool that goes to buy a bucket of water when the house catches fire...his motives i question
@@jpandyaraja 100% agree he should not have backed down but I'm sure other Fed members pressured him too
Revenues of corporations will soon start going down because people will be able to afford less goods and services. They will also have to pay higher wages and increase prices of services and goods even higher which in turn will make the revenues even worse. It's a snowball effect from here that will stop when all wages increase by 40-50% which won't happen soon. The FED messed up
The FED didnt messed up, thats mission accomplished for them, The FED is a private criminal institution designed to create DEBT and charge for it. The more they print the more they own, because thats what they sell fiat money created from nothing.
El-Erian called it months ago.
These guys kill me. All you have to do is ask the average person about inflation and they will give the correct answer. "It's already out of control". Worst i have seen it since the 70s. Groceries? Unbelievable? Housing, buying or renting, unbelievable! Need I go on?
And the millionaires and billionaires in Congress are getting richer by insider trading. ;)
True, the way these idiots calculate economy is completely on stock markets and bank rates, while most of the population can not afford a home to live in.
Rebel Capitalist knew this 2 years ago.
Stimulus without production equals inflation.
End the FED. Carry on printing.
Mainstream Financial News…. Bringing you: “Yesterday’s news next week”
In the end all he said was: accelerate the “bond buy” tapering in December. Well they’ll (Fed) do that, I think, anyway after seeing the inflation reports for November. And phase in interest rate increases of quarter basis points in the first and second quarters 2022. Expect 4-6 rate increases, the last higher, topping off at 3%. That’s all assuming inflation edges down to under 5% then under 4%. If not, there will be 100 basis point hikes til they get to 5-6%. (They just need to signal their rate hikes way in advance so that it won’t spook the equity markets and punish growth and tech stocks.)
Lol, I hope they do raise rates to the levels you say, because things will get pretty affordable pretty fast.
Not with Biden moving towards replacing Powell with Brainard, here comes UBI and money printing forever.
Disagree. They may speed up the taper, but I doubt that. Powell‘s more worried about spooking the markets and destroying the little recovery we had. Rate hikes pretty much impossible during Q1. They’ll be colossally late to the party. Also, just a Single 100 Basis Point hike would kill equities. It didn’t work in 2018, and it won’t work now due to even higher debt loads.
SHORT SELLING OF GOLD AND SILVER SEEN IN THIS WEEK... silver will fall to 18$/oz.// GOLD WILL FALL TO 1800$..../
Done on purpose and by design.
what an easy life just printing money
Next he'll be saying "Inflation finds a way" like he's straight out of Jurassic Park 😆
4 % GDP "Growth" and 5 % Government measured CPI means drepression right?
Stagnation and inflation hence stagflation. ☹️
@@backwoodsbungalow9674 that's a dirty word! I thought the economy is booming?
The only spending that works is a conservative normal fiscal policy of investment in the economy. Proves what happen when you try these silly monetarist policies of just spend spend spend, low interest rates and all.
When does the Fed crime syndicate end look at these massive bubbles!
Seriously acting like this was an accident?
Give this guy the keys of the bus...
Too much money chasing too many goods and services...cut energy and watch out.....I never miss M E-E....such class.
Yeah, I sure do miss Bill Gross. ☹️ Mr. Gross always said it best and saw it first. It's good to be King. All hail Bill Gross!
What's happening today is way beyond fed policy. They are just bystanders at this point.
Germany Bundes bank CEO resigned or jumped from sinking ship.Euro currency can collapse in 2022
It’s hard not to conclude that this is a deliberate policy from the Fed, to allow inflation, so that we can pay back all this debt with debased dollars.
Exactly, yet these clowns all need to sound special.
Debt/currency debasement, agreed by all central banks.
They a robbing those not up the risk scale to then give hand outs later on.
the longer they wait, the bigger the damage. And in the meantime the dumb money keeps pumping the market
On what basis does he think that he knows what is best for the economy? I always hear judgement and prescription without analysis or justification.
I just wish El-Erian would get a decent microphone one of these days.
End the FED >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> out
The fed new this result from the beginning. That can't be that stupid.
Are we still pretending the fed cares about living standards? Good one
100% right supply demand is the problem
Something tells me that the next President of the US will be calling to 'Audit the Fed'. In any case there should be direct consequences (to individuals) who are entrusted to shepherd the national economy and fail as spectacularly as ours will by mid 2022.
you need to wake up !!!! wake up !!! there will never be such president in the US or anywhere else, they are not elected democratically, they are not elected period. they are placed there by those whom they serve and you and I there here to serve them all. that is the reality, so I say to you, wake up cause it's all a nice dream you have.
TAX THE FED!
Peter Schiff was right!
How Insensitive can El-Erian be? Not once did he mention how tapering and raising rates could effect Congress's reelection chances! 🤣🤣🤣
I got your sarcasm. Thumbs up for you. Greetings from Switzerland.
Only way to deal with the massive US govt debt load is to inflate our way out of it, deflating the debt away and paying it off with "larger" (same value but more currency) tax revenues, devaluing the US dollar until the situation becomes manageable. It is much more palatable to society to create inflation to shrink the debt than raise taxes.
Best economist out there.
Why are people saying bitcoin? If there is a taper and rate rise, this is BAD for bitcoin.
Prices go up salary needs go up also
Keep printing money but I'm gonna quit my job when the pay doesn't match inflation and most likely work remotely from a cheaper country.
in india the cost of petrol is 100 rupees. few days back it was 110. people are filling up their petrol tanks with 10-20 rupees petrol because they cannot afford 100 rs petrol. its a disaster.
I am with the Fed. interest rates mechanism is not the way to deal with inflation though raising rates can be helpful. Govt debt is not the same as household debt. We have now on record that El-Erian says the Fed made a terrible mistake. Time will tell.
Maybe stop printing money?
@@LucyTheBichonFrise I take it print digital money. That is the function of central banks, to ensure liquidity in the market place for presumable stable prices and for most advance economies, to stimulate business and hence employment. I commonly say, you have to create a mental model how the world works, or if you cannot, play computer games, you will then understand. Or read enough history with a critical mind. Most of the time if not ALL of the time, the talking CNBC heads, financial news ...or everywhere if there is a doomsday crisis...will talk about liquidity crisis and solvency. How is that possible if you think the world is awash with cash ...? It is not. The Fed holds the ultimate gun on many countries ... not enough dollars. That is right not enough -- because the Fed can easily suck money out of the system. If you read the Fed notes and research, they are transparent about their operations. This trillions and trillions is not out there, how can it be possible that from a mere billions in reserves to BIG number trillions, there is no hyperinflation? Once you understand how the world works, you then plug into the digital world, and go make money. Seriously like the matrix.
They said it was Transitory, would they lie or don't they know..
Both!
this was done on March 18th 2020
Where are all the El Erian haters now? Yeah, no where to be found.
The question on most vulnerable, I have to call him on that. Does he realize that these folks are getting free money and subsidized not to work ever again, just to keep voting a certain way? Inflation doesn’t hurt these people in the view of policymakers, it is buying votes, but the policymakers discount how much it harms everyone else-and who also vote. Policymakers also make the mistake of arrogance that they can control inflation once it gets rolling. the, of course, the most vulnerable will be hurt most, but the policymakers will double down on more free money. It’s just getting started, professing to be wise they have become fools-reality is coming.
El Erian is short in equity. He was the guy, who during pandemic gave calls not to buy. Lol
First world nation start to starve what happens to the rest of the world? Complete chaos
It wasn't a bad call. It was a lie.
The correct solution is for the Fed to INSTANTLY stop bond purchases and concurrently raise interest rates to 4-percent or more.
This will crash the housing and stock markets, force early retirees back to work, and kill off the speculation.
It's ripping off the bandage.
I'll wait patiently to watch it happen.
Yeah but then blame for the aftermath will fall squarely on the central bank and the government. There's no way to scapegoat anyone if the fed's actions directly lead to massive unemployment and an economic depression.
If the powers that be go the hyperinflation route and let the dollar value collapse, they still have some credibility if they blame external forces or global conspiracies for the aftermath.
Hyperinflation is more politically expedient. That's probably how they will play this one.
It's weird cause when it started everyone was saying how we will have problematic and probably long-lasting inflation, and since anyone was saying that (finance background or not), I thought that well, if everybody knows this, than the FED certainly know this and much more, and they should be acting with competence. But now it seems like the average non-finance-JOE was more right than the FED. I mean I still wanna believe that the FED is much more competent than that, but somehow it's a weird territory now. I still back the FED though and hope they have this all under control, (albeit with some slight deviations).
The fed knows what they're doing, they are lying about it.
They are backed into a corner: raising rates is a disaster, and not raising rates is slightly less bad...
they are pretending that inflation doesn't exist to keep the public from panicking.
Two Brits discussing the Fed-created monetary inflation that introduced this American to the joy of baked beans on toast.
That is so true
Canned food is really cheap right now for thanksgiving… go fill your cupboards.
I think the stimulus and tapering is the least concern. There’s only so much demand how is the fed going to deal with supply issue
The math is not in his favor, yoy numbers self correct. Like waves in a bathtub that cancel each other and there isn’t any monetary velocity.
You are ignoring reality. Money velocity is at historic lows and inflation is at historic highs.