We won't all, because we can invest savings instead of holding them in cash.
A positive inflation rate, around 2% per year, is deliberately targeted as a long-term average. This is because having a constant expectation of declining value pressures consumers to consume, which keeps money moving through the economy. (We aren't all entrepreneurs, so we can't all be motivated by the opportunity cost of not starting a business.)
> In fact, I see people pressuring the Fed to lower (!) rates
There have been such calls because the inflation problem that prompted spiking the interest rates appeared to have been mostly resolved, because interest rates at the current level are expected to continue exerting downward pressure on inflation, and mostly because high rates have other negative effects.
Boom-bust cycles are not inherently bad. In the long run, history shows that the booms more than outweigh the busts, and suggests (at least to me) that the net result is better than it would be with slower constant growth (which is hard to manage, since you never know when the next big technological innovation will come).
> the tariffs don't seem to be going anywhere
While high in historical perspective, the tariffs are not effectively as high as the headlines make them sound, and there is a lot more to the economy than foreign trade.
> government spending and debt are at all-time highs.
The system is largely designed to work this way — in all developed nations, not just the US.
While high in historical perspective, the tariffs are not effectively as high as the headlines make them sound, and there is a lot more to the economy than foreign trade.
Agree. the service sector is a huge part of the economy. Imported durable goods, which are most affected by the tariffs, are only a small part of US consumer spending.
> Services inflation provided much of the push higher, rising 1.1% in July for the largest gain also since March 2022. Trade services margins climbed 2%, coming amid ongoing developments in President Donald Trump's tariff implementations.
Figuring out and applying the rules seems to be having more of an effect than the rules themselves. Which is a good reason not to expect a 0.9% monthly shock to translate into an 11.4% annualized inflation (even setting aside that core CPI is a much different measure from base PPI): they won't have to keep figuring out the rules.
We won't all, because we can invest savings instead of holding them in cash.
A positive inflation rate, around 2% per year, is deliberately targeted as a long-term average. This is because having a constant expectation of declining value pressures consumers to consume, which keeps money moving through the economy. (We aren't all entrepreneurs, so we can't all be motivated by the opportunity cost of not starting a business.)
> In fact, I see people pressuring the Fed to lower (!) rates
There have been such calls because the inflation problem that prompted spiking the interest rates appeared to have been mostly resolved, because interest rates at the current level are expected to continue exerting downward pressure on inflation, and mostly because high rates have other negative effects.
Boom-bust cycles are not inherently bad. In the long run, history shows that the booms more than outweigh the busts, and suggests (at least to me) that the net result is better than it would be with slower constant growth (which is hard to manage, since you never know when the next big technological innovation will come).
> the tariffs don't seem to be going anywhere
While high in historical perspective, the tariffs are not effectively as high as the headlines make them sound, and there is a lot more to the economy than foreign trade.
> government spending and debt are at all-time highs.
The system is largely designed to work this way — in all developed nations, not just the US.