President Biden: The NEW one and only politics thread

We likely have. ... but people should be a little careful.

First, the CPI was still up 8.5 percent year over year, of course.

Second, one month doesn't confirm a trend. They released a CPI number at the end of last year that had people dancing a jig about the worst being over, and that didn't hold.

Third, most of the headline number was due to energy prices coming down, which offset the rising prices in almost everything else. Like yesterday, people were focussed on white bread prices and cracker prices and egg prices, which are still surging. And the problem there is that energy prices are being affected by global factors. Russia having found buyers for its oil stopped the price from rising on a moonshot the way it had been, and even more importantly, China's zero covid policy led to them shutting down their economy, which has hit oil demand and has been the biggest global factor for why prices have come down. China is reopening, so absent a slowdown in the global economy (which actually may be happening), it conceivably may only have been a temporary reprieve on energy prices.

The flip side of what I just said though. ... is that the core inflation increase was not as dramatic as it has been in recent months, so that is really good. And in addition to energy, the increase in rent prices slowed down quite a bit. All of that could really signal that, like you said, we hit the peak. We can only hope, at least.

I personally don't think it is going to get under control without a massive economic slowdown. They unleashed so much demand into the economy by monetizing a lot of "stimulus," that the cure unfortunately is going to be pain -- people losing jobs and some serious demand destruction. But they have been pumping the money supply higher continually since the financial crisis and every time they have tried to stop, the hint of credit defaults and the bubbled up markets coming down made them step back in and prop it by buying up more assets with freshly printed money, and keeping the overnight rate near zero (which they are trying not to do now, which is a GOOD thing). They still haven't done much to let anything roll off their balance sheet. The question is, when that starts, if we start to see pain, will they panic and reverse course? Markets have actually been betting that that is exactly what is going to happen, and that they will choose runaway inflation over recession. It's the big difference from the last 12+ years. The inflation genie got out of the bottle, so they are stuck between bad choices now. And on the fiscal side, they are still acting idiotically, passing more huge spending bills over the past few days. ... which requires a central bank to monetize more debt. They have no clue that if they keep trying to do more of the same of the last decade, it's going to keep inflation as a problem for a very long time. So this is very much a story that is still in progress.