Quote of the day—Tom Ozimek

he New York Fed’s August survey of consumer expectations showed that Americans anticipate food prices to rise by 7.9 percent in a year, higher than the overall inflation expectation of 5.2 percent.

Federal Reserve officials have repeatedly characterized the current bout of inflation as “transitory” though they have increasingly expressed concern about the risk of a de-anchoring of inflationary expectations. That’s where confidence in the “transitory” narrative falls and people start to believe and behave as if inflation will be far stickier than previously believed, impacting wage and price-setting behavior and potentially even sparking the kind of upward wage-price spiral that bedeviled the economy in the 1970s.

Tom Ozimek
October 9, 2021
Food Prices Hit Highest Level in a Decade
[See also Biden’s Inflation Now Costs Families $2.1K A Year And About To Get Worse.

One of the things about economics, the stock market, and retails sales that was difficult for me to accept was that significant components are emotion driven. It wasn’t that I rejected that it was true. It was that I wanted it to be false.

I wanted to believe that “everyone”, at least a sufficiently high percentage of people, would act rationally enough that most of the time shortages, crazy housing/tulip-bulb/Dot-Com/whatever bubbles and extreme economic cycles wouldn’t occur. I would think, “How many times must these lessons be taught in the school of hard knocks before people learn the lessons?” The answer I didn’t want to accept was that the majority of people will never learn the lesson.

I’ve become more cynical (realistic?) in my old age.

If people believe there is high inflation coming then they increase the odds that it will happen.

Prepare appropriately.—Joe]


13 thoughts on “Quote of the day—Tom Ozimek

  1. Markets are not rational but can approach rationality when bubbles, crashes, manias, and panics are not taking place (which is most of the time). We’re currently in a inflationary, stagflation bubble based on an unproven Modern Monetary Theory ALONG with a pandemic and irrational beliefs in magic driven by a desire to achieve EQUITY.

    I don’t have much of a clue as to how to deal with it except to acquire physical goods which have value – particularly goods such as machine tools and knowledge of how to use those tools. That includes being reasonable independent during the coming collapse. By collapse I mean not the end of the world, but a third world country of scavengers ruled by our own Taliban. I often think of the 1917 Russian revolution.

  2. Joe,

    How could it be otherwise?

    “The Economy” consists of the sum total of all the decisions, good and bad, that everyone makes.

    People, by nature, are often irrational.

    Therefore, “The Economy” is forced to behave irrationally every time enough people “vote” enough dollars/goods/services in an irrational way. QED.

    • I think more along the lines of propaganda, and mass psychology. Once you have tuned the masses expectations to inflation. They except that they are powerless to stop it.
      Which is your green light to steal, rape, and rob.
      There’s not one thing going on today that has not been planned and controlled. Nothing.
      Hell, the excuses used to create the federal reserve were to prevent these very cycles. That is, by allowing a group to control markets in almost criminal fashion so as to prevent extreme economic cycles. Was the feds whole reason for existence.
      Whither it has accomplished what it real propose was is not the question.
      The facts are that it is managing everything we are suffering, and are going to suffer. Go look up; stock market, “specialist”.

      • Propaganda works because some people believe that shit, and others go along with it.

        In other words, because people can be (and often are) irrational.

        • Yes, your absolutely right. But I’m thinking it’s illegal to do the rational thing right now?

          • The point of propaganda is not to inform, or make you believe. It is to lie. And have you know it’s a lie.
            And to feel helpless against it. Thereby allowing it’s agents to commit ever worse atrocities.
            Rational and irrational are gauged in the penalties one suffers for one’s actions. Or what one considers to be a reward for same.
            Your human. Go, and be rational.
            I was able to live in a warm home. And eat a good steak last night.
            Methinks it’s not quite time to be rational yet.

    • Half the people think there’s a free lunch and that the other half is keeping them from getting it.
      It’s the same idea that a perpetual motion machine is possible, but suppressed, or the magic carburetor, or whatever that the American Auto Industry is keeping from the public. Sometimes the magic carburetor believers do reason from A to B and think it’s the oil companies that have bought it up and are sitting on it. If such a device were existent, the auto industry engineers would have invented it so the CAFE gas mileage numbers didn’t require everyone to drive doll buggies made of aluminum and fiberglass on the same highways as umpteen ton 18 wheelers, some with an additional trailer.
      These beliefs are in the next seat over from what Joe calls Deodands, the idea that inanimate objects have a moral will of their own.

  3. Humans are fundamentally driven by emotions. If they weren’t then all the propaganda and BS tossed at us wouldn’t work….but it DOES. And the TRUE
    rate of inflation is ALWAYS far more than the “official” numbers quoted.

  4. I forget who said it, but there’s a theorem which says, paraphrased, “an individual consumer is an idiot, millions of consumers are genius.”

    In a completely free and open market economic structure there may be some truth to the concept, but “completely free and open” implies manipulative effects are at a minimum and easily overcome by accurate information flows. I suspect such is quite far from the case today; humans have always possessed “vantage point bias” and promoters (advertisers and beneficiaries) have always been guilty of bias but there’s usually been both limited access to constrain it and a wealth of countervailing information to provide balance. In today’s industrial media and government environment the sheer quantity, quality and force of well orchestrated and convincing deliberate and pervasive falsehoods far outweighs any potential balancing by contrary evidence.

    Mass hysteria, of varying degree and quantity, has always existed but never before has it been so easily and subtly manufactured and directed. It used to be that one had to procure a daily published broadsheet, engage in personal interaction or physically attend a function to be subjected to it, now we each willingly possess the dispensing mechanism, or have direct access to similar devices, and eagerly subject ourselves to it every waking moment and reinforce its effect lest we be “uninformed” or “unaware.” That rationality, always suspect and transient under the best of conditions, has become a greater casualty under such manipulation is no surprise.

    • If “millions of consumers are genius” how does one explain the phenomenon of “pet rocks”….a fad that saw literally MILLIONS of ordinary lumps of rock being sold to people. Nope….People are stupid….both individually AND in mass numbers.

      • Is anyone buying them now?

        Fads happen. It’s the nature of the marketplace.

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