{"id":1406558,"date":"2023-08-17T13:25:00","date_gmt":"2023-08-17T17:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1406558"},"modified":"2023-08-17T13:25:00","modified_gmt":"2023-08-17T17:25:00","slug":"soft-landing-not-so-fast","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/soft-landing-not-so-fast\/1406558\/","title":{"rendered":"Soft Landing? Not So Fast!"},"content":{"rendered":"

Soft Landing? Not So Fast!<\/span><\/p>\n

\n

Via SchiffGold.com,<\/em><\/a><\/p>\n

Good news! The recession is off!<\/strong><\/em><\/p>\n

For months, economists predicted the Federal Reserve\u2019s rate hikes to fight\u00a0price inflation<\/a>\u00a0would spin the US economy into a recession. But there is a growing consensus that the central bank can slay price inflation while guiding the economy to a \u201csoft landing.\u201d<\/p>\n

<\/a><\/p>\n

Economists Bob Murphy and Jonathan Newman say, \u201cNot so fast!\u201d<\/strong><\/em><\/p>\n

In a recent episode of the Human Action Podcast,\u00a0 Murphy and Newman explain why a soft landing isn\u2019t likely and point out that this is eerily similar to the calm before the storm in 2008.<\/p>\n<\/p>\n

Economist at the Federal Reserve recently changed their forecast and canceled the impending recession. Fed Chair Jerome Powell mentioned this during his press conference after\u00a0the last FOMC meeting<\/a>.<\/p>\n

The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession.\u201d<\/strong><\/em><\/p>\n

Other economists have also become much more sanguine. As one analyst put it, the economy is \u201cchugging along.\u201d<\/p>\n

Newman said it doesn\u2019t appear that they are looking to the future.<\/p>\n

They\u2019re jumping the gun on this. They don\u2019t really have a good reason why they have this view that there\u2019s going to be a soft landing except they haven\u2019t seen a hard landing yet. Therefore, we must be having a soft landing.\u201d<\/strong><\/em><\/p>\n

The mainstream operates under an economic theory known as the Phillips Curve. Simply explained, under this theory, price inflation is inversely correlated with the labor market. If the labor market is tight, price inflation will necessarily rise. If unemployment is rising, price inflation will fall. Based on the Phillips Curve, the remedy for price inflation is to push interest rates up and tamp down aggregate demand. This will lower prices, but it will also necessarily cause unemployment. As Murphy put it, the mainstream generally believes that \u201cthe only way monetary policy can affect prices is going through the labor market.\u201d<\/p>\n

As an Austrian [school economist], I would challenge that and say, no, you can have full employment and stable, or even falling prices. There\u2019s nothing contradictory about that. And on the other hand, you could have massive price hikes with high unemployment.\u201d<\/em><\/p>\n

For example, Zimbabwe had high unemployment even as its currency collapsed.<\/p>\n

Murphy goes on to explain that it\u2019s not just his mindset as an Austrian School economist that makes him skeptical of the \u201csoft landing\u201d narrative. There is plenty of empirical evidence pointing to a recession.<\/p>\n

Murphy and Newman also point out that there are a lot of similarities between the run-up to the Great Recession and today. For instance, the Fed stopped hiking rates in 2006 at 5.25%. But unemployment continued to fall after that peak rate hike for nearly a year.<\/p>\n

<\/a><\/p>\n

In other words, all the reasons that right now they\u2019re saying, \u2018OK, we\u2019re out of the woods. We got a soft landing,\u2019 that was true back then as well. It wasn\u2019t that unemployment started rising rapidly. No, they said, \u2018OK, we raised rates steadily over the course of a while here. We raised them from 1% all the way up to 5.25%. We\u2019re starting to get CPI under control. This housing bubble is starting to get a little under control. Everything seems great.\u2019 So, my question is would it be fair to say as of late 2006 that the Fed had achieved a soft landing and gotten the housing bubble under control? Most people would say, no. They had sown the seeds for the worst crisis since the 1930s. And likewise, right now, the data are eerily similar to that, and yet everyone is running around talking about a soft landing.\u201d<\/p>\n

Newman rolled out some news headlines from 2007.<\/p>\n

IMF Survey; Soft Landing Ahead for US Economy<\/p>\n

Fed Chairman Projects Soft Landing for US Economy<\/p>\n

US Economy on Track for Soft Landing According to the Dallas Fed<\/p>\n

US Inflation Pressures Are Easing and the Economy Should Manage a Soft Landing<\/p>\n

What\u2019s funny is you could see these exact headlines today, including some of the taglines, some of the data about interest rates and the unemployment rate. \u2026 Of course, in hindsight, we can look at 2008 and 2009 and see there was a major crisis after. So, it seems like people maybe haven\u2019t learned their lesson.\u201d<\/strong><\/em><\/p>\n

During the podcast, Murphy brought up a video compilation titled \u201cPeter Schiff Was Right.\u201d<\/p>\n<\/p>\n

What\u2019s great about it is like in 2006, he\u2019s saying stuff that\u2019s totally spot-on as to what\u2019s going to happen in the next 18 months. And it\u2019s not that the people on the other side are saying, \u2018Well Mr. Schiff, I respectfully disagree with your perspective.\u2019 No, they\u2019re literally laughing in his face. That\u2019s how stupid they think he is.\u201d<\/p>\n

During the conversation, Murphy and Newman also talk about how the pandemic pushed the recession down the road, the dishonesty of Federal Reserve economists, the mechanics of the 2008 crash and how that informs us today, and current recession warning signs.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 08\/17\/2023 – 09:25<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/soft-landing-not-so-fast<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Soft Landing? Not So Fast! Via SchiffGold.com, Good news! The recession is off! For months, economists predicted the Federal Reserve\u2019s rate hikes to fight\u00a0price inflation\u00a0would…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1406558","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-5TUq","jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1406558","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1406558"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1406558\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1406558"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1406558"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1406558"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}