Lone Candle
Champion of Truth
Russia is suffering from a deep deficit, high inflation, and high interest rates due to sustaining their invasion.
Russia is hurting and could decide that the war is not worth it if Ukraine had consistent backing.
https://www.youtube.com/watch?v=kse-o0Oz2AI
“Trump talked repeatedly about runaway grocery prices during the campaign, pledging that if elected, paying over $4 for a carton of eggs would be a thing of the past. “When I win, I will immediately bring prices down, starting on Day 1,” he pledged. But after
Trump seems eager to help red states with natural disasters, but not California, seeming to not understand the extent that weather made California particularly susceptible to hard to stop fires.
https://www.youtube.com/watch?v=XMrHgQm0n2M
“Trump told reporters Monday night that he’s thinking of imposing tariffs of up to 25 percent on Mexican and Canadian goods. The Peterson Institute for International Economics recently published a study finding that such tariffs “would slow growth and accelerate inflation in all three countries.”
Though the details of Trump’s tariffs remain uncertain, he promised in his inauguration speech to establish an “External Revenue Service [ERS] to collect all tariffs, duties, and revenues,…massive amounts of money” from foreign sources. The Secretary of the Treasury was directed to establish the ERS on Monday night by the America First Trade Policy order. Howard Lutnick, Trump’s pick to run the Commerce Department, said that “the External Revenue Service will put up tariffs, or walls that protect you.” They will do just the opposite.
As Reason’s Eric Boehm explains, “The tariffs Trump levied during his first tenure were paid nearly entirely by American consumers and businesses.” Trump has to choose: Complement his deregulatory agenda with free trade policies that decrease the price of consumer goods, manufacturing, and production, or hinder them with protectionism that benefits select industries at the expense of the American people. Let’s hope the president chooses the former.”
https://reason.com/2025/01/21/trump-must-choose-tariffs-or-lower-prices/
“Trump can’t influence the Federal Reserve much — for right now.
When it comes to interest rates, which are basically how much it costs to borrow money, Trump can complain they are too high (or too low) like any other American, but the Fed’s leaders are the only government officials with the power to adjust those rates. The Fed has lowered interest rates this year as inflation has declined, but it kept rates fairly high for the last few years, in part to fight pandemic-era inflation. Even with the lower rates, however, many Americans are still finding it too expensive to borrow money so they can make big purchases like a home.
Forcing or pressuring the Fed to lower interest rates won’t necessarily fix high borrowing costs for Americans; the interest rates set by the Fed are actually short-term costs that banks pay to each other to borrow money. The Fed’s decisions influence the cost of borrowing, but there are a lot of other factors that go into consumer credit.”
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“Trump might try to meddle in the Fed’s affairs is by trying to fire Federal Reserve Chair Jerome Powell. Trump appointed Powell, but was highly critical of Powell’s decision-making during his first term, and reportedly looked into whether he could fire the Fed chair.
Powell has said he will serve through the rest of his term, which doesn’t end until 2026, but has declined to say whether he would stay on for a third term.
Legally, Trump cannot force Powell to resign or fire him. Members of the Fed’s Board of Governors, which Powell is part of as the Fed chair, can only be fired for wrongdoing or job performance reasons, not differences in policy. Trump could try to fire Powell claiming he’s performing his job poorly, but that decision would probably embroil the president-elect in a drawn-out legal battle”
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“Because the Federal Reserve was created by an act of Congress, it would take congressional action to make any changes to how it works. Congress has made some changes over the decades, but there’s no signal right now that most lawmakers are willing to challenge the independence of the institution.”
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“come May 2026, Trump will be able to have some congressionally authorized say in Fed policy. That’s when he’ll be required to appoint a Fed chair for a new four-year term, who’ll then have to undergo Senate confirmation. That may be Powell, or it could be someone more compliant with Trump’s idea of what the Fed should be.”
https://www.vox.com/donald-trump/386048/trump-federal-reserve-powell-interest-rates-congress-inflation
In Argentina things got worse after electing a new president, but there are signs that things are starting to turn around.
https://www.youtube.com/watch?v=5bxCfN204PM
Trump’s proposals will be net inflationary.
His plans increase the deficit, which is inflationary.
Large and broad tariffs are inflationary.
A massive crackdown on illegal immigration will also be inflationary as without cheap labor, making products will be more expensive or won’t happen here at all–particularly agricultural goods and housing.
Trump wants to end the independence of the Federal Reserve. Trump has been in favor of lower interest rates, which will increase inflation.
https://www.youtube.com/watch?v=l7s8QizovG8
“President-elect Donald Trump’s victory in the 2024 election was powered by a remarkably consistent nationwide trend of voters turning against the Democratic ticket. Vice President Kamala Harris performed worse than President Joe Biden did in 2020 nearly everywhere: in big cities and rural areas, in blue states and red ones.”
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“What happened on Tuesday is part of a worldwide wave of anti-incumbent sentiment.
2024 was the largest year of elections in global history; more people voted this year than ever before. And across the world, voters told the party in power — regardless of their ideology or history — that it was time for a change.”
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“One credible answer is inflation. Countries around the world experienced rising prices after the Covid-19 pandemic and attendant global supply chain disruptions, and voters hate inflation. Even though the inflation rate has gone down in quite a few places, including the United States, prices remain much higher than they were prior to the pandemic. People remember the low prices they’ve lost, and they are hurting — hurting enough that they see an otherwise-booming economy as a failure.
As much sense as the inflation story makes, it remains an unproven one. We’ll need a lot more evidence, including detailed data on the US election that isn’t available yet, to be sure whether it’s right.”
https://www.vox.com/2024-elections/383208/donald-trump-victory-kamala-harris-global-trend-incumbents
“The U.S. government has limited influence over those global prices, which are shaped by market and geopolitical factors. Gas prices dropped during the early months of the pandemic, for example, because millions of people stayed home and dramatically reduced their gas consumption. But as the Bureau of Labor Statistics documented, prices surged as society reopened and the economy started to rebound.
While energy prices have consistently been higher under Biden than they were during Trump’s first term, they have dropped from their heights in 2022, when Russia’s invasion of Ukraine sent global prices soaring. As the Agriculture Department noted in February, fuel and oil costs saw significant declines in 2023 and are expected to decline again in 2024, thanks to drops in global energy prices. U.S. oil prices in the past few days have dropped to their lowest level in two years as OPEC+ says it will increase its own oil production later this year and fuel demand in China looks weaker.
And it’s not clear green-lighting more domestic drilling would have much impact on energy costs. For one thing, the U.S. is already producing record amounts of oil and gas, not to mention renewable energy like solar, wind and hydropower. The Biden administration has also approved more permits to drill for oil on federal land than many of its predecessors, even as it moves to restrict how much federal land is available for drilling.
Several economists also told POLITICO that while energy costs are a factor in every part of the food supply chain, they’re just one of many inputs companies consider when setting prices.”
https://www.politico.com/interactives/2024/food-cost-price-harris-trump-biden/
“The merely dumb, or at least more respectable, version says that the American economy has become more monopolistic over time, and that is why businesses have been able to raise prices more. Consumers are the victims of a lack of competition. Harris nodded toward this explanation in her speech announcing the new policy, perhaps in response to early criticisms from economists.
Of course, it is absurd to believe that monopolies have developed so rapidly in the last three years that this caused the surge in inflation.
Putting that aside, while few economists would endorse price controls as a solution to insufficient competition—except for true natural monopolies—some would endorse blocking mergers through antitrust policy. The epicenter of the new optimism about antitrust is probably the Stigler Center at the University of Chicago. “The fact that you have prominent people at Chicago calling for antitrust enforcement is changing the game,” says law professor and The New York Times writer Tim Wu.
There aren’t many good case studies of successful antitrust enforcement. Indeed, mergers often create more competition, as when the recent T-Mobile/Sprint merger created a successful wireless network to compete with AT&T and Verizon. Evidence shows the merger raised wireless speeds and expanded 5G availability. Fortunately, the Obama administration did not block the merger (although they did delay it).
But one stylized fact seems to have taken hold of newly pro-antitrust economists: rising markups in the U.S. economy. Markups are the difference between the marginal cost to produce a good or service and the price at which it’s sold. A search for “markups” on the Stigler Center’s ProMarket blog yields dozens of hits. “Markups have increased because firms became better at creating product differentiation and erecting barriers to entry,” Chicago economist Luigi Zingales hypothesized in 2016.
Sounds plausible. But two new papers show that the rise in markups has nothing to do with diminishing competition. The first, a working paper published by the Federal Reserve Bank of St. Louis, finds that markups are higher in the service sector, and consumers are shifting their consumption from manufactured goods to services. Therefore, the average markup in the economy is increasing.
The second, a working paper published by the National Bureau of Economic Research, finds that markups have increased because consumers have become less price-sensitive, a mechanism also explored in the first paper. In other words, consumers have been shopping around less to find lower prices, so markups have risen. But it hasn’t happened because firms have taken advantage of inattentive consumers to raise prices; it’s just that costs have fallen faster than prices, resulting in higher markups.
The two papers have discovered complementary explanations for the rise in U.S. markups. Wealthier households consume proportionately fewer manufactured goods and more services and are also less price-sensitive. As Americans in general have become wealthier, we have all consumed more services and have become less price-sensitive.
This makes sense. As we become wealthier, the cost of our time rises. We’re more likely to quickly buy what we need without comparing prices at multiple locations. We’re also more likely to buy higher-quality versions of the same item. When it comes to food, this is definitely happening; just stroll down the grocery aisles and look at the plethora of “fair-trade,” “humane,” and organic certifications.
These results should hearten us that the U.S. economy isn’t rigged against the consumer.
Indeed, where we do see market power, it’s usually not created by really big companies. A rural hardware store has market power if the next hardware store is a long drive away. Public services like public schools and water and sewer systems have immense market power.
Moreover, big business isn’t necessarily bad. For example, Walmart, Costco, and Amazon have driven down retail prices by competing with each other.”
https://reason.com/2024/08/22/the-dumb-and-dumber-of-kamalas-greedflation-narrative/