Economy

[Archy1221]

Where is there any proof that the Trump checks and Biden bucks caused inflation? What is an actual example of Biden increasing prices? It's pretty easy to tell who in this thread actually deals with supply chains, and specifically international ones, in their daily jobs. That's probably your biggest contributer to inflation (supply chain issues), not stimulus money.

The cost of labor has gone up, which on it's own almost every company could have absorbed. However the price of fuel also increased, a tough hit but manageable. But inventories have drastically reduced due to labor shortages and backlogs from shut downs (and actually believe it or not due to starting back up too soon in the case of microchips), and poor recovery planning from the subtler manufacturers. What this reduction in inventories means is that JIT manufacturers are in trouble. They now can't wait a month on the slow boat from China, or a week for a truck from Mexico. They must airfreight material to receive it in a couple days and keep plants running and often they're still not getting it in time. That's a massive cost hit there between paying the expedite costs (which is exacerbated by fuel prices) and lost product from down time.

Sure Biden could influence fuel prices, but that's only a small piece of the puzzle and doesn't resolve any of the issues created by labor shortages and supply chains drying up. The only way you fix this issue is with a command economy where the government dictates what is being made, how much, and when (which is effectively what companies are doing to manage these issues) Absolutely no one here wants that kind of government! But in reality Trump and Biden have taken small steps to turn sectors into command style economies with the defense production act.

The insane amount of money printed was going to cause inflation.   Think of it like an auction.   The more bidders there are, the likely hood of a higher price on the bid.   The economy works the same way, many more people were flush with cash from all the stimulus, and what do most Americans do with excess cash?  They spend it on goods and services.    Well, to that end, the service economy was mostly shut down so that left goods to spend money on.   Inflation……

Now add in more stimulus money into an already cash flush society in 2021 combined with factories not being able to catch up to pre-Covid inventory levels and inflation surges even more….

Now add in the incompetence of the Fed in not recognizing this earlier and not being more aggressive with rate increases earlier and here we sit.    
 

IMO…Jerome Powell may go down as one of the worst Fed Chairmen ever.  

 

[Dr. Strangelove]

He literally blamed both.  Did you not read his post

Of course I did, but his line of "incompetence" led me to believe he places more blame on the Biden Administration. I could be wrong in that. 

The Republican party is just as much garbage as the Democratic party, so idk if that really matters. But perhaps someone who isn't completely incompetent, ideologically possessed, and corrupt (wishful thinking, I know) wouldn't have shut down the pipeline on their 1st week in office and chosen not to extend oil drilling leases on federal property. That would be a start. Then the additional unemployment payments were a freaking disaster and should have never been approved in the 1st place, but certainly should have been ended FAR sooner.

I think the biggest flaw is bouncing back and forth from Dem to Rep candidates thinking they're going to solve any of the other's problems when they've both shown to be not only incompetent but completely crooked. How anyone can have faith in either party at this point is truly mind-boggling to me.

Pipelines or leases on Federal land wouldn't help. Pipelines take years to develop and don't net add production, but it can lower the costs for transportation. Leases on Federal land don't help because Companies aren't that eager to explore for new projects. They would likely be stranded assets in a few short years. Most people agree that with the rise of electric vehicles, the demand for gas is going to fall dramatically by the mid 2030s. 

For your second paragraph, I largely agree. But one thing people need to realize is that politicians respond to the desires of voters, our government is incompetent because voters want it that way. 

 

[ActualCornHusker]

Of course I did, but his line of "incompetence" led me to believe he places more blame on the Biden Administration. I could be wrong in that. 

Pipelines or leases on Federal land wouldn't help. Pipelines take years to develop and don't net add production, but it can lower the costs for transportation. Leases on Federal land don't help because Companies aren't that eager to explore for new projects. They would likely be stranded assets in a few short years. Most people agree that with the rise of electric vehicles, the demand for gas is going to fall dramatically by the mid 2030s. 

For your second paragraph, I largely agree. But one thing people need to realize is that politicians respond to the desires of voters, our government is incompetent because voters want it that way. 

Idk if they "want it that way" but the average voter is so easily propagandized, and they have about a 2 week memory. An incumbent can spend 3.5 years of their term actively working against the interest of his constituents, and then he campaigns for a couple months and tells people what they want to hear, and they vote for him... Even though the body of evidence shows that almost all of our elected leaders are utterly unworthy of holding the power that they do - and the unelected bureaucrats are just as bad, if not worse. It's a sh*tshow to say the least.

 

[BigRedBuster]

The Republican party is just as much garbage as the Democratic party, so idk if that really matters. But perhaps someone who isn't completely incompetent, ideologically possessed, and corrupt (wishful thinking, I know) wouldn't have shut down the pipeline on their 1st week in office and chosen not to extend oil drilling leases on federal property. That would be a start. Then the additional unemployment payments were a freaking disaster and should have never been approved in the 1st place, but certainly should have been ended FAR sooner.

I think the biggest flaw is bouncing back and forth from Dem to Rep candidates thinking they're going to solve any of the other's problems when they've both shown to be not only incompetent but completely crooked. How anyone can have faith in either party at this point is truly mind-boggling to me.

The Keystone pipeline has absolutely nothing to do with the price of oil right now.  Nothing.  Here's an industry paper from 2020 that says it was scheduled to go into service in the first quarter of 2023.

LINK

At 1,210-miles (1,947-kilometres) in length, the Project will be capable of safely delivering 830,000 barrels per day (Bbl/day) of crude oil from Hardisty, Alberta to Steele City, Nebraska where it will connect with TC Energy’s existing facilities to reach U.S. Gulf Coast refiners to meet critical needs for transportation fuel and useful manufactured products. With pre-construction activities underway, the pipeline is expected to enter service in 2023.

So, how exactly would it be affecting the price of oil in 2022?

On top of that, much of that oil is already getting to market.  Oil companies have thousands of leases they aren't currently using that they could drill on today....but they aren't.

I would agree that the COVID payments from the government could have been done much better and keyed on people who really needed it.  But, again, most of that wasn't this administration....which you acknowledge.

And....hey....I would be all sorts of excited for an Independent President that's not tied to either party's wacko extremes. Let's do it!!!

 

[JJ Husker]

Just a funny side note.

In November 2018 I filed an amended tax return for 2016. I received that refund check from the IRS yesterday…..3.5 years later. It included over $450 in interest. I had to call my CPA to figure out what the check was even for. She just laughed and said, I knew they were behind but not that far behind  :lol:

 

[BigRedBuster]

Just a funny side note.

In November 2018 I filed an amended tax return for 2016. I received that refund check from the IRS yesterday…..3.5 years later. It included over $450 in interest. I had to call my CPA to figure out what the check was even for. She just laughed and said, I knew they were behind but not that far behind  :lol:

Wouldn't it be nice if someone in Washington would think about upgrading technology at the IRS?

 

[BigRedBuster]

Idk if they "want it that way" but the average voter is so easily propagandized, and they have about a 2 week memory.

I would switch @Dr. Strangelove comment around.  Voters are incompetent because politicians want them to be.

 

[ZRod]

The insane amount of money printed was going to cause inflation.   Think of it like an auction.   The more bidders there are, the likely hood of a higher price on the bid.   The economy works the same way, many more people were flush with cash from all the stimulus, and what do most Americans do with excess cash?  They spend it on goods and services.    Well, to that end, the service economy was mostly shut down so that left goods to spend money on.   Inflation……

Now add in more stimulus money into an already cash flush society in 2021 combined with factories not being able to catch up to pre-Covid inventory levels and inflation surges even more….

Now add in the incompetence of the Fed in not recognizing this earlier and not being more aggressive with rate increases earlier and here we sit.    
 

IMO…Jerome Powell may go down as one of the worst Fed Chairmen ever.  

The checks were never going to cause this level on inflation. Again the biggest issue is supply chains, fuel prices, and labor shortages. If the checks were never issues, the economy would have effectively ground to a halt.

 

[BigRedBuster]

The checks were never going to cause this level on inflation. Again the biggest issue is supply chains, fuel prices, and labor shortages. If the checks were never issues, the economy would have effectively ground to a halt.

The checks aren't THE problem for all the inflation.  But, EVERYTHING around the pandemic is and you list some of those with the bolded.  However, to say the checks didn't add to it is naive.  

 

[ActualCornHusker]

The Keystone pipeline has absolutely nothing to do with the price of oil right now.  Nothing.  Here's an industry paper from 2020 that says it was scheduled to go into service in the first quarter of 2023.

LINK

So, how exactly would it be affecting the price of oil in 2022?

On top of that, much of that oil is already getting to market.  Oil companies have thousands of leases they aren't currently using that they could drill on today....but they aren't.

I would agree that the COVID payments from the government could have been done much better and keyed on people who really needed it.  But, again, most of that wasn't this administration....which you acknowledge.

And....hey....I would be all sorts of excited for an Independent President that's not tied to either party's wacko extremes. Let's do it!!!

From my understanding, you're a business person. So question: Are markets reactionary or anticipatory, or some mix of both?

 

[Dr. Strangelove]

Wouldn't it be nice if someone in Washington would think about upgrading technology at the IRS?

The IRS has been intentionally underfunded for decades. Attempts to increase the funding creates pushback from voters. If the public had a positive reception to proper funding of government agencies they'd get it. The public does not have a positive reception to government and therefore reward when goverment is set up to fail. 

I would switch @Dr. Strangelove comment around.  Voters are incompetent because politicians want them to be.

Somewhat true. Politicians play to this the best they can which exacerbates the problem. But voters are adults and if a politician appeals to them with lines like "climate change is a hoax created by China" and they respond positively, that's on the voter. We let voters off the hook for obviously stupid decisions because politicians are easy to blame, but let's be honest: grifting politicians aren't hard to spot. 

 

[BigRedBuster]

From my understanding, you're a business person. So question: Are markets reactionary or anticipatory, or some mix of both?

Both.  However, there's a limit to that.  The pipeline was shut down over two years prior to it even being scheduled to be in service.  There might be a slight bump up in early 2021 when it was announced.  But, that gets washed down over time.  Aslo, like I said, much of that oil (if not all of it) is already reaching market through other transportation methods.  

Where shutting down the pipeline would cause an immediate and major price impact is if it was up and operating and all of a sudden shut down so that oil wasn't reaching market.  

Another thing.  Even if the oil wasn't reaching market now, and all of a sudden the pipeline was up and running, it is less than 1% of the world's consumption of oil.  That's not going to make a major impact on the price.

There are probably valid arguments for or against the pipeline. Reducing the price of oil world wide is not one of them.  But, It's the hot button talking point that pro pipeline people use to get the common voter all lathered up. 

Even without Keystone XL, U.S. set for record Canadian oil imports

Currently, Canada exports about 3.8 million bpd to the United States, according to U.S. Energy Department data. Analysts expect that to rise to between 4.2 million and 4.4 million bpd over the next few years. Pipeline expansions currently in progress will add more than 950,000 bpd of export capacity for Canadian producers before 2025, according to Rystad Energy.

The people who play in these markets aren't you and me type investors.  They know the market and are much less affected by emotional crap that is around the Keystone pipeline.

 

[BigRedBuster]

Somewhat true. Politicians play to this the best they can which exacerbates the problem. But voters are adults and if a politician appeals to them with lines like "climate change is a hoax created by China" and they respond positively, that's on the voter. We let voters off the hook for obviously stupid decisions because politicians are easy to blame, but let's be honest: grifting politicians aren't hard to spot. 

Politicians control the media that their base learns from.  Therefore, they feed the misinformation which leaves the voters clueless....therefore, keeps them in power.

 

[Archy1221]

The checks were never going to cause this level on inflation

Which is what I said in my post.   Inflation was going to happen beyond the 2% goal no matter what becuae of the payments.   As I said in my post, other factors played a role in exacerbating the inflation. 

 

[BigRedBuster]

@ActualCornHusker  Please see this chart.

The price of oil was going to go up from mid 2020 no matter what.  The price tanked in March and April of that year due to the pandemic and nobody was using oil.  Oil companies were, at one point, paying people to take the oil.  So, from there, the trajectory is pretty similar with the price ending up a little higher, but fairly close to January 2020.  

Now, oil production was extremely cut back in 2019 and 2020. Go to this LINK and look at the 5 year chart.  Ever since August of 2020, US production has been increasing.  Oil companies have thousands of leases they could be drilling on.  But, they aren't.  How should the government force them to use the leases?  FYI...Biden's administration is trying to do that.

The big question is, why aren't oil companies increasing production?  My guess is, they increased production a lot for several years then got burned on it during the beginning of the pandemic.  They don't want to do that again. So, they are slowly increasing production to keep prices high.  But, they are also affected by lack of labor and supply of equipment.

Edit to add:  You can go to this LINK to see the US oil rig count.  If you go to the 5 year chart, you will see the number of rigs was already being cut back all through 2019.