Central Bankers Ensuring Cost of Living Stability
Central planners at the Fed frequently speak glowingly of their record of providing price stability in the economy - even as the Fed blew a series of asset bubbles including sequential real estate bubbles.
Let’s look at a Fed index that gives a relatively ‘unadjusted’ measure of the cost of goods in the economy. The Fed’s commodity index gives interesting raw insight into the broad cost of basic food, goods, and materials.
In this Fed graph we can see that that currency printers at the Fed have succeeded in increasing the prices of commodities by 706% since 1970 and by 24.5% since 2020:
While the Fed lowered overnight rates from 19% in 1980 to 0% in 2009 sprouting widespread asset bubbles, it drove indebtedness in the US economy to a current total of $99 trillion.
With the recent ‘inflation surprise’ especially burdening the working class and poor, the interest rate spike has compounded their problems by in turn spiking annual personal interest payments by $210B since 2022:
There is a need for all central bankers to create a Tent City Index and correlate this index to their monetary policy.
Best regards,
David Jensen
Tent city's as total sqkm would be a good metric, it looks so tough in the USA it makes me feel very sad for the people caught up in this new version of homelessness. Australia is not suffering to the same extent, although we have seem substantial cost of living expenses increases. Our real estate still seems to be in an inflationary phase and with our open borders immigration policy it is hard to find accommodation to either buy or rent. Our four major banks have the highest ratio of residential real estate on their loan books in the world, its around 60%. We have a unique "negative gearing" structure where debt payments for "investment" (not primary residence) real estate becomes a tax deduction. People here love to get leveraged up with banks to buy homes, will be interesting if we hit a deflationary phase with real estate.
Homelessness in New Zealand seems to be manifesting in two or more families sharing a property -- house, garage, tent in the garden. Not a new phenomena but much much more widespread and it's not declining. I call these 'Ardernvilles'.