Blaming the current situation on the Ukraine War reminds me of the crash in 2001. Things were going downhill already long before but when 9/11 happened, suddenly everybody blamed the crash on 9/11. I am pretty sure the current situation would have happened without the Ukraine war. Maybe a little different but the writing was on the wall long before.
It’s possible, but since we don’t have the counterfactual, it’s probably more accurate to say that another precipitating event could have occurred to lead us to approximately a similar situation. However, because responses vary so much, even due to randomness, it’s hard to predict the results.
If a different 9/11 had happened - say the perpetrators were Russian - I would agree that a similarly large change in society would have occurred. We probably would have done the same crap with the TSA. However, it’s less likely that the US would have invaded Afghanistan, and possibly Iraq (because every hypothetical is less likely than the 100% probability we have now).
Just because something else would have happened doesn’t mean the response would be anywhere near similar.
My view is that inflation was exacerbated by the sequence of events. The Russian invasion of Ukraine didn't cause inflation but disrupted the ability of the Fed to effectively manage it. That's not to say that inflation would have been transitory. I just think the current situation is worse because of it.
Inflation in Germany stayed <5% since the beginning of the 90s, most of the time <2% for 30 years (should be even smaller because Germany doesn't use chained dollars), then spiked to 10% with the invasion of Ukraine.
So it's not clear what you have been referring to.
I didn’t phrase this correctly. Things weren’t going downhill before the Ukraine war. But it was pretty clear that printing enormous amounts of money while running record deficits by governments couldn’t go on forever.
This was during the war in the Ukraine, which was one of the excuses people gave for inflation being "tranistory" and that things would be sorted out soon.
Sorry, I thought you made your prediction 18 months ago – the generally accepted start of the invasion is 2022-02-24. If your prediction was after, then yes I agree the Fed should have accounted better for the global landscape.
I remember Biden going on TV and blaming high YoY inflation on the Ukraine war when it had been going for about 2 weeks. Before that a lot of transitory smoke was being blown up everyone's backside.
