The Drivers Of Inflation: Rent, Obamacare And Minimum Wage Hikes

Sunday, February 21, 2016
By Paul Martin

By Southbay Research
ZeroHedge.com
02/21/2016

“Recent sizable declines in oil prices will likely hold down overall inflation in the near term. But as the effects of these oil price declines and other transitory factors dissipate and as resource utilization continues to rise, the Committee expects inflation to move gradually back toward its objective.”
– Janet Yellen, December 2014

“once oil and import prices stop falling, the downward pressure on domestic inflation from those sources should wane, and as the labor market strengthens further, inflation is expected to rise gradually to 2 percent over the medium term.”
– Janet Yellen, February 2016

The Fed’s Dilemma: The Wrong Kind of Inflation

Inflation pressure does not come from economic demand (aka Resource Utilization)
Inflation comes from:
Fed loose money policies (shelter aka real estate)
Fiscal policies: Obamacare & minimum wage hikes
Rate hikes can stem only part of the inflationary factors
Fortunately, inflationary pressures continue to remain low

The Fed is Partially Right

Oil price deflation is holding down inflation
The effect is transitory

Oil inflation has been a major factor holding down inflation.

The Rest…HERE

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