'Big Short' investor Michael Burry is back on Twitter - and warning of the biggest market bubble in

Inflation is not a tax nor does it behave like a tax. It is a reduction in the value of currency, not more, not less. The consequences of inflation certainly fall upon the public, no doubt about that. So do the consequences of additional taxes.

 

The Prime Interest Rate has little to no bearing on the current "Inflation."

There is actually a fifth form of Inflation called Interest Inflation which affects those things tied to interest rates.

There is little doubt that the low Prime Interest Rate is causing Interest Inflation and artificially inflating the prices of homes, condos, and other buildings on top of the Demand-pull Inflation that affects a small number of the 120,000+ housing markets in the US.

You're mistaken.

The goal of the Federal Reserve is to control Monetary Inflation, not Demand-pull Inflation or Wage Inflation which it simply cannot do ever.

You simply do not understand the various forms of "Inflation" (snicker).

The Federal Reserve has been hugely successful in controlling Monetary Inflation for the past 30 years.

The only two countries that do better are Britain and Switzerland, and they only do a little bit better.

 

Well, let's hope that when you get your Economics degree, you'll understand the difference.

That's Monetary Inflation.

Demand-pull Inflation is.

When Demand exceeds Supply, the price inflates and it inflates artificially because of Demand.

You see that most often with housing but it affects other goods, services, commodities and resources as well.

Consumers have 3 choices:

1) stop consuming like locusts
2) seek substitutes
3) increase Supply

Increasing Supply isn't always possible -- and that is often the case with housing --- or it's only possible over the long-term.

Congress caused Demand-pull Inflation on many -- but not all -- foods and beverages when it stupidly mandated that corn be used for ethanol.

Why?

Because Congress artificially created a new market, specifically to wit: the corn ethanol market.

The corn ethanol market competes with these markets:

1) Corn-on-the-husk
2) Corn-on-the-cob
3) Canned corn
4) Cream of corn
5) Succotash
6) Corn flakes
7) Corn meal
Corn flour
9) Corn starch
10) Light corn syrup
11) Dark corn syrup
12) High fructose corn syrup
13) Popcorn
14) Feed corn
15) Seed corn

Just to name a few markets.

All those markets (and more) are competing for corn produced by farmers.

The amount of corn produced by farmers hasn't changed, but the number of players demanding corn has, and it has increased and that is what causes the price of food and beverages to increase.

I'm a cannery and I'm buying corn to make canned corn and the purchase price of corn has gone up and so I increase the price of my canned corn to match.

If you, as a consumer, cannot bear the higher cost of canned corn, you'll have to do without or seek a substitute like succotash which has lima beans or butter beans or whatever the hell those nasty things are called and corn, but less corn than a can of corn. That's how substitution works.

If I'm buying corn to make popcorn, I have to raise my price and you as a consumer can either pay the higher price, do without, or seek a substitute like potato chips instead of popcorn.

That's why raising the minimum wage is stupid, because all it does is keep pressure on Demand and drive prices even higher.

As a farmer -- a produce of corn -- does your costs increase? No.

Can you enter the market to produce more corn? Well, maybe. Maybe not.

If you can break even or make a profit, you will, but if you're gonna lose money -- and you could -- then you won't. Instead, you'll wait until corn prices get higher and you can break even or make a profit, but that might take 6 months or 6 years or 60 years.

That's how it works for most things.

 

I converse with you when you decide to stop going off topic and stop the strawman arguments.

 

Your unconditional surrender is accepted.

I was not off-topic and I did not in any way misrepresent your argument, which is the definition of what a Straw Man is.

You said...

The Federal Reserve is not "preventing free markets."

A bank's profits consist in part of the difference between the Prime Interest Rate and the Free Market Interest Rate (which is based on the Supply & Demand of particular types of loans as they relate to the credit-worthiness of a particular person or entity.)

The Prime Interest Rate is currently 3.25%.

If a bank determines the credit-worthiness of a customer to be 4.75%, then the bank's profit on the mortgage is 4.75% - 3.25%.

If a credit card-holder's credit worthiness is 18.9%, then the bank's profits are 18.9% - 3.25%.

Obviously, if the Federal Reserve increases the Prime Interest Rate to 6.5%, then it's 18.9% - 6.5%.

It's not Quantum String Theory, but it is 4th Grade Math.

You failed again here....

The Federal Reserve can only control Monetary Inflation.

Is there some part of "Monetary Inflation" you don't understand?

The Federal Reserve controls Monetary Inflation by raising interest rates and/or decreasing the money supply.

The problem is you don't have Monetary Inflation. You have Demand-pull Inflation due to Supply/Demand issues and to a smaller extent Cost-push Inflation due to the burdensome costs businesses face related to STUPID-19.

Do you believe the Federal Reserve is using Psionic Mind-Blast techniques to coerce American households to buy items in short supply?

How does that work exactly?

If the Federal Reserve and bankers were CDL qualified, they could drive trucks and deliver goods to increase Supply and lower prices.

I understand low-information voters can't handle much more than a tweet, but my goal is to educate and to embarrass the low-information voters into getting educated.