![]() Throw in technology in the form of shared housing, such as Airbnb and VRBO, where landlords find it more profitable to rent out their spare unit 10-15 days a month to tourists versus rent to our locals on a long-term lease. Have their incomes increased by 50%? Nope. People who were paying $2,000 for a 1-bedroom apartment are now paying $3,000 in just a few short years. Rents in most urban cities have increased around 50% in the past two-to-three years. Facebook matthew banks driver#But here’s the biggest driver to inflation that the Fed has zero control over - rents. With California’s ridiculous regulations (Climate change! CO2 emissions! Rising sea levels!), it’s no wonder Kurt Kramer is going on his third decade to build a housing community in the McKay Tract. The Fed has zero control over new housing stock. Why are oil companies’ profits soaring while they’re screwing us at the pumps? Because they can. The Fed (and the White House) has zero control over gasoline prices. The government was shoveling money at people, while we had a shortage of workers at factories and warehouses to keep our supply of goods flowing. Don’t even get me started on the massive increase in unemployment checks, where people were getting $44,000 per year to not work. Then the 2021 Child Tax Credit, where the government gave parents $250 per child per month and $300 for children under the age of 5. Finally, we had the American Rescue Plan Act in March 2021 which gave out another $1,400 per person and child. Then in December 2020, we had the Consolidated Appropriations Act, which gave out another $600 per person and $600 per child. In March 2020, the CARES Act gave out $1,200 per person and $500 per child to every taxpayer on file. This time around the government gave out billions in cash directly to the average American. Millions of Americans lost their jobs, their savings, their retirement, got foreclosed on and were angry. During the 2007-2008 financial crisis, the government gave billions to Wall Street and the banks and let Main Street suffer. When the pandemic hit in 2020, the government started giving out cash in a new way. The Fed is always playing from behind the 8-ball. ![]() Facebook matthew banks free#We then had the financial crash of 2007-2008, where the economy went into a free fall. We then had the tech crash of 2001, then 9/11, where the stock market fell almost 50% from its 2000 highs to its 2002 lows. Soon, a downturn to the economy and a heavily favored Bush lost his re-election to a hillbilly from Arkansas. Bush’s approval rating was through the roof. It lasted 43 days and only 100 hours of ground assault by coalition forces. Think back to Operation Desert Storm or the first Gulf War in January 1991. ![]() The Fed always seems to be playing catch-up as shocks to the system hit our economy like a Mike Tyson punch in his prime. When I graduated college, mortgage rates were in the 18% range, inflation was running wild and unemployment was high. Finally, the Fed controls the Reserve Requirement, which is the amount a bank needs to keep as reserves versus lending out. ![]() It also controls Open Market Operations, which is the buying and selling of Treasury bonds and mortgage-backed securities, which adds or drains liquidity (money supply) to our economy. The Fed can only control a few things in our economy, such as the Discount Rate, the overnight lending rate from the Fed to banks. The Fed has done a remarkable job of failing at these objectives throughout modern history. Congress authorized via the Federal Reserve Act three key objectives for monetary policy: maximizing employment, stabilizing prices, and moderating long-term interest rates. The Fed (Federal Reserve) is one of the most powerful institutions in the United States. ![]()
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