While the Fed Still Fuels the Fire, the Bank of Russia Throws Shock-and-Awe Rate Hikes at Raging “Persistent” Inflation, But US Inflation Not Far Below Russia’s

These mega rate hikes likely have Putin’s support because inflation can become a political bitch.

By Wolf Richter for WOLF STREET.

In another shock-and-awe move to douse raging inflation that is making no effort at being transitory, the Bank of Russia raised its policy rate by 75 basis points today, to 7.5%, its sixth rate hike, and the largest hike since the 100-basis-point hike on July 23. And it held the door open for more rate hikes.

“This is a significant increase and, obviously, this is not a fine-tuning exercise,” Bank of Russia Governor Elvira Nabiullina said in her post-meeting statement.

“This decision is driven not only by the current pace of inflation, but primarily by high inflation expectations and a considerable revision of the forecast,” she said.

A rate hike was expected but not of that magnitude. Only one of the 44 economists surveyed by Bloomberg had forecast a 75-basis-point hike; the other 43 saw a hike of 25 basis points or 50 basis points.

Since the rate-hike cycle began on March 19 with a surprise 25-basis-point hike, when economists had expected no rate hike, the Bank of Russia has raised its policy rate by 325 basis points, from 4.25% to 7.50%.

These mega rate hikes likely have the support of Putin who is coming under pressure from frustration over surging prices, particularly food prices, and those types of rate hikes would be unlikely without his support.

The Russian index for annual food price inflation jumped 9.2% in September, up from 7.7% in August. In its statement, the Bank of Russia noted specifically the rising prices of fruit and vegetables.

In her post-meeting comments, Governor Nabiullina explained the importance of food prices to inflation expectations: “Meat, milk, and vegetables are all the so-called marker products. When prices for marker products surge, even if their share in the consumer basket is rather small, this might speed up inflation expectations.” And “inflation expectations are already high,” she said.

The overall inflation rate in Russia soared to 7.4% in September, from 6.7% in August. The Bank of Russia cited a preliminary estimate through October 18 by which inflation jumped further to 7.8%. This is clearly going in the wrong direction.

“The balance of risks is markedly tilted to the upside. The effect of inflationary factors may be intensified by elevated inflation expectations and accompanying secondary effects,” the Bank of Russia said in its statement today.

“This largely reflects the fact that steady growth in domestic demand exceeds production expansion capacity in a wide range of sectors. In this context, businesses find it easier to pass higher costs, including on the back of rising global prices, on to consumers,” the central bank said.

Yup, same in the US.

“At the same time, the impact of one-off supply-side drivers of inflation translates into growing prices for a wider range of goods and services as inflation expectations of households and businesses remain high and unanchored,” it said.

Yup, same in the US. Note the term “unanchored.” This is exactly what has happened in the US, where inflation expectations have spiked.

“The dominating influence of inflationary factors could lead to a more substantial and prolonged upward deviation of inflation from the target,” the statement said.

Russia’s overall rate of annual inflation in September of 7.4% was just 2 percentage points higher than the US inflation measure of CPI-U (for urban consumers) and only 1.5 percentage points higher than CPI-W (for urban wage earners).

The Bank of Russia, by lifting its policy rate to 7.5%, roughly in line with the overall inflation rate, is just trying to remove stimulus. It is still not tightening. That would mean pushing short-term rates significantly above the rate of inflation.

The Fed, on the other hand, still has its foot all the way on the accelerator and, intoxicated with its official Wealth Effect dogma, is blowing through every red light at every intersection, printing $120 billion a month to repress long-term rates and repressing short-term rates to near 0%, despite 5.4% CPI-U inflation and 5.9% CPI-W inflation. This will go down in history as one of the most reckless Feds ever.

But inflation becomes a political bitch. People – those who work for a living – hate it when they lose purchasing power, and they hate it when their raise gets eaten up by inflation, and they hate it when their dividends and interest income get eaten up by inflation.

Putin understands this. Among US policy makers, this understanding has not yet fully sunk in, though they’re signs that it is slowly spreading.

The Bank of Russia, like everyone else, has consistently underestimated just how much this inflation would continue to surge, and it keeps raising its inflation forecast, always a few steps behind, and it raised its inflation forecast to a range of 7.4–7.9% by the end of 2021.

But being a few steps behind is better than the Fed, which hasn’t even tried to catch up, is already miles behind, and is falling further behind with every passing day.

“The contribution of persistent factors to inflation remains considerable on the back of faster growth in demand relative to output expansion capacity,” the statement said.

The Bank of Russia has been using the term “persistent” in its statements at least since July, while the Fed is still slinging “transitory” and “temporary” around.

What is fascinating and refreshing is the clarity of the statements in English issued by the Bank of Russia. They’re actually designed to be read by humans, not algos. The Fed could learn a lesson all around.

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  154 comments for “While the Fed Still Fuels the Fire, the Bank of Russia Throws Shock-and-Awe Rate Hikes at Raging “Persistent” Inflation, But US Inflation Not Far Below Russia’s

  1. SpencerG says:

    Delaying what needs to be done will NOT solve inflation.

    That said, I still think the Fed is waiting to see how big the stimulus package gets approved in Washington. But they can’t wait forever.

    • Jay says:

      Manchin & Sinema are certainly doing their part to delay the stimulus package. More power to them, I say. There’s way too much money already in the system.

      • Depth Charge says:

        Manchin is such a corrupt phony. I’m happy that he is an impediment, but at the same time his antics are 100% in the interests of the donors who fund his crooked existence, not the American people. Papa Pork holds out until the gettin’s good for his puppetmasters.

        • Jake W says:

          manchin caves every time. he talks a big game so that he can look good in his conservative state, but then he ultimately goes along with 95% of what pelosi and schumer want. look at the way he pushed hard against the wasteful stimulus payment, and then was bragging that he got the income cap down from $160,000 to $150,000 for a married couple. whoop de doo.

        • MarMar says:

          It’s not just the donors, the man makes half a mil a year from his stake in his son’s coal company. Unbelievable.

      • Bobber says:

        Sinema is arguing for unfunded spending, as evidenced by her stance against tax increases on the wealthy. Thus, she’s about as irresponsible as you can get. People and governments shouldn’t spend like crazy if they don’t have the money.

        It does Manchin a disservice to put her name in the same sentence.

        • MyLadyHumps says:

          Recklessly spending money without raising taxes is really awful but at least she is in favor of spending less money (albeit still way too much).

          And she has an interesting fashion sense. If you’re stuck in the car with Thelma and Louise and heading for the cliff, might as well try to enjoy your last moment, so I say hurray for her crazy fashion.

          Compare either Manchin or Sinema to Washington Senators: Cantwell and Murray, a couple of lazy trolls with Democrat rubber stamps and an ink pad and you will have a greater appreciation. It a matter of degrees of horrible.

    • max says:

      Inflation, always and everywhere, is primarily caused by an increase in the supply of money and credit. In fact, inflation is the increase in the supply of money and credit. If you turn to the American College Dictionary, for example, you will find the first definition of inflation given as follows:
      Undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie.

      Milton Friedman said, ‘Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output…’

      John Maynard Keynes:
      By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

    • RH says:

      The Russian central bank is one of the few that apparently is competent and less corrupt. That is an amazing thing to say, since the Putin regime is ultra-corrupt. However, it is not corrupt when compared to the thieving of TRILLIONS from Americans by the parasitic financiers’ “Federal” Reserve through the creation of inflation, so that the banksters can borrow from their “Fed” money from Americans (indirectly, since it is their legal tender that the “Fed” prints) at 2.5% per year or less and charge Americans 25% per year by lending them those same funds on credit cards.

      (Some will jump again to criticize Americans for using foolishly credit cards. However, Americans must resort to using credit cards, because the money printing, e.g., of 25% of all dollars ever created in the last two years by “Fed” to profit its banksters, has created more and more inflation, which makes Americans’ wages be less and less adequate to cover their needs.)

      The fight between those politicians owned by the parasitic ultra-rich (including the banksters) to prevent taxes from being increased on the ultra-rich and their corporations and the rest of Americans continues, which the ultra-rich appear to be winning. Their tax loop holes continue as discussed in “Apple Successfully Avoids $50 Billion in American Taxes” in Gizmodo and “How Apple—and the Rest of Silicon Valley—Avoids the Tax Man” in Wired.

      It looks now like the ultra-rich will win, since it is not just high technology companies that have used these GINOROMOUS income tax, loop holes for decades. As Simon Johnson pointed out in his “The Quiet Coup” in the Atlantic and his book, the parasitic financiers gained control over the US government long ago. Clearly, they retain such control.

      Those traitorous, ultra-rich, Benedict Arnolds are also still urging Americans to invest in the CCP’s companies (as they continue to implode) while the CCP arms more and more and announces its intent to nuke Japan, the US, blow up Guam, etc. I wonder if Americans would have reacted similarly if American, parasitic crooks had insisted on helping Hitler arm after he had invaded France.

      • VintageVNvet says:

        Bush and other families made gazillions helping Nazi financing of arms before USA entered WW2.
        Similarly for many families of the global banking cartels for all the wars USA has participated in, no matter the enemies.
        Some families have been profiting from wars for thousands of years, without regard to their nations, etc.
        Nothing new, far damn shore.

        • RH says:

          Amen. I had hoped that some would also note that certain, major, American companies also reportedly helped Hitler and at different times, different companies helped Stalin as each was engaging in their human rights abuses and genocides. The question is do we let the Wall Street parasites get away with it now?

      • Anon1970 says:

        In June 1991, the old Soviet ruble had an official exchange rate of 27 rubles to one $US. The black market rate was about 40 to the $. At the time of the collapse of the Soviet Union (end of 1991), Soviet rubles were exchanged for Russian rubles on a one to one basis. By 1998, the value of the Russian ruble had fallen so much that new Russian rubles were introduced at a rate of 1000 old rubles for one new ruble. 6,000 old rubles = 6 new rubles = 1 US $. By 2021, the rubles to US $ rate had increased to about 70 rubles = 1 US $. I guess the Russians are not anxious to see their currency collapse again. US politicians have yet to learn anything from history. They are playing a very dangerous game.

        I was visiting an acquaintence in Moscow in June 1991, so I was a witness the the breakdown of the local pricing system.

        • Nick Kelly says:

          You may be the only person commenting on this who has been there. My sister has been. I at least have read about it, including Putin’s People, by Catherine Belton, 2020. These 500 pages, plus over 100 pages of notes, document in detail how KGB Inc. stole the key enterprises of the former USSR and set themselves up as its new royalty. Needless to say, there were struggles within factions. Putin’s faction was first involved in taking over an oil shipping port, an ideal rentier asset, a toll gate. When things really heated up he sent his daughters to Germany. The Aluminum Wars were especially strewn with bodies.

          Five oligarchs or their companies are suing Belton and the publisher in UK courts, where they expect a better hearing than the equivalent in a Russian court. (Many Russians think the Soviet courts were fairer even in purely domestic disputes. The key to any substantial business now is a ‘roof’ or connected (made) political protector)

          Re. ‘The West exporting inflation to Russia’. We can prove the reverse in the case of UK trophy real estate where Russians play a major role. It gives some idea of Russian inequality that a country ranking 57 in GDP per person (far behind Argentina, even behind Romania) has numerous individuals able to outbid for some of the most expensive RE in the world.

      • Ian says:

        In the UK before WW1 the governing Conservative party members of parliament all owned shares in the big arms companies. They were happy about the hate campaign against Germany run by the Daily Mail, as they could then justify increased arms spending. They were probably even more happy when war broke out and the dividends came rolling in.

    • wisoot says:

      Its not how much is approved. Its how valuable is a piece of paper. Ben Fulford explains.

  2. The Bob who cried Wolf says:

    What has this country devolved into that the smart countries are now Russia and China? Biden seems to be asleep at the helm.

    • crazytown says:

      Made me lose all remaining faith in our entire political system. I guess it was good to rip that bandaid off.

    • Thomas Roberts says:

      China is no longer smart. It was actually moving in a positive direction before Xi, but since then it has crossed many points of no return. It’s difficult to say, what would have happened, if Xi never became ruler.

      As for the difference between America and Russia. It comes down to the everything bubble, above all else. The primary purpose of the US government, is to preserve and grow the everything bubble. Russia doesn’t have this problem. Because of the everything bubble, America has become far more corrupt, surpassing Russia (i.e. America is more corrupt than Russia).

      Once the bubble bursts, America will move in a new direction, nobody can say what though. Nothing major can change in America, until the everything bubble pops; except, ending the war on drugs; That would be the biggest thing to focus on. Some positive developments in making America more self sufficient, could also happen; These would be smaller individually, but could add up to alot.

      • ivanislav says:

        Do you have any first-hand experience with corruption or changes in level of corruption in Russia? They’re portrayed as the poster-child for corruption and from what I read, that was accurate in the years following the USSR collapse. Having not been there myself, I don’t know how much of the reputation is still deserved.

        Russia is attractive investment-wise on the basis of low debt and a large physical footprint against a backdrop of global natural resource depletion. On the other hand, their demographics aren’t great, they’re laggards in science and technology entrepreneurship despite being first-class weapons manufacturers, and increasing immigration and growing Muslim population could lead to instability.

        Just curious if people have insight on these issues.

        • Thomas Roberts says:

          Hello ivanislav,

          I do not have first hand experience for Russia. It is on high on my list for places to travel to. I have traveled to Europe and Asia before and met many people along the way from across the world, including Russians. I have known Russians in college and other places, who just left or still live in Russia.

          I do have a degree in economics and computer science and further study up on economics and finance almost every day. Once you understand enough about how people, countries, and economies work; you can have a good understanding of what is going on, even if you haven’t been there. You just have to find good info about the country.

          It’s absolutely true that the majority of Europe and America discriminates against Russia and tries to make it look bad. This also slows their economic growth and effects how much money they can use to fund large scientific projects, Russians are substantially contributing to the sciences, behind the scenes.

          When measuring something like corruption, the most important thing to do is to understand all of the roles a government plays, and then measure the level of disfunction in various parts of the society. Right now, the crime rates in Russia are dropping and are below America (you have to find the latest numbers). Unlike America and many other countries, there isn’t large efforts to divide the population. There is definitely corruption in Russia, but if you step back and observe carefully, you can see that russia is one of the only countries that is currently developing forward. The overall society in Russia, is at least as stable as the European average. The actual quality of life, is temporarily stagnant and below average for Europe, but they are successfully becoming self sufficient. They are for instance, rebuilding their aircraft industry, the Irkut MC-21 is a good example of this. As they become self sufficient, the standard of living should improve and they will be in a better position when dealing with other countries.

          They do export more than people think. The issue Russia had was after the Soviet union collapsed, their entire supply chain was lost; they have been rebuilding it back up, and will be able to export more non Commodities in the near future, this will greatly improve standard of living.

          As for immigration to Russia, unlike America, the immigrants to Russia are required to learn the native language and that is a much bigger deal, than people realize. The bulk of immigrants to Russia are also from the former Soviet union, this means the cultural differences, are much smaller than immigrants to America. Despite what people claim, most countries with below replacement level birth rates, will eventually improve. Russia’s overall expected future population size is well within the stable range, especially when immigration is combined.

          Just like any country they could screw up and be in very bad share for decades plus, but, I have a lot more confidence for Russia than most. They are also going to be the biggest “winners” of global warming.

          It’s a very broad question and so I have to be very broad in answering. If you want to know something more specific, I can be more precise and convincing. This comment got very long, but was pretty quick to write.

        • Marmaduke says:

          I can chime in on some personal anecdotal knowledge since my whole family is from there.

          Corruption is indeed a pretty big thing in the country. At the very high echelons it is obscenely corrupt (but that can be said about a lot of Western countries too, it’s just hid in a much more sophisticated manner). The real jam there is that mid-to-lower levels of society there are also inundated with a corrupt mentality. In small towns you still may see local power quite literally force the sales of successful medium-small businesses under dubious some dubious, strong-arm pretext. You still hear of stories of police literally planting drugs and threatening to close a business if not sold to a certain individual.

          The situation has markedly improved since the 90s and 00s when it was simply the wild west though. Corruption is mainly channeled to a small group of connected individuals that have implicit cover from government. I remember lots of stories of being able to bribe anyone from doctors to teachers (school and uni) to get favorable treatment/results for laughably small sums and this seems to have largely been stamped out with the exception of very large bribe amounts.

          Ultra-rich and large corporate interests aside, the biggest issue is still being able to run small and medium business on a fair playing ground. There is no shortage of smart and motivated folks there (even though many have gone abroad) but there is just no reason for them to stick around. As in the USSR, the select industries that do get attention (Defense) do churn out impressive contributions despite a lot of that being mostly built on Soviet era achievements.

          Putin did a pretty good job of corralling and bringing into line a lot of the rampant gangsterism when he first came in and the primary fear of Russians is a return to that chaos if the strongman were to leave. Objectively he has overstayed his time in power but many in the country are still traumatized over the the collapse of nearly everything since the USSR’s collapse.

    • The Real Tony says:

      He got elected as things today would be exponentially worse had Trump been reelected. Trump was the guy who hired Powell. Trump left the world his legacy.

      • C# engineer says:

        I would have to disagree. The country would have been doing much better under Trump.

        Joe Biden is a continuation of globalization and policies similar to Obama and Bush both of whom were horrible. Biden does seem to care at all that we have high inflation, an illegal immigration problem, rising oil prices etc.

        Massive government spending and misallocation of capital are fine by him as he’s not affected and his donors are taken care of. The little guys (us) are the ones that have to deal with the problems he causes.

  3. TimTim says:

    One thing you can say about the Russians, they don’t F*CK about, do they?

    • Truckman says:

      Chess, math, and music are what the Russians do with sublime subtlety.
      The rest is handled figuratively, and often literally, by drunks driving Main Battle Tanks. Big, ugly Main Battle Tanks, with exposed rivets and graunchy gears ;)

  4. polistra says:

    Nabiullina is the ONLY sane central bank head. She has always tried to let the feedback loops of REAL CAPITALISM function properly, with minimal clamps and controls.

    • c1ue says:

      That lady is hated within Russia as a bankster/Atlanticist stooge.

      • TimTim says:

        Anybody seen to be taking away the punchbowl is going to be demonized along the lines of that society’s bogeyman.

        Besides, where would Russia be without a little ‘provocation..’?

      • c1ue says:

        No, she is hated for the opposite: helping Russian banksters as opposed to the Russian people.
        Kind of like the Federal Reserve in the US…
        Just goes to show: a bankster is a bankster – whatever their nationality/race/gender/whatever.

  5. Mike says:

    Feds QE accelerator is “pedal to the metal” and they’ve got full turbo boost as well….what could possibly go wrong?

    • Jay says:

      So the FED has said that they’d start out with $15B in tapper. Okay. But how soon does that go to $20, $30B, etc?

      • historicus says:

        Slow play…
        We will be careful ….etc.
        $15 billion cut is nothing if they keep reinvesting the maturing securities…
        Bernanke, when he lied about the temporary QE in the WSJ July of 2009 laid out how it should end…the maturing securities roll off, not reinvested.
        1/4pt raisings will have nearly no effect…..Fed Funds should be equal to inflation.
        And for those who say raising rates would be too expensive I say..
        “That’s why you dont get in this position…and to continue will bring a much larger problem.”
        Casual TRILLION DOLLAR spending bills must come with a REAL cost.
        Notice we had no TRILLION DOLLAR spending bills until rates went to unrealistically low (ZIRP) levels.

  6. davie says:

    Have you ever stopped to wonder if the Fed actually controls the prices of things?

    • Wolf Richter says:

      The Fed controls the prices of the most important “things” in a modern economy: the prices of money, credit, and risk.

      • MCH says:

        They do indeed. But how independent are they?

        Not specifically saying anything about the trend here, but Kaplan, Rosengren who are both on the way out are hawkish members of the Fed board. Clarida who needs to go is a middle of the road guy. Powell as chairman (even though he is more dovish) is likely going to be the fall guy when all this goes down.

        Interestingly, the hawks are going to be more ascendant as voting members in 22, Rosengren was going to be a voting member next year. Now he is out thanks to reporting on his trading activities. Aren’t we all curious to see what the records of the rest of these members are like? Because the spotlight so far is targeting on the hawks and the potential fall guy, makes you wonder….

        Overall, the Fed knows one thing, higher interest rates means the debt and interest payments on that debt becomes more unsustainable. On the other hand, there will be political consideration because, let’s face it, the guys in charge don’t want to be blamed when inflation really kicks in.

        It’s a total cluster because there is no good way out… Either they have to curtail the spending and bring in revenue, or they have to raise interest rates. This is going to really not end well.

        • c1ue says:

          Conservative conspiracy theorists are wondering why the disclosures all affect hawkish/center types.
          It seems highly unlikely that these 3 are the only Feds breaking the rules…

        • Augustus Frost says:

          I’d hardly call any of the FOMC members “hawkish”. Every one of them believe in perpetual currency debasement. The “hawks” just claim to prefer to limit their theft to 2% per annum.

        • Jake W says:

          yeah which is why you don’t dig yourself into a hole in the first place. who would have guessed that keeping rates low for so long would have encouraged more deficit spending and borrowing by private companies?

        • historicus says:

          “It’s a total cluster because there is no good way out… Either they have to curtail the spending and bring in revenue, or they have to raise interest rates. This is going to really not end well.”

          Which is why you don’t get into positions like this. And the position is TOO MUCH DEBT. Irresponsible actions by the Fed to placate, encourage and subsidize debt and spending in some misguided MMT exercise.
          Stealing from the future to fluff the present….which was to be prevented by the THIRD unmentioned Fed mandate, “promote moderate (not extreme) long term interest rates”. This would prevent emptying out the future to fluff the present. This would keep a balance between lender and borrower. But the “dual mandate” game cleverly cuts out the THIRD maybe most important and most abused of the mandates.
          There was no mention of TRILLION dollar spending bills until rates went to zero.
          And the small integer game…put a small number in front of the word TRILLION. Who can wrap their mind around what a TRILLION is?
          (a billion seconds is 32 years. a TRILLION seconds is 320 CENTURIES!) Does Nancy Pelosi know this?

        • MCH says:

          @Historicus

          Or the other rational view is that some of the people posting here are radical conservative conspiracy theorists out to undermine the foundations of this democracy.

          Who are they to complain about the ways our government spends money after all, they have been elected to do things this way. They have a clear mandate from “the people”

      • si m says:

        Exactly. And like the Russian Bank, the Fed knows exactly what it is doing. It is looking after those it wants to look after. The best investment advice is to copy the investing of the crooked politicians who benefit from the Fed’s current policies.

  7. Harry Houndstooth says:

    Putin is doing the right thing. He is an astute observer of popular opinion.

    Speaking of politics…
    It would appear Manchin (opposes spending and New Green Deal) and Sinema (opposes increasing individual, corporate or capital gain taxes) are actually going to kill the big give away. If Youngkin (R) beats McAuliffe (D) for Virginia governor (see WSJ column today noting yard signs leaning (R)), Katie bar the door. The bottom will fall out of the stock market.

    • crazytown says:

      The Fed hasn’t yet positioned themselves for the bottom to fall out. So the “build back better” or whatever this garbage is called (build back better doesn’t even make sense, how is that a slogan, what are we building back from?) failing won’t do it. The Feds new rules on insider trading are going to be the signal. Its cover for then to hit the exits.

      • historicus says:

        Where is the penalty for front running “confidential Fed policy”?
        And what of all those they tipped off…all the hedge funds and friends?

        Government service is the land of no consequence.
        (The Fed is independent…..right.)

        Who knew that the Fed would push for inflation (despite a stable prices mandate) and then not lift a finger when it ran too hot?
        It would be like knowing the bank guards won’t stop you…go ahead.

    • max says:

      Putin is scare that people maybe do not have shorts memory:

      the hyperinflation in Russia in the 1990

      By the end of 1991 it had become apparent that conditions approaching hyperinflation had set in. Whereas in 1985 inflation stood at 4.6%, this increased to 19% in 1990 and reached 200% by the end of 1991.

      • Harry Houndstooth says:

        This 1991 Perestroika memory is deeply ingrained in former Soviet citizens over 35 years old. Paper tickets to be exchanged for milk, bread, eggs and buckwheat. Today’s Wall Street Journal editorial was not very flattering of our President’s memory (defending Taiwan). Our American citizens who remember the early 1970’s inflation are far fewer, but hopefully better prepared to take advantage of the imminent asset crash just ahead.

  8. COWG says:

    The Russian CB is at least thinking about the citizens…

    Can’t say the same for the US…

    The 5.9% COLA ( as behind as that was) is going to lose another 2% to inflation before we even get it…

    • Serge says:

      The only thing they are thinking about is their pocket. Russian banks are crooks. They charge you commission on everything. Bill pay you getting charged 1% from the amount. Transfer to other people (like zelle) they charge you 1-1.5%. You go to another region they charge commission to withdraw your money ( from the same bank). Wire transfer to your account more than $8500 they need proof where that money came from, also there might be a hold for 90 days or pay 10% commission. On top of everything they even charge you for SMS notifications from you bank app.

      • josap says:

        So costs are higher in Russia to bank. But everyone needs a bank.

        Here, some banks charge and some don’t. And for different things, always depending on how much money you have in the bank.

      • Harry Houndstooth says:

        One of the first steps to wealth accumulation is to realize the truth in the first Three Estates: Banking, Real Estate and Insurance. Every dollar in your lifetime associated with these three things needs to be going to you. Borrowing money is slavery; lend to others. You must be involved in Real Estate following the cycles (it is time to sell, not buy), Self Insure.

        The Fourth Estate (newspapers) has transferred to Google advertising which is about to be slammed (See Front Page WSJ today). Google eliminated several of our businesses off of Google Maps because we did not advertise with them. Bizarre negative reviews from sources we cannot identify started after we stopped sending Google advertising money. We will not be intimidated.

        YELP is worse.

    • qt says:

      You mean our daytrader FED members are just thinking of themselves and their rich pals (regardless of political party)??? The hell you say

  9. MonkeyBusiness says:

    The order of mandates in this world.
    1 – 4 The Fed mandate.
    5. The mandate of Heaven (CCP)
    6. The mandate of Putin

    That’s all.

    • crazytown says:

      The fed only has 1 mandate. Steal as much as possible as quickly as possible before the general population notices. Over 100 years later and with the value of a dollar dropping almost 99%, they have exceeded beyond their wildest dreams.

      • Augustus Frost says:

        No kidding.

        I have Fedinand Lundberg’s “The Rich and Superrich” published in 1964. Based upon what they actually own (forget what it is “worth”), most of today’s billionaires don’t come even close to qualifying because currency debasement and asset inflation just makes them look a lot wealthier than they really are.

        Looking at Forbes’ estimates of NBA team values recently. Worth from slightly over $1B to about $5B. Most of this is “status value” premium. Even though COVID hit the league hard in 2020, multiples to operating revenue (forget profits) are obscene. It’s also interesting to see the current owner’s purchase price, one of which I recall was about $10MM in the mid-80’s.

        Sure, there’s been some growth including from an “underutilized” asset but mostly, it’s just another massive bubble. The prior prices far more accurately reflected “fundamentals”.

        • Anon1970 says:

          In Ferdinand Lundberg’s day, the four wealthiest families in the US were probably the Rockefellers, DuPonts, Fords and Mellons. No member of these families is on the Forbes 400 list in 2021. US wealth is probably as highly concentrated as it was in the 1920’s. But the people at the top are from different families than the ones in the 1920’s.

      • Anon1970 says:

        The US $ has actually outperformed the C$, the British pound, the yen and, I suspect, most European currencies (since 1913). But past performance is no guaranty of future performance.

    • MyLadyHumps says:

      The Fed has only two mandates:
      1 Create inflation
      2 Monetize Government Deficit Spending (see mandate 1)

      The mandates are intended to guarantee all the world’s wealth is equitably divided among 100 chosen special people.

      • historicus says:

        New Federal Reserve Mission Statement to be released soon…..

        “It is the Federal Reserve’s actions, as a central bank, to achieve these goals specified by Congress: promote unemployment by providing cheap money to the federal government to dole out and encourage idleness, promote inflation, punish savers and holders of dollars, and promote record low long term interest rates so as to facilitate the pulling of wealth forward from the future generations of the United States””

  10. Depth Charge says:

    Can I buy Russian treasuries? I trust them more than I do the US. This administration, and this FED, are financial terrorists at this point.

    • Depth Charge says:

      The Russian 10 year bond is 7.81%. I’d like to buy some.

      • Alku says:

        go ahead (and hope 1998 won’t repeat :)

      • John says:

        Depth Charge,
        Putin raised tax on them awhile back if you get them as a foreigner. Forget how much. It was high though. Thanks Wolf.

      • The Real Tony says:

        The Russians with money will all become wealthy from interest rate hikes. Still Russia waited too long before hiking rates now inflation is out of control. Pushing up the value of a country’s currency vis-a-vis the U.S. dollar also quells inflation. Higher interest rates slows demand pushing prices lower and pushes up the value of the currency which also pushes down inflation.

      • Auldyin says:

        @DC
        Back in December 20, when my cash a/c went to 0% , I said F*** this I may as well take a punt on Russia for a 5% divi in a diversified fund, Russian managed.
        I put half my cash in and got 101.6 Ru for my GB£. I thought I’ll add to it on weakness, see how it goes. No weakness (touch wood) up 60% (energy) dividend maintained, in spite of Covid. 96.6Ru per GB£ today.
        I’ve heard Putin speak a lot (un-filtered) and I think the past is the past for Russia IMO. He is a really smart guy. IMO
        I’ll disappear from this site if it goes ‘T**s UP’

        • Wolf Richter says:

          These rate hikes have been very good for the ruble. I think it’s been the best-performing Emerging Markets currency since this rate-hike cycle started.

      • MCH says:

        To do so would place undue trust on the people in power. The only difference is the people in question happen to be Russian. If history has shown anything…. You cannot trust those in power… not for long.

        The only exception is when the person who is in power is yourself, then you can trust away.

    • Depth Charge says:

      Of course not:

      “…the US placed sanctions on ruble-denominated debt sales and ahead of a summit between President Vladimir Putin and US President Joe Biden scheduled for next month.

      The latest round of anti-Russian penalties bans direct purchases of Russian ruble-denominated sovereign debt from mid-June. The ban comes in addition to the already existing restriction on the direct buying of sovereign Eurobonds issued by the Russian government.”

      • Citizen AllenM says:

        Tiaa bank has a Ruble CD paying 5.4 that complies with our effing stupid laws.

  11. Depth Charge says:

    Why do American politicians hate Americans so much?

    • Trucker guy says:

      They don’t hate us. They just are in it for the money. No surprise that the best way to make a ton of money is take 1 dollar from a million than to take a million from 1 person.

      • MonkeyBusiness says:

        Totally. It’s business, nothing personal.

      • sunny129 says:

        Trucker guy

        Political career in America is the most lucrative one, for those who keep on egging on deficit spending, supported by lobbying by Military industrial complex, Medical industrial Complex (Bog Pharma, Ins Cos) and University Bank complex (student loans and exp education)

        The biggest crook was Obama who gave the kool-aid of ‘CHANGE WE BELIEVE IN” slept with WAll ST and banks and made himself multi millionare

    • Truckman says:

      Most countries’ politicians hate their average citizens these days.
      George Orwell used to think that only happened in England.
      Indeed, it has almost become a job requirement, for to value one’s citizens might lead to empathy with them. This would make it much more difficult to abuse and exploit them.

      • wisoot says:

        Politicians are puppets. Countries dont exist. Citizens dont exist. Land dwellers do. Free men and women do. Community organisers are volunteers who lead with their heart and not for a paycheck or recognition. Why dont we all create our own money after all it is we who decides its value. On what basis have you accepted you have no right to print or make your own money or barter tool. What? You fogot how to critically think? Why did you forget? Why did you delegate community tasks to people you dont trust? What does that say about you?

    • Billybob says:

      Not true DC.

      They love us. Just not as humans.

      We are their tax mules. And who doesn’t love their beasts of burden?

  12. Jeremy says:

    What’s the level of home ownership in Russia vs North America?

    I’m guessing there’s less risk there of triggering mass mortgage defaults, which would also cause political issues.

    • Truckman says:

      Russia 87%, USA 65%.
      Most of the former Soviet Bloc countries have very high ownership rates.
      However, the average Russian ‘home’ is an ex-Soviet apartment with all the grace of a nuclear waste storage depot on the outside, yet some surprisingly nice decor on the inside. Maintenenance and modifications will be done with large industrial mining equipment borrowed from work.

      • Alku says:

        “all the grace of a nuclear waste storage depot on the outside” – how do you know that? :)

        On a serious note, just FYI:

        Basically the only difference between owners and renters of “ex-Soviet apartment” is that owners can sell it. Both owners and renters pay the same “HOA fees”, maybe owners pay even more because they are responsible for more maintenance stuff. Which doesn’t mean they will get much in return.

        A concrete example: an owner at 9th floor can’t have proper water pressure because a renter on the 6th floor doesn’t care and don’t let the plumbers in to change a 50 y. o. pipe (even though it’s free of charge for him). To force him you need to have a majority of votes of all who live there in the house (9 storey, 5 sections). Good luck with that.

        In the USSR times, all were renters, then it became possible to privatize, and initially there was a rush to do that. This window is closed now, but thee are many people who want to de-privatize.

        • Wisdom Seeker says:

          Now I understand why people from some parts of the world are such excellent creative problem solvers!

          Those living in saner systems can just muddle along … but in places where things make no sense, deep creativity adds a lot more value!

      • Harry Houndstooth says:

        Do not underestimate the “Pride in Ownership” effect. Yes, those Soviet concrete slab flats have been lovingly insulated with external foam, mini-split air conditioners installed and window upgrades. The reason we must all have at least one Wolf Beer Mug (Nothing Goes to Heck in a Straight Line) is his absolute adherence to the truth.

  13. DawnsEarlyLight says:

    The FED is trapped by how much Treasuries they need to buy/back the US Treasury, the maximum bank profits, and the minimum treasury interest rates they can get away with. Guess which one has priority?

  14. The Russian CB has nearly doubled their policy rates and what does it have to show for that? The rate hike cycle began in March and inflation has increased! The US Feds policies are deflationary and they should stick to them, or inflation will move to double digits. Russia is selling oil at a premium relative to global growth, into bottle necked supply systems, and keeping Europe warm this winter after they mismanaged their inventories. Yes inflation is high in Russia but so are profits, if the oligarchs were to share any of them.

    • Depth Charge says:

      “…The US Feds policies are deflationary and they should stick to them…”

      This is a shockingly obtuse statement.

      • There is no correlation between low interest rates and inflation, but there is correlation between low interest rates and deflation.

        • kam says:

          Hmmm……
          No correlation between (low) interest rates and inflation. How perverse.
          Raising interest rates to 3% above real inflation will certainly slow down economic activity.
          So if higher interest rates slow down purchases of long life assets, resulting in lower demand, lower prices, then low interest rates certainly do increase inflation.
          And you have conveniently avoided discussion of money printing/credit creation which is the evil partner married to low interest rates.

        • Saltcreep says:

          The relationship will eventually become quite apparent, I would suggest, AB.

          The exponentially increasing future obligations/asset prices following from current CB/gov’t policies will inevitably lead to exponentially increasing liquidations of obligations in the future. Even if faith in exponential debt growth is maintained a while longer, when conversions like the payouts from pensions and social security programs cross the stalling and eventually dropping output capacity of a greatly overexploited environment and energy/resource base, we’ll be in for real trouble.

          The exponentially growing debt loads and consumption increases engendered by current policies are eating up our societies’ equity (both financial, natural and societal). And the problem we have is that the lag is one of decades from inception until reality hits us with a sledgehammer.

        • 91B20 1stCav (AUS) says:

          Salt-apropos your last paragraph-how to function best among a humanity who, for the most part (in the ‘First World’ with its global influence, at any rate), seems to work from an existential view of the world that begins only at personal birth and ends with exit of same? Tragedy or Entropy of the Commons?

          may we all find a better day.

      • historicus says:

        Orwellian Monetary Theory (OMT)
        Debt is good.
        Lender is slave to the borrower.
        Saving is Punished.
        “Stable” now means increasing at a stable rate of increase.
        Extremely low interest rates are moderate, even though at immoderate record lows.
        The future funds the present.
        Free market economy is arranged by unbridled unelected power.
        Democracy is ruled by monetary dictators.
        Ignorance is strength.
        Freedom is slavery.
        We can not raise rates because there is too much debt, so we must allow the current condition of zero cost debt creation to continue

    • Mutthead says:

      All Ros* entities, including Gazprom, are subject to the “superprofits” tax, sending the bulk of all Russian corporate profits into the sovereign wealth fund, from which they are distributed directly to the people.

      • Auldyin says:

        @M
        Russia had/has a flat rate tax which was 13% until Vlad put it up to 15% to fight Covid before the recent election when his party’s vote share dropped from 56% to 50%. Try that in USA.
        I get dividends from Gazprom.

    • 91B20 1stCav (AUS) says:

      …and meanwhile, great taiga fires appear to be burning relentlessly towards Moscow…

      may we all find a better day.

      • Saltcreep says:

        Well, 91, have you seen that New Yorker cartoon depicting a shareholder’s presentation or something, with the CEO standing at the rostrum concluding “And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end period will be filled with unprecedented opportunities for profit”?

        • 91B20 1stCav (AUS) says:

          ‘lo, Salt-dangit! Now there’s unsavored coffee on my keyboard, again!

          Keep smiling through the apocalypse…

          and,

          may we all find a better day.

  15. Kim says:

    Russia’s debt ratio is one of the lowest in the world at 19.48% of its GDP with a total debt of approximately $208 billion, not trillion but billion. Russia is the ninth least indebted country in the world.
    At least there is still one area where the United States still leads the world, the national debt! As of August 31, 2020, federal debt held by the public was $20.83 trillion and intragovernmental holdings were $5.88 trillion, for a total national debt of $26.70 trillion.

    • Wisdom Seeker says:

      Of course, the reason Russia has little sovereign debt is because they default and devalue fairly frequently, making it a high-risk proposition to lend to them…

      But it does put them in the enviable position of not being weighed down by the accumulation of unfulfilled promises-to-pay-someone…

    • Wolf Richter says:

      Kim,

      The bulk of Russia’s debt is owed by Russia’s state-owed giant corporations (oil, gas, metals, defense, etc.), and much of this debt is owed in foreign currency. No one wants to lend to the state of Russia in foreign currency because it already defaulted on its foreign currency bonds, and no one wants to lend to Russia in rubles because the ruble is being systematically devalued against the USD, EUR, and YEN. Look at a 10-year RUB/USD chart.

    • Ron says:

      What. About unfounded wars your not even close on amount

  16. Brewski says:

    Monetary & fiscal policies are out of control.

    Sadly, this will need to play out in a series of very unpleasant scenarios if history is any kind of guide.

    The difference between inflation and hyperinflation may be just a matter of time before it presents itself.

    B

  17. Antonps says:

    Wolf, what are you thoughts on CBDCs?

    • Wolf Richter says:

      Antonps,

      Depends how they’re set up. In terms of the Fed, it’s working on a CBDC, but it may never come alive because the Fed is worried about a lot of things — the dollar is such a huge currency, used all over the world, that they’re worried about messing up some part of it where the unintended consequences then start cascading through the global financial system. These concerns have been vocalized by Fed governors. So we’ll see.

      • There’s a series of articles there. Fed chief denies any obligation to the dollar, while behind the scenes the govs are working on this thing. If hyper inflating the dollar is Feds ultimate goal, then crypto must be a CIA psych ops. Certainly Yellen cannot abandon the dollar. (she said we do not support a weak dollar). Crypto dollars are in direct competition with the paper dollar, which is a unlimited liability. At least Bitcoin has a cap, a monetary limit and more likely crypto is driving the dollar, stocks and bonds, and this is the supply chain snafu. There simply aren’t enough paper dollars to track the expansion of digital fiat which has broken out of its natural limits because it is written in fiat which has no limits. and gold will do the same thing, probably. Crypto is a good idea based on a fallible premise. Do not trust the inside trading Fed govs, who have no idea WTF is going on.

  18. ru82 says:

    Oil looks like it is going to get to $100 this year.

    I read that miles driven is pretty much pre-covid levels. Global Oil supply right now is less than demand.

    Rig counts are still about 30% lower than pre-covid.

    I noticed that oil in Permian basin is actually at pre-covid production levels. At first I thought that was sort of hard to believe. Did some digging around and found out that about 3000 wells drilled but not completed were completed and now producing oil. I am thinking those previous drilled well were a nice buffer but there were a lot that were drilled last year but not completed because of the low oil price.

    That buffer of drilled but not completed wells may soon go away.

    From everything I read, it looks as if supply and demand in the U.S. should be fine. It is the rest of the non-oil producing countries that may have issues.

    nat gas demand is pretty flat in the U.S. and production keeps going up but so do exports. If it were not for LNG exports we would have an over abundance and very cheap nat gas. The U.S. produces probably 25% more nat gas than we consume.

    So if nat gas prices start to go up much more….call you congress person and tell them to limit LNG exports. The U.S. chemical industry is already lobbying congress to reduce nat gas exports. Not sure why U.S. consumers should pay for other countries converting to green hurt U.S. consumers.

    • Anthony A. says:

      As of August 2021 there were just over 2,100 drilled, but not completed wells in the U.S. I believe oil producers are still drilling since rig costs are still low.

  19. DR DOOM says:

    Let us see if Inside Man Jerome and the Banking Cartel called the Fed can convince people that marinated card-board is a good replacement for chicken gizzards. I believe the electorate will love it if it’s packaged correctly and with chipotle flavoring and a lot salt and have “all natural” stamped on it. Hell, throw a Fauci autographed N-95 inside for a sweetener. Jerome may as well just come out and say it. Go F&$k yourself. Inflation ain’t a problem for him or the Cabal. Besides if Russia is raising rates it must mean that it’s some how en-riching Vladimir the Terrible. It can’t be that Vlad cares about the needs of the people. That would humanize him . We can’ allow that. Jerome would not want to play into this devious yet obvious trap set by Vladimir The Terrible by believing this inflation bull . No-sir, not our guy. Inside Man Jerome. Waitin’ for them moderation blues, oh yeah.

    • historicus says:

      Dr Doom…

      Indeed! The PCE that the Fed “watches” substitutes out items that rise “too much” in price. How’s that for a metric?
      So hamburger helper is really pretty good all by itself….
      When has Powell been in a grocery store or a lumber yard?
      And I am dying to ask if his parents were born rich, and if not, did they SAVE THEIR MONEY to get on their financial feet? And if so, why is HE POWELL denying the people of this nation the ability to SAVE without being PUNISHED deliberately by Fed policy? (5% inflation, .05% return on savings)

  20. si m says:

    As other countries raise their interest rates to cover persistent inflammation they will attract foreign money. Surprisingly quickly, US will be unable to to, because of their low rates. The crooks in charge will be stung too much, by the required high rates, so they will not allow them to rise. What great entertainment potential we have got!!

  21. si m says:

    Hhmmm. Freudian slip with predictive text on my last post.

  22. Seneca's cliff says:

    I would trade J Powell for Elvira any day. ( Cooler name too).

    • DR DOOM says:

      No Joke ! Just after I read Seneca’s comment I was going to the mailbox and heard the song Elvira by the Stadler Brothers coming from the mailman’s jeep as he was putting mail in my box. What a chuckle.

  23. si m says:

    As other countries raise their interest rates to cover persistent inflation gtthey will attract foreign money. InSurprisingly quickly, US will be unable to to, because of their low rates. The crooks in charge will be stung too much, by the required high rates, so they will not allow them to rise. What great entertainment potential we have got!!

  24. 42 says:

    complain all you want. life has never been better.

    • historicus says:

      “Honey, how much higher is the stock market this morning? And why are our neighbors leaving so early in the morning? They really cant STILL be going to work. Meet you for lunch at the club darling.”

      • historicus says:

        Fed policy has bifurcated this nation and its society…..and that aint good. IMO.

  25. 42 says:

    squeaky wheel gets the grease, whiners.

    • Saltcreep says:

      I thereby take it that there is an important practical difference between a squeak and a whine.

  26. JeffD says:

    “Reckless” is the polite explanation for this Fed.

  27. Nick Kelly says:

    ‘Just before 1 a.m. local time on 16 December 2014, the Central Bank increased its key interest rate from 10.5% to 17% in an attempt to slow or stop the decline of the ruble.[46][47] It was the sixth increase in interest rates by the Central Bank during 2014.[46

    BTW: if you enter ruble crisis, you have to specify which one.
    The point is that what we consider unimaginable fluctuations in rates are not new for Russian CB. Volcker jacked up rates but not 6% overnight.

    A number of commenters have noted that US inflation is the same thing as US$ weakness. The external weakness of the ruble is irrelevant to the regime and the rest of the world. Politically, internal weakness is another matter. In 2014 Russians fled the ruble by buying ANYTHING priced in rubles. (Gold and silver weren’t.)

    This size of this move means something but the baby steps by CBs with convertible currencies mean at least as much. For example, the instruction of the NZ government to its CB to stop supporting housing prices.

    • Wisdom Seeker says:

      @Nick: “A number of commenters have noted that US inflation is the same thing as US$ weakness.”

      That doesn’t make them correct.

      “US inflation” is a measure of the dollar’s strength vs. the consumer product index – a basket of goods and services.

      “US$ weakness” usually refers to the relative value (exchange rate) of the US dollar against a trade-weighted basket of international currencies.

      Those are very different things. And the US dollar is holding its own against the world’s major currencies.

      The US can have inflation AND a strong dollar when the “basket of goods and services” is hard to purchase due to constrained supply and high global demand, and when the other nations have been easing their credit much as the US has.

      Put another way – all the major currencies are having the same inflation, so the exchange rates of the currencies are fairly stable.

      • Nick Kelly says:

        My point is that, to understate the case, the ruble is not a major currency. The US $ is holding its place as cleanest dirty shirt, but not against oil, which is another way of measuring all currencies.

    • Nick Kelly says:

      Some of these comments about how ‘caring’ Russia is…the one about all profits going to the people…OMG. That might actually be true in a narrow accounting sense. After all the soldiers, capos. oligarchs, and Mister Big have wet their beaks there might not be a profit.

      The place doesn’t offer anything like the Western idea of social programs. The OAP is about $110 a month and they don’t get that in $!

      A young lady newsreader on Russian TV actually started laughing as she read the extra benefits for the OAP. It was like $12 for transit, 8 for medicine. Credit Suisse says inequality in Russia is so extreme it belongs in a category all by itself.

      Even in Russia, it’s unseemly to turn the thugs loose on a protest of pensioners. The minister of finance just ran past them saying there was no money in the budget.

      • Depth Charge says:

        Does Russian have hundreds of thousands of homeless people eating, sleeping and defecating on the sidewalk? I don’t think so. The US is quickly turning into a 3rd world shithole.

        • Anthony A. says:

          According to what I have read, they have many homeless but most of them are not in the cities but are in rural areas where support facilities are available. If a homeless person still has his “papers” (Official ID, etc) they can qualify for some support. Other with no official ID have a bad time of it.

        • Nick Kelly says:

          When the Sochi Olympics happened (most expensive ever, so much rip- off and laziness Putin replaced management even though it was paying off) a few Westerners wandered off site. A few hundred yards away sanitation was in the Middle Ages.

        • tom17 says:

          And yet legal & illegal continue to come.
          How does Russia handle their open borders
          and the masses wanting in?

        • Lisa K Melby says:

          Great comment!!

        • Harry Houndstooth says:

          Easy now. Next you will have to explain why shoplifting under $950 is not prosecuted in San Francisco. Bye bye Walgreens.

          Perhaps the pendulum has peaked and will swing back; will Trump’s narcissism hand over more Democrat seats like the two Georgia Senators? What exactly did Liz Cheney do wrong?

        • Wolf Richter says:

          “… why shoplifting under $950 is not prosecuted in San Francisco.”

          That’s total ignorant BS that people keep regurgitating and spreading around. Shoplifting under $950 is prosecuted as a misdemeanor, not a felony.

          There has always been a dollar-line on property crimes between what is a misdemeanor and what is a felony. Go over the line, and it’s a felony. The dollar amount of that line was raised, after years of not having been raised. That’s all. You can call it an inflation adjustment.

  28. Mutthead says:

    Vlad has repeatedly identified Western Central Bank fiat printing as the source of the inflation exported to Russia

    • Nick Kelly says:

      How would it be exported? The West would have to buy stuff from Russia, raising prices in Russia. All the West buys from Russia is oil and nat gas at prices set largely by Russia.

    • Auldyin says:

      @M
      Spot on M
      At the Moscow energy conference when everybody was blaming him for high energy prices, he said what do you expect when the US Fed is printing trillions of dollars and flooding the World. He was speaking exactly my language and he is on exactly the same tack as many commenters here. No wonder the MSM stifle and denigrate him.
      By the way he also said Europe was short of gas because US exporters had abandoned them to sell to China who were paying whatever it took on the spot market. The real test will be if they also abandone USA to make big bucks in China.
      Russia is the second largest US energy supplier after Canada. Russian gas is three times cleaner than US gas. Ask your MSM to fact check that.

      • ivanislav says:

        @Auldyin

        Good of you to point that out. Russia INCREASED its total natural gas supplies to Europe year over year, while the USA cut its LNG supplies to Europe by 50% in favor of delivery to Asian markets where it was trading higher. Meanwhile, international media were busy running stories blaming Russia and conveniently ignoring the fact that European suppliers in large part caused the crisis by not buying contracts, in hope that they could get better prices later. Well, later has arrived and prices are higher. Tough luck! I’m so disgusted by the topical and predictably narrative/ideology-driven news coverage of just about everything.

      • Anthony A. says:

        “Russian gas is three times cleaner than US gas. Ask your MSM to fact check that.”

        I find this hard to believe. I worked in the oil and gas industry for 30+ years and gas sold for power generation or commercial/residential heating is cleaned up in a processing plant to meet regulatory standards. It is dried, has any impurities removed, and has correct BTU content for its intended use. This is the way field gas is processed all over the world.

        LNG leaving a port is dried, cleaned and liquefied and on the receiving end it’s again sent through a processing plant to get it back in gaseous state.

        • historicus says:

          Good comment Anthony

        • Auldyin says:

          @AA
          I’m quoting Vlad.
          If he means straight out of the ground, there’s a lot of processing money to be saved.
          I’m assuming MSM would be on Vlad like a hawk if there was any way they could denigrate him.

      • Nick Kelly says:

        How would the US printing $ force Russia to raise prices?
        No doubt it would, why not, but it didn’t have to.
        Creating an opportunity for higher prices does not equal an obligation to raise them. If Russian gas price rises, it’s because Russia decided to raise it.

        • Auldyin says:

          @NK
          So you don’t believe that printing money increases money demand for available resources and thereby increases prices.
          It’s obvious to lots of folks but not all such is the nature of opinion.

  29. fred flintstone says:

    He did it again……..toward the afternoon……J……the crook…… Powell……announces info about interest rate tapering out of school…….this guy has someone trading the market in his family.
    The smell is really bad…….

  30. Cobalt Programmer says:

    In Russia men rob banks. In USA, banks rob men. Russian currency is a weak currency while US currency is a “hard” money. Obviously, Russia cannot export their currency but US can. A drop of 20% in stocks, will send shock waves and rate cuts. So I do not expect a rate hikes to a very high level >0.5%. Also, the mentality of East is to tighten the belt and austerity while try to squeeze with whatever available even during scarcity. US on the other-hand, people are used to “American Excess” in terms of food and goods. Even a shortage of peanut butter will be an oppression. Lets see…
    I got a few simple points.
    1. If you have a hammer everything looks like a nail. How raising rates to 1% in US can magically stock the shelves and employees back on the job?
    2. How are you preparing for shortages and empty shelves?
    3. Welcome back “Big guy”. Your return will not go unnoticed.

    • Dv says:

      I cannot be that ignorant. Russian banks have been among the best-performing in the world over the past few years. In fact, Russia’s top fintech bank, Tinkoff, is the only one among about fifteen globally that operate on the same model which has been consistently profotable over the years.

      Anyway, there have been Just about 5 bank robberies in Russia over the past decade. And if you recalculate US inflation according to Russia’s formula, it will most likely be higher than in Russia.

  31. historicus says:

    Fed Funds have never been this far below inflation….
    1/4 pt raises are nothing….

    Who learned the Fed would PROMOTE inflation, then once achieved, let it run…unaddressed?
    For that is what is happening, and the stock market seems to love it….
    Whose game is this? And who is stealing from the American dollar holder to enrich he and his friends?

    • historicus says:

      and BTW, the Fed Governors that front ran … and told their friends to front run Fed policy are PIGS and should be punished, like PIGS.
      The fact that they wont be is telling…….telling us how things really work, the network, the protected, and the beneficiaries.

      • DR DOOM says:

        The only way rates rise is the electorate has to be punished and punished and punished and punished untill they quit believing the distraction narrative that their power-less neighbors behavior and their beliefs are the problem. We ain’t even close to the tipping point yet. The pain is barely registering . The proof of this is they are buying like mad if they can find it. If enough people are brought to their knees the Fed’s master,Congress, will force rates on their bitch the Fed or let them print more and more untill absolute collapse. The result will be same. This is the only way to sound money. Killing inflation by killing asset prices with high rates works the quickest with less damage. Congress will always chose the slowest with the most damage course and will therefore choose to print and print and print untill collapse. If one thinks this is transitory then why be timid with monetary policy? Either Milton Friedman and the Exchange Equation is wrong or Inside Man Jerome is wrong. Take your pick and plan accordingly. I am going with the man who drove around California with the Exchange Equation on his license plate . I am a believer of his quote that Inflation is everywhere and always a monetary event. If Inside Man Jerome is correct that we have a new type of inflation called ” transitory inflation” which is caused by supply chains then why not let the money printer keep going go Brrrrrrrrrrr and lets us print prosperity for all. The supply will eventually catch up and it will be fabulous.

        • historicus says:

          “If enough people are brought to their knees the Fed’s master, Congress”
          The ultimate power lay in the hands of Blackrock and Vanguard who likely (Wolf won’t like this) control both Congress and the Fed. IMO

  32. Linda says:

    Can someone explain how the socialist cesspool of European Union pushed down interest rates on Greece bonds to negative rates, 1 month -0.189%, 3months, -0.343%, 6 months -0.389%, and very low interest rates on 5, 10, 15, 20, 25 year bond yields of 0.292%, 1.028%, 1.096%, 1.068%, 1.237%. They used to be high interest of 15% to 35% the last few years ago.

    This is total BS and pure artificial manipulation, rigging by the ECB, European Central Bank. When is this going to break down and Europe interest rates be much higher. Singapore is much better off financially than Greece has much higher interest rates with 1, 2, 5, 10, 15, 20, 25, 30 year bond yields of 0.43%, 0.73%, 1.25%, 1.76%, 2.09%, 2.17%, 2.09%.

  33. David W Young says:

    I say we send all current Fed members, even at the economist level, to Siberia to not only get their pudgy bodies into some sort of shape breaking rocks, but getting courses on how to possibly run a Central Bank. Boy, if I could get 5.9%, the current CPI garbage data spewed out from Washington, on my cash balances, I could buy shoes and be somebody!!

    When it comes to foreseeing unintended consequences of their ZIRP and QE to the Moon monetary policies, we only have to look at the soaring overnite balances of Reverse Repos issued by the Fed since October, 2019. Their statues, if they ever get some from melted down Robert E. Lee bronze, will be taken down in every village square in the country, just like those of Stalin and Lenin bit the dust.

  34. Antonio says:

    The way things are going, Russian bond yields will be 10% by 2022. Barzil’s 10 year bond yields surpassed 12.0% now when just last year as low as in the 7.5% range. A few years back, they were 16%+ 10 year Brazil bond yields.

  35. Keep your shirts on. That the Fed has committed a huge error is mere speculation, and the policies taken by the Fed and US Congress at this point are far more realistic than the efforts after the GFC.
    Covid required drastic action and those actions saved the finances of many households…a very good thing.
    Normalization is far from out of the question, and with an economy still in recovery, there is still a downside risk that must be respected. It’s much easier to slow an economy than it is to pull one out of the mud.
    Give our institutions some credit. So far this response has been very good. There will surely be costs but too many are being hyperbolic in regards to potential future problems.

    • Harry Houndstooth says:

      Only when the tide goes out do you discover who’s been swimming naked.

      Warren Buffet

      I am surrounded by naked humans long the stock market on margin and in debt up to their eyeballs, just like 2008.

  36. Randy says:

    Say what you want about Russia. But Putin play’s a mean game of chess. He’s a intelligent man.
    Something we are without. Here the lunatics are loose and running the asylum.
    .
    “When you’re born you get a ticket to the freak show. When you’re born in America, you get a front row seat.” ~ George Carlin

  37. historicus says:

    What will Blackrock tell the Fed to do?

  38. Yort says:

    Per Wolf – “…because inflation can become a politcal bitch”

    Per CNBC Monday:

    Combined with price spikes across a variety of goods, inflation is hitting Americans’ wallets and threatening the economic rebound heading into the 2022 midterm elections.

    Voters are increasingly blaming “The President (Mr. B)” for the spike in prices: 66% of respondents in an early October survey conducted by CBS News blamed U.S. government policy for inflation, and 60% said the administration is not focused closely enough on the issue.

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