How the Housing Market Split in Two, Doubts about the Taming of Inflation, and What’s Going on with New & Used Vehicles

Wolf Richter on “This Week in Money,” at, recorded on February 1:

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  88 comments for “How the Housing Market Split in Two, Doubts about the Taming of Inflation, and What’s Going on with New & Used Vehicles

  1. Swamp Creature says:

    Looks like the home sale market is split in three. Was in a highly desirable inner city neighborhood in the DC Swamp today, Capitol Hill. Turn of the century houses were being listed and were under contract all over the place. Prices were up slightly. Mortgage interest rates have dipped and the FOMO frenzy has taken over in this location. In the farther out suburbs the market is like what Wolf described in his podcast. So that means there are more like three distinct housing markets, not two.

    • dang says:

      Actually, the home sale market is not only split but broken. At some point the pretense gives way to reality.

      Generation X’s ability to afford a home is dependent on either a collapse in prices which is the preferred solution as opposed to the alternative which is long term financial torture of the young men and woman of this country.

      Never able to get ahead of inflation, which unfortunately, seems to be the policy that the banks that control Fed policy, have decided.

    • Gene says:

      I’m in Northern Virginia, just outside the Beltway. There’s such a tremendous amount of federal spending and so many “defense” contractors with their corporate offices and lobbyists in this area. I used to audit Northrop before it merged with Grumman. They had their corporate office in Century City, next to Beverly Hills. The offices were called “Mahogany Row.” To be closer to the power center, they moved to McClean, Virginia. As long as the federal spigot is turned on full blast, housing prices will not go down in this area. The only thing I really worry about at my advanced age is nuclear war. I worry about the planet.

  2. Richie Cat says:

    Is part of the high service inflation, other than funding rising salaries, to make greater profits in a higher inflationary economy than the 2% norm? Thus causing, or deliberately keeping, inflationary pressure on the economy and helping reduce the obscene sovereign debts.

    • Wolf Richter says:

      Companies raising prices = inflation. Companies will always raise the prices to the maximum they can without sacrificing their sales goals. The fact that companies are able to increase their prices like this and not lose sales, that’s the inflationary mindset which kicked in late 2020 and early 2021. If consumers had refused to pay those prices (vehicles, electronics, appliances, etc.), companies wouldn’t have gotten away with raising prices, and inflation would have been stopped in its tracks.

      Services inflation came after goods inflation was already raging. The shift of inflation from goods to services was a big topic here back then. But once inflation sets in for services, it’s hard to stop because services are often essentials and hard to shop. For inflation to take off, you need to have consumers that are willing and able to pay for those higher prices.

      • Debt-Free-Bubba says:

        Howdy Lone Wolf. ” If consumers had refused to pay those prices (vehicles, electronics, appliances, etc.), ”

        One of the last proudful American traits. Continue living and enjoying life. No matter what Govern ment or life does to you.

        • Warren G. Harding says:

          Shop ’til you drop!

        • Debt-Free-Bubba says:

          Howdy Warren YEP. Exactly why ZIRP was invented. Made it pointless to savers to save. Some of US squirrels were not that stupid though…..

        • dang says:

          Actually, you are on too something about the “Continue living and enjoying life” tell.

          Make believe nonsense from my perspective, life is never enjoyable for the majority of human beings. It is burden. To suggest otherwise is an indication of privilege.

      • Winston says:

        “Companies will always raise the prices to the maximum they can without sacrificing their sales goals.”

        And yet most people don’t realize the reason for the insane rate of increase above inflation of the cost of a college education for an otherwise useless, in most cases other than technical fields, piece of paper that has become a requirement simply because so many people have one. “Prices will rise to what the customer can bear.”

        Accounting for the Rise in College Tuition
        Grey Gordon, Aaron Hedlund
        September 28, 2015


        “These results accord strongly with the Bennett hypothesis, which asserts that colleges respond to expansions of financial aid by increasing tuition. Existing theories can fully explain the increase in net tuition between 1987 and 2010. Our model suggests demand-side theories have the most predictive power. In fact, our results show the Bennett hypothesis can fully account for the tuition increase on its own.”

        The Bennett Hypothesis: “Increases in financial aid in recent years has enabled colleges and universities blithely to raise their tuition, confident that Federal Loan subsidies would help cushion the increase.”

    • John H. says:

      Richie Cat-

      Layman’s view of the progression of services inflation (jaded and perhaps misguided):
      – Services inflation is rooted in rising wages.

      – Business owners are forced to raise wages by the prospect of losing good employees to competing employers.

      – Employees can switch jobs because because consumers are spending (like inebriated mariners), flush with spending money (saved or borrowed) as they are, stimulating hiring across the economy.

      – Consumers’ (individuals and businesses) spending money is so available due to elevated fiscal and monetary stimulation.

      – The elevated fiscal stimulus exists due to deficit spending made possible by below-market interest rates maintained through monetary policy.

      – Monetary policy seeks to control the otherwise free interest rate markets, and is the result of our well-intentioned but over-active and somewhat misguided central bank.

      – We voters and taxpayers support our congressional leaders when they ask too much of our central bank.

      From which I conclude:
      Deficit spending, enabled by the Fed, and accepted (so far) by the voting public, is the real problem. Jacques Reuff succinctly referred to this path as “deficits without tears.”

      Is deficit spending policy consciously designed around “helping reduce the obscene sovereign debts?” My guess is it’s less concrete policy than a consequence of past benevolent but misguided attempts to have our cake (max employment) and eat it too (stable inflation). Sounds good on paper; doesn’t work sustainably over longer periods.

      • bulfinch says:

        Just got off the phone with a coworker who was lamenting only being able to walk away with 300K if he sells his Garage Mahal in Plano TX vs the 500K he would’ve gotten two years ago. All for simply living in a big blah house in suburbia where he used a spare bedroom exclusively for his aquarium, his car posters, and a corduroy beanbag chair.

        This is the taproot of at least one of the EZ money trees…sudden and enormous windfalls.

        • 91B20 1stCav (AUS) says:

          bul – the ‘win the lottery’s mindset is where one finds it (…and found frequently…).

          may we all find a better day.

        • 91B20 1stCav (AUS) says:

          …auto-whatever insists on adding an ‘s’ after almost every apostrophe. I missed this one, apologies…

          may we all find a better day.

  3. SoCalBeachDude says:

    The prices of ordinary used cars are falling significantly while the prices of extraordinary classic cars are rising significantly.

    • dang says:

      The last time the economy contracted I could have bought a 60 grand, 2006 Porche for 12 grand.

  4. SpencerG says:

    Good interview Wolf.

  5. Thomas Curtis says:

    Thanks Wolf,

    Just exactly what your written word has said but I did pick up a bit more coloring by being able to listen to your exclamations and exasperations. You’re the best.

  6. JimL says:

    This is good stuff. Actually great stuff.

    I am pretty sure it comes through in my posts, but in case it doesn’t, I think your stuff is top notch. The world would be a much better place if everyone in the world turned off CNBC, Fox Business, and other such crap and just read your posts.

    Thank you. Seriously.

    • dang says:

      The only reason that the financial networks are broadcasting is because they have an audience. Unlike you, suggesting that you know what is best for society. Network television is a commercial operation that makes it’s profit by your purchases history. Just ask Google, that creepy wraith that organizes the dirt.

  7. John says:

    Thanks so much Wolf! Great job! I agree with Curtis on the color especially about the 10 year bond.

  8. TrBond says:

    Very good interview Wolf, I have a question based on your comments.
    You state that you think Gov’t has decided that they will use Inflation to mitigate their very own Gov’t Debt problem (even while they’re rapidly increasing it !).

    So does that mean the Federal Reserve (and their Wall Street minions) is just doing a big Kabuki dance to fool investors into thinking that the Inflation rate IS going back to their 2% rate?
    That the Fed is in on the joke ?

    • Wolf Richter says:

      In terms of your question, no. What is happening is that fiscal policy and monetary policy are now fighting each other. This is not a good situation (depending on where you stand) because it means higher inflation and higher rates for longer.

      Fiscal policy and monetary policy should pull in the same direction.

      Inflationary times require tighter monetary policy and tighter fiscal policy. Tighter fiscal policy means a combination of less spending and higher taxes, to dramatically reduce the deficits; and we have the opposite.

      • Jon says:

        Fiscal policy would always win over monetary policy.

      • TrBond says:

        Makes sense. Thank you

      • Andrew says:

        Some help here from the Fed. They are doing some QT and taking money out of the money supply which is deflationary. Perhaps they can reduce some of the inflation generated when we get lower interest rates on a strong economy.

  9. hreardon says:

    Wolf, I don’t know if you’ve covered homeowners and auto insurance policies, but I’d like to bring this up: my policies renew next month and the rate increases this year are staggering. Here’s what I just received:

    1. Auto coverage: VW Golf and BMW 3 Series. Rate increase from $2,600/year to $3,500/year. No accidents, no tickets in 7+ years. $500 deductible.

    2. Homeowners: $150,000 suburban 1,700 sq. ft. colonial in Northeast Ohio. Rate increase from $1,200/year to $2,300/year. $1,500 deductible

    Upping the deductibles (doubling) reduces the rates a total of about $250.

    To say I was shocked is an understatement. I’m used to annual increases, but this is crazy!

    • HowNow says:

      Reading a great book by two great econ authors: Akerlof and Shiller: “Phishing for Phools”.
      Our ignorance of how we’re conned into believing stories about the economy is laid out clearly and simply. Regarding the Insurance industry, they are the second largest lobbying group in the country. Any wonder why the “regulators” aren’t doing anything about the gouging??
      And who’s on first: Pharmaceuticals.

      • Dan says:

        To be fair to the insurance industry the state governments have taken control of much of the rate setting process, the coverage process, and for the auto insurance, the loss paying process. The insurance companies are negotiating terms with the governments. It’s corrupt, but they have no other options.

      • Einhal says:

        The insurance companies have a very low margin relative to many industries (think like 5% last I looked?).

        The reasons they’re jacking up their rates is because the costs of replacing and repairing things has skyrocketed.

      • Thomas Curtis says:

        Here now,

        Thanks, downloaded it.

        Most of the financial news I see is ‘bent or broken’. Keeping one’s own thoughts from being ‘bent or broken’ is most difficult.

      • SoCalBeachDude says:

        All insurance companies are STATE regulated by insurance commissions and must maintain profitability or else they will go insolvent unless they cut off all coverage prior to doing that.

      • JimL says:

        Insurance margins are low. No outsized profits there. In fact industry wide they are terrible. No signs of gouging or corruption there.

        I think it has more to do with the nature of insurance.

        For an investor, investing on a car insurance company us a great inflation hedge because they can often update their rates to match the rise in inflation. Some customers pay monthly and can be updated monthly, at worst they pay yearly so rates can be updated yearly.

        It looks like you pay yearly so you are getting a years worth of inflation.

        Also, the low rates (cheap money) for the past 30 years have sort of distorted the insurance market. Anyone and their brother could start an insurance company. Capital was cheap and inflation was low. If they screwed up, it was easy to replenish the capital base. Plus the mistake probably wasn’t too bad given inflation.

        Now with higher inflation and higher rates, insurance companies cannot make as many mistakes. If they sell insurance too low they will get killed by both inflation and high rates trying to replenish their capital base.

        Basically, you are playingbfor a years worth of inflation at once. Plus, if your insurance company screwed up in their inflation estimates a year ago (maybe the thought the FED was going to cut rates last year), they might be trying to make up from last year’s inflation as well. Furthermore, if youe insurance company was a cut rate insurer with a weak capital base, they might be trying to shore that up through rate increases rather than borrowing.

    • SoCalBeachDude says:

      Who are the insuring companies?

    • Wolf Richter says:


      CPI auto insurance is up 21% yoy.

      So it may also be time to go shopping for a different insurance carrier.

      • SoCalBeachDude says:

        AAA is the best choice here in California for both automobile and for homeowner insurance.

    • Jon says:

      My auto insurance increased by 60 percent.
      My home insurance increased 400 percent in last 4 years

    • Gabby Cat says:

      Typically it costs more to insure when base price on replacements double. Your 150K house would cost near $300K to replace. Therefore, rates doubled. Same for the automobiles. It doesn’t matter if you own them, the cost goes into replacement.

  10. Swamp Creature says:

    J Powel just recently stated “we’re on an unsustainable fiscal path”, 2 5 trillion deficits a far as the eye can see. It’s about time! Volcker & Greenspan are on record mentioning this problem multiple times when the deficits were far lower. The Fed can’t do it’s job lowering inflation while trying to finance this debt year after year. What they SHOULD do is in March instead of a rate cut, they should have a rate INCREASE. That would send a clear message that they mean business.

  11. SoCalBeachDude says:

    MW: US Treasury yields continue to jump after Powell interview, PMI data, as equity and commodities markets fall noticeable…

  12. Peeping Ton says:

    Wolf what’s your back of the envelope thinking on what inflation expectations are when you see the 10 year yielding 4%? In the interview you talk about investors expecting inflation to “go down to 2%” over this period — or at some point during this 10yr period — but how do you figure if expectations are for 2% or 2.5 or 3.5 based on the prevailing 10yr yield? It makes sense that if inflation expectations rise the yields rise in tandem what is less clear, to me anyways, is how much of a premium the 10yr trades over and above the expected avg inflation rate. Thoughts?

    • Wolf Richter says:

      Right now investors expect long-term CPI inflation of around 2%-3% (which translates into about 1.8% to 2.5% core PCE, and without QE, that translates into about a 4% 10-year yield, give or take, which is where it’s priced right now. It’s the long-run inflation expectation in addition to other factors (supply, panic, etc.) that drive the current 10-year yield.

      • Einhal says:

        Investors are insane then to think that we’ll have 2-3% CPI while people are voting for trillions in spending every day.

        • Einhal says:

          *Should have been every year.

        • ru82 says:

          No kidding.

          The Government debt is at 34 trillion. I think the CBO is projecting an additional 1.8 trillion of debt this year but this cut and paste of a CNBC article thinks it will be 2 trillion. That is a 5.9% increase in debt.

          I am not sure how you get to 2-3% inflation when the government is increasing debt by 5.9%? 2 Trillion / 34 trillion = 5.9% increase.


          For the period from October 2023 through December 2023, the budget deficit totaled just shy of $510 billion, following a shortfall of $129.4 billion in just December alone, which was 52% higher than a year ago. The jump in the deficit pushed total government debt past $34 trillion for the first time.

          Compared to last year, which saw a final deficit of $1.7 trillion, but 2024 is running even hotter. If the current pace continues, 2024 would end with a deficit of just more than $2 trillion.

        • MM says:

          Yes they certainly are.

          Makes for a nice contrarian trade.

      • Peeping Tom Again says:

        So your thinking is that the term premium or time-value premium on the 10-yr is anywhere from 1-2% over [the expected rate of] inflation?

        Second, where do you go to see the prevailing 1, 2, 5, 10, 30 year inflation expectation? Or do you just work backwards based on the treasury yields? For instance I can find the market’s bet on the Fed trajectory by referencing the Fed watch tool, anything similar for LT inflation expectation out there?

      • TrBond says:

        In 1980, when I was very early in my career managing Bond portfolios , Supply was a very big issue. I can remember the Refunding announcements ( 3,10 & 30 year maturity bond issuance) would bring fear and trepidation to the bond market.

        Now there is so much more US Treasury supply but so little fear!!
        I suspect over time ( and an established Bear market in bonds) that Supply will have a powerful negative effect on pricing again.

        • John H. says:

          Tr Bond-

          Good point.

          The collective bond market has chosen to focus on short-term trading opportunities for the time being, rather than long-term T-bond supply realities.

          When it wakes up, the investment world will be rattled, as in the slow-rolling transitional bond market crisis from the 1950’s to 1980’s.

          “The error of optimism dies in the crisis, but in dying it gives birth to the error of pessimism. This new error is born not an infant, but a giant.”
          — Arthur C. Pigou, about a century ago, but equally apt to today’s bond market.

  13. spencer says:

    Powell: “So, the national debt doesn’t play a big role in our thinking.”

    Money didn’t either.

    • Wolf Richter says:

      His comment was a reference to the different bailiwicks. Congress is in charge of the deficit, and Powell is trying not to step on their toes. The Fed is in charge of monetary policy, and it wants Congress to stay out of it. Warren berating Powell over interest rates is a sign that some in Congress are not staying out of monetary policy — and that has of course always been the case. Higher rates (and QT) trigger enormous political backlash, almost always have, including by Trump who was keelhauling Powell on a daily basis over mini-QT and 2.5% rates. Congress and the White House (whoever is in charge) love Easy Money.

      Powell is also trying to fend off pressures to accommodate the government’s huge debt and surging interest expense – by cutting rates and buying some of that debt. Sometimes I get the impression that the Fed is the last adult in the room, amidst a bunch of drunken teenagers. That’s how low we have fallen, to consider the Fed the last adult in the room, LOL

      • Einhal says:

        The flip side to this is that by making monetary policy “accommodative,” it indirectly encourages Congress to spend more.

        The Fed can lower short term rates, but it can’t do anything about long-term yields unless it starts QE again.

      • Sean Shasta says:

        @Wolf: You said “That’s how low we have fallen, to consider the Fed the last adult in the room, LOL”

        I think you gave yourself away. Almost all of your postings have been supportive of what the Fed has been doing – which in the last couple of years has been a reasonable position. However, that stance led a lot of posters to question why you are so supportive in spite of their nonsensical zirp, QE, etc. over the last 2 to 3 decades. The above statement shows how you really feel about the Fed. LOL.

        • HowNow says:

          I think the Fed has had to contend with two crises that could have taken down the entire country, no exaggeration. Rules from the slow/non-response of the central bank at the onset of the Great Depression (they initially wanted to “cleanse the system”) was a lesson that caused the Fed to take immediate action to stem the losses – both in 2008 and in 2020.
          We look back and tend to collapse history into: “…their nonsensical zirp, QE, etc”. They were trying to goose the economy to keep it from failure.
          Posters here, those particularly likely to express hate, blame them for their excesses and any and all miscalculations. Sure they made mistakes… but they didn’t want to stall and do nothing. People who thrive on fault-finding will blame them whether or not they did a decent job or not. Monday-morning is a constant for those who think they could have made the right calls, of course, this is through a rear-view mirror.

        • HowNow says:

          Meant to say “Lessons from the GD”, not “Rules”.

        • 91B20 1stCav (AUS) says:

          How/Sean – …when we’re all Bozos on this bus, little wonder, wherever we go, there we are…(appropriating/mixing memes and metaphors a specialty of mine…). Best to all from a bomb-cycloned and soggy Sonoma County…

          may we all find a better day.

        • Bobber says:


          I couldn’t disagree with you more. How would the popping of a financial bubble “take down the country”? I think that crazy notion stems from bank and Wall Street propaganda.

          The USA has a strong workforce that isn’t going away because a small wealthy class takes a hit to its stock portfolio. And people like you and me will always be around to take advantage of financial opportunities. If Apple drops to $100, I’ll buy plenty of it. If banks collapse and have to sell their bad loans at $.60 on the dollar, I’ll buy those too.

          In any “crisis”, the Fed should let weak players take their well-deserved losses, even if that leads to recession. The wrong move is to artificially prop up everything, which is what the Fed has done again and again.

          Wall Street continually tries to reframe an over-valuation problem into a liquidity crisis, so government bails them out.

        • John H. says:


          Well stated.

          We would have a healthier economy if market players felt the consequences of their investment decisions without government/agency interventions or protection.

      • Debt-Free-Bubba says:

        Howdy Lone Wolf. Squirrels like me are loving these sky high interest rates of 5.5 %. Sky High according to the young folk… Go ahead Powell and make my day by lowering rates too soon.
        It ‘ll be Boogie Time Again and I will then bet the Youngins that:
        This time, lower too soon for too long??? THEY may not be able to stop inflation for decades…….

      • TrBond says:

        Powell may well be the last adult in the room.
        But his predecessors, Bernanke and Yellen, were certainly not.

  14. Swamp Creature says:

    People who shop for insurance based on price alone should think again. Last year I changed my auto insurance to Geico based on repeated instances of bad claims support from USAA on my homeowners claims. Now I am in the midst of a major bodily injury lawsuit against a hit & run driver who put us out of work for three months. Geico insurance is without a doubt the most incompetent bunch of criminal gangsters masquerading as an insurance company. I have had to hire an attorney to sue my own insurance company because they are working not for me but against me. They are the cheapest insurance company out there for good reason.

    • Debt-Free-Bubba says:

      Howdy Swamp C. The system is set up against US, laws written for a reason. Takes an attorney and that takes $$$. Fighting Insurance Companies makes a fair and just result impossible. State Agencies are of no help also….. Good Luck

    • Cookdoggie says:

      As with most companies in most industries, the ones who advertise the most are the least trustworthy.

  15. Einhal says:

    The part that annoyed me on 60 Minutes is that Powell didn’t say unequivocally that there would be no March cut, just that it’s “unlikely.”

    I understand that he needs to hedge because, in theory, something catastrophic could happen in the next 4 weeks that necessitates a cut.

    However, he has no issue unequivocally saying that he will NOT raise rates.

    It seems that he has a loosening bias.

    • blahblahbloo says:

      If all the relevant measures show inflation in the 0-1% range by then, they would definitely be justified in making a 0.25% cut.

      Is this impossible? No. But it is “unlikely.”

      • Wolf Richter says:


        Why are you disappointed? Do you think he is a dictator who can just do whatever he wants? He CANNOT say that now. They VOTE, and if a majority or members votes that there is not rate cut, then there’s not rate cut. He has a pretty good feeling where everyone is currently, but there still has to be a vote, and even if he knows how the vote will turn out, he cannot preempt the vote by announcing the results of the future vote two months in advance.

    • Sean Shasta says:

      @Einhal: I think the Fed’s language over the last few months has been to prevent a market crash. They know that they can head off a bigger bubble in the stock and RE markets with the rate increases that are already in the pipeline, now they are seeking to prevent outright crashes.

      It is like they do want the bubbles to leak slowly but they don’t want an outright burst. And it seems that they want a controlled leak, so they put the finger on the leak now and then.

      Anyway, that’s how I see it :)

      • Einhal says:

        If you want a controlled leak, saying things that lead to markets reaching all time highs is a strange way of doing it…

      • BobE says:

        I see if the same way. There is so much pent up hope for rate cuts that a Fed cough that sound like “cut” will send the markets soaring. The Fed is taking advantage of the psychological mania to slowly bleed out the hot air and prevent a crash.

        Thank you for the great interview and information, Wolf.

  16. andy says:

    Today feels like the day the market turns. I was right and early before. But today feels more right than usual. Hold on to your pants.

  17. SoCalBeachDude says:

    MW: Bond-market selloff driven by ‘higher for longer’ fears

  18. markymark says:

    I think many are missing the canary in the coal mine here. Since Japan clearly can run debt to gdp at 3 times plus and sell its t-bills well under 1%, without a care in the world, means to me that The US can also do the same and more, and party on like its 1999 for another 50 and emulate the japanese model, as clearly there are absolutely no problems with simply extend and pretend here. If there were, we would see it in Japan already. Empty CRE no problem here, simply pretend it doesnt exist. Darken up the windows and do not talk about any of it.
    On a personal note i’d be 118 years old in 50, so not to sound obtuse; but party on baby. Party on. Kind of like the pro oil people say, drill just drill baby. Drop those rates, and fix the ensuing inflation with all those special fed tools in that feds tool box, already. We’ve seen these tools time and again in the last 15. Whats another 50 amongst friends?
    Its a new paradigm. Some call it mmt. Im sure there’s a good chance of being called out here, but i’ve got history on my side.

    • Scott says:

      There’s a secular trend and a free-rider issue here: Japan racking up debt multiples is a lot more tenable when 1) they’re the only liquidity extremophiles, and 2) they’re cutting against a deflationary undertow.

      • Markymark says:

        Scott, there’s no issue here. Just simply Japan cuts a free ride, with its huge and massive debt load, and countries like Argentina get taken out back for much less. Like I said, no issue for me. What’s up with all of that? Just askin?

        • Perth says:

          Japan is a net creditor nation.

          The USA is a net debtor nation as is Argentina.

          That is the big difference and why Japan can carry a huge amount of debt.

        • Bobber says:

          The debt is not huge when you back off the portion owned by the central bank. The central bank portion is not debt, it’s printed money that will never be withdrawn.

          Japan prints money to offset deflationary forces in the economy. Deflation stems from demographics, limited geography, lack of immigration, and savings culture.

          The country will dwindle as other countries grow. With so many people already on that island, that’s the way it has to be. Simply put, there is no way an already overpopulated country with such small geographic presence can grow much in the future, but they can maintain a high standard of living as a smaller country.

    • ru82 says:

      Good point. I have read at some point the Government will be at a point of no return and there will not be enough buyers of US treauries and most likely the FED will need to start buying US treasuries. I have no idea when but hey, if Bank of Japan can do it, why not the FED?

      The Bank of Japan is holding a total of ¥576 trillion in outstanding Japanese government bonds, excluding treasury bills, as of the end of March 2023, according to the BOJ’s Flow of Funds Accounts report. The share of JGBs held by the BOJ has reached a record high of 53.34%. The holding ratio was 11.55% in March 2013

    • spencer says:

      The U.S. is the obverse of Japan. Their velocity of circulation is much lower.

      The only way to match Japan largesse is to impose reserve requirements across the board.

      Milton Friedman advocated: “I would make reserve requirements the same for time and demand deposits”. Dec. 16, 1959.

    • jon says:

      FED can easily buy trillions in treasuries to support Govt deficit spending.
      WR can attest that FED buying treasuries does not really cause inflation. It only caused asset inflation which is seen as no inflation per govt metrics.

      We saw 9% inflation only when things were shut down and people were sent direct cash in their account.

      I see FED buying more and more treass over time, assets going up and up.
      There is no stopping of this.

    • Z33 says:

      Do you know the demographics of Japan? What about the US? You’re comparing a declining population of super savers who are under-consumers to a growing population of people who don’t save and overconsume. What do you think the money velocity is between the average person in Japan and the US? What do you think those factors have on inflation? Do you think that could explain why inflation in the US was so much higher than Japan in 2022 even though “supply chain issues” and money printing were experienced by both? The answer is obvious.

      • Z33 says:

        ref: “Family Income and Expenditure Survey by the Statistics Bureau of Japan in 2019, working households’ savings rate (≡ 1 − consumption/disposable income) is 38.5% for people under the age of 40, 34.6% for people 40–50, and 20.1% for people 60 years and older.” found in 2021 publication “The aging society, savings rates, and regional flow of funds in Japan.” I don’t recall pre-covid savings for working households of Americans in those demographics being that high.

      • Markymark says:

        Z33, tell us in layman’s terms what you just said. please

    • Happy1 says:

      I believe the majority of Japanese debt is held by the Japanese, or at least was in the past. This is not the case for US debt.

  19. SoCalBeachDude says:

    MW: 10-, 30-year Treasurys post biggest 2-day losses in years on strong economic data, Powell interview

  20. Paul from NC says:

    It’s all funny money folks. Get ya’ some goats!

    • Markymark says:

      Paul, cryptocurrency is funny money. My ink on paper will still buy me a Pepsi, and on a cold nite keep me warm with help from a match! Just kidding.

Comments are closed.