Tag: inflation

Biden must stop inflation denial and quit doing dumb things

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April 16, Michael L. Davis, economics professor at the Cox School of Business, SMU Dallas, for a piece calling out the Biden Administration for denying the presence and negative impacts of inflation. Published in FoxBusiness under the heading Biden must stop inflation denial and quit doing dumb things: https://tinyurl.com/bdz6ftkb ​

So, these three middle-aged guys go in for their annual checkup. They get terrible news. They’ve got high blood pressure, bad cholesterol and if they gain another two pounds, they’ll be officially classified as “severely obese.” The doctor says that even though they feel fine now, the future is not bright.

The first guy convinces himself it’s not so bad. He tells himself it’s just a temporary thing — probably too much time at the all-you-can-eat on that last trip to Vegas — and that once things get back to normal, he’ll be fine.

The second guy goes home and tells his wife she needs to help make things right — maybe save the bacon and eggs for weekends. But then, of course, he sits down in his recliner with a bag of chips, grabs the remote and asks her to bring him a beer.

The third guy pulls out a picture of his 2-month-old granddaughter and promises himself to change. Six months later, he’s at the gym swapping salmon recipes with his workout buddies.

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US debt downgrade could mean trouble ahead. We should heed the warnings

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August 8, Michael Davis, economics professor at the Cox School of Business, SMU Dallas, for a piece examining the impact of the debt downgrade and how that may indicate U.S. economic troubles ahead. Published in Fox News Business under the heading U.S. debt downgrade could mean trouble ahead. We should heed the warnings: https://tinyurl.com/3te6jmku

Recently Fitch’s, a service that rates the quality of bonds, downgraded U.S. Treasuries from AAA to AA+.

Bad news, right? I mean if your credit score went down wouldn’t you be at least a bit worried – especially if you were about to shop for a new car?  Of course.

And so shouldn’t you worry that your government – which every day borrows enough money to buy about 82,000 new cars – is seeing their credit score go down? Yeah, you should.

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Cheer up. Inflation’s up and stocks are tanking, but it’s not as bad as you think

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Sept. 14, Michael Davis, economics professor at the Cox School of Business at SMU Dallas, for an op-ed explaining U.S. economic challenges, but pointing out the country is better prepared now than in 2008. Published in the Houston Chronicle under the heading Cheer up. Inflation’s up and stocks are tanking, but it’s not as bad as you think: https://tinyurl.com/4y8utme6

What happens in California doesn’t always stay in California, and that’s why Texans tracking the disruption of bots and other non-humans ought to be concerned that California Gov. Jerry Brown signed a law last week that criminalizes using unlabeled bots for political gain. The law is also almost certainly unconstitutional. Yes, the law addresses a problem regarding the influence of AI (artificial intelligence) actors and the misleading information they often carry. Yes, the law is worded to avoid halting all AI expression; it merely requires that AI disclose that they are bots.

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Inflation surged in June and Americans should be furious at the Axis of Idiocy that created it

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July 13, Michael L. Davis, economics professor at the Cox School of Business at SMU Dallas, for an explanatory piece about the failures of our government economic advisors to tamp down inflation and avoid a likely recession. Published in Fox News Business under the heading Inflation surged in June and Americans should be furious at the Axis of Idiocy that created it: https://fxn.ws/3Ol9HFf

​By now you’ve seen the news that June inflation hit an annualized rate of 9.1%. And you know that’s bad—not just bad, epically bad, the highest in 41 years. What you may not know is that right now a small army of economists are trying to figure out how best to react. Should they talk about whom to blame or worry about whom to warn?

I say, why choose? Let’s warn about the people who are to blame.

Start with the Federal Reserve. They had one job—ONE JOB! They were supposed to keep inflation from ever getting started. Wednesday’s numbers are yet more evidence of how miserably they failed. And it’s not like they weren’t warned about the consequences of needlessly expansive monetary policy, they just thought they knew better.

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Is the economy making the Fed an offer it can’t refuse?

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April 20, Michael Davis, economics professor at the Cox School of Business, SMU Dallas, for a commentary that points out the perilous path of attempting to reduce inflation without bringing on a recession. Published in the Austin American-Statesman under the heading: Is the economy making the Fed an offer it can’t refuse?: https://bit.ly/3EtLjOE 

Since this is the 50th anniversary of the movie The Godfather, it’s worth remembering that great scene where a gang war is about to break out and the Don’s trusted capo, Clemenza, explains to the young Michael Corleone, “These things gotta happen every five years or so…It helps get rid of the bad blood.”

Any similarities between Federal Reserve Chairman Jerome Powell and Michael Corleone are purely coincidental. Still, I wish Powell had Clemenza whispering in his ear.

The Federal Reserve has two problems. First, it has to figure out how to reduce the highest inflation rates we’ve seen since the early 1980’s. Anyone who buys gas or groceries understands that problem. And anyone who knows much of anything about economics and finance understands that the Fed has to raise interest rates and tighten monetary policy in order to deal with that problem.  It’s already started. After the last meeting the Fed raised their target interest rate by ¼ percent and promised more increases to come.

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Unexpected inflation is the broken promise of a generation

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Oct. 8, Michael Davis, economics professor at the Cox School of Business, SMU Dallas, for a commentary warning new and older generations about the specter of inflation. Published in the Orange County Register under the heading Unexpected inflation is the broken promise of a generation: https://bit.ly/3Aqa62e 

Prices are the words we use to make promises. Earlier today my plumber promised to fix a broken pipe and I promised to fill up his trucks with gas. Of course, he doesn’t expect me to meet him at the gas station every time a tank is empty. He expects me to give him $300 when he’s done with the work.

But the promise of plumbing for the promise of gas is what matters to both of us. And without the language of prices, it’s very hard to make such promises. Barter is a terrible way to do business. Prices make it easy to promise to give someone what they really want.

And that’s why we should worry more about inflation.

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