The effect of a bad policy doesn't necessarily end when the policy does. The economy has inertia so some effects, such as inflation, are self-reinforcing and need active undoing even when the policy is relaxed.

> If we were to also raise broad based taxes

Tariffs affect households unevenly [0], but I think it would be fair to characterize them as broad based taxes.

[0] Some good info here: https://budgetlab.yale.edu/research/state-us-tariffs-septemb...

And then we have Japan, which has spent 30+ years in the economic doldrums.

What I'm saying is that these types of systems have "inertia" and can be exceptionally long lived in their 'bad' state, regardless of the policies used to try to get them out of that state.

It would require admitting policies were wrong

And obeying the Constitution

And a lot of other things that are never going to happen

It will take a decade to dig out of this hole

And then there will be 11 million people "disappeared" from labor market

They are on a crime-spree, you don't do this much damage without malice

Look at what they are doing to the WhiteHouse Oval Office, Rose Garden, ballroom, look at the BILLION dollars stolen from nuclear missile maintenance for a personal jumbo jet, etc. etc.

The bad news is that we're only one year into the 4 years of bad policy(if we're lucky) and the policy itself will probably continue to get worse

It's much easier to destroy than build, and some things once destroyed can't be rebuilt.

Trump's inconsistent tariff and policy flip flopping means no one trusts the US to behave rationally and predictably.

The fact that the US population elected him a second time means that the US as a whole can't be trusted to behave like rational adults.

Decades or centuries of reputation has been thrown away. That can't be changed just by a new face saying "sorry we want to take it back".

Zoning is the bigger issue than interest rates with the housing market. Most hand over fist growth happened in our cities when there were higher interest rates but also plenty of zoned capacity. Zoned capacity is barely ahead of present population in cities with exorbitant housing prices today.

I don't believe it's entirely the result of bad policies, but you also left if vague. Which bad policies are entirely causing this in your opinion?

> The good news is that these economic problems are entirely the result of bad policies and can be reversed.

I think one danger for western countries is having governments that just move from one bad policy of one kind to a bad policy from the other end of the political spectrum. Look at what’s happened recently with resignations at the highest levels of government in multiple countries. And in America, if Trump gets replaced by someone who is put forth as a reaction to him, are they going to really do any good? Even if they had great policies, they’d be in danger of being undone a few years later. There isn’t the same guarantee of consistent forward progress that a country of China seems to be enjoying.

You're right. Fixed!

I knew that, but my puny little brain somehow didn't catch it as I was writing my comment.

I remember my parents being excited about the opportunity to refinance their mortgage to something in the high teens. And now these days headlines act like the apocalypse is occurring when mortgage rates are in the 6-7 range.

I remember a friend having a 17% mortgage, which he eventually walked away from.

You’re vastly underestimating the income and political effects of stagflation. Historically speaking, one doesn’t ride it out. It’s fixed fast or the system collapses.

As he raised the federal fund rate to 20%, Volcker became widely hated indeed. Businesses and consumers suffered because of his actions.

Politicians of course tried to take control of the Fed. They also tried to fire him. At one point he needed Secret Service protection. Here's an article from the 1980's about it:

https://www.latimes.com/archives/la-xpm-1987-04-05-fi-492-st...

I watched an interview with him several years ago. The brother was sipping from a glass of whisky on the rocks the whole time. I fully get it.

> Today's economy is all about politics.

When has it not been? It's how we actually determine the allocation of resources

Well it's already a clusterfuck so...

The 10 year breakeven inflation rate as of today is 2.38%.

Deciding that stagflation is coming and changing you asset allocation based on a solicitation of opinions from random people is probably a bad idea.

If nothing else you should look for academic papers on ways to estimate expected inflation instead of asking for opinions here.

All I can suggest is to read Buffett's classic article from 1977:

https://fortune.com/article/buffett-how-inflation-swindles-t...

U.S. dollar loses value, property depreciates (no one can afford payments) and equities have their P/E ratios slammed (and we are at all-time historic highs...)

So the solution historically has been stable goods. Gold is the historic standard, but probably Bitcoin now as well. Possibly foreign stocks/currencies. But since everything is so interlinked now with pensions and 401ks that the financial world is far different place than the 70s. If you really want a safe bet, it's that there will be a fair bit of volatility and every asset class will have more risk with spikes up and down. All of this depends heavily on how the U.S. responds along the way.

Basically anything but hold cash, at least until interest rates are forcibly pushed to the moon to try to break out of stagflation. Assuming you can avoid selling whatever you've bought until the other side.

[EDIT] If you think we're in for a long period (decades) in which nobody will do what's needed to break out of stagflation and we're going to head the way of various inflationary South American economies over the past century, I guess look at Europe? IDK, it'll be bad everywhere if that happens.

Bogleheads [1] gives better financial advice than HN. Every time I peruse some threads there, I learn something new about personal finance I didn't know about.

[1] www.bogleheads.org/forum

This time won’t be like the last. The point of such episodes is to destroy capital. A rational response would be to de-lever before everyone else. Focus on the meaningful and the productive in the near-term, disregard promises about the future.

If you’re aggressive, issue long-term, fixed rate debt and buy whatever you think everyone else will view as personally meaningful or currently-productive, provided someone didn’t beat you to it.

Arguably we’re 40 years into the “cash is trash” trade so everyone is in a little bit of suspense what happens next.

Gold, make sure your debts are low, trim expenses now. Start thinking long term, what things will you need 5-10 years from now that will only be much more expensive or hard to get.

That depends - if you are good at timing the market you would sell your stocks at the peak, put it into cash for a year or two and then buy long term low risk, high interest rates bonds that cannot be called... Too bad I don't know anyone who can time the market. (I'm not confident that stocks will start falling before the bond rate peaks, even though that is my guess).

My guess is that real estate will not do well in general. However there are always exceptions, but I don't know if the exception is in Dallas Texas (random big city), or Chaseley North Dakota (random place not even a town, cannot support even one store)

Real assets like precious metals, commodities, real estate should do well during stagflation. I think crypto (mainstream ones, not fringe) should be doing well too IMHO, despite the skeptics.

Well there is another issue: trust in the dollar is waning, so central banks have been buying gold. If Trump messes too much with the fed's independence, this can only get worse.. One source theorizes that his admin. is doing this not so much to lower interest rates, but to get the fed to reduce interest it pays to banks for money they keep at the fed (a thing that started after the GFC). The idea is that then the banks would buy treasuries instead, which might reduce the debt payment burden on the government.

Anyway... gold is all about wealth preservation, not growth, so I don't know what to tell you. But it is up 44% over the last year.

You might just be in a long epicycle of poverty and not realize it.

Investment returns have been falling across the board. A good guide on how to invest:

https://www.amazon.com/Investing-Amid-Low-Expected-Returns/d...

Well if you were following sound financial advice and understand the economics from an Austrian perspective you'd likely be diversified into several equal buckets with one of those buckets designed to offset the losses. You do this when it doesn't matter because you can never time the market. No one can.

In the case of inflation/stagflation it would be physical assets that increase in value under such circumstances. Gold/Silver meet this, as do many other assets. Under such environments counterparty-risk must be carefully evaluated.

All of your mentioned standard strategies have opaque and significant banking counter-party risk. There are also details such as the YTM loophole where the assets you hold may not have been marked to market (when interest rates go up).

This is particularly true of any bonds, or bond backed securities, and the leverage involved in many such markets is next to impossible to discern, and as a result the average advice of passive investment breaks down towards losses in the near term but not long-term.

None of this is financial advice, just reiterating things people should already know about. The stock market's synthetic share problem coupled with dark pools, and the commodity market's (COMEX) fail to delivers and failure to loadout (physical delivery), are things to know about. Unspecified risk from bad actors.

Its all paper with substantial counter-party risk until you hold it in your hands.

> And the employment situation in the US is still very good in historical terms. (There are valid concerns about the methodology behind the headline unemployment rate, but it's still the same methodology.)

I should add: historically, increases in the unemployment rate have a tendency to accelerate and then produce a spike, which is then brought under control by some other mechanism, and tends to correspond with a recession. But this is just the normal boom-bust cycle, and seems rather unavoidable. The rate can't keep going down forever, and having it level out doesn't seem feasible, either. The magnitude of such a spike doesn't necessarily indicate the severity of economic downturn, either.

I hope you're right.

To the extent I come across as doubtful and concerned, it is only due to recent firsthand experiences buying food, clothes, and electronics. My perception is that prices are still rising in many product categories. Anecdotal evidence is not data, so I can't and won't make a prediction, but I think it's fair for me to express doubt and concern.

All I know for certain is that we'll find out as more data becomes available.

[flagged]

Its hard to ascribe individual responsibility in that way when the only two choices were existentially awful.

"You elected an idiot president...", the choices were Communism, or Fascism; which is recoverable and better for people. Certainly not the former, but to be clear neither are a real choice when you vote for democracy, and not voting is a vote for both fascism/communism at the same time.

Such was a similar failure and rise of demagogues that ruined Rome.

First-passed-the-post voting is fundamentally flawed, and so is ranked choice...

Until the end of 2024 the US had an economy the world envied.

At least, this allows Europe to rise, again.

Trump is incompetent at best (a crony at worst), a bull in the legislative China shop, and revels in drawing attention to himself... so it shouldn't be too surprising people are on high alert during his tenure and news headlines get more attention.

    Last administration cooked the books on BLS numbers for nearly 2 years

twelve pinocchios

Seems like Trump is doing just fine creating a recession on his own.

[citation needed]

What is back to basics mean here? Forgetting metrics, for a national economy, seems not good.

You do know economic data is not used only by "economists", right? Given that you seem to dislike the word "economic" data, focus only on the data part. Tell us how politicians/policy makers run the country without data? How do they know rates have to be increased/decreased if they don't have such numbers? Through wishful and magical thinking about focusing on the basics?

... I mean, I can assure you it wasn't just the economists unhappy about stagflation.