INFLATION Archives - Capital Market Journal

Why Can't the Fed Control Inflation Anymore? The Shocking Flatness of the Phillips Curve.

MUST WATCH VIDEO FOR ANYBODY
"We're living in a new economic paradigm where the old rules no longer apply. The Fed is flying partially blind, and understanding this flat Phillips Curve ...is key to understanding everything from your paycheck to your portfolio."
Why has the Federal Reserve struggled to control inflation in the 21st century? The answer lies in the shocking breakdown of one of economics' most fundamental relationships: the Phillips Curve.

In this data-driven analysis, I use sophisticated economic models and New Keynesian Phillips Curve to reveal why traditional inflation control methods have failed.

🔍 KEY FINDINGS:
• The Phillips Curve is FLATTER than ever (κ = 0.001-0.0447)
• The Fed SECRETLY ignores unemployment in policy decisions
• Hours and wages are the true labor market "shock absorbers"
• Current Fed policy shows extreme gradualism (98% interest rate smoothing)

📊 METHODOLOGY CHAPTERS:
00:01:00 INTRODUCTION, TECHNOLOGY, A.I. AUTOMATION AND LABOUR MARKETS (WHO WILL PAY INCOME TAX?)
00:10:00 INITIAL PHILLIPS CURVE LINEAR REGRESSION FINDINGS. UNEMPLOYMENT & INFLATION
00:20:00 POTENTIAL INFLATIONARY EFFECTS OF TARIFFS
00:30:00 NEW KEYNSIAN PHILLIPS CURVE AND DSGE MODELS, PARAMETERS AND MONETARY POLICY REACTION FUNCTION
00:53:00 M2 MONEY SUPPLY, CREDIT SPREAD AND UNEMPLOYMENT RATE
01:00:00 ROLLING CORRELATION FACTORS
01:14:00 OLS REGRESSION CONFIRMS INFLATION DYNAMICS DEPEND ON LAGGED INFLATION AND INFLATION EXPECTATIONS, LESS ON UNEMPLOYMENT
01:24:00 MORE INFLATION FORECAST WITH DYNAMIC FRAMEWORK
01:32:00 VECM MODEL UNCOVERS THE PARTICULAR FEATURES OF THE LABOUR MARKET DYNAMICS
01:55:00 APPLYING OUR FINDINGS INTO THE TAYLOR FORMULA, 2.3% or 3.1% ?
WHY CORPORATE BOND INVESTMENT GRADE YIELD DEFINES THE EFFECTIVE NEUTRAL LEVEL OF INTEREST RATE IN THE ECONOMY

This isn't just theoretical - these findings explain real-world phenomena like the "missing inflation" of the 2010s and the inflation surge of 2021-2022.

#FederalReserve #Inflation #PhillipsCurve #MonetaryPolicy #Economics
#DSGE #VARModel #VECM #EconomicModeling #Econometrics
#CentralBanking #JeromePowell #InterestRates #MacroPolicy
#Unemployment #EconomicAnalysis #Macroeconomics #EconomicData
#Inflation2024 #EconomicOutlook #Recession #SoftLanding
#FederalReserve #Inflation #PhillipsCurve #MonetaryPolicy #Economics
#CentralBanking #InterestRates #Macroeconomics
#EconomicData #Unemployment #EconomicAnalysis

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Why Can't the Fed Control Inflation Anymore? The Shocking Flatness of the Phillips Curve.

MUST WATCH ...

The Ultimate Portfolio Hedge? I Did Backtest Gold & Sector ETFs to Find Out #gold

I spent weeks ...

I spent weeks backtesting 20 years of data (2005-2025) on 35 major sector ETFs and Gold (using the spot price and GLD ETF) to find out once and for all: ...Does adding gold actually improve your risk-adjusted returns, or does it just drag down your performance?
📊 What You'll Learn in This Video:
00:00:02
The session introduces a detailed exploration of various ETFs popular among retail investors, including the S&P 500, TLT, GLD, and QQQ. It covers extensive data analysis on these ETFs alongside time series data for major economic sectors, with a focus on revealing interesting findings related to gold and sector investments.
00:01:11
Gold Price Rally
The significant rally in gold prices has raised eyebrows, with major investment banks predicting targets as high as $4,000 to $4,600 per ounce. This video serves solely for educational purposes, emphasizing the importance of conducting personal research and consulting with financial advisors before making any investment decisions.
00:01:55
ETF Performance Analysis
The analysis highlights that the QQQ ETF has shown the highest cumulative returns, while the TLT ETF, representing long-duration treasury bonds, has lagged due to rising interest rates. Gold has emerged as a strong performer, suggesting potential as a hedge against market liquidity distress and inflation, especially in a low liquidity environment where it can also yield positive returns.
00:04:39
Correlation with Gold
Gold displays an inverse correlation with the S&P 500, indicating that when stock prices decline, gold often appreciates, making it a potential protective asset during market sell-offs. Analysis of various ETFs reveals that while tech sector ETFs like QQQ and XLK are highly correlated with the market, gold maintains a neutral beta with attractive returns and lower volatility compared to these tech funds. Furthermore, the challenges facing long-duration bonds highlight the shifting dynamics of investment preferences amidst macroeconomic uncertainties.
00:28:16
Market Liquidity and Gold
Market liquidity, often measured through bond ETFs or the S&P 500, shows an inverse correlation with gold prices, suggesting that gold can act as a refuge during liquidity stress in the stock market. Historical data reveals that gold has provided positive returns in such times and has outperformed the S&P 500 about 50% of the time, reinforcing its value as a hedging asset against market volatility. Analysis also illustrates that while gold experiences more positive returns when market liquidity contracts, it can also face sell-offs under extreme liquidity crunches.
01:24:13
Portfolio Construction Strategies
Various portfolio structures, including equal weight, tangency, risk parity, minimum variance, and max diversification, were analyzed using 35 ETFs, demonstrating that diversification typically yields better returns, averaging 10.3%, while the minimum variance portfolio performed the worst at about 4%. The tangency portfolio achieved the optimal Sharpe ratio, utilizing a simpler selection of just five ETFs, while the max diversification portfolio was noted for its lack of true diversity. Overall, effective portfolio construction seems to require careful analysis and advice from a financial expert.
01:27:32
Exploring various portfolio strategies, the discussion emphasizes the importance of risk-adjusted returns, particularly highlighting the tangency portfolio and the risk parity portfolio as optimal choices. The analysis incorporates multifactor models and demonstrates how dynamic allocation can enhance performance compared to traditional static strategies. Ultimately, portfolios that adjust for beta tend to yield superior expected returns, emphasizing the need for a nuanced approach to asset allocation.

⚠️ Disclaimer: I am not a financial advisor. This video is for educational and entertainment purposes only. All investing involves risk. Please do your own research and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
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#οικονομικά #stockmarket #οικονομικά #Gold #Investing #etf #portfolio #hedges #backtest #riskmanagement #goldetf #gld #diversification #StockMarket #Finance #PersonalFinance #InvestingStrategy #SafeHaven #Volatility #Drawdown #SharpeRatio #SectorInvesting #vgt #xle #growthvsvalue #VGT #GLD #investing #stockmarket #goldinvestment #investingsecrets #wealthpreservation #sharperatio #volatility #gold #portfolio #institutionalinvesting #riskadjustedreturns #etf #portfolio #assetallocation
#portfolio #hedge #assetallocation #gold #beta #riskmanagement #investingstrategy #MPT #goldbug #rationalinvestingShow More

Albion Economic Outlook: About the UK

Oct 16, 2025 capitalmarketsjournal

Despite modest growth, the UK economy faces a complex landscape. The International Monetary Fund (IMF) predicts the UK will be…

A.I. AUTOMATION GUNTHER ANDERS INFLATION INFLATION EXPECTATION LABOUR MARKET MONETARY POLICY PHILLIPS CURVE TECHNOLOGY

Impact of Technology on the Labor Market and Taxation

Oct 1, 2025 capitalmarketsjournal

The Flattening of the Phillips Curve Alternative Drivers of Inflation Macroeconomic Models and Parameters Central Bank Monetary Policy and Its…

INFLATION INFLATION EXPECTATION INFLATION FORECAST INFLATION VOLATILITY

Challenges in Modeling Tariff Pass-Through

Sep 30, 2025 capitalmarketsjournal

Here is a flowchart illustrating the direct tariff pass-through effect: Modelling Approaches and Forecasts Sector-Specific Tariff Impacts Monetary Policy Implications…

Uncategorized

The “Special Relationship” and the hefty cost of a potential IMF Debt Restructuring. UK Brexit mistakes and the Inflation Linked Gilt Market Achilles Heel

Aug 17, 2025 capitalmarketsjournal

The United Kingdom could be staring toward the precipice of a financial crisis in the future, which eerily echoes the…

ASSETS PRICES HYPERINFLATION Borrowing Costs OIKONOMIA SYSTEMIC RISK UK GILTS YIELD CURVE Uncategorized UNITED KINGDOM VOLATILITY AND MARKET RISKS YIELD CURVE YIELD CURVE VOLATILITY

ALL YOU NEED TO KNOW ABOUT UK BOND MARKET VOLATILITY AND SPIRALLING HIGHER YIELDS RISK

Jan 14, 2025 capitalmarketsjournal

https://www.youtube.com/watch?v=d0sBry1fLOk

RETAIL SALES

What to expect from UK Retail Sales data off the Christmas period

Jan 14, 2025 capitalmarketsjournal

https://www.youtube.com/watch?v=g5Jj_UzAlFs

Working Paper

Private Sector Social Contributions Shocks and lagged macro-economy effects

Nov 21, 2024 capitalmarketsjournal

Shocks affecting disposable income of households, Three fiscal shocks crucially affect the disposable income of households. These shocks are associated…

ASSETS PRICES HYPERINFLATION FEDERAL RESERVE GROWTH MEANS PRICES GROWTH INFLATION MONETARISM CONTRADDICTION IN TERMS PRICE STABILITY UNEMPLOYMENT

4-Week Average Jobless Claims increase to 240000, expect higher Unemployment

Aug 9, 2024 capitalmarketsjournal

United States 4-week average jobless claims have increased to 240,000 from the previous 238,000, indicating that the U.S. economy is…

ARIMA MODEL ECONOMETRICS RESEARCH GARCH MODEL INFLATION MACROECONOMICS RESEARCH TIMESERIES VOLATILITY UNITED STATES ECONOMY FORECAST

Econometrics forecast research about USA macroeconomic timeseries

Jun 22, 2024 capitalmarketsjournal

In the quest for clues about how the global economy could perform in the coming quarters, additional econometrics research has…

Debt Deleveraging Economic Recession High Private Debt Leverage Housing Market crash Rising Unemployment Swedish Economy

Sweden Q1 -1.1% economic growth figures confirm recession for four quarters in a row

May 2, 2024 capitalmarketsjournal

Latest Swedish GDP figures confirm a recessionary trend that has been accelerating in momentum, with a -1.1% Q1 economic growth…

ARCH ESTIMATING INFLATION VOLATILITY GARCH MODELS HISTORICAL VOLATILITY INFLATION

Estimating volatility of Inflation metrics, implementing MSE volatility, ARCH GARCH HS comparison

Apr 13, 2024 capitalmarketsjournal

Study of Inflation metrics volatility has been started with estimating the 3/6/9/12 months volatility extracted form Mean Squared Error in…

Why Can't the Fed Control Inflation Anymore? The Shocking Flatness of the Phillips Curve.

Albion Economic Outlook: About the UK

Impact of Technology on the Labor Market and Taxation

Challenges in Modeling Tariff Pass-Through

The “Special Relationship” and the hefty cost of a potential IMF Debt Restructuring. UK Brexit mistakes and the Inflation Linked Gilt Market Achilles Heel

ALL YOU NEED TO KNOW ABOUT UK BOND MARKET VOLATILITY AND SPIRALLING HIGHER YIELDS RISK

What to expect from UK Retail Sales data off the Christmas period

4-Week Average Jobless Claims increase to 240000, expect higher Unemployment

Econometrics forecast research about USA macroeconomic timeseries

Sweden Q1 -1.1% economic growth figures confirm recession for four quarters in a row

Estimating volatility of Inflation metrics, implementing MSE volatility, ARCH GARCH HS comparison

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