The US government is inviting inflation

After decades of hearing about trickle-down economics, and seeing lower inflation than ever, it's only taken a couple stimulus checks for people to start becoming inflation hawks. People need to set the bar a bit higher I think. There might be an equity bubble, or a housing bubble, but I'll believe CPI inflation when I actually see it. The Fed has printed money before (helicopter money+buying debt), and it didn't cause CPI inflation.

I've been in the US for 25 years, and I've yet to see savings interest rates above 2% in all of that time, and CD rates of more than 4%. There are other factors of inequality and productivity at work as far as mid-long term inflation is concerned. You want to see short-term inflation? Buy everyone a house.

If you aren't already: yes, you should be diversified across US and foreign equities. In a word: VXUS (or as a mutual fund: VTIAX).

If you just want to preserve value of cash, you can buy I-series bonds from TreasuryDirect, to the tune of $10k/year. They have 20 year duration and track inflation. You can buy an unlimited amount of TIPS, although they aren't better than I-series bonds.

Rents included in the CPI.

The argument is that a house is an investment. I.e you sell it in the end. Investments aren’t included in the CPI.

I think that’s BS because investments increase in value due to inflation (and not just because of their inherent growth).

I get the difficulty of extracting the natural growth of the asset from the inflationary growth, but I also believe most of the 2008 monetary mass increase was shoveled into financial assets and this has to be considered.

that’s the gist of it.

I don't see why inflation is necessary. UBI doesn't have to change the amount of money flowing through the economy; one option is heavy taxes. Wealth redistribution, effectively. That does beg the question of whether incentives will remain high enough to maintain the technological forward momentum we have been making, and whether that slowing down is even necessarily a bad thing.

> [1] my local grocer employees a few folks with Down syndrome at the cash register. They’re super slow, but otherwise good at their job. I love them. They value their job so much, and they have by far the best attitude. Their job gives them the dignity of knowing that they aren’t mere consumers, but also (in their limited way) contributors. That’s very powerful for the soul.

That's very different from smashing the machines to me. They really and truly are contributing something to the world; we need people to check people out and bag their groceries. If we built a machine that could check people out and bag their groceries, smashing that machine so people can get the "sense of pride and accomplishment" of having needlessly manually bagged the groceries seems a little... patronizing? I mean, at that point why don't we just keep using the machines and send everyone to school for the rest of their lives to keep them busy like we do with children?

I think people will gravitate towards work on their own, it just won't look like what you're accustomed to. With that amount of automation, we can support a lot more work that isn't strictly industrial. Arts and culture, artisanal goods, baskets woven underwater, etc. Is it going to propel us forward? Probably not, but I think it will make people a lot happier than pointlessly bagging groceries. If we accept that the value of the work is intrinsic (i.e. the value is in doing the work, not in the product of the work), we might as well let people work on what makes them happy.

For a community that tries to pride itself on good discussion I can't help but notice how awful the HN discourse is for anything related to economic policy. You have a thread where the original source is a twitter post talking about higher than average inflation and in that thread you have a whole bunch of people talking about hyperinflation. These are very different things.

But, first let's talk about monetary policy. The Federal Reserve has 2 mandates, full employment and price stability. When the Fed adds a massive amount of money into circulation during a massive economic downturn it's not because they're disregarding that second mandate. In fact, it's the exact opposite. Inflation is demand driven, if demand goes up and supply stays the same then prices have to go up. The literal number of dollars in circulation is meaningless if no one is willing to spend them. Adding more money to circulation increases demand which increases prices because people have more money to spend, this is how printing money can cause inflation. However, just as an increase in demand decreases the value of a dollar, decreases in demand increase the value of a dollar. This is deflation, it happens when demand falls off a cliff and it's very bad. The reason it's very bad is because it encourages people to stuff money into a mattress instead of spending it, further decreasing demand, further worsening whatever economic collapse got you into this mess to begin with, further increasing deflation. "Price stability" is a mandate that applies in both directions. Most of the money printing recently has specifically been aimed at maintaining price stability, not destroying it.

Since 2008 the average rate of core PCE inflation has averaged at 1.5%, below the 2% inflation target of the Federal Reserve. It will likely take until 2023 until we reach a point where core CPE exceeds 2%[1] at which point it will be up the the Fed how much they want to raise interest rates to control additional inflation. Please note that a 2.5% rate of core PCE inflation is hardly the end of the world and is close to what we saw during the mid 2000s. The 1980s averaged about 4%. Here's a historical graph[2].

[1]https://economics.bmo.com/en/publications/detail/a151d463-e2...

[2]https://fred.stlouisfed.org/series/BPCCRO1Q156NBEA