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The US government is inviting inflation

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Re: The US government is inviting inflation

#91

Post by trey-jones »

duxup wrote: post #50
trey-jones wrote: post #35

Earlier quoted context omitted.

Do you believe that the consequences of 2008 have been fully borne out? I think it's possible that one day we or someone else will look back on 2008-20?? and judge the consequences of "quantitative easing" which hasn't really stopped during this entire period. It seems to me that we've just been kicking the can further and further down the road.

At what point is it X stimulus, or Y stimulus that caused ... some unknown thing in the future? It seems like whatever happens next isn't 2008 stimulus.

The federal funds interest rate never rising above 1% between 08 and 17, and being now back at essentially 0 again pretty much says to me that we've been stimulated this whole time.

Re: The US government is inviting inflation

#92

Post by zpeti »

nicoffeine wrote: post #86
zpeti wrote: post #2

After following Peter Schiff for over a decade, and him being thoroughly wrong about inflation after 2008, I can't help but think "this time is different". Before 2020 all money printing went to banks, which increased the wealth of the 1% and increased asset prices, but it didn't create inflation. But now, we have actual helicopter money. And this time I believe Peter when he says, once you start with stimulus cheque…

> Before 2020 all money printing went to banks, which increased the wealth of the 1% and increased asset prices, but it didn't create inflation No inflation in housing costs? Health care? Education? Fine art and collector car prices? I don't think "reasonable billion dollar interest free loans to billionaires" turns into "actual helicopter money" the moment it's given to a non-billionaire. In my opinion, this is yet…

Why are you implying I want aid for billionaires not the poor? I was making a pretty objective point about Peter Schiff's opinions, without adding any opinions of my own.

So please don't turn me into the billionaire bailout supporter. I'm not and I never said such a thing.

Re: The US government is inviting inflation

#93

Post by kyrieeschaton »

thedudeabides5 wrote: post #38
kyrieeschaton wrote: post #16

20% of all dollars were created in 2020. The only thing preventing that from translating into the broader price level is that money velocity collapsed due to the Covid shutdowns. Instead most of that has channeled into financial and property asset prices. Once velocity increases, as is the plan if you assume 2021 is the year we "recover" from Covid restrictions, the Fed will have a choice between inflation and deflat…

MMT is pretty simple. Run inflation higher than interest rates to push down the nominal value of debt. Usual example is the UK after WWII. https://fred.stlouisfed.org/series/CPIIUKA You don't need hyper inflation to inflate away your debts, just enough monetization to bring indebtedness in line. Now, does that mean the currency will retain value vs real assets, no it means the opposite. Hence the move in stocks, real…

MMT does not depend on or imply the relation between debt and inflation, it addresses the metaphysics of "government debt" as such. In fact it suggests you should not "inflate away the debt", as if governments were subject to an actual fiscal constraint of spending = taxes + borrowing (the premise MMT rejects).

Re: The US government is inviting inflation

#94

Post by snake_plissken »

I was thinking about this topic the other day. US COVID numbers are dropping precipitously, more vaccine supply is coming online, so what happens if things continue to improve at a brisk pace and the economy heats back up faster than anyone expected...and we get some inflation?

I am thinking specifically about how higher and unanticipated inflation affects corporate debt, and the companies which will not be able to survive rolling their debt when the market demands a higher interest rates to cover the inflation.

Policy makers would be in quite the predicament of either raising rates or letting it run it's course and hoping it doesn't get too high.

Re: The US government is inviting inflation

#95

Post by turbinerneiter »

sovsovsod wrote: post #56
turbinerneiter wrote: post #13

Earlier quoted context omitted.

So, bailing out the rich is good, feeding the poor causes an inflation crash. What a world we live in.

I don’t think OP argued to bail out the rich. They only argued that UBI doesn’t make sense. Maybe UBI makes sense. Maybe it doesn’t. I’m on the fence, personally. But bailing out the way we did in 2008-2009, where CEOs and other saboteurs got massive bonuses instead of jail time, was highly immoral. Some of believe that that caused latent inflation. Bailing out the rich has nothing to do with UBI. I’ll welcome an UBI…

Didn't want to imply or criticize OP in any way, just make an observation.

I think your arguments against UBI make sense, I also know a lot of good pro arguments.

But ultimately, whatever the arguments, as long as we bail out the rich, I don't care about potential downsides of UBI. Nobody cares about the downsides of bailing out the rich, so why should I care about the downsides of bailing out the poor?

In short, if: "UBI wrecks personal agency and responsibility", than so does QE, bailouts etc. for the rich. So these points aren't the real reason why the one thing happens and the other doesn't.

Fully agree with all your points, a better labour market is better than UBI.

Re: The US government is inviting inflation

#96

Post by hfsp »

zpeti wrote: post #55
sovsovsod wrote: post #21

Earlier quoted context omitted.

Was he really wrong? If I gift money to an extremely over leveraged banks to save them and, with puckered sphincters (they just saw the abyss), they hold onto it then we won’t “see inflation”. It’s there, but it’s latent inflation. If I demolish wages by exporting jobs overseas, that will have a deflationary effect to counter the effect of inflation. If I replace cocoa butter with food wax, I hide inflation. If I don…

I agree with you, but that doesn't take away from the fact that now we might see actual inflation at the level of "everyone". Which is different to the asset price inflation we've seen in the last 12 years.

The "everyone" inflation is around 10%+ in metro areas: http://www.chapwoodindex.org/.

Re: The US government is inviting inflation

#97

Post by voisin »

jfengel wrote: post #67
giantg2 wrote: post #28

Earlier quoted context omitted.

Considering Yellen has basically stated (and has a history of doing), she would rather do too much and deal with inflation rather than not do enough. So my take away is that we'll see inflation above 3% in the next two years.

It's already well above 3%, if you could include the stock market in the metric. That's the problem facing Yellen: not just doing enough, but doing something that won't just end up inflating the kinds of assets owned by the wealthy. Consumer prices have been stable because despite the increase in money supply, consumers as a whole were treading water (at best) even before the pandemic. She would be happy to do someth…

On topic and timely WSJ article on inflation: https://archive.is/AsvgT

It isn’t just stocks. Our inflation measures make a mockery of including households’ largest expense - housing.

Re: The US government is inviting inflation

#98

Post by thedudeabides5 »

grey-area wrote: post #63
thedudeabides5 wrote: post #38

Earlier quoted context omitted.

MMT is pretty simple. Run inflation higher than interest rates to push down the nominal value of debt. Usual example is the UK after WWII. https://fred.stlouisfed.org/series/CPIIUKA You don't need hyper inflation to inflate away your debts, just enough monetization to bring indebtedness in line. Now, does that mean the currency will retain value vs real assets, no it means the opposite. Hence the move in stocks, real…

And what happens when inflation rises and they need to control it with non-zero interest rates? Then stocks, real estate etc crash and we're back in another recession, which they try to solve with... more money and lower interest rates. We've already seen this story a few times. Inflating away debt is fine if it is done slowly and has been done for centuries. The extreme asset valuations we've seen after a decade of…

Yeah I don't disagree with Lyn, low rates are underwriting our entire bubble ad not necc the monetary policy I'd prefer.

Rather than pushing up financial assets and then jamming everyone into more interest rate sensitive debt, why not print the money, give it to poor people, and create a bit of inflation.

Re: The US government is inviting inflation

#99

Post by jazzyk »

voisin wrote: post #97
jfengel wrote: post #67

Earlier quoted context omitted.

It's already well above 3%, if you could include the stock market in the metric. That's the problem facing Yellen: not just doing enough, but doing something that won't just end up inflating the kinds of assets owned by the wealthy. Consumer prices have been stable because despite the increase in money supply, consumers as a whole were treading water (at best) even before the pandemic. She would be happy to do someth…

On topic and timely WSJ article on inflation: https://archive.is/AsvgT It isn’t just stocks. Our inflation measures make a mockery of including households’ largest expense - housing.

... and healthcare, which has been rising 13%-15% every year

Re: The US government is inviting inflation

#100

Post by voisin »

jazzyk wrote: post #99
voisin wrote: post #97

Earlier quoted context omitted.

On topic and timely WSJ article on inflation: https://archive.is/AsvgT It isn’t just stocks. Our inflation measures make a mockery of including households’ largest expense - housing.

... and healthcare, which has been rising 13%-15% every year

Inflation numbers don’t include healthcare?!
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