Food Prices Are Soaring Faster Than Inflation and Incomes • Hacker News Board

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#561

Post by oceanplexian » Mon, Mar 08, 2021, 11:47 PM UTC

bryanlarsen wrote: post #176

adflux wrote: post #17

Earlier quoted context omitted.

Sure, almost all central banks over the world have printed an astronomical amount of money. Even though they may state there is no significant inflation, I dont buy it and neither do many other economists. Stock prices, house prices and now, at last, commodity prices have gone through the roof... But you're probably earning about as much as you were a year ago, or less, if your industry was affected... It's not just…

Interest rates are at zero. When official inflation starts ticking up they'll raise interest rates which will deflate the stock & house price bubble and cut inflation off at the knees. We have lots of things to worry about -- inflation isn't one of them.

It will also cut cheap corporate debt off at the knees, and likely begin a domino effect where people are laid off, home prices are depressed, and inflation continues in spite of all that as a result of supply shock.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#562

Post by [deleted] » Mon, Mar 08, 2021, 11:58 PM UTC

scottLobster wrote: post #398

blaser-waffle wrote: post #242

Earlier quoted context omitted.

Popping the bubble will be worse than the inflation.

How and for whom? This attitude that the market must always go up has never worked out historically, just makes the eventual reckoning that much worse. Fortunately that mentality means that renters like my wife and I who want our future kids to grow up in a good house in a quality school district can just keep saving money, waiting to capitalize on the inevitable normalization when all the speculators and eggs-in-one…

[deleted]

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#563

Post by oceanplexian » Tue, Mar 09, 2021, 12:02 AM UTC

ChuckNorris89 wrote: post #344

AlexandrB wrote: post #317

Earlier quoted context omitted.

Also for people that put their life savings as downpayment on an overpriced house.

But at least the bubble popping would make it easier for the middle class newcommers enter the market. Just inflating the bubble further, as every European bank and government is doing, to make existing property owners richer on paper and get their votes, is not a viable long term solution. IMHO, it can't pop sooner. Houses should be for living, not for speculation and hoarding wealth. The younger generations have be…

I was around during 2008, that's exactly the opposite of what will happen. Financing will dry up and the newcomers will find themselves in a highly competitive rental environment with inflated prices, while the banks and wealthy snap up SFH's for pennies on the dollar.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#564

Post by oceanplexian » Tue, Mar 09, 2021, 12:25 AM UTC

dominotw wrote: post #206

mistermann wrote: post #175

Earlier quoted context omitted.

Asking for investment advice in a forum is probably not the best idea, but does anyone have any advice for someone who's been sitting almost entirely in cash for over 2 years (including missing the covid rebound)? I have a fair amount of experience in the market but from an intuition perspective, I feel like I have alzheimer's or something, I haven't a clue what a person should do in this situation.

Same. I think market bubble is going to keep going atleast in near future because of the new stimulus money that is going to start flowing to the market soon. https://www.cnbc.com/2021/03/08/how-the-young-plan-to-spend-...

The market != The Economy. The market trades on multiples that represent asset prices in the future, and the stimulus was priced in months ago. The recent movement in the market was a reaction to the possibility that inflation shows up 6-12 months in the future, and the Fed doesn't raise rates. Subsequently high inflation will erode the value of bonds (Corporate debt). Who is holding them? Banks. If the banks fail lending tightens and the whole thing implodes. People can't get mortgages, corporations can't pay employees, home prices crash, etc.

It's possible something could set off the market today that accelerates the whole process, like the upcoming supplementary leverage ratio change. Or, the bubble could continue inflating until doesn't. But either way the whole thing is incredibly fragile and much more complicated than the "Stimulus is good for the economy" talk politicians are peddling.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#565

Post by chii » Tue, Mar 09, 2021, 1:09 AM UTC

jeofken wrote: post #522

faet wrote: post #491

Earlier quoted context omitted.

Purchasing power has been consistent. https://i.redd.it/7qqhlk5i48l61.png The graph uses average hourly wages which does not include overtime, bonuses, shift premiums, and employer benefits. It also doesn't account for all workers. https://files.stlouisfed.org/files/htdocs/publications/es/07... total compensation tracks pretty well.

Thanks for the interesting data point regarding purchasing power. I think we would agree that you’d expect purchasing power to increase when efficiency increases, rather than staying constant. And as efficiency (as measured by value i.e. usefulness/efficiency of capital) has continued to increase while purchasing power stayed mostly stagnant since 1971, those earning their income from labour are drawing the short sti…

> why purchasing power stays the same when efficiency increases since 1971.

i would expect that purchasing power remains consistent for people doing the same work.

It's true that capital gains is captured by those who own the capital - but those who do own such capital had to take capital risk to obtain such gains.

Labour income (aka, wage income) increased if the labour changed to be more efficient without said use of capital - for example, programmers' income is very high. But for someone whose labour output hasn't changed from the 70's, is it expected that their purchasing power somehow increases (compared to someone else's)?

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#566

Post by chordalkeyboard » Tue, Mar 09, 2021, 1:38 AM UTC

lmohseni wrote: post #324

Wolfenstein98k wrote: post #178

" Food Prices Are Soaring Faster Than Inflation and Incomes " ...Food price rises ARE inflation!

I have a pretty imperfect understanding of inflation, but wouldn’t increased food and energy prices mean that a consumer will have less money to spend on discretionary purchases? Ie, aren’t food price rises DEflationary?

No, inflation is the increase in the money supply resulting in each unit of currency having less real value.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#567

Post by tharkun__ » Tue, Mar 09, 2021, 2:10 AM UTC

lumost wrote: post #488

sokoloff wrote: post #472

Earlier quoted context omitted.

Yes. What then should happen when Good Z is invented and grows from 0% to substitute for 25% of Good Y? How should a measure of inflation track that? What if Good X becomes half as expensive per unit but people consume twice as much of it as a result? Should that be reflected as a reduction of inflation? If housing per front door goes up by 100% but only up per square foot [or room] by 50%, should the inflation rate…

TBH looking at my budgets I think this type of argument is missing the point. Excluding savings, My budget boils down to discretionary and non-discretionary spending. Roughly 1/4th of my budget is fully discretionary and will vary year to year with what I like to do, tracking inflation on the discretionary portion seems like a high difficulty activity which ultimately doesn't matter to my perception of prices. The re…

Even discretionary and non discretionary is a contentious item and in a CPI has to be defined.

For example: is TV service discretionary? Is Internet service discretionary? Is broadband Internet access discretionary?

I just checked. Bell TV + Internet is advertised as $120CAD right now. Cell service combined with that add $70CAD. Per month. With taxes on top that's round about $2,620 per year if we are talking Single person household.

Now it depends on where you are and whether you live alone or not and such. In Toronto as a single person at the median income this alone can be 4.5% of your net income. I'd say that moves the needle. I pay less than half of this with a different ISP and cell provider + Netflix. Of course the precise calculations change as we move between cities and provinces as well as single person vs. families etc. as base costs get shared.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#568

Post by CountSessine » Tue, Mar 09, 2021, 2:48 AM UTC

whoisninja wrote: post #264

ErikAugust wrote: post #243

Earlier quoted context omitted.

Real question that nobody has yet answered: With what data CPI is even calculated? The data sources are all hidden. Related: https://news.ycombinator.com/item?id=26259279

there's this also: https://wtfhappenedin1971.com/

https://en.m.wikipedia.org/wiki/Nixon_shock

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#569

Post by lumost » Tue, Mar 09, 2021, 3:27 AM UTC

tharkun__ wrote: post #567

lumost wrote: post #488

Earlier quoted context omitted.

TBH looking at my budgets I think this type of argument is missing the point. Excluding savings, My budget boils down to discretionary and non-discretionary spending. Roughly 1/4th of my budget is fully discretionary and will vary year to year with what I like to do, tracking inflation on the discretionary portion seems like a high difficulty activity which ultimately doesn't matter to my perception of prices. The re…

Even discretionary and non discretionary is a contentious item and in a CPI has to be defined. For example: is TV service discretionary? Is Internet service discretionary? Is broadband Internet access discretionary? I just checked. Bell TV + Internet is advertised as $120CAD right now. Cell service combined with that add $70CAD. Per month. With taxes on top that's round about $2,620 per year if we are talking Single…

The hypothetical single income earner that we are debating would pay an average rent of $2250/mo for a 1-bedroom in Toronto. Roughly 10x the cost of TV, internet, and phone. This cost has risen from ~$1750/mo in 2017 at roughly ~10% per year.

For perspective, our hypothetical individual would be experiencing house price inflation equal to a new TV, phone, and internet bill every year.

(1-bedrooms displayed the lowest price increase of any housing category in Toronto according to https://www.zumper.com/rent-research/toronto-on )

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#570

Post by chii » Tue, Mar 09, 2021, 3:34 AM UTC

ceejayoz wrote: post #164

chii wrote: post #153

Earlier quoted context omitted.

The poor person paid out $100 over 10 years, for the equivalent goods that would've costed $50 in upfront capital (good shoes). So an enterprising banker would be willing to lend this poor person $50, to be repaid with eight $10 installments yearly, for a total of $80 - a 60% return on investment (7.5% pa returns). This would've kept the poor person's cashflow the same - $10 per year, and he'd have paid an extra $30…

Then they get hit with an unexpected $1k medical bill. They now default on your shoe loan, and the coat loan, and the car loan, and the rest of the microloans. Poor people generally don't have access to capital except at incredibly high APRs that typically make things worse, not better.

if they were going to get a medical bill, they would've been in the same, or worse position. They would've been without a shoe, instead of with a shoe and face default on the shoe loan.