So many factors going in right now...
Government printing money nonstop. Material shortages (real and manufactured). Demands for increased wages.
It's going to be a bad time to be on fixed income.
The Ultimate Guide to Inflation
41–50 of 364 posts
Re: The Ultimate Guide to Inflation
#42Earlier quoted context omitted.
I agree. I made a great bet at the beginning of the pandemic, but then the Fed hurt me with it's quick action. I didn't understand macroeconomics, but Lyn Alden has really helped me understand it better with her long form articles.
I wonder if the Court of Claims would cover trading losses from the Fed’s actions I should look up the judges to get a feel for their predilections I wanted to see S&P 12,000 for a moment
How would the Fed fulfilling its mandate give anyone a case for recovering their trading losses?
Re: The Ultimate Guide to Inflation
#43Time to buy gold.
Re: The Ultimate Guide to Inflation
#44Didn’t see healthcare. My dads carefully planned retirement was ruined because he never imagined how expensive it would get. I pay 1400 a month for a family. Still doesn’t cover a lot.
I have no idea how families that earn less than $100k are saving enough money for healthcare expenses / loss of income in their years between 50 and 65 (or whatever age Medicare will start at in the future). Unless you have a cushy government job with those benefits or a high paying white collar job, those years are the most likely for you to lose income due to age, health reasons, etc and any new job you get probabl…
They aren't. That's what the "tax the rich" stuff is all about.
Re: The Ultimate Guide to Inflation
#45Earlier quoted context omitted.
Interesting but, I don't really think I understand what this is. Would you mind explaining it in lay terms?
It describes a very sharp increase in created money. The poster of the linked tweet is implying this is unique and we will see negative economic effects (like inflation) because of it. Parent to that tweet is arguing we have not seen those effects despite past federal reserve action and so there is no worry. The wider context to this conversation is that some people [who?] believe federal reserve policy is flawed and…
Yes, don't worry guys. The Federal Reserve has got you covered. And if things get too expensive, you can always just ask for a raise, amirite! :)
Anyway, here's a cash crop chart for corn that has more than doubled in price since last year. Once the cost of making finished products with these crops increase, you can be sure that shop prices will also reflect it. Some of these charts are even growing exponentially.
^1: https://www.barchart.com/futures/quotes/ZCY00/interactive-ch...
Re: The Ultimate Guide to Inflation
#46Earlier quoted context omitted.
These organizations would be expected to have some marginal cost increases from running data centers and physical hardware cost increases and they would calculate passing these on to consumers. Or as an excuse to. But I guess that is covered by your example and understanding that their physical costs being non-digital goods. So, fun thought exercise.
Yeah, that is why I intentionally said "practically zero" instead of actually zero, because there are some marginal costs. They are just orders of magnitude less than what they are for physical goods. But yeah, I am just curious how that math all works out on a macro scale.
This is a good point, and there is also no finite limit which is what typically makes the supply and demand machine go brrrrrrrr.
Netflix pays some % of their monthly subscription fee for servers. The amount really doesn't matter, and they can add the entire planet as subscribers before running out of servers so the supply is infinite for all practical purposes.
Re: The Ultimate Guide to Inflation
#47I've wondered what the effect our modern digital economy has had on consumer price inflation. Normally, an increase in money supply would cause consumer goods to increase in price, since more people are able to buy them and there is a limit on how much of any particular physical good is available. This isn't the case, however, for digital goods. If there are suddenly 100 million new people who want to buy a Netflix s…
We are entering a Post Scarcity Economy. A lot of fiction books write about how this plays out. Regardless of what happens a lot of economic theory becomes less relevant.
https://en.wikipedia.org/wiki/Post-scarcity_economy#:~:text=....
Re: The Ultimate Guide to Inflation
#48Earlier quoted context omitted.
It describes a very sharp increase in created money. The poster of the linked tweet is implying this is unique and we will see negative economic effects (like inflation) because of it. Parent to that tweet is arguing we have not seen those effects despite past federal reserve action and so there is no worry. The wider context to this conversation is that some people [who?] believe federal reserve policy is flawed and…
If the comparison is with 2008, the answer is that the "money" was created on different sides of the balance sheet for different purposes. (We all remember that banks are effectively statistically multiplexing asset cash against liability deposits, nu?) 2008 the Fed printed $2 trillion asset cash(M0) and used it to buy bad debt off the banks books, and put the debt in a runoff fund. No discernible impact on M2. (well…
For people that want to understand this better:
“Print” is a misnomer, as only the US Mint prints paper currency and mints metal coins which is a very tiny sliver of the M0 money supply.
So to rephrase what actually happens: “in 2008, the Federal Reserve decided to buy a notional amount of $2 trillion in bonds and debt securities, every time it bought some it created the same amount of new US dollars at the time of transaction which becomes owned by the seller. Increasing the money supply upon payment.”
Its primary mechanism for controlling the money supply and people’s behavior is by purchasing a predetermined amount and category of assets from people. Unless authorized by Congress to do something specific.
Congress does not usually touch the Federal Reserve Act, as the whole point of the Federal Reserve system was to remove politics from management of the money supply. But they obviously can and always could alter the Federal Reserve’s charter and in 2020 they let the Federal Reserve give money directly to individuals in some of the stimulus programs.
Re: The Ultimate Guide to Inflation
#49So far it's a lot of words and graphs with a tenuous grip on reality in a few places:
> There are, however, some groups in lower income brackets that do poorly in inflationary environments. If someone doesn’t have a lot of money and lives on a fixed income in retirement, they have a lot of vulnerability to inflation. Those sorts of folks should consider owning inflation hedges to protect their lifestyle, if they expect that high levels of inflation have a reasonable probability of occurring.
If you think someone in a low tax bracket on fixed income has the spare money to invest in anything, you're not understanding the words "low income" or "fixed."
> Capital had political control from the late 1800s through the 1920s. Labor had political control from the 1930s through the 1970s. Capital again had political control from the 1980s through the 2010s. I’m not sure what’s next but signs are increasingly pointing towards labor regaining some influence, and it’s a topic I continue to monitor.
What?
Re: The Ultimate Guide to Inflation
#50I've wondered what the effect our modern digital economy has had on consumer price inflation. Normally, an increase in money supply would cause consumer goods to increase in price, since more people are able to buy them and there is a limit on how much of any particular physical good is available. This isn't the case, however, for digital goods. If there are suddenly 100 million new people who want to buy a Netflix s…
We are entering a Post Scarcity Economy. A lot of fiction books write about how this plays out. Regardless of what happens a lot of economic theory becomes less relevant. https://en.wikipedia.org/wiki/Post-scarcity_economy#:~:text=... .
Post scarcity only for certain things. Things like living space are becoming scarcer and more expensive.