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The Ultimate Guide to Inflation

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Re: The Ultimate Guide to Inflation

#101

Post by splitstud »

kebman wrote: post #74
Edman274 wrote: post #65

Earlier quoted context omitted.

If you zoom out to 20 years it shows that back in 2011 the same thing happened; did we have hyperinflation in 2011 or huge price increases in food in 2011?

I didn't say we'd have hyper-inflation. I said we'd have inflation, and the banks are saying that too, btw. What we're seeing now isn't just some seasonal pump, but a huge across the board pump. Of course, if wages also reflect that increase, then there's not much of a problem. But what we're facing today is massive unemployment, and a massive amount of money sitting un-touched in banks, sometimes with negative inter…

Since the massive QE is happening in economies around the world,vthere will be some flight to the dollar as well as gold. A lot of money could continue to sit at negative rates. There won't be much impetus for capital investment for a decade. It's hard to say exactly how this will play out month to month, but it is going to be a harrowing.

Re: The Ultimate Guide to Inflation

#102

Post by z3t4 »

cortesoft wrote: post #34

I'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…

Also the marginal cost for Macdonals to serve one more hamburger is also very low. And anything that is automated has very small marginal cost, which is most stuff now a day. If you want to measure inflation, check how much it cost to hire a plumber. And craftsman likes to charge even numbers, so they will jump from $100/hour to $200/hour (rather then from 100 to 110)

Re: The Ultimate Guide to Inflation

#103

Post by Negitivefrags »

leg100 wrote: post #94
deanak wrote: post #49

So 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 expe…

The idea that workers were lording it over the rich from the 1930s through to the 1970s is preposterous. Unless the words political and control have been twisted to mean their polar opposites.

To quote a recent Scott Alexander blog post:

The post-WWII-but-pre-1970 economic world - the world of “embedded liberalism” - was a pleasant place. There were corporations, but they didn't do anything garish like compete with each other. Executive pay was taxed so heavily that nobody had much incentive to try to increase their profit margin; workforces were so heavily unionized that companies were nervous about any changes that might upset employees. As long as companies followed the script, the government embraced and protected them. Starting a new business was considered some bizarre act of alchemy, like discovering a new form of matter; normal people worked for the same giant company their whole life and got a nice gold watch as a reward when they retired. The government wasn't exactly socialist per se, but it kept starting and expanding programs like Medicare and Medicaid and Social Security, and every night you went to sleep knowing there would be probably be another uncontroversial, mostly-successful government welfare program tomorrow.

Re: The Ultimate Guide to Inflation

#104

Post by BurningFrog »

bob33212 wrote: post #47
cortesoft wrote: post #34

I'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=... .

As long as people want things they don't have, there will always be scarcity.

I'll believe the Post Scarcity Economy only when I see it.

Re: The Ultimate Guide to Inflation

#105

Post by ItsMonkk »

sbelskie wrote: post #89
ItsMonkk wrote: post #86

I've been researching this topic independently over the last year and about 70% of what I've researched is presented beautifully within this article. What a great post. The only thing I would try to add that she left off was just the Fed's power[0] over this entire topic. It's mentioned slightly with interest rates dropping, but they play such a pivotal role, together with the yield curve, that it needs to be mention…

Is your claim that the Fed intentionally causes this cycle? I’m not sure I understand what their supposed goal is here.

I think the generally understood stance from economists is that they fear inflation(despite the well researched article we're responding to that states that we won't see hyper-inflation!) more than they fear recessions, and that no one truly knows whats going on when a yield curve inversion happens and why it creates recessions. It is well established that unemployment and inflation is linked, see the Phillips curve.

In practice, it keeps working so they keep doing it.

Re: The Ultimate Guide to Inflation

#106

Post by HNfriend234 »

mensetmanusman wrote: post #98

“ The power of technological deflation is important not to overstate, though. In everyday use, the rise of the smart phone displaced a lot of house phones, cameras, video recorders, film, CD players, iPods, beepers, radios, scanners, roadmaps, and many ATMs. They also displaced a big percentage of physical newspapers, calendars, dictionaries, encyclopedias, and books. In more niche areas they displaced some mobile ga…

This is true but it is imperative that citizens have a reliable currency to use to do transactions. This is why I think it is imperative that we transition over to cryptocurrencies that are based on strong fundamentals that make money reliable.

https://en.wikipedia.org/wiki/Money

Re: The Ultimate Guide to Inflation

#107

Post by qsort »

bob33212 wrote: post #47
cortesoft wrote: post #34

I'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=... .

Quote:

    This article is written like a personal reflection, personal essay, or argumentative essay that states a Wikipedia editor's personal feelings or presents an original argument about a topic. Please help improve it by rewriting it in an encyclopedic style. (January 2021)"

Re: The Ultimate Guide to Inflation

#108

Post by Negitivefrags »

jpmattia wrote: post #79

The section on owner's equivalent rent (OER) is worth finding in the long article: OER accounts for about 1/3 of the CPI. However, when you view OER in light of the housing bubble around 2006, CPI was negligibly affected. IMHO, it is a large signal that CPI fails to accurately describe consumer inflation for a large segment of the population.

But in 2008 the housing bubble popped and the prices came back down to 2004 levels.

Wouldn't you say then that the CPI was correct not to adjust too far to account for it?

And if you think housing right now has increased a lot and the CPI isn't taking that into account, perhaps that says something about what is to come....

Re: The Ultimate Guide to Inflation

#109

Post by dr_zoidberg »

alex_smart wrote: post #71
cortesoft wrote: post #34

I'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…

>The marginal cost for a new subscriber is practically zero, so there should be no price increase caused by a shortage. Yeah, I don't think that that argument works at all. The price does not increase due to "shortage", it increases due to an increase in consumers' willingness to pay. Going by the Netflix example, if Netflix realizes that not too many people will cancel their subscriptions if they were to increase th…

It's also debatable that there are no costs associated with digital goods. If suddenly Netflix had a surge in subscribers and they doubled them over a short period of time, they'd have to invest in infrastructure to support the extra demand. That would cost them in hardware and human resoursces to handle the extra demand. But yeah, digital services have a better situation at meeting demand than physical goods of which, after the produced amount sells out, you have to wait for more to be manufactured, delivered, etc.

Re: The Ultimate Guide to Inflation

#110

Post by paulpauper »

Negitivefrags wrote: post #103
leg100 wrote: post #94

Earlier quoted context omitted.

The idea that workers were lording it over the rich from the 1930s through to the 1970s is preposterous. Unless the words political and control have been twisted to mean their polar opposites.

To quote a recent Scott Alexander blog post: The post-WWII-but-pre-1970 economic world - the world of “embedded liberalism” - was a pleasant place. There were corporations, but they didn't do anything garish like compete with each other. Executive pay was taxed so heavily that nobody had much incentive to try to increase their profit margin; workforces were so heavily unionized that companies were nervous about any c…

was it really so pleasant? inflation was very high, medical treatments were not so great, entertainment was expensive, most jobs still did not pay much, hours were long. Someone with a tech job probably earns more money on an inflation-adjusted basis and has a much nicer standard of living compared to someone living in the 60s
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