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The Ultimate Guide to Inflation

lynalden.com

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Re: The Ultimate Guide to Inflation

#201

Post by dnautics »

km3r wrote: post #115
HNfriend234 wrote: post #106

Earlier quoted context omitted.

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

Every economy in the world has and will continue to operate with some inflation, taking away an inflationary currency is dangerous and will serve to further entrench the wealth inequality we have seen grow over the past century. Sure crypto is nice because you don't have to trust a central government, but you already are trusting that government with the other 99% parts of life, rendering this sort of moot. In additi…

> Every economy in the world has and will continue to operate with some inflation, taking away an inflationary currency is dangerous and will serve to further entrench the wealth inequality...

Patently false statement. The us has had decadal deflationary periods of its history during which it made great technological strides

Re: The Ultimate Guide to Inflation

#202

Post by forgithubs »

chii wrote: post #183
forgithubs wrote: post #112

Earlier quoted context omitted.

Inflation is not always in relation directly to the price. For example, if Netflix is able to get 10,000,000 new subscribers. It receives $100,000,000. It can now spend $50,000,000 on new infrastructure, which will make the price rise. Netflix can also hire for $50,000,000, which creates jobs that otherwise wouldn't exist. Those new employees, working for that new currency will spend their salaries, rising the prices…

but those $50 million of subscription revenue means there's $50 million less spent on something else. And those $50 million paid to employees are for producing value for netflix (presumably, more than $50 millions worth). So no, this will not increase inflation. The goods produced matches the money spent, so demand and supply continue to match up. Inflation would occur if production ceases, but demand continues to re…

I forgot to specify that the 100 million is entirely printed money.

Whatever the way you see it, that 100 million of buying power should not exist and eventually ends up lifting the prices of normal goods just with the economic activity it generates.

Re: The Ultimate Guide to Inflation

#203

Post by dnautics »

shubik22 wrote: post #125

Seems like a solid, albeit somewhat dry explanation of inflation. I love concrete examples of how inflation impacts people’s lives, and there are a few that really helped clarify my understanding of inflation that I like to point others to now. 1) https://www.npr.org/sections/money/2015/12/02/458222801/epis... . A great Planet Money episode about how Brazil combatted hyperinflation by just replacing their currency. 2…

Krugman's blindness to the patently obvious solution to babysitting coop scrip story is astounding. If anything it belies the Marxist philosophy that an hour of work is an hour of work. It's completely ridiculous that any arbitrary pair of hours should be equivalent to each other. They should not have pegged the currency, and that is the problem. When you think inflation is a hammer and all planned economies are nails, people are gonna get hurt.

Re: The Ultimate Guide to Inflation

#204

Post by teitoklien »

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 digital version of goods indirectly does cause inflation.

When you have a surge of users and you got more servers in aws, EC2 prices increase for the on-demand instances , aws buys more servers , the more customers it gets , which means more metal excavation , more semiconductors , more minerals , more trucks to move these things , more fuel to move the trucks , it goes on and on.

Also money gets turned into profit , which is then paid to employees , executives , founders.

Who then go on to pay into other items that are non digital (houses , cars , premium cereals lol), which then do cause inflation.

Until all goods are digital , every digital product still indirectly causes inflation using its non digital items , because all of em are transactions between humans.

And all goods can never be digital , because you still need non digital items to run the digital goods on.

So inflation continues.

Re: The Ultimate Guide to Inflation

#205

Post by chii »

forgithubs wrote: post #202
chii wrote: post #183

Earlier quoted context omitted.

but those $50 million of subscription revenue means there's $50 million less spent on something else. And those $50 million paid to employees are for producing value for netflix (presumably, more than $50 millions worth). So no, this will not increase inflation. The goods produced matches the money spent, so demand and supply continue to match up. Inflation would occur if production ceases, but demand continues to re…

I forgot to specify that the 100 million is entirely printed money. Whatever the way you see it, that 100 million of buying power should not exist and eventually ends up lifting the prices of normal goods just with the economic activity it generates.

i mean, if you claim that $100 million was printed, then regardless of whether it's netflix or something else, it may increase inflation.

But the thing is, there hasn't been that much money printed by the FEDs or the US gov't. The stimulus cheques are not money printing, but money borrowing - a major difference. Borrowed money needs to be paid back, and so there may be temporary inflation caused by said stimulus, but it's clawed back in the future when the stimulus' effect has worked!

Re: The Ultimate Guide to Inflation

#207

Post by dnautics »

anm89 wrote: post #16

So awesome to see Lyn Alden at the top of Hacker News. She is an absolute genius! If you aren't familiar with her work and thinking I think a good introduction interview is: https://www.youtube.com/watch?v=f_JmGLMjIOk&t=35s Fun fact: She is an electrical / industrial engineer by trade, not an economist.

While most of the article is good, It's really sad that she apes the old refrain that inflation hurts the poor because they are in debt.

Many of the poor cannot even be in debt because they have no access to the financial system. Those that do, mostly have access to payday lending. It's laughable to hold the opinion that inflation will do anything for someone who owes 10% on top by next month. For the middle class, it's one step up -- credit cards, still laughable to think that a 2% inflation will help out someone with a 15% APR revolving line of credit.

The place where it starts to help is when you have large capital loans on fixed interest like home ownership. But her graphs in the next section relating inflation to wealth gap capture the 1% vs the rest, which is not necessarily a mechanistically informative figure of merit... I'd like to see it where the wealth gap when you draw the line closer to something like the low-interest loan accessibility gap.

Re: The Ultimate Guide to Inflation

#208

Post by closeparen »

cortesoft wrote: post #195
closeparen wrote: post #190

Earlier quoted context omitted.

A Netflix subscription buys actors, directors, writers, editors, cameras, microphones, lights, clipboards, trucks, sound stages, hair & makeup, trailers, set decoration, tape, clapper boards, generators, radios, VFX render hours, insurance premiums, producers’ risk, and all the other accoutrements of film and TV production. There’s a lot of accounting and financial engineering and temporal shifting going on under the…

Right, but I was talking about the MARGINAL cost per subscriber... those costs you mentioned are fixed costs, and they are the same whether Netflix has one subscriber or a billion. The marginal cost per additional subscriber is basically bandwidth, which is pennies.

The system incurs those fixed costs based on how it anticipates they will pay off. With more money chasing content, the system will find it profitable to green-light more scripts at higher production values. But ultimately everybody’s favorite sound mixer has only two ears.

Re: The Ultimate Guide to Inflation

#209

Post by chupchap »

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.

This is true in a vacuum. With a bigger customer base a company will need to invest more in support. Also, in the case of Netflix, they need to invest more in sourcing content to cater to the now increasingly varied demands of their customers or else they'll lose them to competition who might also be offering their products at the same rate.

Re: The Ultimate Guide to Inflation

#210

Post by rkagerer »

dr_zoidberg wrote: post #109
alex_smart wrote: post #71

Earlier quoted context omitted.

>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 whic…

That's true but I suspect for all intents and purposes the cost delta is pretty marginal.
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