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The Ultimate Guide to Inflation

lynalden.com

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Re: The Ultimate Guide to Inflation

#241

Post by imtringued »

ClumsyPilot wrote: post #123
midhhhthrow wrote: post #118

Earlier quoted context omitted.

It’s just the opposite. The essential goods needed for survival: shelter is becoming more and more Scarce. 34% of millennials can’t even afford their own shelter anymore and are forced to live with parents. Those who can live by themselves are paying over 40% of their income on shelter. There’s been a pretty dramatic drop in living standards here in the US over the last several decades The fact that we can now afford…

Housing prices are not driven by scarcity, they are driven by financialization of our economy. There are multiple cities in England where population has decreased but house prices increased. During lockdown 700k people left London, but house prices kept going up.

California has a lot of cities with 70%+ single family zoning and housing prices are exploding there in terms of monthly payments for mortgages or renting.

Re: The Ultimate Guide to Inflation

#242

Post by imtringued »

pyaamb wrote: post #216
treeman79 wrote: post #134

Earlier quoted context omitted.

Triple the housing supply. Prices will go down.

we shouldn't be treating essential goods as speculative assets

That would require a sufficiently high land value tax or permanent ground leases instead of land ownership.

Re: The Ultimate Guide to Inflation

#243

Post by imtringued »

rvba wrote: post #127
bob33212 wrote: post #47

Earlier quoted context omitted.

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=... .

What I will write probably wont be a popular opinion, but I completly disagree that we enter post scarcity. Post scarcity perhaps exists in some richest parts of selected countries (California? Hamburg?), but even in those places it is often just an illusion. Roads still have potholes and there are homeless on streets. Schools still struggle with supplies. There are also people who work, but whose work does not allow…

>And in my opinion inflation is a result of incompetence, of planned policy by central banks to make the rich richer, while the rest to gets poorer.

You got this backwards. The central bank is planning to make the poor richer, but as a result of incompetence inflation never hit the 2% target. If the central bank did nothing things could be even worse than they already are.

Re: The Ultimate Guide to Inflation

#244

Post by imtringued »

cerved wrote: post #213
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.

If she's not an economist, what is it that lends credence to her writing about economics and monetary policy?

Because those economists are just as clueless as everyone else. The fact that inflation targets cannot be met by central banks is considered a mystery so far.

Re: The Ultimate Guide to Inflation

#245

Post by imtringued »

pashamur wrote: post #189
clarkmoody wrote: post #180

Earlier quoted context omitted.

Monetary inflation increases inequality because the well-connected interests (banks, large corporations, governments) have access to the new money first. They have better financing terms. They have special arrangements. They can spend the new money into the economy before general price levels rise. Asset prices rise as people flee from cash, so those with assets see their wealth outpace those without assets. Inflatio…

This depends on how the money is distributed - if we have stimulus checks (and eventually everyone has an account at the FED), for example, it's not true that well-connected interests get access to that money first.

I'm honestly tired of waiting for the government to decide to do fiscal stimulus. The US is lucky that they got a competent president. In the EU you're never going to see stimulus checks.

Re: The Ultimate Guide to Inflation

#246

Post by imtringued »

matheusmoreira wrote: post #227
km3r wrote: post #115

Earlier quoted context omitted.

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…

> Sometimes to prevent a total collapse, the fed needs to print some money. Endless bailouts paid for by population can't possibly be a sound long-term solution. Maybe it's better to just let it collapse.

Actually, it's the long term solution. The short term solution is to stop all trade deficits and let your country suffer over the long term.

Re: The Ultimate Guide to Inflation

#247

Post by _xnmw »

syshum wrote: post #147
sologoub wrote: post #114

This chart in the expense share of a typical income illustrates a number of issues well, but healthcare stands out like crazy: https://mobile.twitter.com/_cingraham/status/123195012984367... College, transportation and housing are all pretty high overall, but the healthcare share is just stunning. If we were looking at dramatically better outcomes or services, fine. Unfortunately, doctors get to see patients for less…

>>Most other developed nations put a stop to this a long time ago… hmm I wonder if there might be a connection there... as other nation implement price controls a larger part of the R&D and the costs associated with that are born by the US Further Medicare / medicaid price controls to keep the cost of the entitlement program from going bankrupt has transferred the cost to patients not on those programs Third leg of t…

Most Americans I’ve met who actually had the opportunity to use healthcare services in other developed countries like Canada or the EU say they miss NOTHING from the American healthcare system. So no, the higher cost is serving nobody except lining doctors and Big Pharma’s pockets.

Re: The Ultimate Guide to Inflation

#248

Post by imtringued »

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…

That's a weird complaint. What you're essentially saying is that the Fed has the power to both create inflation and reverse it, which is not as impressive as your comment implies.

You're also messing something up. Cycles are not caused by the Fed. They are caused by the cyclical way humans use debt. It's primarily rooted in psychology. People get into debt in times of high consumer confidence and once consumer confidence goes down it becomes obvious that some of these people shouldn't have gotten into debt in the first place and are no longer able to pay their debts back. The Fed drops interest rates so that it becomes easier to pay off bad debt instead of going bankrupt, which increases consumer confidence again.

One problem is that paying a bad debt over a long time frame is still a drag on the economy. It keeps accumulating and the debt burden gets worse over time as more people spend money on debt servicing than consumption, which drags incomes down, which makes the debt problem worse.

Re: The Ultimate Guide to Inflation

#249

Post by 127 »

Just throwing this in the air: in the 1970, getting off the gold standard made it possible to take much more debt in varied ways. This probably enabled the rich and the corporations to drain a much larger part of the economy for themselves.

Also throwing this in the air: debt might not actually increase productivity unless it's explicitly only used for productive purposes. Even then it seems dubious. The whole argument of using debt to build a business smells funny.

Right now if you look, people who have access to cheap debt, are buying assets with it. A lesser version of this has been probably going on for decades.

Re: The Ultimate Guide to Inflation

#250

Post by roenxi »

panarky wrote: post #187
mlyle wrote: post #169

Earlier quoted context omitted.

If you're going to be "terribly econ 101", note that Netflix is not in a perfectly competitive market and almost certainly encounters a downward sloping demand curve... and that its maximum profit point is not going to be at the point where the most units are supplied and may indeed shift as the demand curve shifts.

Many people speak with great confidence about inflation, the money supply and "econ 101". Most of those with the greatest confidence in their own knowledge are not familiar with the fundamental equation of exchange, MV=PQ. Here, M is the money supply, V is the velocity of money, P is the price level, and Q is the real quantity of goods and services. It's easy to see that if M increases and Q increases the same amount…

Yeah, but that is redirecting the focus away from the major problem that we face in practice, which is that M doubles and the money gets given to people who didn't earn it. To add insult to injury, they are also usually wealthy and taking extreme risks that destroy value.

It doesn't matter if prices double, remain constant or halve. It matters is people can afford more, the same or less stuff. At the moment, the rapid pace of technological advancement means most people should be able to afford much more and they can't because of the incessant money creation being done by people in charge of the system.

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