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The Ultimate Guide to Inflation

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Re: The Ultimate Guide to Inflation

#261

Post by ohashi »

lbschenkel wrote: post #256

Some personal anecdotes. I grew up during the hyperinflation days in Brazil (80s, early 90s): talking about 60% a month. People would get their salary and run to the supermarket and buy everything they needed for the month, because if they waited a single day the prices would have changed. A lot of people internalized that habit and still do that nowadays (not in the sense of running to the supermarket, but buying a…

I feel like you ended the story too soon. Let's hear about the Real and how it worked.

Re: The Ultimate Guide to Inflation

#262

Post by kebman »

XorNot wrote: post #150
kebman wrote: post #74

Earlier quoted context omitted.

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…

And there it is. An HN econ discussion with the requisite declaration that hyperinflation is just around the corner. Its too bad I can't buy futures on hyperinflation not happening when people on HN predict it will.

Haha. Arguably you got a really good entry after Elon Musk dumped Doge. ;)

Re: The Ultimate Guide to Inflation

#263

Post by benrbray »

lbschenkel wrote: post #256

Some personal anecdotes. I grew up during the hyperinflation days in Brazil (80s, early 90s): talking about 60% a month. People would get their salary and run to the supermarket and buy everything they needed for the month, because if they waited a single day the prices would have changed. A lot of people internalized that habit and still do that nowadays (not in the sense of running to the supermarket, but buying a…

With prices constantly changing, how were people compensated at work? What were the dynamics of the job market during that time?

Re: The Ultimate Guide to Inflation

#264

Post by anon98356 »

mlyle wrote: post #193
panarky wrote: post #187

Earlier quoted context omitted.

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…

Thanks, and I understand that... but I feel like you don't understand the context of my reply. Mr. Beer above stated that an increase in demand for Netflix would not increase the market price of Netflix. But because Netflix is a quasi-monopoly, they would be likely to increase prices to find the new equilibrium maximum profit point. That is, he made a microeconomic argument which was invalid-- arguing that because Ne…

My reading of GPs comment was more about the cause and effect of any corresponding price increase, not whether Netflix would actually increase their price in this scenario.

For a physical good, if you have a surge in demand as more people can afford you're product you start running into supply issues. This will likely result directly in a price increase as you can't increase profit by just selling more when you don't have anymore to sell.

In the example of netflix, the supply issue almost completly disappears. They don't HAVE to increase the price to increase their profit. Yes Netflix may decide that with the flood of new customers they can put the price up and maintain or increase their profit.

The point I think that is being made is that their isn't a physical supply issue in effect "forcing" them to increase the price. They are doing it because they want to, not because they need to.

Re: The Ultimate Guide to Inflation

#265

Post by tomp »

atq2119 wrote: post #258
cortesoft wrote: post #197

Earlier quoted context omitted.

You are right, not all money supply increases are equal. However, I have thought about this more in the context of proposals around UBI or other wealth redistribution ideas. The common complaint about them is around just what you talk about, that distributing wealth to poor people will increase disposable income and cause inflation from not being able to keep up with increased demand. I wonder how much of that is tru…

FWIW I agree with your thought process here. Proclamations of certainty around UBI are common, but the only intellectually honest position is that we simply do not have enough empirical data to tell with a useful level of confidence how a UBI would affect inflation. Also, I believe that the only way to collect that empirical data is to implement a UBI at a sufficiently large scale and see what happens.

There really is no reason why you wouldn’t be able to pair government intervention on the demand side (i.e. UBI) with government intervention on the supply side. Simply introduce quotas about supply (e.g. that shops cannot throw away more than 1% of the food they sell), and/or limits on non-productive assets (e.g. freeze rents & Netflix subscription). I’m sure there are many smarter interventions than I was able to come up in 30 seconds as wel.

Re: The Ultimate Guide to Inflation

#266

Post by wodenokoto »

lbschenkel wrote: post #256

Some personal anecdotes. I grew up during the hyperinflation days in Brazil (80s, early 90s): talking about 60% a month. People would get their salary and run to the supermarket and buy everything they needed for the month, because if they waited a single day the prices would have changed. A lot of people internalized that habit and still do that nowadays (not in the sense of running to the supermarket, but buying a…

Thanks for the great story.

I’d love to hear more about why the real was successful. Wikipedia makes it sound like it was just luck that Brazil had positive trade balance in the years following its introduction.

Re: The Ultimate Guide to Inflation

#267

Post by wodenokoto »

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…

I think healthcare is 3 fold:

1. Is that it is just out of control in the US, but there are also some valid reasons, like,

2. Aging population. As people get older, they need more medical care, so an aging population will have higher average healthcare spend than a young population.

3. Advances in healthcare tech. We can treat more things, so there are more things to receive healthcare services for. And we can also treat things for longer, at great expense. Something along the line of: 10 years ago you could live with disease A for 10 years at a cost X. Now you can live for 20 years at cost X^2.

Re: The Ultimate Guide to Inflation

#268

Post by Qworg »

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…

The issue with the WTP argument is that Netflix isn't a singular good - there are many replacement goods (Hulu, Disney+, Prime Video) that push down the price via competition. The lack of raw materials makes this competition especially good at keeping prices low.

Now, if the oligopoly within video services (or anywhere else) would conspire to raise prices together - that'd be a different story. We've seen this in other digital goods. The Apple and Google anti-poaching agreements come to mind.

Re: The Ultimate Guide to Inflation

#269

Post by CerebralCerb »

modo_mario wrote: post #239
syshum wrote: post #147

Earlier quoted context omitted.

>>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 other developed" nations where waiting months for a specialist is accepted as normal Which are these developed nations? Because to give my annecdotal perspective it isn't the case in Belgium or others that i know of (With minor exceptions like recently where orthodontists couldn't handle anyone but the most urgent due to covid measures and now have a backlog of patients.) >and semiprivate rooms normally with…

It's accepted as normal in Norway to wait for up to two years for a specialist. If your need is urgent you'll get it much quicker though.

If you are a white-collar worker you'll usually have a private health insurance so that you won't have to wait in line for public care.

Re: The Ultimate Guide to Inflation

#270

Post by skzv »

lbschenkel wrote: post #256

Some personal anecdotes. I grew up during the hyperinflation days in Brazil (80s, early 90s): talking about 60% a month. People would get their salary and run to the supermarket and buy everything they needed for the month, because if they waited a single day the prices would have changed. A lot of people internalized that habit and still do that nowadays (not in the sense of running to the supermarket, but buying a…

> In 1994 hyperinflation was finally tamed when the current currency, Real, was introduced. It was the culmination of an ingenious plan that actually worked.

What was the plan?

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