The Ultimate Guide to Inflation • Hacker News Board

Re: The Ultimate Guide to Inflation

#271

Post by nl » Mon, May 10, 2021, 10:07 AM UTC

pmorici wrote: post #191

nl wrote: post #155

Earlier quoted context omitted.

> However, rates can’t rise much more, or the UD gov’t will be unable to service its debt. Treasury rates are less than 2%. Prior to 2019 they have never in history been lower[1], except for one month during 2016. I don't think the market is worried in any way about the ability of the US to service a 2% rate. [1] https://www.macrotrends.net/2016/10-year-treasury-bond-rate-...

Large share of federal government debt is short duration meaning it has to be rolled over at current rates on a regular basis. Rising rates would definitely drive up costs dramatically.

That's what the bond price is! It shows how much room there is for increased costs before there are any real concerns.

Re: The Ultimate Guide to Inflation

#272

Post by lbschenkel » Mon, May 10, 2021, 10:07 AM UTC

benrbray wrote: post #263

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?

There was an official index, named "correção monetária" (literally: "monetary correction"), which was basically tracking the inflation index. Everybody's salary and the amount of money in the savings accounts had to be increased every month by this index. The idea was that you didn't lose money because it would be corrected every month. At least if you assume that the official inflation numbers were accurate.

But the moment you had money in hand, you had to spend it as soon as possible or soon it would be worth nothing.

Re: The Ultimate Guide to Inflation

#273

Post by notsureaboutpg » Mon, May 10, 2021, 10:10 AM UTC

zby wrote: post #254

127 wrote: post #249

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 argume…

"The whole argument of using debt to build a business smells fnny" - so what is the alternative? Do you believe that equity is the only way to finance a business?

I believe in many societies this was the main way to finance businesses, or profit sharing investments (essentially equity).

This is because in olden days, outstanding debts could land you in debtors prison or essentially leave you enslaved to the person to whom you owed a debt so people were not as willing to take on debt for financing a business

Re: The Ultimate Guide to Inflation

#274

Post by dannyw » Mon, May 10, 2021, 10:32 AM UTC

wodenokoto wrote: post #266

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.

I did not live in Brazil, but the government sharply increased interest rates and reduced public expenses with the introduction of the real. Those actions are deflationary.

Re: The Ultimate Guide to Inflation

#275

Post by yunohn » Mon, May 10, 2021, 10:34 AM UTC

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…

> Indian market is much more price sensitive

That’s an odd way to say India is way poorer, and there’s no way the avg Indian can afford to pay a US price for Netflix. People being price sensitive is only an additive effect on top of that.

(India => any developing country)

Re: The Ultimate Guide to Inflation

#276

Post by lbschenkel » Mon, May 10, 2021, 10:38 AM UTC

wodenokoto wrote: post #266

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.

Economics is not a subject that I can say that I know anything about, so this is my completely subjective interpretation.

I think the problem was that Brazil got into a positive feedback loop, and we had what Wikipedia calls "inertial inflation" [1]. We got this going for so long that everybody internalized the inflation, and expected it, and behaved as it was a foregone conclusion that there was going to be inflation next month. So it became a self-fulfilling prophecy.

I see the plan ("Plano Real" [2]) to break it as a social engineering hack. They realized, after so many failed attempts, that in order to succeed you had to change people's minds and make them see the price of goods/services/contracts as stable, which would also change their habits and expectations. Remember there was a generation of people, including myself, who lived their entire lives under high inflation so they didn't know anything else.

So what the government did was to create an index, called URV ("unidade real the valor" = "real value unit"), and mandated that all salaries/prices/contracts/etc. should be indexed against this particular index (and not any other index, or the dollar). Everything should be advertised in URVs. The government would publish, every day, the "price" of 1 URV in what it was the currency back then (cruzeiros reais). So when money actually changed hands, you would pay in cruzeiros reais the quoted amount of URVs using that day's URV price. The URV was roughly tracking the USD, which gave confidence to everybody that the index was "fair" and not losing value.

This went on for a year. And it actually worked: everybody started thinking in URVs instead of cruzeiros reais. All prices became stable in URVs. And then in 1994 they introduced a new currency, the real, where 1 real = price of 1 URV. And inflation suddenly dropped from ~50% a month to ~2% a month. Still high but a miracle to us compared to how it was before. (Eventually it dropped to less than 10% a year.)

So they basically "de-indexed" the economy (and people's minds), killing the positive feedback loop and the hyper-inflation. This was such a life-changer for Brazilians that the economy minister during Plano Real, Fernando Henrique Cardoso (the public face of this plan, even though he wasn't the author), ended up being the next president.

There are a few articles that may be a good summary as well: [3][4]

[1] https://en.wikipedia.org/wiki/Inertial_inflation

[2] https://en.wikipedia.org/wiki/Plano_Real

[3] https://www.npr.org/sections/money/2010/10/04/130329523/how-...

[4] https://www.thisamericanlife.org/423/transcript

Re: The Ultimate Guide to Inflation

#277

Post by lbschenkel » Mon, May 10, 2021, 10:40 AM UTC

ohashi wrote: post #261

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.

Replied at https://news.ycombinator.com/item?id=27104509

Re: The Ultimate Guide to Inflation

#278

Post by syshum » Mon, May 10, 2021, 10:47 AM UTC

InvertedRhodium wrote: post #199

syshum wrote: post #148

Earlier quoted context omitted.

>>yet apparently has poorer outcomes than other G10 nations I assume you have data for this? Something more than the flawed infant mortality rate that is often cited but is a very poor judge of a health system in reality? Something like 5 year cancer survival rates. Time a person waits on Specialist Wait List, the time it takes a person to get a replacement Hip, MIR, or Heart Stent. All of which I believe the US is v…

I note that all your statistics are based on figures that only involve the number of people that successfully obtained healthcare which seems like it's ignoring the possibility that a significant percentage don't have access to those wait lists at all. If you only let half of your population on the list in the first place, I don't think it's overly shocking that metrics across the board would appear better. I'd be in…

Ok show me the stat that 50% of people that desire healthcare do not have access to it?

Even the most aggressive numbers on uninsured in the use put it about 15% to 20% of the population, no where near the 50% you are claiming in your comment

There was a time in my 20's where I did not have insurance, I still had (and got) care when I needed it. Sure it was expensive but I was never denied services.

Yes you can find stories of people that do not have access to care, and we should do what we can to eliminate those edge cases where there are clearly gaps in the system but paint these edge cases as the rule is just disingenuous at best

Re: The Ultimate Guide to Inflation

#279

Post by syshum » Mon, May 10, 2021, 10:51 AM UTC

shkkmo wrote: post #165

syshum wrote: post #148

Earlier quoted context omitted.

>>yet apparently has poorer outcomes than other G10 nations I assume you have data for this? Something more than the flawed infant mortality rate that is often cited but is a very poor judge of a health system in reality? Something like 5 year cancer survival rates. Time a person waits on Specialist Wait List, the time it takes a person to get a replacement Hip, MIR, or Heart Stent. All of which I believe the US is v…

The US does really well at high end care. It does less well in terms of overall agregate health outcomes. As I recall last time I saw a really good analysis if this posted to HN, You have to take into account a few other risk factors (obesity etc) in addition (to how infant mortality it reported) to get the US health outcomes inline with other developed nation. Even then, the US ends up paying way more to achieve tha…

>>You have to take into account a few other risk factors (obesity etc) i

I disagree, we have a free society, and one of my concerns about a government run health care system is that it would allow encroachments upon that freedom. I do not need or want a parent via the government. I neither need nor want the government passing laws to control what food I eat, how much food I eat, or what health choices I make

The questions comes down at that point to if you desire a collectivist authoritarian government, one that "the greater good" (which is subjectively defined) always over rules the individuals rights, or do you want individualism and individual rights to reign supreme over the collective

I support individualism

Re: The Ultimate Guide to Inflation

#280

Post by syshum » Mon, May 10, 2021, 10:54 AM UTC

DistressedDrone wrote: post #196

inter_netuser wrote: post #182

Earlier quoted context omitted.

Canada has socialized healthcare. 200 to 300 thousand travel to the US for healthcare every year. That's with population of ~30 million. Extremely common. Which begs the question, why do they travel to the terrible USA, when wonderful social care in Canada is so amazing on paper, with wait lists measured in years?

Getting an accurate portrait of Canada as a whole is very difficult, as healthcare is a provincial responsibility. As a Canadian however, it would not surprise me if most of the people traveling were upper class people trying to bypass the waiting lists. You have to understand that this is inevitable as long as our systems don't have the same level of fairness and people are allowed to "choose" their system. Of cours…

>>By the way, the position on the waiting list is often adjusted according to the urgency of one's situation

This is only technically true, and ignores the fact that many medical procedures that are done when something is not critical means making a full and complete recovery with no life long effects but delaying the treatment while sitting on a wait list until the issue becomes "critical" means the problem may only be able to be partially rectified and the person may suffer from life long effects due to the delay in treatment

At the end of the day government run health systems control costs by limiting the supply and ignoring the demand. This creates an untenable system that can never be "fair" to anyone.