The Ultimate Guide to Inflation • Hacker News Board

Re: The Ultimate Guide to Inflation

#311

Post by sologoub » Mon, May 10, 2021, 3:26 PM UTC

wodenokoto wrote: post #267

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 t…

The thing is that these don’t hold up well when compared to other peer nations, especially with the top EU healthcare - per capita spend is double in the US and outcomes are not better (actually worse than some).

The more likely issue are lack of competition and high cost of entry (regulatory and educational). Regulatory you can’t really loosen, as that’s a direct protection for patients. Educational costs for doctors we can absolutely fix.

The lack of competition probably cannot be fixed with the normal “market” approaches because you are not dealing with a rational consumer behavior - when people are sick they are anything but rational. This is where something like a public option health care plan could come in with a strong negotiating position. Unfortunately, there is a good chance politics would prevent that from negotiating as well…

Re: The Ultimate Guide to Inflation

#312

Post by fouric » Mon, May 10, 2021, 3:48 PM UTC

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…

Slate Star Codex has an article that examines this effect in more detail (although the author doesn't make any conclusions as to the cause): https://slatestarcodex.com/2017/02/09/considerations-on-cost...

Re: The Ultimate Guide to Inflation

#313

Post by deanak » Mon, May 10, 2021, 3:50 PM UTC

xyzzyz wrote: post #75

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…

> If you think someone in a low tax bracket on fixed income has the spare money to invest in anything, you're not understanding the words "low income" or "fixed." The low fixed income often comes from investment. For example, you save money in 401k, then as you near retirement, you shift investments into safer instruments ie. bonds. The result is exactly low fixed income and vulnerability to inflation.

https://www.epi.org/publication/retirement-in-america/

> Nearly half of families have no retirement account savings at all.

https://www.nytimes.com/2021/01/26/upshot/stocks-pandemic-in...

> Families grouped by percentiles of net worth:

> Bottom 50: 50% of Families | 1% of Equities | 0% of Stock

I'm not sure why you think the poor have investment portfolios. They don't.

Re: The Ultimate Guide to Inflation

#314

Post by anm89 » Mon, May 10, 2021, 4:03 PM UTC

deanak wrote: post #283

anm89 wrote: post #77

Earlier quoted context omitted.

This is culture war baiting. The whole appeal of someone like Alden is that she isn't playing for either team, shes just trying to step back and analyze. And it is a much more useful an interesting perspective on the world than turning every single discussion into team sports politics. The fact that the parent is one of the more upvoted comments I've ever written seems to indicate that I'm not alone. A final point is…

> shes just trying to step back and analyze... And it is a much more useful an interesting perspective on the world than turning every single discussion into team sports politics. When is the last time you read a serious financial analysis that divided up 150 years of world history in such a way? Or tried to relate it to investment? > The fact that the parent is one of the more upvoted comments I've ever written seem…

> When is the last time you read a serious financial analysis that divided up 150 years of world history in such a way? Or tried to relate it to investment?

Ray Dalio, the founder of the world's biggest hedge fund does primarily this in his public communication.

Anyway suit yourself, the whole point of it not being team politics is that it really doesn't matter at all if people disagree. I factor her advice heavily in my own portfolio and it has benefitted me. If you think she's wrong ignore her. And I guess complain loudly that other people find it useful.

Re: The Ultimate Guide to Inflation

#315

Post by [deleted] » Mon, May 10, 2021, 4:32 PM UTC

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…

[deleted]

Re: The Ultimate Guide to Inflation

#316

Post by ORioN63 » Mon, May 10, 2021, 4:33 PM UTC

saiya-jin wrote: post #305

lbschenkel wrote: post #276

Earlier quoted context omitted.

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 inflatio…

why didn't everybody switch simply to USD? That's some hard cash that doesn't care about some petty Brazil's issues. Anything local in such a situation, no matter how well designed or intended, would be suspicious to me.

They can't legally print USD. That's a pretty good reason.

Re: The Ultimate Guide to Inflation

#317

Post by maxsilver » Mon, May 10, 2021, 4:36 PM UTC

mac01021 wrote: post #310

maxsilver wrote: post #301

Earlier quoted context omitted.

The Midwest US can assure you that they've definitely already tried this. We're literally mowing down every cornfield for housing here (I'm typing this from a neighborhood with thousands of units, 90% of all buildings here were built after 2012). It never works, prices are still at an all-time high, even for units on the market 6+ months or longer. "Just building more" alone isn't ever going to lower prices enough to…

Are all those new houses occupied? Where are all the people coming from?

- A bunch are staying un-bought and remain empty. (The bottom of the market is closing in hours, the top of the market is sitting for months)

- A bunch are technically getting occupied, but buyers are having to go way beyond their means to get them. (2008-style, except it's not their fault, you have to live somewhere or die, and you can't manufacture used housing, so it's hard to fault them for taking on risky mortgages. There simply isn't cheaper options)

- A bunch are getting bought and turned into luxury rentals, and those rentals are getting occupied. (This might seem like a win, since the end result is people-in-housing, which should be a good thing. But forcing people into unaffordable rental rates permanently hollows out those people's finances, it's super unhealthy unsustainable housing strategy)

- A handful are getting bought and getting turned into illegal unlicensed hotels. (Permanent "Air-BnB-s").

- A bunch are getting bought and stay empty. (According to local realtors, "second-home" purchases are up 300% since 2019. Generally, this is wealthy or upper-middle-class coastal urbanites realizing the currency conversion between the coasts and the midwest, and using that to their advantage)

Individually none of these are the worst thing or the primary culprit. But added all together, it means that "real people buying houses to sustainably live in", is the least likely scenario for any given home on the market right now here. "Demand" is super high, but most of the "Demand" is kind of fake-demand (demand from finance, demand from investment, demand for vacation -- but not demand for housing to house people).

> Where are all the people coming from?

They aren't coming. House prices are up 250% this decade, but we've only got a ~1.5% YoY population growth rate (for our city) and a 1% population loss YoY (for our state). We aren't a major city, and we've built more new housing units than had actual new population for 5 years straight now.

Re: The Ultimate Guide to Inflation

#318

Post by thebean11 » Mon, May 10, 2021, 5:13 PM UTC

karagenit wrote: post #162

simonsarris wrote: post #153

Mentioning M2 without mentioning the accounting change that completely changes the graph starting May 2020 is very odd. Of course the percent change is large when you start measuring a different thing from before. The simplest explanation of accounting change can be found here: https://www.collaborativefund.com/blog/the-fed-isnt-printing... But the St Louis fed also publishes a disclaimer at the bottom of their graph…

Are you sure that's correct? If I'm reading the article you linked correctly, they basically decided to count savings accounts as M1 instead of M2. But since M1 is included in M2... this shouldn't change the total value of M2? So all of the increases in M2 were actually due to printing of more money (among other things).

Wouldn't counting savings as M1 allow the bank to create additional M2 due to fractional reserve?

Re: The Ultimate Guide to Inflation

#319

Post by forgithubs » Mon, May 10, 2021, 5:57 PM UTC

chii wrote: post #205

forgithubs wrote: post #202

Earlier quoted context omitted.

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…

You might want to find out to whom the debt is owed.

The US government owes money to the US government. The trend is an uptrend.

The only thing stopping this stratagem is currency devaluation on the free global market.

Re: The Ultimate Guide to Inflation

#320

Post by marcosdumay » Mon, May 10, 2021, 5:58 PM UTC

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…

> by just replacing their currency

And stopping printing money and balancing the budget. Also a lot of legal interventions to stop some habits, and even a constitution change.

The Real was a complex and multifaceted project.