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Earlier quoted context omitted.
When the supply of goods goes down, it pushes prices up.
But inflation has to do with the supply of money, not the supply of goods, right? Genuine question
Earlier quoted context omitted.
When the supply of goods goes down, it pushes prices up.
But inflation has to do with the supply of money, not the supply of goods, right? Genuine question
If the supply of these chips causes a loss in supply of in demand items, like cars, then it will cause an increase in the price of cars.
The thoughts are that this is temporary, until the components that are in low supply can catch up and meet the demand.
But if the lack of supply lasts for too long then people become used to the increase price and manufacturers can just keep the price there at the inflated price. Now it's permanent inflation. Or that can happen if the supply doesn't keep up with the demand.
We are now witnessing the effects of our modern hyper-efficient just-in-time global manufacturing system.
Earlier quoted context omitted.
When the supply of goods goes down, it pushes prices up.
But inflation has to do with the supply of money, not the supply of goods, right? Genuine question
As a chip supplier, I'd be feeling a lot of pressure right now. In the short term you can squeeze and the tail can wag the dog for a bit. But longer term this opens the door wide open for new competitors in the market and / or vertical integration.
I think in general all chip manufacturers are at capacity and it comes down to getting in line. And I'm sure many chip manufacturers are trying to expand their capacity. I can't imagine they're sitting there thinking this will last forever.
This so-called “transitory inflation” is really starting to seem like it will parlay into full blown inflation.
"In July, some of these sectors (used cars in particular) experienced a big deceleration in inflation, bolstering the argument"
https://news.yahoo.com/us-used-car-bubble-burst-141009925.ht...
"The price index for used vehicles rose 0.2% in July, after having risen at least 7.3% in each of the previous three months. The category was one of the few, along with hotel rooms and airfares, that drove recent inflation, the economist Paul Krugman pointed out on Twitter. “Combined, these three sectors account for…more than 1/2 [half] of inflation over the past three months,” Krugman wrote. In May, in fact, a full third of the overall price rise was due to the surge in used car prices."
This so-called “transitory inflation” is really starting to seem like it will parlay into full blown inflation.