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US inflation jumps to 31-year high amid global supply chain crisis

theguardian.com

21–30 of 304 posts

Re: US inflation jumps to 31-year high amid global supply chain crisis

#21

People need to decide whether they think this is because of supply chain issues and the demand spike following COVID or if it's because of the Fed.

Wouldn't the evidence of inflation occurring in other countries suggest that COVID is its primary driver, rather than a specific monetary policy? (though it does seem that the scale of inflation in the U.S. is a little higher than elsewhere)

See for example:

UK: https://www.reuters.com/world/uk/boe-chief-economist-says-uk...

Australia: https://www.reuters.com/business/australia-core-inflation-sp...

China: https://www.reuters.com/world/china/chinas-factory-gate-infl...

Germany: https://www.reuters.com/world/europe/german-inflation-could-...

Brazil: https://www.reuters.com/article/brazil-economy-inflation/upd...

Re: US inflation jumps to 31-year high amid global supply chain crisis

#22

I've mentioned before [1] but these prices still don't seem that serious. Most prices have still not beat their highs made in 2008-2014 (crude oil, global energy price, eggs, milk, sugar, rice, chicken, pork chops). Ground beef is an outlier, however. And US price per kwh is back at its peak, though it declined in these October numbers to be below... 2014 numbers again. [2] So while the climb up is bad, the prices th…

I see significant errors in your thesis. You are using global commodity prices to make claims about US consumer prices and consumer inflation. We have comprehensive data from national food retail that shows strong price inflation. Your insistence in using global commodity prices to disprove consumer inflation concerns is incorrect.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#23
post #5

The ongoing supply-demand imbalance that is contributing to rising inflation worldwide is in my view the most pressing short-term problem that needs to be solved by hackers, engineers, and entrepreneurs today.[a] We need more people doing what Flexport's Ryan Petersen did with LA ports[a]: Figure out quick, cost-efficient ways to get our current system out of its currently degraded state and back to operating smoothl…

I completely agree with you; but it’s because this is what “the collapse” looks like. A long, slow decline into a world that most of us cannot afford. I honestly don’t think there’s much we can do to stop it at this point; it’s the result of 100 years of energy policy keeping prices artificially low by ignoring the externalities that causes.

I don’t think we’re ever going back to the pre-pandemic past. Climate change is simply becoming too disruptive to supply chain networks. This probably would have happened anyway, the pandemic just moved it up by 5-10 years.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#24
post #5

The ongoing supply-demand imbalance that is contributing to rising inflation worldwide is in my view the most pressing short-term problem that needs to be solved by hackers, engineers, and entrepreneurs today.[a] We need more people doing what Flexport's Ryan Petersen did with LA ports[a]: Figure out quick, cost-efficient ways to get our current system out of its currently degraded state and back to operating smoothl…

How does degraded supply chain throughput connect to inflation?

The market price is set so that demand and supply match. If supply of some good decreases, then the price will keep increasing until a sufficient amount of people can no longer afford it. This can range from something fairly benign, like keeping an old car around a few years longer, to something disastrous like people starving.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#25
post #5

The ongoing supply-demand imbalance that is contributing to rising inflation worldwide is in my view the most pressing short-term problem that needs to be solved by hackers, engineers, and entrepreneurs today.[a] We need more people doing what Flexport's Ryan Petersen did with LA ports[a]: Figure out quick, cost-efficient ways to get our current system out of its currently degraded state and back to operating smoothl…

I completely agree with you; but it’s because this is what “the collapse” looks like. A long, slow decline into a world that most of us cannot afford. I honestly don’t think there’s much we can do to stop it at this point; it’s the result of 100 years of energy policy keeping prices artificially low by ignoring the externalities that causes. I don’t think we’re ever going back to the pre-pandemic past. Climate change…

Can you elaborate on why your view of the situation is so bleak?

Re: US inflation jumps to 31-year high amid global supply chain crisis

#26
You need to take this seriously.

the reason you should be concerned about these prices in relation to their 2008 crisis prices is because the countermeasure that resulted in 2008 relief --Quantitative Easing-- cannot be used again because we effectively never quit using it to prop up the last decade of commercial market performance.

https://en.wikipedia.org/wiki/Quantitative_easing#US_QE4

the Federal reserve also has no leverage to modify the prime interest rate to combat this inflation, as it already sits near-zero and the fed funds rate has been agreed to stay at under a quarter of a percent. modifying any interest rates in 2021 would blow up the corporate credit bubble, so the fed is mostly just bloviating about "transient inflation" to no ones real entertainment.

https://en.wikipedia.org/wiki/Corporate_debt_bubble

finally, the bond buyback taper the Federal reserve has been touting since July 2021 but too terrified to implement is effectively meaningless as its not set to end until next July at the earliest, effectively allowing uncorrected inflation to continue another eight months. the fed hasnt announced any further countermeasures after this...they just assume a bond taper will coincide with the purported end of covid and surge of consumer confidence which never manifested in 2021. Instead the supply chain continued to fail and vaccine targets were never met.

Id conject the level of wishful thinking driving fed policy at this point should be enough to tenure Powells resignation sometime in March. the only thing combatting stagflation at this point is corporations like Amazon who know if they dont do something about real wages in the absence of effective federal policy it will start to reflect on their earnings reports, and even they seem recalcitrant to take any real steps unless the union comes a knockin.'

Re: US inflation jumps to 31-year high amid global supply chain crisis

#27
Hey everyone - we need to chill out for a second. Stop buying the knee jerk reaction of the media trying to freak everyone out and get some good advertising dollars.

This is going to take until after the new year maybe Q1-Q3 timeframe to see if it is transitory.

Reminder: we had an unprecedented global supply collapse followed by shutdowns and border closures for more than a year combined with historic levels of fast moving monetary growth during that time. We now have a situation of incredible levels of built up demand, a labor shortage and supply chain issues. Not to mention significant amount of illness and deaths as a result of a pandemic.

There were bound to be second and third order effects. The system needs some time to adjust.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#28

People need to decide whether they think this is because of supply chain issues and the demand spike following COVID or if it's because of the Fed.

People just need to look at a money supply chart.

Edit - it's true. There's a very well established connection between inflation and money supply. Hell, the entire point of QE is to try stimulate inflation to encourage spending to encourage growth. It's not some unknown effect...

Re: US inflation jumps to 31-year high amid global supply chain crisis

#29

People need to decide whether they think this is because of supply chain issues and the demand spike following COVID or if it's because of the Fed.

Wouldn't the evidence of inflation occurring in other countries suggest that COVID is its primary driver, rather than a specific monetary policy? (though it does seem that the scale of inflation in the U.S. is a little higher than elsewhere) See for example: UK: https://www.reuters.com/world/uk/boe-chief-economist-says-uk... Australia: https://www.reuters.com/business/australia-core-inflation-sp... China: https://www…

US is world reserve currency. We have the ability to print unlimited dollars. All other currencies are primarily backed by US dollars. Most important commodities like oil are priced in USD. Therefore, US drives inflation globally.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#30

Interest rates really should have went up a couple of years ago. Not just for the sake of stemming inflation, but what good is the tool of lower rates in bad times when they are already at bottom in good times? If something goes wrong (or more wrong) we will have no effective economic tools available because they are constantly running as if we are in crisis already.

Nobody wants to be the next Jimmy Carter who lets the fed raise interest rates to stem inflation because it invariably triggers a recession that gets said president and his party voted out of office. So rates will stay perpetually low.

Eh, we had high interest rates in the 90s and it worked out. Also, involving politicians is a huge mistake, the Fed needs to recapture its independence so it can make tough decisions. As for the rest, we as a society have become too petulant, expecting a forever boom and doing hardly anything to mellow out the boom bust cycle. And it’s not just the USA either.
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