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

theguardian.com

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

#241

Post by IAmWorried »

unethical_ban wrote: post #236
IAmWorried wrote: post #224

In reality it's a lot higher than 6%. You have to understand that the CPI is utter crap. They have continually adjusted the definition of it over time to make inflation seem not as bad as it actually is. It doesn't include house prices, equity prices, college tuition, etc. And the number generated from the remaining categories is dragged down by cheap software and electronics. In reality I'd say inflation is closer t…

Notwithstanding the concerns about inflation, I challenge the notion that helping people feed their families when they're poor, redistributing wealth from the tippity-top to the middle and down, providing more education, and providing more healthcare to the elderly are "ridiculous". "Handout" is a dogwhistle.

My personal opinion is that the US government is mostly incompetent, and its employment structure incentivizes laziness and waste. Any expansion of government into the lives of the people is bound to backfire. The rich would just find a new way to hide their money, the food programs would be taken advantage of, etc. I think we already spend more per student than any other country, and our public education is mostly a joke. But to each their own, I get the sentiment behind these programs.

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

#242

Post by givemeethekeys »

ItsMonkk wrote: post #193
tbabb wrote: post #136

Earlier quoted context omitted.

Maybe a stupid question, but if the velocity goes up, couldn't/wouldn't the Fed contract the supply? It seems like having large supply is desirable/correct when velocity is low.

No. We live in a fiat currency world where every dollar is allowed to leverage 10x. This means that every dollar defaulted on results in the destruction of 10 dollars. Even during the housing crash of 2008, the money supply didn't contract because the government was forced to keep the money supply constant, and if they did not it would lead to cascading failures that would destroy the currency entirely. Allowing the…

Ray Dalio's "beautiful deleveraging" ?

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

#243

Post by boringg »

hindsightbias wrote: post #199
boringg wrote: post #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…

Lumber is cheap for anyone who can build their own home. Home Depot as packed this weekend.

It finally came back down in price for the retailers? I've been waiting for the retailers to lower their prices after they paid off the costs of the original surge in wholesale lumber. And then the wholesale price of lumber came right back to earth but the retailers still had to cover their costs of acquisition.

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

#244

Post by wbsss4412 »

IAmWorried wrote: post #233
wbsss4412 wrote: post #229

Earlier quoted context omitted.

Housing, tuition and equity prices have been skyrocketing for the last decade and no one panicked. Has tuition even notably increased in the last 12 months?

I don't exactly think people were very happy about it either. I mean look, I'm 24 years old and I don't own any of these assets. At the rate things are going now, I probably never will own these assets. The best thing that could happen for me is major deflation. But it is too politically unpopular, I bet it will be years before we get a fed chairman who has the spine to raise rates. So I'm reduced to angrily complain…

The fed _was_ raising rates pre pandemic, it got detailed by Covid.

I would confidently bet money that they raise rates in 2022.

At the end of the day, the fed has to take its queues from the fiscal policy that’s in place. This time around is very very different from 08.

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

#245

Post by swiley »

standardUser wrote: post #33

Inflation reduces the value of debt and an era of increased inflation stands to benefit a lot of households. Of course, it helps if wages go up alongside prices, and they have. But even without wage increases, the value of debt lost to inflation is likely worth more than the value of salary lost to inflation for many households.

As usual it benefits only those who hold property and not the people at the bottom.

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

#246

Post by throwawaygh »

fleventynine wrote: post #171
throwawaygh wrote: post #76

Earlier quoted context omitted.

> Inflation reduces the value of debt and an era of increased inflation stands to benefit a lot of households. Maybe. The policy responses to inflation are to increase supply and/or raise interest rates. Both of those put downward pressure on housing prices. So, inflation devalues the debt you owe (good for household) but also devalues the underlying asset (bad for household).

In order for young people to have any chance at the same quality of life of their parents, the "real" value of housing needs to come down to at least 50% of the current value. The only way to accomplish this without wiping out those with mortgages is to have a large spike of inflation. It's painful, but likely necessary.

> The only way to accomplish this without wiping out those with mortgages is to have a large spike of inflation.

This doesn't make much sense when rent/imputed rent are primary drivers of inflation.

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

#247

Post by boc »

techsin101 wrote: post #49

It's not transitory. Prices have increased, unless there is extreme deflation, they aren't going down. Prices will continue to increase. At this rate, feds will have no control.

You can put your money where your mouth is by setting up a divergent-pairs position for T-bills and TIPS.

The markets still believe the FED knows better than you. But hey, the great thing about our system is that you're always allowed to bet against it.

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

#248

Post by SideQuark »

rsj_hn wrote: post #131
ChrisLomont wrote: post #93

Earlier quoted context omitted.

There's a reason exactly zero of top econ journals or economists[2] are Mises.org Austrian economists - they don't have a track record of anything resembling accuracy, predictions, or theory that works. In fact, it's hard to find much even on Google Scholar.... [1] https://ideas.repec.org/top/top.journals.all.html [2] https://ideas.repec.org/top/top.person.all.html

Meh, Hayek was awarded the Nobel. The Austrian school does have a lot of useful insights. Perhaps those insights are not so amenable to the kind of economics that is a fruitful research field and can get grants, but that doesn't mean it's not fruitful for understanding the economy. The main reason why the Austrians tend to be snubbed is that their insights are primarily qualitative rather than quantitative, and thus…

Hayek got a Nobel for decidely non-Austrian work. His Austrian work was widely panned, and he moved away from it later in life. His co-winner was displeased to win a Nobel on a topic shared with someone like Hayek who early in his career pushed a lot of stuff that didn't pan out.

Hayek also never embraced all the stuff Austrians taught, such as Mises claiming neoclassical was completely flawed, whereas Hayek accepted the majority of neoclassical as correct. Hayek does not take Mises a priori approach to economics whatsoever. There's plenty more. So if your claim is that Austrian is reasonable because a big person believes it, this is not that person.

Whenever someone points out that Mises and Austrian economics is not very relevant to modern economics, and someone invariable pulls out the lone closest thing they can find, know that this is not quite true.

>The main reason why the Austrians tend to be snubbed is that their insights are primarily qualitative

There's entire subfields of well published and researched economics that do this that are not Austrian.

If you simply google "why is Austrian economics snubbed" you get a whole host of decent sources showing how it fails to match empirical evidence. That is the reason it's snubbed. It sounds pretty, appeals to Libertarians, but does not match observed evidence. That's good enough reason to stop any line of thought from being accepted science.

(Of course, when you build your entire field on rejecting empirical evidence, of course you end up with beliefs and theories that do not match empirical evidence, so no surprise there).

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

#249

Post by wbsss4412 »

option_greek wrote: post #144
starkd wrote: post #123

Earlier quoted context omitted.

It doesn't have to reach hyperinflation to have a seriously disabling influence. People look ahead for potential impediments to being able to get the goods they need. Hopefully, it won't amount to inflation, but historically, hyperinflation always tends to come out of nowhere. It's very hard to control once it gets going.

Not even as difficult as that. As the prices rise with a regular periodicity, people stock up more goods with expectation that in future their money will buy them less. Which causes more price increases and corresponding increase in stocking. Obviously 6% won't do that but at higher levels its the complex dynamics driving inflation than good old supply demand balance. And don't think that exports will solve hyper inf…

What you’re describing around consumer expectations is that the absolute price level continues to rise at a higher as consumer expectations change. It doesn’t follow however that the rate itself increases due to this dynamic. Consumer expectations tend to anchor inflation at a particular level.

This is just a fundamental misunderstanding of what causes hyperinflation.

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

#250

Post by gilbetron »

felistoria wrote: post #206
boringg wrote: post #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…

It would be nice if America had factories that produced things rather than having to import all of our crap from China. Maybe then there wouldn't be 100+ ships waiting to be unloaded in LA.

We still manufacture like crazy:

https://www.stlouisfed.org/on-the-economy/2017/april/us-manu...

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