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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

#251

Post by boc »

mattmoose21 wrote: post #41

Reading this article and going through these comments make me realize that while I know what these words are I have a real lack of understanding how this stuff works. This may not be the best place to ask but do any of you guys have any recommendations on where to learn more about economics? Preferably something with good historical context.

I'll go a different route and recommend that you read The Ascent of Money[1]. It's much more engaging to read vs an econ textbook and it will give you a much better understanding of money, currency, and finance by starting way back at the beginning of modern civilization. It effectively explains all of the major concepts of international finance (bonds, insurance, stocks, currency, loans, etc) through the real-world examples which created them.

[1] https://www.amazon.com/Ascent-Money-Financial-History-World/...

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

#252

Post by MeinBlutIstBlau »

Supermancho wrote: post #118
MeinBlutIstBlau wrote: post #59

Earlier quoted context omitted.

I know HN doesn't like it when you criticize the US left but I'm here with you. I didn't buy a single word out of the Biden administration pre-election. The "never Trump" people were so blinded by Trump that they didn't realize the other guy was a worse bought and paid for puppet than Hilary. Hilary at least had a functioning brain and could reign in the Dems. Biden doesn't even know it's Wednesday.

Biden is used by the D party and allowed a little leeway when he's clear. To be fair, I'm not sure Biden is worse than Trump, who ran amok. It will take decades to recover from the damage done to parts of the country and world (eg lifting the freeze on coal-leases, lift ban on personnel landmines, judge appointments, etc).

Not everyone had an issue with the scotus appointments. Just because they were added by the conservatives l doesn't make their logic any less sound.

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

#253

Post by MeinBlutIstBlau »

rsj_hn wrote: post #172
podgaj wrote: post #164

Earlier quoted context omitted.

Poor people, which is a large majority of the United States, can only afford processed food. You neoliberals in your whole foods crap make me nauseous.

Poor people are a large majority ? Like, 2/3? 3/4? Median family income is 80K in 2021. The median HH income for 2021 will come out soon, but it will be north of 70K.

Most of the US is not NYC, SF Chicago, and Seattle you know. I'd be shocked if household incomes near me in the Midwest were greater than $55k yet. There are tons of people who make less than $15/hr still.

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

#254

Post by tbabb »

nightski wrote: post #234
tbabb wrote: post #231

Earlier quoted context omitted.

Again, maybe dumb question, but what sense is "every dollar leveraged 10x"? Also in 2008, it looks like money velocity decreased during the recession (as it's been doing almost monotonically since the mid 90s). It looks like after the crash, velocity increased slightly, and indeed the supply contracted just slightly at basically the exact same time.

Fractional reserve banking.

If a dollar is defaulted, I'm not sure it's accurate to say that one dollar is destroyed (as opposed to moved), let alone ten? If the borrower defaults, it is the same as the borrower owing the depositor $1 (the bank is in a sense acting like a risk-absorbing and expertise-adding middleman between the depositor and the borrower).

And doesn't whether that dollar is "destroyed" depend on why the borrower can't pay it? If it's because someone else got ≥ $1 richer off the borrower, then it seems to me like the supply of money in the economy as a whole hasn't actually gone down.

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

#255

Post by boc »

wbsss4412 wrote: post #209
boc wrote: post #202

Earlier quoted context omitted.

Unravel the petrodollar and replace it with what? There are no better alternatives.

At the end of the day, the petrodollar is a geopolitical arrangement, it’s end and subsequent replacement will be drafted to reflect whatever the new geopolitical order comes to be.

Which will remain the United States as the sole superpower. China does not have a blue-water navy and won't for another decade+, which means they cannot regulate oil shipping routes worldwide like the USN. Russia can't project naval power outside their region. The entire EU collectively doesn't have close to the naval power that the US does, and does not have the resources to keep routes open.

The petrodollar is The Prize the US receives for being willing to enforce global shipping lanes across the world's oceans. Without that overwhelming force, things rapidly collapse as Iran shuts the Strait of Hormuz.

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

#256

Post by 999900000999 »

trimbo wrote: post #239
999900000999 wrote: post #174

Would buying property be a good inflation hedge. I'd love to lock in a cheap mortgage,even if money is worth 10% less next year, my mortgage remains the same.

If you're going to live in or use the property for a long time, possibly. I've also been looking at buying property with these mortgage rates, but it's not intended as a short term investment. In terms of investment property or flipping, there are many factors and you might want to look at what happened historically. For example, raising interest rates significantly like Volcker did in the 80s stopped new home buildi…

I'm thinking of buying a condo in Chicago even if I don't want to live there forever. If you check my post history I'm very fond of the Second City. This condo would be next to public transportation and allow me to live car free. I'd rather invest my money in property vs giving it to Ford Motor Credit.

My current 401k contributions alone would cover the mortgage.

Ideally when I don't live their I'd rent it out.

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

#257

Post by wbsss4412 »

boc wrote: post #255
wbsss4412 wrote: post #209

Earlier quoted context omitted.

At the end of the day, the petrodollar is a geopolitical arrangement, it’s end and subsequent replacement will be drafted to reflect whatever the new geopolitical order comes to be.

Which will remain the United States as the sole superpower. China does not have a blue-water navy and won't for another decade+, which means they cannot regulate oil shipping routes worldwide like the USN. Russia can't project naval power outside their region. The entire EU collectively doesn't have close to the naval power that the US does, and does not have the resources to keep routes open. The petrodollar is The…

Which is why I didn’t say I expected the system to be imminent danger of collapse.

Someday? Probably. Now? Unlikely.

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

#258

Post by lazide »

wbsss4412 wrote: post #184
lazide wrote: post #138

Earlier quoted context omitted.

The last shock in the 70’s caused large scale socio economic changes and power shifts, and the ‘currency’ was brand ‘new’ at the time (less than 20 years since Bretton Woods, still riding high on post WW2 prosperity, etc) The demand collapse and now demand spike we’re seeing only started occurring very recently (less than 6 months ago for the spike), and we don’t know what will happen. We’ve never had anything like i…

The situation is absolutely unprecedented and it’s going to be a real challenge for policymakers to get the balance right. In retrospect, some level of inflation was going to be inevitable. The question is how to balance it with employment and growth going forward.

Agreed. A big question in everyone’s mind i think is if this is ‘permanent’ inflation ‘catching up’ from all the QE and money printing/stimulus, or a temporary spike as pent up demand from the drop last year unblocks and rushes for the door, and will subside afterwards as the larger deflationary (consumer price wise) trend continues afterwards.

I personally suspect it will be a 70’s style ‘step’ (down related to buying power of a given dollar, probably not visible in relation to other currencies though, and up in prices), albeit without a strong hike in interest rates that happened under Carter and caused really weird other effects. They didn’t have the overall consumer price deflation due to tech and global trade like we’ve had for awhile now.

It would be nice to have a crystal ball, but alas.

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

#259

Post by missedthecue »

seanmcdirmid wrote: post #17

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.

There is literally no point in raising rates and slowing the economy simply so that you can then lower rates and reinvigorate the economy again. That doesn't accomplish anything.

And rates can always go lower from where they are now. It's not like the Fed is out of room if they wanted to lower rates further.

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

#260

Post by missedthecue »

symlinkk wrote: post #179
ASinclair wrote: post #155

There's one thing I've never quite understood. There seems to be some sort of obsession with inflation and Fed policy among the HN/Reddit demographic. Could it be the crossover with interest in Cryptocurrencies? I could be wrong but it's just something I've noticed over the years.

HN and Reddit has a younger crowd that doesn’t have a lot of major assets (like a house, big stock portfolio) so they’re getting the worst of all worlds - the price increases from inflation without the corresponding rise of asset value.

Stocks and assets don't necessarily increase in value as inflation occurs.

During the decade of the 1970s, there was some phenomenal levels of inflation, and the S&P500 inflation adjusted returns for the decade were about -20%

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