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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

#291

Post by JackPoach »

dlp211 wrote: post #152
MeinBlutIstBlau wrote: post #62

Earlier quoted context omitted.

I remember thinking $50k was an awesome salary when I first started working. Now I think "damn how do families survive off that kind of household income" after seeing essential goods and services cost roughly 1.5x what they were pre stimulus.

Median household income has gone up. It's currently the highest it's ever been in real terms. Households are better off today then they have ever been in their day-to-day affordability of goods. You also can't cherry-pick a handful of things that have gone up a lot and then assume that it applies to everything. Some things have gone up in price, others haven't. Inflation is sitting at about 6%, which after a decade+…

Real wages have been stagnant since 1970s in the US. Median household incomes have only gone up because some people work in highly paid industries, like IT, plus household incomes include income from stocks and real estate AND most households now are two working adults.

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

#292

Post by fleventynine »

throwawaygh wrote: post #246
fleventynine wrote: post #171

Earlier quoted context omitted.

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.

We've had significant house price inflation for years due to insufficient supply. I want CPI to increase similarly, along with wages. If housing prices stay the same as today (in dollars) the house buying power of a young person will be much higher after the wage inflation. And because the dollar price of the house doesn't drop, today's mortgage holders won't find themselves underwater. Seems to me like the best we can do for both groups given the circumstances.

To make this happen we'd have to build new homes like crazy while keeping the interest rates low.

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

#293

Post by [deleted] »

seanmcdirmid wrote: post #287
HappyTypist wrote: post #185

Earlier quoted context omitted.

Rates went down because the underlying economy was seeing slowing growth; particularly due to impacts of the trade war.

Trump on the one side of his mouth was trumping up "record economic growth!" but on the other side of his mouth was complaining "the economy will crash if they raise rates!" It is crazy that the Democrats are the fiscal conservatives these days while the Republicans are much more irresponsible (though Obama and Biden are definitely nowhere near Clinton in terms of responsibility, they are way more responsible than Bu…

[deleted]

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

#294

Post by option_greek »

mywittyname wrote: post #197
option_greek wrote: post #132

Earlier quoted context omitted.

The money fed prints doesn't stay in USA. It floods the entire globe trying to find the maximum return it can. That is the reason all stock markets everywhere are at record highs and commodities are continuing to push upward. As more economies are getting heated, many have started raising their own interest rates to reduce inflation.

At some point, we need to accept that The Fed is not God of the World Economy. They can have a major impact on the country's economy, and they can influence foreign markets to a degree , but they are not responsible for everything. They just don't have that kind of power. If commodity inflation is caused by an over abundance of USD, then there would be a whole host of side effects from this. One of which, is as I sai…

The USD vs other currencies cannot be compared to USD vs commodities which paint a more transparent picture because no one wants their own currency to be stronger than USD due to export competitiveness getting effected. So whenever USD goes down, they buy more USD with their own currency to keep the peg contained in a range. I know all are supposedly free floats central banks do buy and sell to contain volatility. So the thing that needs to be watched is not the ratio of currency but the USD denominated forex levels which as per my understanding have raised across the board as capital leaves US shoes to these countries. I don't have data to back it up but at least in non tourism dependent economies it is the case.

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

#295

Post by native_samples »

ac29 wrote: post #286
nostrademons wrote: post #181

Earlier quoted context omitted.

Corporate debt. Fed raised rates and then when it came time to roll over their debt, a lot of major corporations said "Uh, if interest rates keep going up, we are going to go bankrupt because of the higher costs of debt service." The markets had a taper tantrum (the S&P 500 dropped by about 18% in the second half of 2018), and then the Fed reconsidered and started dropping rates again. Situation is worse now, because…

> Situation is worse now, because it's highly likely that the U.S. Government would go bankrupt if they had to roll over their debt at higher rates Is it even possible for a sovereign nation to go bankrupt in its own fiat currency?

Sort of. Bankruptcy means you "cannot" pay your debts. The US can get itself into a situation in which for structural reasons it "cannot" pay back its debtors because the political/social costs of the money printing or taxation required are infeasible, e.g. nobody who will do it can get elected. In that case even though it would be technically possible, it wouldn't happen and the US would refuse to pay.

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

#296

Post by littlestymaar »

ignasheahy wrote: post #282
littlestymaar wrote: post #271

Earlier quoted context omitted.

What would break mean? The US debt, like all debt, is somebody else's asset. This “somebody” has zero interest in collapsing the system. The only two things that can actually make the system collapse in the next 30 years are: - a communist revolution in the US (this is not happening anytime soon, do not worry). - zealots with a debt fixation, who would rather collapse the entire economy because they think debt is imm…

What I mean by "break" is runaway inflation or hyperinflation. That doesn't mean the whole system collapses. The rising debt or money supply is not a problem - the problem is its second derivative - how fast rising increases and how connected it is with underlying economy. And this points to a kinda dire future at the moment.

Hyperinflation (or even “a little bit to high” inflation) would literally destroy billions of financial assets (public and private debt), given the enormous political power of the finance industry, it's not going to happen.

Also, there is exactly zero historical instance of hyperinflation caused by public debt labelled in a country's own currency. Zero.

There's little rational reasons to believe public debt will cause hyperinflation, and as I mentioned above there are in fact powerful effect acting in the opposite direction.

The only reason people make the link between those two is that hyperinflation is the canonical example of an economic catastrophe and because people believe debt to be immoral, it must lead to a catastrophe in the end. This is a religious/moral discourse, which has no link with the actual world.

And to conclude, keep in mind that high level of public debt is a political decision (borrow from the wealthy instead of taxing them) it would be quite straightforward to fix (with the 60s income tax level) but it's in the interest of no-one with a bit of political power.

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

#297

Post by littlestymaar »

anm89 wrote: post #284
littlestymaar wrote: post #270

Earlier quoted context omitted.

> Yoy 6% for october. Inflation is already up. What are they waiting for? 10%? 15%? You realize that this figure was only calculated a few days ago, right? What reaction time do you expect?

So then you want to go on the record and say you think they will raise rates at the next on FOMC meeting?

Yes,I have little doubt that the rate won't remain as low as they are now for much longer. I don't know if that will be at the next meeting or in Q1 2022 though.

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

#298

Post by wayoutthere »

podgaj wrote: post #266
podgaj wrote: post #157

Earlier quoted context omitted.

Democrats are the Charlie Brown’s of politics. And Republicans are Lucy.

I guess getting downvoted on this means there is no chance of a third party....

Not with first past the post voting and the electoral college. It was a fine voting system in the 18th century, but has not scaled well in the modern world and caused problems basically from day one.

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

#299

Post by curryst »

throwawaygh wrote: post #220
podgaj wrote: post #163

Earlier quoted context omitted.

But you’re mistaking inflation for the rate of inflation growth. The rate of inflation growth is horrible right now.

> But you’re mistaking inflation for the rate of inflation growth. You mean... like... a first derivative? What am I mistaken about? I literally said literally exactly this: >> It's various first and second derivatives + the amount of "potential energy" in the system that have (informed) people scared. (and, in fact, it's not just the rate of inflation but also several other related rates of change and rates of rates…

There's really not a need to be that hostile. They probably misread; I did too at first. I thought you were referring to financial derivatives.

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

#300

Post by MeinBlutIstBlau »

JackPoach wrote: post #291
dlp211 wrote: post #152

Earlier quoted context omitted.

Median household income has gone up. It's currently the highest it's ever been in real terms. Households are better off today then they have ever been in their day-to-day affordability of goods. You also can't cherry-pick a handful of things that have gone up a lot and then assume that it applies to everything. Some things have gone up in price, others haven't. Inflation is sitting at about 6%, which after a decade+…

Real wages have been stagnant since 1970s in the US. Median household incomes have only gone up because some people work in highly paid industries, like IT, plus household incomes include income from stocks and real estate AND most households now are two working adults.

>AND most households now are two working adults.

This is the one aspect I feel like most people gloss over the most. Most people I graduated high school with are dual income households.

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