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Inflation surges to its highest since 1990

npr.org

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Re: Inflation surges to its highest since 1990

#51

Post by qeternity »

the_gastropod wrote: post #49
qeternity wrote: post #46

Earlier quoted context omitted.

Completely agree. And hedonic adjustments are not a bad thing either. As you say, inflation is an insanely complex beast that we don’t really understand. But it’s worth pointing out that certain agencies use CPI imperfections when it suits them: the Fed has pointed to low inflation for years as justification to continue its monetary policies. And then when CPI no longer backs their actions, they change the narrative…

What incentive is there for the Fed to continue printing as opposed to doing the right thing? What’s the conspiracy here?

Risk assets will fall, which although not part of their mandate, they are very sensitive to (see previous tapertantrum).

Re: Inflation surges to its highest since 1990

#52

Post by piva00 »

foota wrote: post #12

Were bad things happening in 1990? Iirc it was the start of one of the most prosperous periods in recent American history.

USSR disintegrating after 91 and the opening up of markets around the world from the wave of neoliberalism helped a fucking lot, movements such as Latin America slowly dropping its market-protection practices, former Soviet states adopting free market ideologies and so on created quite a high demand, it was the start of globalisation as we are used to nowadays.

Most of the most prosperous periods in American history are following large shifts in the world order, WW1 and 2, collapse of the USSR, starting the Age of Information, etc.

Re: Inflation surges to its highest since 1990

#53

Post by pa7x1 »

danielrpa wrote: post #50
pa7x1 wrote: post #16

Earlier quoted context omitted.

Inflation does not affect (relatively speaking) the poorest more. On the contrary, it's a tax on people that have a lot of cash or cash-equivalent assets. That's not the poor. The poor have either very little cash or even negative (via debt), so inflation benefits them. And you can see this historically, too: Historical inflation rate chart: http://www.aboutinflation.com/_/rsrc/1369736825466/inflation... Wealth gap i…

This is so wrong I don't know where to start. I'll just say 2 things: a) your charts are a classical example of "try hard enough and you will find 2 charts that correlate" b) Inflation affects the poor because they don't, and sometimes can't, hold assets that traditionally protects the rich from inflation, such as real hard assets (such as real estate) and a sizeable chunk of stocks (some types) and bonds (TIPS and s…

Is it? What if we go even farther?

http://www.aboutinflation.com/_/rsrc/1369736776695/inflation...

Without looking back at the wealth inequality chart. What would you say was the result of the highly deflationary period of the 1920s? Increase of wealth inequality or decrease of wealth inequality?

Without looking back at the wealth inequality chart. What would you say was the result of the high inflationary period of the 1940s? Increase of wealth inequality or decrease of wealth inequality?

Re: Inflation surges to its highest since 1990

#54

Post by pa7x1 »

danielrpa wrote: post #50
pa7x1 wrote: post #16

Earlier quoted context omitted.

Inflation does not affect (relatively speaking) the poorest more. On the contrary, it's a tax on people that have a lot of cash or cash-equivalent assets. That's not the poor. The poor have either very little cash or even negative (via debt), so inflation benefits them. And you can see this historically, too: Historical inflation rate chart: http://www.aboutinflation.com/_/rsrc/1369736825466/inflation... Wealth gap i…

This is so wrong I don't know where to start. I'll just say 2 things: a) your charts are a classical example of "try hard enough and you will find 2 charts that correlate" b) Inflation affects the poor because they don't, and sometimes can't, hold assets that traditionally protects the rich from inflation, such as real hard assets (such as real estate) and a sizeable chunk of stocks (some types) and bonds (TIPS and s…

As I explained above, some assets protect you from inflation. Like stocks in companies with pricing power, real estate... But almost no assets protect you from the raise in the risk-free-rate that is usually following a high inflationary periods. As the risk-free-rate enters into model valuations of future cash-flows and a raise to it implies a multiple contraction.

Re: Inflation surges to its highest since 1990

#55

Post by edmcnulty101 »

d_t_w wrote: post #11
edmcnulty101 wrote: post #7

Earlier quoted context omitted.

Doesn't the CPI include housing? (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services) Question 10. https://www.bls.gov/cpi/questions-and-answers.htm

I'm not quite sure what 'housing' means in that quote because CPI specifically excludes most housing costs. RPI takes into account housing costs such as mortgage interest payments, building insurance etc. I'm not sure what USA measure, but the UK shifted to CPI in 2003 to harmonise with EU. So no, UK/EU/CPI inflation measures basically don't include housing related costs. Certainly not the price of houses, which migh…

I have no clue haha. I mean if it DOESN'T include housing doesn't that just mean that since housing costs are skyrocketing that this reported number is actually a lowball for inflation?

Re: Inflation surges to its highest since 1990

#56

Post by edmcnulty101 »

noduerme wrote: post #36
edmcnulty101 wrote: post #8

Earlier quoted context omitted.

Poor people and the middle class who deal in cash day to day to pay bills, seem to end up with less money. The rich seem to be asset heavy so are buffeted against inflation.

This is a foreign concept, but Americans have caught on just fine: When the currency is inflating, people buy hard physical goods or whatever they can get their hands on now before the price goes up. Cars, white goods, remodels, houses, jewelry. It's funny to watch the whole universe of punditry wring its hands over the supply chain crisis when in fact what we're seeing is Americans attempting to cash out of the doll…

> in fact what we're seeing is Americans attempting to cash out of the dollar

Interesting! Did not look at it like that. I've had that subconscious instinct as well to purchase important things I need now because tomorrow feels so unstable.

Re: Inflation surges to its highest since 1990

#57

Post by edmcnulty101 »

ericd wrote: post #39
edmcnulty101 wrote: post #8

Earlier quoted context omitted.

Poor people and the middle class who deal in cash day to day to pay bills, seem to end up with less money. The rich seem to be asset heavy so are buffeted against inflation.

Keep in mind that nominal inflation-driven gains are taxed, so even perfectly inflation hedged investors (not many are) end up behind in real terms.

Investments have to meet an estimated inflation barrier of 6% right now just to break even with inflation THEN they get taxed as well on that 6% gain!

And 6% isn't an easy target to reach for safe conservative investments like a retirement account.

So the gov't borrows money, has the power to make the money they borrowed worth less to pay back, then taxes everyone on earnings on this newly inflated money.

What a racket!

Re: Inflation surges to its highest since 1990

#58

Post by metafunctor »

jtsiskin wrote: post #18
metafunctor wrote: post #13

Earlier quoted context omitted.

Are you assuming interest rates and inflation are somehow uncoupled?

They’re referring to people with existing, fixed interest rate debt. My student loans for example are 5%

Still not uncoupled, but rather an estimate of future reference interest rates (which is strongly coupled to inflation).
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