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The Great Resignation? More Like the Great Renegotiation

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411–420 of 520 posts

Re: The Great Resignation? More Like the Great Renegotiation

#411

Why is the central bank inflation target typically 2%? Well if you target 0% and any actual result below 0% happens, that's deflation which is a disaster for economies. If inflation is say 10%. Maximum employment is near certainly impossible. Debt will be expensive and the economy crawls to a halt. Who wants to pay 10% interest on their student debt? So where in between do you have a good price stability? It tends to…

I keep hearing that people in debt win when inflation goes up but the problem is you only win if you have assets that already appreciate in value or access to large amounts of capital to purchase assets that are inflation resistant. Simple example Tim is a manager at Lowe's Tim makes $66,000, each year. Tim spends most of that money on the necessities of life, a car payment a house payment if he is lucky, a rent if h…

Its mostly just "economics 101" stuff; how it plays out in reality is different, and your analysis isn't wrong.

Inflation is good for debtors if wage keeps pace with inflation. That's it.

Taken to the extreme: Imagine I make $100k in 2030. I take out a 1 year loan for $10k @ 5% (10% my income). Inflation is at 50%, but my wages keep up. 2031: I make $150k. I pay back the loan: $10.5k (7% my income). The loan is worth less as a percentage of my income, because of inflation and wages keeping up.

Generally speaking, wages do keep rough pace with broad CPI inflation, if the inflation is slow, predicted, and a product of monetary policy. The issue in today's climate is multifold, but: first, there are critical sectors of consumer goods which are substantially out-inflating even the elevated CPI averages (housing/rent & microchips are the biggest). Second, most CPI-calculated goods are inflating not due to monetary policy, but due to supply-shock, which is harder to mitigate with wage increases because, well, in short, companies can't make money to give workers raises if they can't sell stuff.

Re: The Great Resignation? More Like the Great Renegotiation

#412

At least two things happened here: - The pandemic gave most people an unusually-long period of time at home to help them realize all the things they could have been doing (e.g. spending more time with family, not being stuck in a commute), if only their work had not been sucking up all their time and energy. - Income vs. expenses changed to the point where people couldn’t hope to pay off their debts even if they work…

Close to a million people have died in the US. That is a pretty important point in the labour market, quite aside from the brutal human cost.

The people demanding "let 'er rip" got what they wanted - mass death to avoid personal inconvenience - and it turns out that they're getting an economic cost anyway.

Re: The Great Resignation? More Like the Great Renegotiation

#413

> But there are growing fears of a wage-price spiral in which workers, seeing rising prices, demand higher pay — and companies, having to pay their workers more, start charging higher prices. These higher prices lead workers to demand even higher pay, leading companies to charge higher prices, and so on. It's the inflationary cycle of nightmares. Can someone explain to me how this works? I'd assume wages to prices ar…

also they have to account for the ever increasing bonuses to the c-suite. See Chipotle. "While Chipotle attributes raising menu prices to the growing price of labor, some analysts point to high CEO compensation as another factor. In 2020 CEO Brian Niccol took home $38 million, $1.24 million of which was his base salary. The rest was made up of other incentives and an annual bonus." https://www.businessinsider.com/chi…

How much is that per food item (the example you were responding to was $.05/item)?

Re: The Great Resignation? More Like the Great Renegotiation

#414

At least two things happened here: - The pandemic gave most people an unusually-long period of time at home to help them realize all the things they could have been doing (e.g. spending more time with family, not being stuck in a commute), if only their work had not been sucking up all their time and energy. - Income vs. expenses changed to the point where people couldn’t hope to pay off their debts even if they work…

Close to a million people have died in the US. That is a pretty important point in the labour market, quite aside from the brutal human cost. The people demanding "let 'er rip" got what they wanted - mass death to avoid personal inconvenience - and it turns out that they're getting an economic cost anyway.

> Close to a million people have died in the US. That is a pretty important point in the labour market

This doesn't make sense given the average age of people who died from Covid is well over working age.

Re: The Great Resignation? More Like the Great Renegotiation

#415

Why is the central bank inflation target typically 2%? Well if you target 0% and any actual result below 0% happens, that's deflation which is a disaster for economies. If inflation is say 10%. Maximum employment is near certainly impossible. Debt will be expensive and the economy crawls to a halt. Who wants to pay 10% interest on their student debt? So where in between do you have a good price stability? It tends to…

> They by mandate should have drastically increased interest rates. I disagree, we are having inflation because of supply bottlenecks, not because of demand. Raising interest rates would only make it harder for companies to get finances to ensure supply chains meet demand. That's if you even believe raising interest rates stops inflation. The correlation between interest rates and inflation over the last 40 years is…

> I disagree, we are having inflation because of supply bottlenecks, not because of demand.

I've seen this multiple times but what's the underlying evidence for either side. If demand goes up and the supply can't increase to follow, it'll look like a supply issue but ultimately caused by demand. What's ultimately the difference?

Is the idea that if the supply chain is scaled for X then moving from X-2 -> X is easier then X -> X+2?

Re: The Great Resignation? More Like the Great Renegotiation

#416

Earlier quoted context omitted.

What nobody is addressing is that it got a lot more expensive to live. People are trying to keep up with inflation.

Because everyone was given free money which they spent on things, driving prices up.

Is increased buying power the actual cause of inflation? Or is it disruption in China? Or is it executives choosing to take profits because they can (for some particular reason)?

What evidence could be used to distinguish between the various possibilities? I don't actually know, and I'm curious.

Re: The Great Resignation? More Like the Great Renegotiation

#417

At least two things happened here: - The pandemic gave most people an unusually-long period of time at home to help them realize all the things they could have been doing (e.g. spending more time with family, not being stuck in a commute), if only their work had not been sucking up all their time and energy. - Income vs. expenses changed to the point where people couldn’t hope to pay off their debts even if they work…

Also a huge third thing:

* Large portions of the middle class and professional class got temporary, permanent, or indefinite semi-permanent Work From Home privileges, leading lots of people who'd been renting small apartments in the cities to buzz off for a larger house out in the burbs. This leads to a lot of consumption of household goods.

Re: The Great Resignation? More Like the Great Renegotiation

#418

Earlier quoted context omitted.

Pretty sure they're not.

US tax brackets seem to be https://www.irs.gov/newsroom/irs-provides-tax-inflation-adju...

1% inflation seems about right for the 2020->2021 tax year. Most indicators are lagging so if inflation started taking off during 2021 it wouldn't show up right away.

Re: The Great Resignation? More Like the Great Renegotiation

#419

Earlier quoted context omitted.

also they have to account for the ever increasing bonuses to the c-suite. See Chipotle. "While Chipotle attributes raising menu prices to the growing price of labor, some analysts point to high CEO compensation as another factor. In 2020 CEO Brian Niccol took home $38 million, $1.24 million of which was his base salary. The rest was made up of other incentives and an annual bonus." https://www.businessinsider.com/chi…

How much is that per food item (the example you were responding to was $.05/item)?

no idea but I would wager that McDonalds sells a ton more burgers than Chipotle does burritos.

Funny addition to this is that the NY times just published an article on this topic with this funny anecdote:

"On a chilly Tuesday afternoon this month, James Marsh stopped by a Chipotle near his suburban Chicago home to grab something to eat.

It had been a while since Mr. Marsh had been to Chipotle — he estimated he goes five times a year — and he stopped cold when he saw the prices.

“I had been getting my usual, a steak burrito, which had been maybe in the mid-$8 range,” said Mr. Marsh, who trades stock options at his home in Hinsdale, Ill. “Now it was more than $9.”

He walked out."

https://www.nytimes.com/2022/01/21/business/fast-food-prices...

Re: The Great Resignation? More Like the Great Renegotiation

#420

Earlier quoted context omitted.

What nobody is addressing is that it got a lot more expensive to live. People are trying to keep up with inflation.

Because everyone was given free money which they spent on things, driving prices up.

Money supply has not been shown to increase inflation in recent decades. Supply chain issues have.
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