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Have we been thinking about inflation all wrong?

thewalrus.ca

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Re: Have we been thinking about inflation all wrong?

#61

Post by ren_engineer »

pdonis wrote: post #32
mdavis6890 wrote: post #12

The thing to keep in mind is that what really matters is stuff : The goods and services that add economic value to our lives, like shoes, houses, food, sports games, accounting services, haircuts, etc. Also called the metaphorical "pie." Inflation is bad to the extent that it causes the total stuff we produce to go down or to become more poorly distributed, and good to the extent that it does the opposite. And a shri…

> Inflation is bad to the extent that it causes the total stuff we produce to go down or to become more poorly distributed, and good to the extent that it does the opposite. Even doing the opposite can be bad if it's the wrong stuff. It's not just the total amount of stuff that matters; it's how much of the stuff is stuff people actually need or want, as opposed to stuff that gets produced but never actually used bec…

>I agree with being focused on production, as long as it's production driven by actual customer needs

this has always been an interesting question to me, because in theory companies like Facebook are worth hundreds of billions despite making many people miserable and actually lowering productivity by wasting time.

Basically part of the sin economy, things like gambling and drugs. All bring in lots of money but we'd arguably be better off without them. Facebook makes money by getting people addicted to their app by design.

Customers and markets aren't rational if the people are driven by addiction, in which case it would make sense for the government to intervene. China is doing this by incentivizing people to go into hard sciences like semiconductors instead of consumer software

Re: Have we been thinking about inflation all wrong?

#62

Post by WillPostForFood »

If inflation were allowed to run a bit higher, it could deliver a long-overdue win for young people who have had to face a combination of stagnant wages and rising housing costs.

Inciting inflation to fix rising houses costs and stagnant wages is kinda crazy. It definitely won't help housing prices, and wages increases are almost always lag behind price increases.

Re: Have we been thinking about inflation all wrong?

#63

Post by TameAntelope »

pdonis wrote: post #44
TameAntelope wrote: post #23

Earlier quoted context omitted.

If the cost of preventing additional hundreds of thousands of dead Americans is a year or two of substantial inflation increases, this administration did right by me.

> preventing additional hundreds of thousands of dead Americans But it hasn't. We have gotten the worst of both worlds: huge economic damage and lots of dead Americans. More Americans have died of COVID since the current administration took office than before that. And since governments around the world have demonstrated that they cannot stop COVID, the least they could have done was refrain from inflicting the econo…

None of what you wrote here deals with what I said, which is that more Americans would have died, had we not spent the money we did.

Re: Have we been thinking about inflation all wrong?

#64

Post by TremendousJudge »

ccuqui wrote: post #58

Inflation is the direct result of governments printing money like crazy to hide why they spend money like crazy and continue to be extremely inefficient and corrupt instead of cutting expenses and becoming more efficient and leaner. And it mainly affects the poorest in society. How can that be good?! Don't take my word for it: see what is happening in Argentina, Venezuela, Brazil, etc and then decide for yourself how…

Brazil has had its inflation under control (for Latin American standards, anyway) since the 90s, after the Plan Real. Also, Latin American runaway inflation is something that has been happening since the 60s, every measure under the sun has been tried to fix it, with only limited success in some cases. Anyway, it's a bit more complicated than "spending money like crazy and being corrupt".

Re: Have we been thinking about inflation all wrong?

#65

Post by TameAntelope »

AnimalMuppet wrote: post #54
TameAntelope wrote: post #17

Earlier quoted context omitted.

The article's point is that it doesn't hurt the poor as much, because more poor people can find jobs, pay off their loans more easily, and they do make more money. Not to mention that the price of everything isn't going up a single number -- poor people can adjust their spending to account for the items that reflect the highest inflation, and focus on the goods that are least effected. The article isn't suggesting th…

But the article is wrong - it does hurt the poor. The reason is timing. Prices go up. Then, later , wages go up. That time gap is hard on poor people. The poorer they are, the harder it is.

Wages going up is not what the article is talking about, wages becoming available is what the article is talking about, as seen by our extremely robust jobs numbers.

Re: Have we been thinking about inflation all wrong?

#66

Post by sleepingadmin »

The walrus being a far-left MMT proposing place wrote this when inflation was at 3.5% or so. It's now much higher and very evidently out of control.

The article quotes Mark Carney, as if he were on their side. BoE under Carney have raised interest rates twice: https://tradingeconomics.com/united-kingdom/interest-rate and that hasn't even dented inflation. https://tradingeconomics.com/united-kingdom/inflation-cpi

I believe Carney has a speech tonight which most likely will touch on inflation and interest rates. Guess we'll see.

MMT and UBI as political subjects have been utterly dead since the time this article was written. What a disaster of an article.

Re: Have we been thinking about inflation all wrong?

#67

Post by kkoncevicius »

jbluepolarbear wrote: post #60
kkoncevicius wrote: post #53

Earlier quoted context omitted.

That's relative. If food gets more expensive - that money goes to someone, someone who is producing or selling food. Prices cannot increase without someone at the same time making more money.

That money doesn’t go to the people that need it. It goes to fuel, shipping, taxes, etc. the person stalking the shelves gets nothing, the person that works at the gas station gets nothing, the person on fixed income gets nothing, and on and on. Inflation only helps the top and the bottom gets recked.

I don't know, my hair stylist increased the price for a haircut 2 times during the past 2 years. She isn't rich by any means. People who work and can set their prices adjust fast. People who depends on salaries set by others lag behind, but eventually even the government wages catch up. What never catches up are the savings. If you had 10,000$ before inflation - that will be worth less after without any bouncing back.

I don't think we disagree.

Re: Have we been thinking about inflation all wrong?

#68

Post by opportune »

djrogers wrote: post #5

It's telling that the vast majority of the pushback on the 'inflation is bad' viewpoint comes from well-off academics, tech folks, and just generally people who are hurt the least by inflation.

Poor people can benefit from inflation in the sense of it wiping out debt or spurning wage inflation/decreasing wealth inequality

Re: Have we been thinking about inflation all wrong?

#69

Post by dragonwriter »

mise_en_place wrote: post #41

Inflation favors the debtor, while deflation favors the saver. Obviously the world's largest debtor (US govt) will consider inflation to be desirable and necessary. Otherwise it would lead to a sovereign debt crisis if there are positive real interest rates leading to a US govt default. Keep an eye on the Fed, especially before the midterm elections. The Biden administration will put an extreme amount of pressure to…

> Inflation favors the debtor, while deflation favors the saver

No, deflation favors currency hoarders and lenders; the primary mechanism of saving is investment in productive assets, which deflation disfavors.

> Obviously the world's largest debtor (US govt) will consider inflation to be desirable and necessary.

Except it doesn't, except at a very low level; inflation in general (and energy inflation, in particular, which is one of the main factors in the current overall inflation) is one of the most well-established objective factors adverse to reelection of incumbent politicians in the US.

> Keep an eye on the Fed, especially before the midterm elections. The Biden administration will put an extreme amount of pressure to continue quantitative easing, even if the Fed is signaling that rate hikes are coming soon.

If? The Fed is already tapering QE, scheduled to end it mid-March, and signalling a mid-March rate hike.

Re: Have we been thinking about inflation all wrong?

#70

Post by pdonis »

TameAntelope wrote: post #63
pdonis wrote: post #44

Earlier quoted context omitted.

> preventing additional hundreds of thousands of dead Americans But it hasn't. We have gotten the worst of both worlds: huge economic damage and lots of dead Americans. More Americans have died of COVID since the current administration took office than before that. And since governments around the world have demonstrated that they cannot stop COVID, the least they could have done was refrain from inflicting the econo…

None of what you wrote here deals with what I said, which is that more Americans would have died, had we not spent the money we did.

> more Americans would have died, had we not spent the money we did.

But we don't know that that is true, and it doesn't seem likely based on the fact that the data shows no perceptible changed based on the money being spent; the variations in the data are entirely due to seasonality and different variants appearing.

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