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Have we been thinking about inflation all wrong?

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Re: Have we been thinking about inflation all wrong?

#71

Post by TameAntelope »

pdonis wrote: post #70
TameAntelope wrote: post #63

Earlier quoted context omitted.

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.

You don't think lowering healthcare costs, keeping sick people at home, and straight up giving parents of children cash resulted in fewer of the most vulnerable people in US society dying?

And there absolutely was a substantial dip in deaths after the American Rescue Plan Act of 2021 was passed in March of 2021. Last summer was the closest to "back to normal" we've gotten since this pandemic started.

Re: Have we been thinking about inflation all wrong?

#72

Post by WillPostForFood »

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.

Data does not support that. People with lower wages suffer the most with inflation. It's like a regressive tax. A $2 increase in the price of a gallon of gas takes a much bigger percentage chunk out of the disposable income of a minimum wage employee than tech folks.

https://fivethirtyeight.com/features/most-americans-are-afra...

Re: Have we been thinking about inflation all wrong?

#73

Post by kkoncevicius »

sleepingadmin wrote: post #50
kkoncevicius wrote: post #21

The best one-sentence description of inflation I've heard is: inflation is a hidden tax on savings. People who save money are hurt the most. It's as if the newly printed money is generated by taking a bit from anyone according to how much cash he/she has stored away.

>The best one-sentence description of inflation I've heard is: inflation is a hidden tax on savings. People who save money are hurt the most. It's as if the newly printed money is generated by taking a bit from anyone according to how much cash he/she has stored away. Who are the people who save money? Or rather, more specifically are either holding cash or in bonds whose real-yields are very negative? Tourists, down…

Everyone is quick to talk bad about the "ultra rich". Ultra rich have means, they are intelligent, they have advisors, and they know how to adapt. If economy turned towards deflation those ultra-rich would liquidize their assets, store money, and benefit from that instead. When two opposing processes can benefit the rich I would say it's not in the process but in how you react to the undergoing changes and how you adapt.

Re: Have we been thinking about inflation all wrong?

#74

Post by odonnellryan »

aaa_aaa wrote: post #14
titzer wrote: post #8

Earlier quoted context omitted.

I think there are decades of bad policy stacked on top of each other that are responsible for the current mess.

Current administration created gazillions of dollars out of thin air, far more than previous ones. They deserve the credit.

> Current administration created gazillions of dollars out of thin air, far more than previous ones. They deserve the credit.

You mean the previous admin? Biden did not do much in response to covid.

Re: Have we been thinking about inflation all wrong?

#75

Post by pdonis »

ren_engineer wrote: post #61
pdonis wrote: post #32

Earlier quoted context omitted.

> 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 a…

> in theory companies like Facebook are worth hundreds of billions despite making many people miserable and actually lowering productivity by wasting time

They are "worth" that amount not because they are creating that much wealth, but because they have developed a system that allows them to transfer that much wealth from others to themselves in a zero sum game.

> Customers and markets aren't rational if the people are driven by addiction

In the sense that people can be manipulated, sure. But "addiction" is by no means the only way to do that. Advertising in general (which is how Facebook makes much of its money) attempts to do the same thing.

> in which case it would make sense for the government to intervene.

But, as your example shows, we know what it takes for government intervention of this sort: it takes being China, i.e., having a government with virtually absolute power. And that is not a viable long term solution, because a government with such power, even if it uses it to do some good things, will use it to do many more very damaging things, and everyone ends up worse off on net.

Re: Have we been thinking about inflation all wrong?

#76

Post by dragontamer »

opportune wrote: post #68
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

> wiping out debt

Do poor people have access to severe amounts of debt?

The #1 source of debt in the USA seems to be the home mortgage, and #2 is probably the car-loan after that.

Poor people don't have access to home mortgages because they can't afford it: they're in the renter class. So all inflation does is increase the price of rents to them.

Car loans are also somewhat difficult for people with low credit scores.

EDIT: Ah right: student loan debt. Which is once again, largely a rich person thing in the aggregate. Poor people aren't going to college. The middle class who can go to college may get significant amounts of student debt, but its nothing compared to the student loans the upper-class get for Lawyer / Medical Doctor schools.

> spurning wage inflation

While average wages have inflated, have they increased by 7.5% over the past year? I don't think so.

---------

You need to be relatively well off to have a home-mortgage that benefits from inflation. (+Home value while decreasing the value to the loan). In fact, it is the richest among us who have the access to the most amounts of debt instruments (ex: a home speculator / house-flipper may own 10 homes and 10 different mortgages, but they needed a high amount of capital to find themselves in that situation).

Re: Have we been thinking about inflation all wrong?

#77

Post by WillPostForFood »

opportune wrote: post #68
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

Rich people are more likely have debt like fixed rate mortgages that inflation can wipe out. Poor people are more likely to have interest indexed debt like credit cards or variable rate loans that will crush them when inflation rises. Inflation is terrible for the poor. We can already see wages lagging behind inflation.

Re: Have we been thinking about inflation all wrong?

#78

Post by odonnellryan »

miki_tyler wrote: post #9

Inflation washes out debt. Who think inflation is good? People, companies or institutions that are buried in debt to the tits. For the rest of us it is just an extra hand inside our pockets.

It's also probably fine if you do not have large amounts of cash savings.

Lots of people have debt. I think most or almost everyone has debt.

Re: Have we been thinking about inflation all wrong?

#79

Post by odonnellryan »

causi wrote: post #10
miki_tyler wrote: post #9

Inflation washes out debt. Who think inflation is good? People, companies or institutions that are buried in debt to the tits. For the rest of us it is just an extra hand inside our pockets.

Inflation washes out debt as long as wages are rising with inflation. If they're not it's just crushing us all.

Not true. Likely with high inflation the real return on your debt is positive. My mortgage returned +4.5% last year. That is a great investment!

Re: Have we been thinking about inflation all wrong?

#80

Post by trhway »

sneeze-slayer wrote: post #33

Rampant inflation is a problem. The inflation seen now in many places is not quite there. 7% is higher than we would like, but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation. In the US at least, a lot of the raise in the US CPI is due to rising energy costs (predicted months ago due to cold winter in Asia), used and new cars (the infamous chip shortages), and…

> 7% is higher than we would like, but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation.

The alternative is to have typical 2-3% of inflation and correspondingly the typical 2-3% of GDP growth with healthy labor market. The 7% inflation does get you that 7% GDP growth we're seeing and red hot labor market, yet it is just a temporary effect, like a shot of stimulant, which will soon produce a very heavy hangover.

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