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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?

#81

Post by mdavis6890 »

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…

Yes, this is an important refinement of my position. And the next refinement would be to quantifiably measure the value of different stuff and prioritize and allocate resources among the products, taking into account their changing value over time and with respect to how much we already have. I'm sure we could keep going with this...

But really if we could just start thinking in terms of stuff rather than money I think we'd be doing well :-)

Re: Have we been thinking about inflation all wrong?

#82

Post by brandmeyer »

GeekyBear wrote: post #43
efdee wrote: post #16

Earlier quoted context omitted.

[citation needed]

The enormous increase in money creation is very real, but it started in the last year of the Trump administration. https://fred.stlouisfed.org/series/M1SL

Relevant to interpreting M1 and its sudden jump in 2020:

https://fredblog.stlouisfed.org/2021/05/savings-are-now-more...

Re: Have we been thinking about inflation all wrong?

#83

Post by TremendousJudge »

baragiola wrote: post #31

Trust me, you don't want inflation. Source: Argentinian

Hah, but this time _they_ have the dollar printer. They can actually take the convertibility of 1 dollar = 1 dollar all the way to the stratosphere if they want.

Greetings from a fellow neighbor

Re: Have we been thinking about inflation all wrong?

#84

Post by pdonis »

TameAntelope wrote: post #71
pdonis wrote: post #70

Earlier quoted context omitted.

> 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.

> 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?

I think this is a very nice theory which, unfortunately, doesn't seem to be borne out in the data. See below.

> there absolutely was a substantial dip in deaths after the American Rescue Plan Act of 2021 was passed in March of 2021.

First, the money didn't magically appear in everyone's pocket the day the act was passed, so if you were going to look for any effects, it wouldn't be right after the act was passed. You would have to allow some time for the effects to propagate. How much time? Of course nobody has any answer to that; anyone who claims to is just waving their hands and pushing an ideological position.

Second, as I've already said, all the variation we see in the data can be explained by seasonality and the times at which various new variants appeared. So Occam's Razor says there was no significant effect due to all the additional money being printed.

Re: Have we been thinking about inflation all wrong?

#85

Post by mdavis6890 »

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 1000 years people will see most of our current internet the same way we see the pyramids at Giza, and they will wonder why we spent so much effort on something with no obvious value.

Re: Have we been thinking about inflation all wrong?

#86

Post by sirspacey »

xyzzyz wrote: post #49
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…

> The US federal government could subsidize farmers that grow real vegetables, not just corn and soybeans. You can’t subsist on “real vegetables”. Vegetables form important supplement to the diet, but they are not basis of it, nor they ever been (people used to eat much more grain and much less meat and vegetables than they do now). Governments are subsidizing staples, because it is by far most effective way to ensur…

Having been a recipient of those programs “staples” are not what is being subsidized. The largest “food” producers are, like General Mills and Coca Cola.

I could get soda but not fresh fruits or vegetables for my kids.

We somehow have to keep discussing what real nutrition for children looks like and the impact it has on their ability to become productive citizens. It’s really not that much of a mystery anymore, plenty of reproducible studies have been done, but our systems are still not designed to achieve it.

Yes, it makes a massive difference what the goals of food security are.

Re: Have we been thinking about inflation all wrong?

#87

Post by licnep »

It always seems weird to me how people think of inflation as a single number, when it is made of made of many different components, some prices might be going down or constant, while others are rising. Energy prices rising are definitely the most impactful ones cause they affect every sector.

Re: Have we been thinking about inflation all wrong?

#88

Post by WillPostForFood »

TameAntelope wrote: post #65
AnimalMuppet wrote: post #54

Earlier quoted context omitted.

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.

But we are already at low unemployment before COVID and all the spending; we don't need inflation to drive jobs growth. It would be worth debating the tradeoffs if we were sitting at 10%+ unemployment with no path for improvement, but if anything, it is the job market starved for labor, not the other way around.

Re: Have we been thinking about inflation all wrong?

#89

Post by TameAntelope »

pdonis wrote: post #84
TameAntelope wrote: post #71

Earlier quoted context omitted.

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.

> 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? I think this is a very nice theory which, unfortunately, doesn't seem to be borne out in the data. See below. > there absolutely was a substantial dip in deaths after the American Rescue Plan Act of 2021 was passed in March of 20…

So you go from saying what I claimed "isn't born out in the data" to saying there's no way of knowing when the effects kick in (though you do give some sense of timelines, which happen to line up pretty well with what is observed), to saying the effects we do see in the data (contradicting your first point) "can be explained by seasonality".

Just sounds like you're making up whatever excuses you can to avoid giving credit where credit is due.

Occam's Razor here says that the dump of money helped people, as that is by far the simplest explanation. It's your convoluted mishmash of viewpoints that is objectively more complex.

Re: Have we been thinking about inflation all wrong?

#90

Post by JackFr »

scottiebarnes wrote: post #56
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…

> but if the alternative is to have shrinking GDP and massive unemployment, I would rather have some inflation. This is the general problem with central banking. Politicians and governments will ALWAYS take action to "save the economy", whether that is a small downturn or a big one. There's too much pressure to not use the magic money printer. Short term election cycles incentivize everyone to just fix the problem as…

> The US Federal debt is currently $30 trillion USD. This is never getting balanced, ever. There's only one possible eventual outcome with this system.

The US debt to GDP ratio is currently slightly higher than it was at the end of WWII. It is significantly lower than that of Japan, who has a debt to GDP ration similar to those the UK ran during portions of the 19th century.

There are very good reasons for governments should be prudent in their spending and high levels of debt are to be avoided. But no, it will never be balanced, the national debt is permanent and exists by design.

> There's only one possible eventual outcome with this system.

I don't think that's true, and I'm really not even sure what you're ominously hining at.

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