Have we been thinking about inflation all wrong? • Hacker News Board

Re: Have we been thinking about inflation all wrong?

#121

Post by sokoloff » Thu, Feb 10, 2022, 8:49 PM UTC

rmbyrro wrote: post #97

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…

It also incentivizes people to worry about how to keep their share of the pie the same size, instead of contributing to increasing the pie with services, products, innovations. That's precisely what happened to me. I'm taking some attention away from my business venture to protect my wealth from evaporating.

Isn’t a growing business one of the best possible hedges against inflation?

Re: Have we been thinking about inflation all wrong?

#122

Post by overtonwhy » Thu, Feb 10, 2022, 8:49 PM UTC

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…

Disregard new accounts that claim the sky will be falling. The debt will always be going up and there will always be inflation. That's how fiat currencies work. Research the federal reserve and it's stated objectives to understand why.

Re: Have we been thinking about inflation all wrong?

#123

Post by CyberRabbi » Thu, Feb 10, 2022, 8:49 PM UTC

Throughout this entire “stimulus” fiasco, my faith in the ability of nominally smart people to independently reason about simple concepts like supply, demand, and inflation has been humbled.

First there was a denial that inflation was occurring now there is an excessive panic that it signals the end of the economy. Can I get off this clown car?

Periods of unusually high inflation happens. This happened in the 70s. It will happen again. The fundamentals of the American economy are changing but not in any dramatic way since at least the 90s. Everything is still made in China, we are still a service economy.

Re: Have we been thinking about inflation all wrong?

#124

Post by dragontamer » Thu, Feb 10, 2022, 8:50 PM UTC

glenstein wrote: post #110

dragontamer wrote: post #76

Earlier quoted context omitted.

> 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…

I would add medical debt, student loans, credit card debt.

I think I accept your point on medical debt. Medical debt can happen to anyone.

But even credit-card debt is dependent on your credit score. Poor people don't have good credit, and therefore their ability to take on credit-card debt is limited compared to a richer person.

Re: Have we been thinking about inflation all wrong?

#125

Post by usrusr » Thu, Feb 10, 2022, 8:50 PM UTC

mdavis6890 wrote: post #85

ren_engineer wrote: post #61

Earlier quoted context omitted.

>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.

I doubt it. Those rock piles are seriously famous! Landmark achievements of our internet will perhaps be known on the level the highlights of medieval scholasticism are known: experts exist, but people like me know as much as that Occam wasn't a barber and that somehow jokes about angels dancing on a needle are a thing.

Look at how quickly the Rockefeller name faded: to people not particularly interested in the era, it's barely more a family that was so important they sponsored a cute ice rink.

Re: Have we been thinking about inflation all wrong?

#126

Post by fennecfoxen » Thu, Feb 10, 2022, 8:50 PM UTC

dnautics wrote: post #120

> 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 what the hell? Inflation exists as a policy to stiff wage-earners. This is arguably more likely to go exactly the other way than the author expects. Take it from a nobel laureate: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi…

Don't worry, it'll be great! You'll get a 10% raise, and prices will only be up 15%.

Re: Have we been thinking about inflation all wrong?

#127

Post by unyttigfjelltol » Thu, Feb 10, 2022, 8:51 PM UTC

This nihlism about currency depreciation and deficit spending will end badly. Two plus two does equal four, no matter how much more profitable or convenient it would be for it to equal four trillion.

Re: Have we been thinking about inflation all wrong?

#128

Post by overtonwhy » Thu, Feb 10, 2022, 8:51 PM UTC

bryanlarsen wrote: post #94

sleepingadmin wrote: post #66

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 be…

> It's now much higher and very evidently out of control. Monthly inflation is slowing, and is at an annualized 4.8%. We had a big spike in the summer/fall that's still showing up in our annual figures, but inflation itself is coming under control. https://news.ycombinator.com/item?id=30289147

Yeah but they're a brand new user who is claiming that everything is terrible!

Re: Have we been thinking about inflation all wrong?

#129

Post by zozbot234 » Thu, Feb 10, 2022, 8:52 PM UTC

jbay808 wrote: post #57

When it starts to get really burdensome to keep your promises, the idea of breaking them gets really attractive. But that doesn't come for free. It costs credibility. The cost of central banks breaking their inflation-control commitment when inflation starts running hot, is that the market starts pricing in their unwillingness to raise interest rates. This fuels a whole bunch of other inflation feedback loops, and th…

Yup. The kernel of truth behind Austrian theories of macroeconomics/the business cycle is that interest-rate based policy setting is inherently an unstable system. If the central bank makes policy errors that fail to stabilize the underlying target (whether inflation, nominal income, exchange rates, whatever) the whole system starts spiraling away from that unstable equilibrium point, and the subsequently needed correction grows even larger. It's important that errors be promptly corrected, and expectations about future policy remain properly "anchored" to the right target.

Re: Have we been thinking about inflation all wrong?

#130

Post by dnautics » Thu, Feb 10, 2022, 8:53 PM UTC

fennecfoxen wrote: post #126

dnautics wrote: post #120

> 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 what the hell? Inflation exists as a policy to stiff wage-earners. This is arguably more likely to go exactly the other way than the author expects. Take it from a nobel laureate: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi…

Don't worry, it'll be great! You'll get a 10% raise, and prices will only be up 15%.

To be frank, for a small sliver of wage:mortgage ratios this could be fucking fantastic... for "young wage-earners" who already have a house (like me! but I'm not really that young anymore). For other wage-earners, not so much, sad trombone.