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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?

#131

Post by fennecfoxen »

dnautics wrote: post #130
fennecfoxen wrote: post #126

Earlier quoted context omitted.

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.

Yeah, if you're at all on the fence, or close to the fence, it's a fine time to get a mortgage, even if house prices have gone up somewhat. An excellent inflation hedge!

Re: Have we been thinking about inflation all wrong?

#132

Post by dnautics »

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…

> If your goal is stability

this is the thing to be questioned. Stability, at what cost? Is it worth tearing up the environment, tricking people into buying shitty disposable consumer products, financializing the economy, and stealing from the poor and unborn to give to the rich in the here and now? I don't really see anyone challenging the tradeoffs of stability in the economic discourse, it's just so often given as an unquestionably good thing.

Re: Have we been thinking about inflation all wrong?

#134

Post by triceratops »

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.

Pretty sure Covid stimulus started in March/April 2020, before this administration. People somehow tend to have amnesia about stuff that began under Republican administrations after a Dem administration takes over. See also: the 2008 financial crisis, the Afghanistan and Iraq conflicts.

Re: Have we been thinking about inflation all wrong?

#135

Post by tjader »

TameAntelope wrote: post #17
jhawk28 wrote: post #7

Earlier quoted context omitted.

If anything it increases inequality. It hurts the poor the most. The wealthy are more immune because they will have their wealth in things that go up with inflation. When it is caused by the government spending more than it takes in, it is effectively a hidden tax. NONE of these things are new concepts. Even the belief that the inflation won't hurt is new. Many other societies have blindly thought they were immune un…

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…

Can't that same argument be used to lower the minimum wage when inflation is low?

Re: Have we been thinking about inflation all wrong?

#136

Post by oonerspism »

TameAntelope wrote: post #96
WillPostForFood wrote: post #88

Earlier quoted context omitted.

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.

We may need inflation to drive job growth now, and we've definitely needed inflation to drive better job growth. An office job being created because a paper company can support an additional employee due to inflation is a better situation than continuing to work in a warehouse job. Inflation will eventually recede, but that new job will give opportunity to the worker. Scale that up by a factor of millions across the…

The truly poor do not have jobs, nor much hope of one in future. They are on fixed state incomes at best, which if they are lucky may have a trivial rise some years after the fact.

We don't need to get terribly cerebral to note the basic mechanism of proportion, whereby $10 added to the daily food cost of a person who makes $50/day is vastly more impactful than the same $10 added to the daily food cost of a person who makes $500/day.

Re: Have we been thinking about inflation all wrong?

#137

Post by wolpoli »

There used to be a simulator called Chair the Fed [1] that shows the effects of various economic shock and the interest rate movements that's required to stablize the inflation rate and maintain full employment. In a negative demand shock similar to what we just experienced, it requires quite a bit of high real interest rate (Interest rate - Inflation rate) to slowly get inflation back down.

Sadly, they removed the game early in the pandemic and I can't get it to work on archive.org.

[1]: https://www.sffed-education.org/chairthefed/WebGamePlay

Re: Have we been thinking about inflation all wrong?

#138

Post by redisman »

WillPostForFood wrote: post #62

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.

I don’t understand hire this helps. Personally I got a 4% raise against 7.5% inflation so..

Re: Have we been thinking about inflation all wrong?

#139

Post by foolinaround »

JackFr wrote: post #90
scottiebarnes wrote: post #56

Earlier quoted context omitted.

> 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 government…

> the national debt is permanent and exists by design.

Can you pls point me to something about its design?

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