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

Re: Have we been thinking about inflation all wrong?

#201

Post by adolph » Thu, Feb 10, 2022, 10:36 PM UTC

vorpalhex wrote: post #172

cool_dude85 wrote: post #171

Earlier quoted context omitted.

Why haven't I been reading this kind of hemming and hawing over the lack of full employment for, oh, the last 50 years or so? The fed has a mandate for that too, but somehow when they didn't manage to achieve it, I never heard about how society is going to collapse any minute now. Only when poor people are making income gains. Strange.

We are pretty close to full employment. Rising groceries and fuel costs hurt everyone, but that hurt is more so on the poor who have less overall cash flow.

> We are pretty close to full employment.

The number of persons not in the labor force who currently want a job was little changed at 5.7 million in January. This measure decreased by 1.3 million over the year but is 708,000 higher than in February 2020. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.

BLS publication "THE EMPLOYMENT SITUATION — JANUARY 2022": https://www.bls.gov/news.release/pdf/empsit.pdf

See also the Labor Force Participation Rate: https://fred.stlouisfed.org/series/CIVPART

Re: Have we been thinking about inflation all wrong?

#202

Post by flavius29663 » Thu, Feb 10, 2022, 10:37 PM UTC

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…

Economists were saying some time ago on NRP that inflation becomes a vicious circle when it encourages/forces employees to demand higher wages "because everything is more expensive", which in turns makes everything more expensive, because wages are higher now.

I think we are already there, everyone is jumping ship to get a higher wage right now, rampant inflation is here to stay

Re: Have we been thinking about inflation all wrong?

#203

Post by BitwiseFool » Thu, Feb 10, 2022, 10:39 PM UTC

friedturkey wrote: post #195

uses wrote: post #173

Earlier quoted context omitted.

Inflation doesn't exist as a policy to stiff wage earners. Inflation exists as a reality of a growing economy (more goods and services needs more money to cover them). The alternative is deflation, which would be extremely bad. So what we aim for, is low inflation. Which we've had for ~40 years. Low, controlled inflation is the vastly preferable alternative to any amount of deflation, so it's the side of the scale we…

Yeah, deflation is awful. Imagine our continuously increased production and efficiency resulting in goods becoming cheaper and the value of the working person’s dollar going farther. Horrifying.

There's this really weird dichotomy where whats "good for the economy" is often bad for you as an individual, and vice versa.

Re: Have we been thinking about inflation all wrong?

#204

Post by nine_k » Thu, Feb 10, 2022, 10:39 PM UTC

wolpoli wrote: post #179

zozbot234 wrote: post #129

Earlier quoted context omitted.

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 corr…

> It's important that errors be promptly corrected, and expectations about future policy remain properly "anchored" to the right target. It would be interesting to know if inflation expectation has become unanchored in the mind of the general public, because, ultimately, inflation expectation causes inflation.

I don't think that inflation is as easy to cause without a fresh supply of money. And you know who prints fiat money.

Re: Have we been thinking about inflation all wrong?

#205

Post by yazantapuz » Thu, Feb 10, 2022, 10:39 PM UTC

fshbbdssbbgdd wrote: post #140

baragiola wrote: post #31

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

Argentina’s problem is it owes debt in dollars, so inflating the peso doesn’t reduce the debt.

No. Our problem -I live in Argentina- is that we spend like there is no tomorrow and no consequences.

Re: Have we been thinking about inflation all wrong?

#206

Post by rmason » Thu, Feb 10, 2022, 10:41 PM UTC

Most folks on HN aren't old enough to remember inflation as an adult and it's effects but I am.

Nothing in my life hurt more people than inflation. If you were older and on a fixed income you were screwed, folks had to sell their possessions to survive. I remember farmers paying 20% interest to get loans for fertilizer, fuel and seed to plant their crop. The average person overnight had less buying power.

The only people who benefited were the rich. If they owned land or buildings the prices shot up. If they were highly leveraged they could pay off their loans with cheaper dollars. If they were in business they could raise prices on what they sold and pass along the cost to someone else.

Re: Have we been thinking about inflation all wrong?

#207

Post by flavius29663 » Thu, Feb 10, 2022, 10:42 PM UTC

MSM wrote: post #39

aaa_aaa wrote: post #14

Earlier quoted context omitted.

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

This administration has created a ton of money, but I also remember a previous administration going out of their way to literally put their name on the stimulus checks that were sent out following their trillions of dollars of stimulus passed...

I don't understand this bickering about Trump signing the checks, I got a check from Biden as well, with his signature.

Re: Have we been thinking about inflation all wrong?

#208

Post by flavius29663 » Thu, Feb 10, 2022, 10:43 PM UTC

triceratops wrote: post #134

aaa_aaa wrote: post #14

Earlier quoted context omitted.

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.

2008 was caused almost single-handedly by Bill Clinton

Re: Have we been thinking about inflation all wrong?

#209

Post by asdff » Thu, Feb 10, 2022, 10:47 PM UTC

dragontamer wrote: post #124

glenstein wrote: post #110

Earlier quoted context omitted.

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.

They take on payday loans instead from predatory lenders you only find in poor neighborhoods.

Re: Have we been thinking about inflation all wrong?

#210

Post by ska » Thu, Feb 10, 2022, 10:47 PM UTC

kkoncevicius wrote: post #52

wodenokoto wrote: post #37

Earlier quoted context omitted.

The whole point of inflation is to keep people from storing money under the mattress. Savings are to be invested. If investments can’t beat inflation then you have a shrinking economy and no amount of deflation is going to get the wheels turning again. It’s not that Keynesian economists don’t understand that inflation is a tax on money, it’s that they see the purpose and reason for inflation from a completely differe…

Say we trade and I give you an apple. In return you give me a note saying "this note is a proof wodenokoto owns me one apple and can be exchange for one apple at any time". What good does making this note depreciate over time serve, except as a pressure for me to demand you return the apple as soon as possible? It acts as a mechanism which nudges me to lend less apples overall. If inflation is good, why not ramp it u…

> except as a pressure for me to demand you return the apple as soon as possible?

What you describe is something like a promissory note, and doesn't really capture it. If you can trade that note to someone else for a box of framing nails, then you get to the crux of the issue.

It's not pressure for you to ask for the the apple back soon, but to use it for something soon not just sit on it.

The economists will tell you this pressure keeps the economy trucking along nicely. Of course, if it goes too far, you ruin peoples lives. Going to far in the other direction, also ruins lives.