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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?

#361

Post by watersb »

Spooky23 wrote: post #339
e4e78a06 wrote: post #175

Earlier quoted context omitted.

Poor people are making _nominal_ income gains. Their real income is actually declining because wage gains aren't keeping up with inflation despite a red hot labor market. It's almost like rents rise to match incomes unless you build more housing. Rent control just means that the costs get offloaded to other things like the security deposit, application fees, and deferred maintenance. You can't regulate the market out…

Every student debtor is 7.5% less in debt in real terms than they were last year. Many of the poor working people have made substantial gains. Dishwashers and line cooks in my area are making $30/hr in some cases now. Nurses are a while other universe. My friends are taking a year off after one of them banked almost $400k as a visiting nurse. Our local hospital has 90% turnover in nursing and is almost exclusively ag…

> Every student debtor is 7.5% less in debt in real terms than they were last year.

Because Federal Student Loan payments were deferred last year, interest free.

Such loans can also be forgiven -- canceled and considered paid in full -- for borrowers which qualify for certain programs. One of the most widespread are programs for Public Service job holders, Teachers, and National Guard members. These borrowers are credited as paid in full after holding a qualifying job and making payments for ten years.

The student loan payment deferral due to COVID-19 relief did not extend the terms of such borrowers; they are credited with the year of service, even though payments were not required.

Then there are a constellation of programs to have student loan debt reorganized and in some cases reduced. You can settle on monthly payments of no more than 15% of your current income, and if you can make every payment without fail for some time (is it also 10 years? I think longer) then the remaining balance can be forgiven.

Global, blanket cancellation of a student loan debts is not yet a thing, and may never be.

All this is Federal debt. Private debt is another world... but private debt can be reorganized, renegotiated, or discharged (canceled) via bankruptcy.

Re: Have we been thinking about inflation all wrong?

#362

Post by samwisedum »

BitwiseFool wrote: post #218
NovemberWhiskey wrote: post #45

Earlier quoted context omitted.

> The US federal government could subsidize farmers that grow real vegetables, not just corn and soybeans. I mean they could also just stop subsidizing corn production quite so much; that would probably be preferable to providing a larger subsidy to grow other things.

I wonder how much of an impact the Iowa Caucuses have on our government being so darn corn farmer friendly.

It's shocking that we subsidize farmers at all. If we want people to afford food, we could just give that money to the people.

Re: Have we been thinking about inflation all wrong?

#363

Post by randmeerkat »

quadrangle wrote: post #359
kangaroozach wrote: post #357

Earlier quoted context omitted.

More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly p…

"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spe…

> You might as well say that gravity has nothing to do with up and down.

To be pedantic, gravity has nothing to do with “up” or “down”, it’s just the attraction of two or more masses relative to one another. “Up” or “down” is perspective. If someone on the South Pole is looking up and someone on the North Pole is looking down, an argument could be made that the person on the South Pole is actually looking down.

Re: Have we been thinking about inflation all wrong?

#364

Post by kristov »

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…

It encourages you grow more apples I guess.

Re: Have we been thinking about inflation all wrong?

#365

Post by chmod600 »

quadrangle wrote: post #359
kangaroozach wrote: post #357

Earlier quoted context omitted.

More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly p…

"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spe…

What you say makes sense, but it makes me wonder if there's a related concept where huge amounts of money are sitting on the sidelines that could start moving at any time. That seems kind of like inflation.

Re: Have we been thinking about inflation all wrong?

#366

Post by majormajor »

kangaroozach wrote: post #357
quadrangle wrote: post #354

Earlier quoted context omitted.

Austrian economics is all anti-empirical say-so internally-consistent models that aren't tested against reality. Traditional economics is stuff that claims to be more empirical but fails to do so and focuses almost entirely on official stats and on its own versions of models that aren't tested against reality. The whole field of economics is overall messed up. It's insular, arrogant, and extremely resistant to outsid…

More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly p…

> More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary.

Crypto isn't in a vaccuum. If the only currency in the world was bitcoin, sure, call it deflationary.

But compared to a decade ago, there are far more dollars floating around thanks to crypto. Not only are there are the rich people holding dollars and other currency, or gold, etc, but we've invented a bunch of crypto tokens that we also value massively, so you can be bitcoin-rich or ethereum-rich or nft-rich OR currency-rich... which is no different than printing currency out of thin air.

Re: Have we been thinking about inflation all wrong?

#367

Post by quadrangle »

randmeerkat wrote: post #363
quadrangle wrote: post #359

Earlier quoted context omitted.

"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spe…

> You might as well say that gravity has nothing to do with up and down. To be pedantic, gravity has nothing to do with “up” or “down”, it’s just the attraction of two or more masses relative to one another. “Up” or “down” is perspective. If someone on the South Pole is looking up and someone on the North Pole is looking down, an argument could be made that the person on the South Pole is actually looking down.

This is really tangential, but "up" and "down" are completely meaningless without gravity. Literally, without gravity, "up" doesn't exist. "Up" is literally just "away from the primary gravitational pull".

People on either pole looking away from the planet are both looking up. That's what "up" is. It's funny to realize that two people can look "up" in opposite directions, but that's what's going on. Neither of them is looking "down", even though each one is looking in the direction of the other person's down.

Re: Have we been thinking about inflation all wrong?

#368

Post by quadrangle »

chmod600 wrote: post #365
quadrangle wrote: post #359

Earlier quoted context omitted.

"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spe…

What you say makes sense, but it makes me wonder if there's a related concept where huge amounts of money are sitting on the sidelines that could start moving at any time. That seems kind of like inflation.

You might say "threat of inflation" because we imagine (reasonably) that the effect of sidelined money moving could lead to a pattern of inflation (given all the complex ways that might incentivize people to choose to raise prices). Good economists (not sure what portion of economists qualify in this case) would be fine with that framing.

Re: Have we been thinking about inflation all wrong?

#369

Post by ledauphin »

dnautics wrote: post #251
giaour wrote: post #242

Earlier quoted context omitted.

I guess if you are free of debt and living paycheck to paycheck, inflation is pretty bad. But that's not most people. > IF their wages catch up. If their wages don't, do the math. It depends on your situation. If you have $20K in remaining student debt and make $40K a year, then, yes, assuming a fixed wage, any real decrease in the value of your outstanding debt would be wiped out by the decrease in your real wages o…

> That's an important case, Let's think for a second here. You don't think that's a particularly important case? There is a reason why being indebted is viewed with a tinge of moral disgust -- debthood makes it so that when you fail, someone else also is at a risk of failure. Now, there is a sense in which having some of this is good because it creates shared social interest; but goosing it and making that risk syste…

I've read through a lot of this thread and I think this is an underrated point. Thank you for making it; it's been good food for thought.

Re: Have we been thinking about inflation all wrong?

#370

Post by ledauphin »

xapata wrote: post #238
rmason wrote: post #206

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 pe…

40 years ago, there were many fewer stock market participants, and many more retirees on fixed income. Now it's relatively rare to retire with a fixed-income pension. More of us are shareholders now, with IRAs and 401ks.

most of _us_, I can easily believe. But most _people_ in the Western world? I'd like to see some references.
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