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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?

#491

Post by jwarden »

quadrangle wrote: post #367
randmeerkat wrote: post #363

Earlier quoted context omitted.

> 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 i…

In a 3D world without gravity, something like “up” and “down” would exist, just as left and right, and forward and backwards would still exist. You need some sort of label for each direction on each axis of orientation.

Re: Have we been thinking about inflation all wrong?

#492

Post by int_19h »

quadrangle wrote: post #402
didericis wrote: post #396

Earlier quoted context omitted.

Yanis Varoufakis sounds interesting. Will check him out, thanks. Doesn’t align with my sensibilities at all/am generally allergic to anything described as Marxist, but the way you describe him and the misconceptions sounds worth looking into/I should challenge myself. I view Marx as more of a social analyst and a historian rather than an economist/a lot of what I understand of what he advocated for economically seems…

Some short perspectives, if simplistic: Marx was basically just inspired by French Revolution idea of "Liberty, Equality, Fraternity" and dismayed that it didn't work out. He came to some real insights about why capitalism doesn't achieve that vision. He changed his views over time and wrote strongly about cases where he was wrong. He didn't want anyone to idolize him in some static way or be "Marxist". He actually w…

While we're at it, there's a persistent belief that all socialist (in the proper sense of the word) left is Marxist. This is wrong - not even all statist socialists are Marxist, and the vast majority of libertarian ones are not, although they may subscribe to specific notions (like LTV).

Re: Have we been thinking about inflation all wrong?

#493

Post by int_19h »

karpierz wrote: post #329
stale2002 wrote: post #319

Earlier quoted context omitted.

> Imagine an economy where you are self sufficient and sell but never buy anything ( cough germany). > Selling and selling isn't a free market, it's not even a market. You are not describing much of a problem. What you are asking is "What if there was an entity, that provided the rest of the world with lots of goods and services, and the only think they accepted for that is green pieces of paper". That sounds pretty…

The issue isn't the first part; it's what happens when they cash in their green pieces of paper.

Then they find out just how much they're really worth. But that would be a problem for them, not the rest of the world, no?

Re: Have we been thinking about inflation all wrong?

#494

Post by GeekyBear »

efdee wrote: post #484
GeekyBear wrote: post #340

Earlier quoted context omitted.

There wasn't 1.9 Trillion dollars in additional Federal spending at the second inflection point in the graph of the money supply? The Fed certainly expected at least some inflation from that much spending, although they seem to have missed the size of the increase. >President Joe Biden's $1.9 trillion American Rescue Plan is contributing to elevated inflation but it isn't expected to overheat the economy, a new resea…

Inflation is currently high everywhere, not just the US. Can't blame that on the current administration. It might influence it a little, but things like energy pricing (which has gone x4 in just a year or so) has a lot more to do with it.

> Inflation is currently high everywhere, not just the US. Can't blame that on the current administration.

After blaming Trump for a global pandemic, we probably don't get to use that excuse to shield Biden from blame when bad things happen under his watch.

For good or ill, "the buck stops here" is a longstanding American tradition.

Re: Have we been thinking about inflation all wrong?

#495

Post by int_19h »

lamontcg wrote: post #269
lumost wrote: post #182

Earlier quoted context omitted.

Except, with higher interest rates the nominal price of housing falls relative to wages. A worker can reasonably hope to buy there way out of rents at some point in the future (assuming the price of the house is set as a multiple of it's rental equivalent cash flow discounted over time)

And the real value of debts fall, including student loan debt, housing debt and even consumer credit. I think we're going to hit a wall soon where we either need to forgive or inflate debts away. The alternative is likely to be a crushing depression and fiscal austerity that is much less than any of the downsides of inflation. If you're a largely debt free upper-mid to upper class tech person then the your personal v…

Periodic forgiveness of debts was fairly common in ancient societies - that's what the Jubilee originally was about, for example - so there's certainly precedent for it.

Re: Have we been thinking about inflation all wrong?

#496

Post by int_19h »

vorpalhex wrote: post #468
adolph wrote: post #201

Earlier quoted context omitted.

> 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…

> 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. I mean, I suppose we can forcibly employ everyone? Anyone not employed in two weeks gets contracted out to the IRS or whatever.. but that doesn't seem to be the goal. If you aren't looking for a job, and you can't take a job.. you aren't going to…

You'd need to investigate why those people aren't actively looking to make meaningful conclusions. E.g. if they don't because they tried and consistently failed and just gave up, I think it's fair to count them as unemployed.

Re: Have we been thinking about inflation all wrong?

#497

Post by int_19h »

uses wrote: post #173
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…

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…

Do we actually have a growing economy in practice at this point? Or do we pretend that it's growing by inventing value out of thin air (as is the case with e.g. stocks)?

Re: Have we been thinking about inflation all wrong?

#498

Post by int_19h »

colinmhayes wrote: post #456
scottiebarnes wrote: post #447

Earlier quoted context omitted.

You realize the yield on a 1 yr US treasury bond is currently 1%, and the yield of it one year ago was 0.1%? And that bonds pay coupons denominated in dollars? The savings rate at Bank of America is 0.01% APY. A person has no risk-free ability to save, and is forced to speculate in asset markets just to keep up with inflation.

> The savings rate at Bank of America is 0.01% APY. The government doesn't want you holding large amounts of cash. It causes problems for everyone. > A person has no risk-free ability to save Nothing is risk free. Yes, the government wants to force people to invest their money in order for it to keep its value over long periods of time. Hoarding money is bad. If you don't think T-bonds pay enough you're free to buy o…

The end result is that everybody is an "investor" (mostly by proxy via 401k and pension funds), and that is then used as the trump card to shoot down any regulations that would reign in the insanity that is the modern stock market, by pointing out that any reduction in market profits hurts those "investors".

Re: Have we been thinking about inflation all wrong?

#499

Post by int_19h »

wodenokoto wrote: post #37
kkoncevicius wrote: post #21

The best one-sentence description of inflation I've heard is: inflation is a hidden tax on savings. People who save money are hurt the most. It's as if the newly printed money is generated by taking a bit from anyone according to how much cash he/she has stored away.

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…

Invested into what? The stocks, which are valued in ways completely divorced from anything approaching reality? Because that's where the majority of present investment seems to be in practice.

Re: Have we been thinking about inflation all wrong?

#500

Post by quadrangle »

randmeerkat wrote: post #486
quadrangle wrote: post #475

Earlier quoted context omitted.

I don't know how squids perceive things, but obviously water pressure is correlated with gravity in their case. There's no way to have up and down without gravity. It's meaningless. It's not that gravity can't exist without up and down. Gravity exists independently of anyone perceiving anything. But up and down do not exist without gravity. Either up and down are the perception of gravity, even though indirectly thro…

If you’re in a room with no windows in space in zero gravity with a table glued to one of the “floors” you’ll perceive anything else as being up, because up / down is a perception that exists outside of gravity. When people discuss the gravitational pull of the moon on the earth no one discusses whether or not the moon is facing up or down.

I don't really disagree enough to bother arguing. But my thermometer analogy is still the same. You can create situations in which thermometers do indeed show something that actually is an indication of something and that something isn't heat. Thermometers are used to measure heat though.

Anyway, I'll just accept your points. When I tried to think of an analogy that was as silly as "inflation has nothing to do with price" I failed. I can't think of anything as wrongly silly apparently.

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