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The anti-inflation pivot of 2022

adamtooze.substack.com

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Re: The anti-inflation pivot of 2022

#71

Post by spywaregorilla »

howmayiannoyyou wrote: post #62
spywaregorilla wrote: post #30

I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…

> I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Look at USD FX rates. The US may be able to purchase resources and goods abroad at more favorable exchange, but who can afford to buy US exports as the USD rockets skyward? And what is the logical follow-on to unobtainable USD units of trade? Substitutes that China, for example, are more than delighted to support if it means t…

FX rates are like racing logic. It might be better to be behind for a while (weaker currency) because that could have long term advantages like moving industry to your country. But you want to be in first place.

The USD is strong because people need to buy things from the US to begin with. That is, at best, a "nobody goes there it's too popular" kind of comment. The idea that you weaken your currency to increase exports is something you do to benefit from growth, like moving industry to China. But if something like an energy shortage or a fertilizer shortage start limiting your ability to produce things with that opportunity, you're just doubled down on a bad situation.

This isn't even a story on "reserve currency" status. This is just the US (and Canada) being in an incredible competitive situation. What do you do when there's a global food shortage and the US is the only country unhindered? You suck it up, buy those stupidly expensive US dollars, and import US food. And get screwed if you owe USD denominated debts while your currency goes down.

And if the US finds it's not at the right level, it can always just... spend more money. It's basically free. Everyone's getting hit with inflation because it's genuinely harder to make and ship things. Slapping on some excess money sloshing around to try and keep things going is dangerous.

Re: The anti-inflation pivot of 2022

#72

Post by MisterBastahrd »

seydor wrote: post #19

> It is the most concerted effort to slow down growth and employment in the interests of monetary stability that we have seen since the 1980s. I see it as a war of generations. The boomers/genXers are eager to preserve their wealth and are once again dumping on young people. The 70s was a period of high inflation, it was also, according to piketty a period of high income equality for the world over. The central banks…

Gen Xers are mostly still 30 years from retirement. This is the work of the ownership class who are seeing their profits nibbled away by employees who want to be paid a fair wage for their labor and aren't afraid to change jobs because millennials and gen Z aren't going to "go the extra mile" without being compensated for it.

Re: The anti-inflation pivot of 2022

#73

Post by buscoquadnary »

spywaregorilla wrote: post #30

I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…

This is the basic premise of this talk by Petar Zeihan https://www.youtube.com/watch?v=Wi_nFz1CJSI&t=2s

Re: The anti-inflation pivot of 2022

#74

Post by landemva »

fennecfoxen wrote: post #70
landemva wrote: post #69

Earlier quoted context omitted.

> fuel prices falling 10% again next month. Mid-term elections are approaching and gas pump prices are an easy talking point. With SPR releases, why won't USA fuel prices drop?

Okay, you've convinced me. Now how about the month after that?

No idea. Which circus tribe will be in charge?

Re: The anti-inflation pivot of 2022

#75

Post by FormerBandmate »

blagie wrote: post #15
sfe22 wrote: post #9

Earlier quoted context omitted.

Why 8? Doesn’t there need to be a premium for borrowing money? If i can borrow money at zero percent inflation adjusted rate, that is a great deal and still inflationary. I would say 12 percent would be neutral on 10 percent inflation.

No, there doesn't need to be a premium on borrowing money. Why would there need to be a premium? If I can invest in businesses with 0% return and make a profit, that's generally good for short-term economic growth, and bad for long-term economic efficiency. I'm not arguing for more or less interest, but I don't think there is a "natural." Interest rates have gone negative several times in several contexts, and the un…

When interest rates are negative it's inherently inflationary. It won't destroy the universe but it encourages people and businesses to borrow to get additional resources (the deteriorating economic conditions right now make that a very bad idea, but in general this is true)

Re: The anti-inflation pivot of 2022

#77

Post by splitstud »

mjburgess wrote: post #7

This article appears to take place in a universe where interest rates at central banks are at counter-inflationary levels. They've been inflationary for a decade, and continue to be so. With inflation at 10%, fears about "going too far with interest rates" make sense only *at least* north of 5%, and realistically, 8%.

No post body was provided.

Re: The anti-inflation pivot of 2022

#78

Post by spywaregorilla »

buscoquadnary wrote: post #73
spywaregorilla wrote: post #30

I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…

This is the basic premise of this talk by Petar Zeihan https://www.youtube.com/watch?v=Wi_nFz1CJSI&t=2s

Pretty much. I think he's too eager to write off certain things to paint a wholly American picture, but he's generally got it right. The China story is not as clear. But the Europe picture is pretty plain. America is gonna eat it's lunch.

Re: The anti-inflation pivot of 2022

#79

Post by FormerBandmate »

nie100sowny wrote: post #46
desindol wrote: post #39

Earlier quoted context omitted.

Crisis is never good look at the correlation between unemployment and excess mortality rates…

I think you refer to the long unemployment. Crisis time needs to be shortened then. Banks should raise rates firmly, reaching levels higher than inflation. Big companies should not be artificially saved from collapsing, and regulations simplified. The unemployment period will be then short.

When big companies collapse people take huge losses, lose the trust in the economy necessary for things to grow, and the economy is hurt for a long time. The bankruptcy of Lehman Brothers almost destroyed the entire financial system, slow-motion collapses like GE and Sears that take decades are vastly preferable

Re: The anti-inflation pivot of 2022

#80

Post by t_mann »

csours wrote: post #37
spywaregorilla wrote: post #30

I think the US (and Canada) just needs to ride the tide and let all the other boats sink. Pretty much everyone else is screwed. I think people are underestimating the second order effects of the US still having stable energy and farming capabilities. We'll see more stuff get done here and less stuff done elsewhere. Unemployment will be great here no matter what we do really. It will suffer in other countries. Though…

I ask this question every so often on economic threads - Are jobs created or discovered? What field of study is most associated with "new jobs"?

The fields are macroeconomics and labor economics. I don't understand your other question, so it's hard to answer. What do you mean by "discovered"? Discovered by whom, the employer or the the employee?

But you may be interested in knowing that models of labor markets are often based on matching models - you've got two groups (employers, employees) and everyobdy is trying to find {one,many} members of the other group that are a good match.

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