The anti-inflation pivot of 2022 • Hacker News Board

Re: The anti-inflation pivot of 2022

#251

Post by lupire » Tue, Sep 20, 2022, 1:16 AM UTC

WalterBright wrote: post #209

marcosdumay wrote: post #159

Earlier quoted context omitted.

Well, the part of the China's economy that works isn't centrally planned. They do seem to have a very planned part (looks like so from the other side of the world), that isn't internationally competitive. But simply claiming that their economy is planned is clearly wrong.

> But simply claiming that their economy is planned is clearly wrong. I didn't claim that. I was pointing out that the centrally planned part isn't working. China has a mixed economy.

Can you expound upon your analysis? At the moment you are simply assuming your conclusion.

Re: The anti-inflation pivot of 2022

#252

Post by lupire » Tue, Sep 20, 2022, 1:21 AM UTC

prottog wrote: post #234

JPKab wrote: post #141

Earlier quoted context omitted.

Mexico will be fine as well. North America is in a pretty good place compared to the rest of the world when it comes to energy/food/labor demographics. China is, unfortunately, a long way from the competent leadership of Hu Jintao and the other previous post-Mao leaders. Unlike the previous leaders (primarily selected on merit), who WANTED to prevent another Mao-like cult of personality, Xi is a deeply-insecure man w…

This is why any system of government that relies on an unbroken chain of good leaders, as opposed to limited government with systemic safeguards, is bound to fail, and often times sooner rather than later.

Question is whether the failure is worse than the increased success during the good times.

Without strong leadership, China might still be a pre-ondustrial/low-industrial poor region plagues by wars between small nations.

Re: The anti-inflation pivot of 2022

#253

Post by refurb » Tue, Sep 20, 2022, 1:25 AM UTC

scld wrote: post #43

refurb wrote: post #21

Earlier quoted context omitted.

Chart 1 lays it out. https://www.bls.gov/news.release/pdf/cpi.pdf Inflation isn't increasing much in August - relatively to July, but July was still high. That graph needs to go negative (a decrease in the inflation rate each month) for a long time before we get back to something "normal" like 2-3% inflation.

That chart going negative would be deflation, not a decrease in inflation.

The chart is the first derivative of the inflation rate.

Re: The anti-inflation pivot of 2022

#254

Post by lupire » Tue, Sep 20, 2022, 1:25 AM UTC

tel wrote: post #223

kansface wrote: post #108

Earlier quoted context omitted.

Interesting. Do you know why mortgages in Canada are so different from the US? They seem much more risky on the buyer’s side.

The USG massively subsidizes home ownership. The burden is passed down to taxpayers, but also may cause a drag on the global economy due to lopsided interest rate hedging.

USG massively subsidizes home debtorship, driving prices up to benefit legacy landowners.

It's not at all clear whether the policy actually helps ownership.

Re: The anti-inflation pivot of 2022

#255

Post by lupire » Tue, Sep 20, 2022, 1:26 AM UTC

rvense wrote: post #151

Analemma_ wrote: post #134

Earlier quoted context omitted.

Nobody but the United States has long-term fixed rate mortgages: they're horrible for lenders because the lender has to assume all interest rate risk. The reason they exist in the US is because the government acts as a backstop due to pro-homeownership politics, but it causes a bunch of market distortions that are made invisible to American borrowers.

30 year fixed-rate is very much the norm here in Denmark. There was a period of experimentation leading up to 2007, but I think fixed rate is very popular. I'm certainly happy that's what we went for when we bought our first house two years ago.

It's hard to call it a "norm" when it's so new that no one has yet seen one completed.

Re: The anti-inflation pivot of 2022

#256

Post by lupire » Tue, Sep 20, 2022, 1:27 AM UTC

_whiteCaps_ wrote: post #124

dragontamer wrote: post #95

Earlier quoted context omitted.

It is common to have adjustable rates in Canada, while the standard in USA is fixed rates. So in these times where rates go up, it makes Canadian homeowners suddenly have to pay more for their houses they're already living in.

https://www.cibc.com/en/personal-banking/mortgages/resource-... In variable rate mortgages, the amount going to principal vs interest changes. The monthly payments remain constant.

OK, eventually they have to pay more. Still painful.

Re: The anti-inflation pivot of 2022

#257

Post by lupire » Tue, Sep 20, 2022, 1:27 AM UTC

_whiteCaps_ wrote: post #129

roflyear wrote: post #109

Earlier quoted context omitted.

Well, I hope those people don't end up homeless. I don't see how the housing market crashing is going to be good for them.

IMO the best option for Canadian real estate is for prices to remain stagnant for a long time, allowing wages to catch up, and decouple the idea of your primary residence as being a good retirement plan.

Why would wages catch up? Wages can go down.

Re: The anti-inflation pivot of 2022

#258

Post by lupire » Tue, Sep 20, 2022, 1:30 AM UTC

mdcds wrote: post #238

unholiness wrote: post #219

Earlier quoted context omitted.

Macroeconomics novice here. What's the argument that interest rates need to be close to inflation rates to counteract it? It seems like there should be an intrinsic time-value of money (e.g. 1 stuff today is worth 1.05 stuff next year) which is tradable (supply of future-stuff will equal demand for future-stuff at some rate like 1.05). And that single rate of stuff-interest would exist if the central bank does nothin…

I had the same question! The mechanism of higher rates reducing inflation isn't clear to me. Does it go down because people with cash choose to park it and earn interest instead of buying goods and services? Or does it go down because higher interest rates make the cost of doing business more expensive which leads to reduction in overall business activity? If it's by reducing business activity, then seems like the "b…

You can't increase supply by lowering rates if there is a real shortage of inputs, as caused by Covid. Printing money (lowering rates) only helps if there is potential capacity (idle people and resources, and cash-poor-demand) that need a jump start to find each other and "combust" to create value.

Re: The anti-inflation pivot of 2022

#259

Post by 972811 » Tue, Sep 20, 2022, 1:39 AM UTC

kylehotchkiss wrote: post #192

ddorian43 wrote: post #41

Earlier quoted context omitted.

Nah. Canada real estate has to take the hit.

Canada's real estate situation makes no sense to me as a US citizen. * Plenty of land * Plenty of wood * Plenty of sources of fresh water * Pro-immigrantion policy could reducing construction costs * Seemingly high rate of 'cottage' ownership which seems like a second home to me, which seems to indicate abundance? * Remote working situation good * Fiber can't be that hard to roll out to new places right next to roads…

I think the US and Canada are really similar here (and maybe it's global), but essentially the trend is:

1. There has been more demand for living in cities and less for rural areas

2. That demand has not been met with the same increases in housing supply, so prices rise

3. Low interest rates make housing an even more attractive investment, and throw gasoline on the fire

Re: The anti-inflation pivot of 2022

#260

Post by SantalBlush » Tue, Sep 20, 2022, 2:06 AM UTC

WalterBright wrote: post #210

thfuran wrote: post #176

Earlier quoted context omitted.

Which country are you referring to? I rather suspect that their government is a good deal less hands off than you're implying.

The US is a fine example, especially the first century.

It's never worth discussing political economy with die-hard free market types, because the they claim the US is a free market when it suits them, then deny it's a free market (calling it "crony capitalism", for example) if you point out legitimate flaws in the economic system.

Not to mention, the notion that the US was a free market at any point in its history is unequivocally false, and anyone who thinks a system that observes slavery qualifies as a free market should be embarrassed.