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The Fed plans to sharply boost unemployment

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Re: The Fed plans to sharply boost unemployment

#191

Post by pitaj »

PaulDavisThe1st wrote: post #131
rufus_foreman wrote: post #78

Earlier quoted context omitted.

Companies are increasing prices now. If they could have profitably increased them before, why did they wait until now?

Because genuine supply chain problem-induced price increases gave them cover to increase prices on things without supply chain problems. And also because in late 2020/early 2021, it appeared that labor was about to get a bit uppity and wee bit more powerful than it had been, so price increases were a nice preemptive move to deal with upcoming compensation issues.

> Because genuine supply chain problem-induced price increases gave them cover to increase prices on things without supply chain problems.

Or maybe the supply chain problems bubbled out to affect more and more things? Or maybe there was an actual general devaluing of the currency? Might want to employ a razor here.

> And also because in late 2020/early 2021, it appeared that labor was about to get a bit uppity and wee bit more powerful than it had been, so price increases were a nice preemptive move to deal with upcoming compensation issues.

This reads as "the cabal of big capital got together and decided to raise prices across the board because they were worried about labor power". You realize this makes you sound like a conspiracy theorist right?

Re: The Fed plans to sharply boost unemployment

#192

Post by qeternity »

PaulDavisThe1st wrote: post #128
nilsbunger wrote: post #66

Inflation is high because demand exceeds supply. You have to reduce demand to match the available supply. Interest rates are the main tool to do that. This is true even if the ultimate cause is supply chain issues.

Inflation is high because corporations have increased consumer prices well above their own increases in costs. There's just as much evidence for this claim as "inflation is demand > supply" or "inflation is M2".

Corporations raise prices until demand starts to reduce. If you had a store that was constantly selling out of goods, you’d raise the prices until you stopped constantly selling out, no matter what your input costs are.

This is what the Fed is attempting: demand destruction.

Re: The Fed plans to sharply boost unemployment

#193

Post by theropost »

lamontcg wrote: post #171
thunky wrote: post #168

Earlier quoted context omitted.

But there is no wage inflation overall. In real terms, wages are declining except for maybe the lowest earners [0]. For some reason that's unacceptable. [0] https://www.americanprogress.org/article/wages-and-employmen...

> In real terms Nominally they are increasing, that is a component of inflation. Inflation-adjusting the nominal rise of prices that are causing inflation just hides the inflation. You can't analyze it that way. > For some reason that's unacceptable. I'm not the Fed, I don't support what they're doing, I'm just explaining it. EDIT: research from the Fed: https://www.frbsf.org/economic-research/publications/economi...…

In Canada, Ontario was forecasting a $30 billion dollar deficit for the current fiscal year. When the final numbers were in, they reported a $2 billion dollar surplus - even with higher expenses. The nominal revenue growth was 11.9% - inflation boosts the coffers.

Re: The Fed plans to sharply boost unemployment

#194

Post by ethbr0 »

fallingfrog wrote: post #75
ethbr0 wrote: post #47

Earlier quoted context omitted.

It's healthy in that it causes unproductive firms to go bankrupt. It's painful in that unproductive firms are no longer handing out free money to employees and customers. Looking at the market of companies today, especially in the tech space, IMHO ten years or so of fiscal prudence would be really healthy. The only downside is that Apple, Amazon, Google, and Microsoft would weather it and come out more relatively dom…

I agree, that’s probably what will happen. It’s the natural progression of things and the boom/bust credit cycle speeds the process- a new field of technology, full of hungry competitors, eventually winnows down to a small number of large firms, who then usually proceed to fix prices to ensure permanent profits. Then you have to get government involved to make sure they don’t abuse their monopoly power, and the whole…

Looking backwards (90s/early 00s), it's curious we didn't see hyperscale cloud concentration earlier. The tech was there, at least relative to state of the art of the day.

I guess it was a demand problem.

There needed to be one huge customer to dictate a single set of needs, and that didn't exist until Amazon bootstrapped via its own demand and internal interoperability mandates.

It'll be curious if Google bows out. You'd think Android would have taught them that sometimes throwing money on a bonfire is a good investment in aggregate.

Re: The Fed plans to sharply boost unemployment

#195

Post by proffeatur8 »

socialismisok wrote: post #49
deburo wrote: post #45

Earlier quoted context omitted.

You must be underestimating the negative effect high long-term inflation has on a society. Labor doesn’t gain leverage, it loses a lot of buying power.

Not at all. I'm saying we have many levers to control inflation, worker power is only one.

No post body was provided.

Re: The Fed plans to sharply boost unemployment

#196

Post by econ101time »

PaulDavisThe1st wrote: post #148
econ101time wrote: post #135

Earlier quoted context omitted.

Robert Reich is a politico with a political agenda, and that article is in a US politics opinion section. Inflation is a major US electoral issue, and the Biden admin has tried to shift blame to greedy companies (not that it's necessarily fair to put the blame on the Biden admin, that's another issue altogether). And even if he were an economist (which he's not, despite the PPE degree), economists can be political ha…

I didn't ask what he was. I asked if he understood supply and demand. As for what he actually is: a professor of public policy at UC Berkeley and a former 1-term secretary of labor. He was appointed to the latter position, not elected. Almost anyone with an interest in the world has their own "political agenda".

I'll spell it out more clearly for you, since you didn't seem to understand the implicit point: I sure hope a fellow like him understands supply and demand. I assume he does. But I think that understanding takes second seat to trying to convince people that greedy companies, not incompetent governments, are to blame for inflation. And he writes that (putting aside whether he also thinks it's true) in order to advanced a political agenda. That's why it's in a US politics op-ed section of a left-wing newspaper.

Re: The Fed plans to sharply boost unemployment

#197

Post by credit_guy »

It does not matter how we got here. Who's fault it was, or wasn't. It does not matter if the inflation is driven by supply or demand.

The Fed has a job to do, by law. It has the dual mandate of keeping inflation low, and also unemployment law. Now inflation is higher than it was in 3 decades, and unemployment is record low. They are good by one measure (unemployment), but incredibly bad by another one.

Their job is to take inflation down. At some point the two mandates will pull in opposite directions, but right now the inflation is high, and unemployment low. Sure, fighting inflation will increase a bit the unemployment, but few things come for free in life.

Re: The Fed plans to sharply boost unemployment

#198

Post by nemo44x »

dehrmann wrote: post #156
nemo44x wrote: post #18

They should start by firing themselves. In a managed economy it’s the managers who are at fault for the situation we are in. But naturally it’s the common man who will suffer. They’re just a statistic after all.

I don't think you realize how hard it was to get this right. Between covid, reopenings, and the war in Ukraine, there were massive supply and demand shifts in the last 3 years.

Maybe everyone saying that lowering rates well over a year ago was ridiculous at the time were right?

Yea it’s hard but that’s the job.

Re: The Fed plans to sharply boost unemployment

#199

Post by PaulDavisThe1st »

pitaj wrote: post #191
PaulDavisThe1st wrote: post #131

Earlier quoted context omitted.

Because genuine supply chain problem-induced price increases gave them cover to increase prices on things without supply chain problems. And also because in late 2020/early 2021, it appeared that labor was about to get a bit uppity and wee bit more powerful than it had been, so price increases were a nice preemptive move to deal with upcoming compensation issues.

> Because genuine supply chain problem-induced price increases gave them cover to increase prices on things without supply chain problems. Or maybe the supply chain problems bubbled out to affect more and more things? Or maybe there was an actual general devaluing of the currency? Might want to employ a razor here. > And also because in late 2020/early 2021, it appeared that labor was about to get a bit uppity and we…

There's never any need for conspiracies or cabals when the interests of a given group are naturally aligned, and they are not large in numbers. Corporations can behave in their "own interest" and most times, they will find themselves acting in concert, without coordination.

> Or maybe the supply chain problems bubbled out to affect more and more things?

Shrinkflation is not explained by supply chain problems. My razor is that corporations will generally do whatever they believe they can get away with; "supply chain problems" gave them something approaching carte blanche to reprice anything they wanted.

Re: The Fed plans to sharply boost unemployment

#200

Post by PaulDavisThe1st »

econ101time wrote: post #196
PaulDavisThe1st wrote: post #148

Earlier quoted context omitted.

I didn't ask what he was. I asked if he understood supply and demand. As for what he actually is: a professor of public policy at UC Berkeley and a former 1-term secretary of labor. He was appointed to the latter position, not elected. Almost anyone with an interest in the world has their own "political agenda".

I'll spell it out more clearly for you, since you didn't seem to understand the implicit point: I sure hope a fellow like him understands supply and demand. I assume he does. But I think that understanding takes second seat to trying to convince people that greedy companies, not incompetent governments, are to blame for inflation. And he writes that (putting aside whether he also thinks it's true) in order to advance…

I don't care what his political agenda is, I care what the actual source of inflation is. I see a lot more evidence that a lot more of it is due to price gouging by corporations than the money supply or supply chain issues. I don't care where he writes it either. It's not as if the WSJ is going to publish an argument like this.

So maybe we can get away from "I hope understands supply and demand" and actually tackle the evidence that has been presented by many economists and economic pundits regarding the relative contributors to the current inflation.

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