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Inflation is at a 40 year high. What can history teach us?

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Re: Inflation is at a 40 year high. What can history teach us?

#31

Post by mc32 »

ForHackernews wrote: post #16
mc32 wrote: post #7

Earlier quoted context omitted.

I gotta say, I should not be surprised at people advocating for inflation. But I am. High inflation has been the boogeyman, foe and underminer of economies world-wide, left-leaning and right-leaning, so I didn't see it coming. But here we are, people advocating for the erosion of purchasing power! But, if it were a wining combination I guess we can expect Biden to embrace Inflation, Advocate for it and pronounce that…

Assuming wages rise (they are), debtors benefit from inflation as their debts become less onerous in real dollar terms. Most Americans are debtors.

So, Brazil had it good when they had high inflation because debtors... Wait... doesn't CC rates go up during inflationary times?

But Ok, maybe we should follow the example of Brazil, right?

Re: Inflation is at a 40 year high. What can history teach us?

#33

Post by bsaul »

ForHackernews wrote: post #19
nsxwolf wrote: post #12

Print lotsa money, get lotsa inflation.

Yes, but why now? They have been printing money for a long time. This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

It took a bit of time to compensate the destruction of value that occurred in 2008.

Re: Inflation is at a 40 year high. What can history teach us?

#34

Post by joycian »

ForHackernews wrote: post #19
nsxwolf wrote: post #12

Print lotsa money, get lotsa inflation.

Yes, but why now? They have been printing money for a long time. This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

Balance of payments.

Re: Inflation is at a 40 year high. What can history teach us?

#35

Post by WalterBright »

lazide wrote: post #4
seydor wrote: post #2

Weren't the high inflation years also some of the most progressive, with some of the lowest inequality in recent decades?

I personally didn’t get that from the highlight reels of the mid 70’s and early 80’s. Mostly it was the total chaos, riots, and unrest. They were also immediately followed by Reagan, who wasn’t exactly a shining beacon of progressivism. But there were a lot of changes during that time, many that could be considered progressive, mixed in with (or perhaps the reason behind?) the chaos. A lot of folks don’t like change,…

> Mostly it was the total chaos, riots, and unrest.

Total nonsense. Source: I lived through the 70s.

Re: Inflation is at a 40 year high. What can history teach us?

#36

Post by rnernento »

ForHackernews wrote: post #24
WalterBright wrote: post #15

History teaches us that inflation will continue as long as the government keeps printing fiat money with no backing. For a historical example, the Confederacy had high inflation. The printing press was in Richmond. When Richmond was threatened with a siege, the Confederacy hustled the printing press out to get it to a new, safer location. Confederate inflation paused during the move. The reason is pretty simple - the…

Ok, but why now? Why not 14 years ago, or 10 years ago, or 5 years ago? We've been in a zero-interest-rate, QE world for quite a while. Somehow I do not think it is as trivial as your 8th grade econ textbook might suggest.

I don't think you realize just how much of the money has been printed in the last 2 years.

See fed balance sheet over time: https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

See M2 over time: https://fred.stlouisfed.org/series/M2SL

Re: Inflation is at a 40 year high. What can history teach us?

#37

Post by Syonyk »

ForHackernews wrote: post #19
nsxwolf wrote: post #12

Print lotsa money, get lotsa inflation.

Yes, but why now? They have been printing money for a long time. This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

> This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

The argument I've heard, though am not well enough equipped to fully analyze, is that the created money was going into overseas accounts as various nations tried to accumulate the global reserve currency - dollars - to purchase oil and other products that were generally traded in dollars. As long as that remained the case, an awful lot of dollars could be printed, spent, and ended up squirreled away elsewhere not really having an impact (velocity of money and such).

Now, though, that arrangement is ending - in no part due to the US abusing our financial system to control what everyone else can or can't do (see Visa's opinions about what industries they'll serve for an example, also SWIFT, global sanctions, etc). So other countries are making other arrangements that don't involve dollars - I'm pretty certain dollars aren't involved in the Russian oil sales to various other countries in their sphere anymore. And any reasonable country that isn't heavily tied to the US has to be figuring out how to move off dollars.

So now those all come home to roost, and combined with the lack of things to buy, we see the nasty inflation we're getting.

I'm not certain how well it holds up if you really dig into it, but there are certainly people answering your question if you actually go looking for how it's being answered.

Re: Inflation is at a 40 year high. What can history teach us?

#38

Post by jrm4 »

ForHackernews wrote: post #19
nsxwolf wrote: post #12

Print lotsa money, get lotsa inflation.

Yes, but why now? They have been printing money for a long time. This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

I do find that they're pretty bad at the whole picture. I'm guessing it has much to do with remembering that "money" isn't at all valuable, "goods and services" are. So this is pretty far from a science; but if there's reasonable "optimism" or more precisely "good churn in economic activity," the effects of inflation will be dampened.

Re: Inflation is at a 40 year high. What can history teach us?

#39

Post by tsimionescu »

WalterBright wrote: post #15

History teaches us that inflation will continue as long as the government keeps printing fiat money with no backing. For a historical example, the Confederacy had high inflation. The printing press was in Richmond. When Richmond was threatened with a siege, the Confederacy hustled the printing press out to get it to a new, safer location. Confederate inflation paused during the move. The reason is pretty simple - the…

You keep claiming this, but it is fairly obvious that prices can be forced up by factors that have nothing to do with the money supply - most notably, constrained supply in basic raw materials (especially oil and its derivatives) can force virtually all prices up, regardless of the amount of currency available.
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