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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?

#51

Post by merely-unlikely »

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?

If I could answer that definitively I'd be crowned Chief Economist but one explanation that is frequently posited is the US (and Western Europe to a lesser extent) has effectively exported inflation. US runs a trade deficit but that imbalance is made up for by being the global reserve currency. International transactions (especially oil) are denominated in dollars generating demand. And our trade partners like China invest in dollar denominated assets (ie US treasuries) making up for the trade imbalance.

Since the USD is a safe haven currency it has held up extremely well relative to other currencies recently. The UK just ran into the limit of loose fiscal policy which imo is a commentary on the extent of their decline as a world economic super power and demand for/perceived safety of GBP.

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

#52

Post by kelseyfrog »

foobarian wrote: post #20
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…

> History teaches us that inflation will continue as long as the government keeps printing fiat money. Of course, that is almost a tautology. The devil is in the details. No inflation is bad because the economy stops. High inflation is bad because of erosion of purchasing power and negative impact on nearly every participant in the economy. So what do you do to get that sweet spot of about 1-2% inflation? I'd say rai…

Why are interests rates as a money sink preferable to the more direct approach of simply sinking money out of supply via tax? They seem to amount to the same thing at the end of the day - siphoning dollars out.

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

#53

Post by WalterBright »

gumby wrote: post #30
lazide wrote: post #4

Earlier quoted context omitted.

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,…

> They were also immediately followed by Reagan, who wasn’t exactly a shining beacon of progressivism. Reagan benefited from Volker, and Carter chose Volker knowing that it would probably cost him re-election. Reagan then squandered the benefit, but is now worshipped as some sort of prelapsarian god. Let's hope the US can slough off that nonsense soon.

Carter could have ended the soul-sapping, grinding misery of endless gas lines, like Reagan did on his very first day in office, with the stroke of a pen.

Carter had no idea how economics works. The prosperity of the 80's was great.

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

#54

Post by beerdoggie »

In California, people fitting certain economic criteria are now being issued $1000 checks for inflation relief. This is beyond ludicrous.

We have printed so much money, the only solution is to... print more?

It's almost like it is all a sneaky backdoor to letting the government redistribute wealth without real oversight...

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

#55

Post by seer-zig »

sbf501 wrote: post #48
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…

The more currency flooding the economy, the less wealthy the rich people are. Inflation occurs because the owners need to remain wealthy, hence prices go up everywhere. If it were possible for the top few to do with a little less, prices wouldn't have to skyrocket.

I disagree about framing it as the top few. I recommend you look into Islam's Zakat system for something that actually works, and is fair across the board.

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

#56

Post by avgcorrection »

mc32 wrote: post #11
avgcorrection wrote: post #8

Earlier quoted context omitted.

You are not saying anything.

What is there left to say when someone advocates for something so far outside common understanding? It defies belief. But, if most economists are wrong and Biden is right, well, we can look forward to his administration proudly proposing higher inflation.

I gotta say, I should not be surprised at someone treating economics like a religion.

And I am not.

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

#57

Post by groby_b »

jrm4 wrote: post #42

I'm no crypto fanboy by any means, but it's hard to not think that, if crypto doesn't completely die out this bear market, it's likely to be at least a somewhat significant factor in all of this. Not saying it will save us all, but it seems like alternate stores-of-value are likely to be, well, valuable.

Why? What would make it more valuable than other stores of value? Bitcoin is roughly at end-of-2020 valuation. So is the NASDAQ. So is the S&P500. So is the Dow.

In fact, for most other stores of value, "dies out in this bear market" isn't even a consideration - the statement is reflective of a (perceived?) higher volatility of the crypto market.

If this is showing anything, it's that crypto currencies are just as vulnerable to monetary policy as other assets.

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

#58

Post by seydor »

boole1854 wrote: post #43
seydor wrote: post #9

Earlier quoted context omitted.

Is that meant to be ironic or not? It is a fact that [real] incomes have not risen for decades, and now , at least in europe, we are facing catastrophic consequences https://www.newyorker.com/news/john-cassidy/pikettys-inequal...

> It is a fact that incomes have not risen for decades Is this a fact? I just checked the data from the US Census Bureau [1]. Here is what I see (all numbers inflation-adjusted to 2021 equivalent [2]). Note: I chose 1994 as the comparison year since that was as far back as the Census data I looked at goes. 1994 median individual income: $44,618 2021 median individual income: $60,008 1994 mean individual income: $58,0…

https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...

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

#59

Post by dasil003 »

zie wrote: post #28
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…

This is a very simplistic viewpoint. One could also argue that Inflation happens when people don't trust that their government will pay back all the money borrowed. The US govt has been on a spending spree as of late, but hasn't yet bothered to mention how they are going to pay for it. In 2008/2009, the US govt was also on a spending spree, but did promise to pay the bill eventually. Inflation didn't spike in 2008/20…

There’s also a tipping point where inflation is self propelled because everyone is used to it so they just proactively raise prices on a regular basis. I experienced this growing up in Brazil in the 80s and 90s. It’s hard for Americans to relate, but essentially the mentality is spend/invest every penny you get before it loses value. Took some creative policy to break the cycle: https://en.m.wikipedia.org/wiki/Plano_Real

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

#60

Post by [deleted] »

mc32 wrote: post #31
ForHackernews wrote: post #16

Earlier quoted context omitted.

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?

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