Inflation is at a 40 year high. What can history teach us? • Hacker News Board

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

#71

Post by fladrif » Tue, Oct 04, 2022, 9:02 PM UTC

rnernento wrote: post #45

lagrange77 wrote: post #26

Earlier quoted context omitted.

> History teaches us that inflation will continue as long as the government keeps printing fiat money. That's what you hear a lot, especially these days. But is it really true? What exactly is the signal path, that leads from more money to a higher inflation? I guess, there is a fair amount of psychology involved.

I mean it's pretty straightforward right? There are now more dollars in play all after the same amount of goods, each dollar has less purchasing power. Why are you so quick to throw out the simplest explanation?

Because sometimes you lose the important details in the generalization. Counter example would be that the dollars created aren't spent depending on how they're distributed. If put under people's mattresses, put into the stock market, or sitting in a savings account, those don't enter circulation and increase the flow of money.

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

#72

Post by Ekaros » Tue, Oct 04, 2022, 9:02 PM UTC

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.

Housing is pretty big counter-point for this. Everything is fine if you don't need to move, but if you need to you are unlikely to sell for what is left of your capital or be able finance with similar monthly payment. You are locked in your current house...

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

#73

Post by IncRnd » Tue, Oct 04, 2022, 9:02 PM UTC

A good working definition of inflation is a general increase in prices and a fall in the purchasing value of money. There will generally be inflation when there are fewer goods to purchase or when the money supply increases.

History teaches us that the government, often through good intentions, decreases the supply of available goods. There are many reasons this happens. Recently, people were told to stay at home, and many businesses closed. At the very least, the supply of many goods dropped, and people were at home all shopping online for the same goods - causing prices to rise - inflation.

History also teaches us that the government increases the money supply by printing more money.

It's not an accident that both of those are caused by the government. These are the masses' reasons to have lower regulation, not to give handouts to some but to stop government interference. Not to favor winners and losers but to have just enough regulation - without printing stupid amounts of money to save the economy in the short-term.

Unfortunately, history also shows us that government interference, though possibly well-intended, results in price controls that also cause the same problem - inflation.

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

#74

Post by groby_b » Tue, Oct 04, 2022, 9:02 PM UTC

beerdoggie wrote: post #54

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...

Given that California can't print money, why do you think those checks are "printing money"?

And no, it's not a "sneaky backdoor". It's the government doing what it should do, tighten financial inequality gaps. And preventing unnecessary suffering. We're still a society, we occasionally take care of the weaker people amongst us. (Frankly, not often enough)

And "without real oversight" is... you're aware this is going through the normal process of fund allocation, is reported widely in the press, and is part of the data that voters can take into account next round, no? It has just as much oversight as any other government spending. (Arguably more than some federal programs)

I get that fiscally conservative folks might disagree with this, and we can certainly debate merits. But "printing money" and "without oversight" are empty slogans without basis in fact.

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

#75

Post by jedberg » Tue, Oct 04, 2022, 9:03 PM UTC

beerdoggie wrote: post #54

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...

It should be noted that California cannot print money. It is simply redistributing what it's residents already have.

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

#76

Post by sebow » Tue, Oct 04, 2022, 9:03 PM UTC

Most people talk about the printing money aspect, and while that's definitely true, it needs to be bought into the context of the covid19 policies that exacerbated the downfall of the economy. Printing money is one thing, but doing that to "cover costs" while also de facto slowing down to the point of stopping the economy is on another level. Add to this the fact that the white collar jobs that "seamlessly" moved to remote positions for people to work from home were kind of a bubble that kept of inflating with no corrections (especially crypto pyramids with no added value in the economy), you end up with this. From there to this day it was basically a matter of inflation spiraling out of control, because the reality is that a lot of green policies, monetary decisions, >newAnd yes, let's also mention the stimulus checks that had more of a bad psychological impact on the working middle class. The total number wasn't that big though, compared to other gov. expenses. Let's not forget, US & Western european countries still have the "luxury" that their economies is more largely composed of industries that functioned during the lockdowns(IT, Entertainment,etc). With the exception of eastern asia, the rest of the world [where most of manufacturing & shipment takes place] did not.

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

#77

Post by merely-unlikely » Tue, Oct 04, 2022, 9:03 PM UTC

kelseyfrog wrote: post #52

foobarian wrote: post #20

Earlier quoted context omitted.

> 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.

That is also a valid approach but I'm not sure it is more direct. Tax policy is generally only set once a year and only affects tax payers. Interest rates can be tweaked more frequently and (I think) directly impact a larger subset of economic players. That and the Fed doesn't determine tax rates.

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

#78

Post by wins32767 » Tue, Oct 04, 2022, 9:03 PM UTC

beerdoggie wrote: post #54

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...

California doesn't print money, the Federal Reserve does. California is required to balance its budget by law, like every state but Vermont. Nearly every state has more money than normal right now (some of it from high tax revenues due to nearly full employment, some due to federal stimulus), so they're finding ways of getting rid of the money. This is a second order effect from the much too large stimulus in 2020/2021.

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

#79

Post by avgcorrection » Tue, Oct 04, 2022, 9:03 PM UTC

mc32 wrote: post #63

avgcorrection wrote: post #56

Earlier quoted context omitted.

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

Ok. Show me economies that did well with high inflation. Where did that work, where is it working today? Are economists wrong to treat it as an electric third rail?

Economies doing well wasn’t even the initial claim. The keywords were progressive, less inequality.

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

#80

Post by WalterBright » Tue, Oct 04, 2022, 9:03 PM UTC

tsimionescu wrote: post #39

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.

Since you know all the obvious answers, try these on:

1. Where does all the money come from to pay for increased gas prices?

2. When gas prices go down (and they often do go down by multiples), why doesn't deflation happen?