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

yarn.pranshum.com

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

#371

Post by 0xy »

abeppu wrote: post #330
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...

Elsewhere in this subthread I pointed out that California is not printing money; it's spending surplus from 2021. California cannot print money bc we use US dollars and not CA dollars. But I think a more interesting aspect of this is the cynical way language around the same idea has changed. The Franchise Tax Board is calling them a "tax refund", though your "refund" is based on your income being low, rather than you…

In this case they're using debt, because while they may have had a surplus in a single calendar year, they're still over $150bn in debt. So it isn't spending surplus, because they're massively underwater and a "profit" is meaningless.

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

#372

Post by stopping »

rightbyte wrote: post #364
stopping wrote: post #348

Earlier quoted context omitted.

Dismissing a contrary position as "propaganda" only stifles debate, and you haven't presented an argument against "sweet spots". It's a good mental model for many situations. What makes you think there doesn't exist an optimal inflation rate? 0% inflation is generally not a safe target. In an economy you want to avoid deflation at all costs. If consumers expect future price drops, demand can dip significantly and ind…

> If consumers expect future price drops, demand can dip significantly and induce further drops in price Sounds awesome? Saves resources. People save money for a rainy day. Lending goes down.

Not at all. The issue of rampant consumerism is mostly orthogonal to issues of overall economic stability. Deflation will certainly reduce consumption, but at the cost of massive societal upheaval by way of extreme unemployment and all of its ill effects.

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

#373

Post by 0xy »

bushbaba wrote: post #226
wins32767 wrote: post #78

Earlier quoted context omitted.

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 2020/20…

The excess tax revenues was also caused by overly inflated IPOs and more than normal capital gains. At least in CA, if the surplus is large enough the government is legally required to give the money back if not spent. Gavin Newsom in this case is acting like Robinhood. Taking from the rich and giving to the less well off.

He's taking from the children of the recipients, considering California's current debt load. When you're underwater, a "profit" doesn't mean you're suddenly flush with cash. It's still debt-funded frivolity, which will paid by children.

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

#374

Post by raffraffraff »

mrb wrote: post #230
rdtwo wrote: post #134

Earlier quoted context omitted.

Yeah but that’s not the whole picture… in 1962 the ford truck was $2000 now is around 40,000 so while a new one is better you still have to earn 2x as much to get the most basic one available

When I go to ford.com and look at their basic truck, the 2023 Maverick, I see "starting at $22,195". So if a 1962 truck truly sold for $2000, the inflation seems to account for entirely the price increase. And I'm pretty sure everyone will agree a 2023 Maverick is superior to a 1962 F-100 in every conceivable aspect. Housing and healthcare are better examples of goods or services whose prices have increased faster th…

In the 80s when I was a kid, we owned our own house, even though my father was a small time farmer and my mother stayed home raising us. We scraped by. In today's standards, it was a life of abject poverty. I knew a guy whose father ran a steel company (self made millionaire). Their house wasn't much bigger than ours, but they had VCR, microwave, CD players and satellite TV years before we did. But the real difference was that they had a new Mercedes and we had a low-end Ford that we drove until it fell apart. Our house build cost about 4x the price of the Ford. The Merc? I don't have exact figures but I think you could have built our house at least 2.5x times before you hit the price of a new Merc. These days that's totally flipped around. For the cost of building my parents house today, you could have at least 4x new Mercs.

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

#375

Post by 0xy »

Negitivefrags wrote: post #208
wins32767 wrote: post #78

Earlier quoted context omitted.

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 2020/20…

You would think that there would be something more useful to do with the money, like fixing the infrastructure.

California's high-speed rail money pit hasn't had enough cash thrown in? The state is incapable of building nearly anything.

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

#377

Post by imtringued »

WalterBright wrote: post #113
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…

> Of course, that is almost a tautology Inflation lags the money printing, so it isn't a tautology. > So what do you do to get that sweet spot of about 1-2% inflation? I'm amazed that propaganda of a sweet spot gets so heavily embedded into the popular wisdom. If there is a sweet spot for inflation, it's 0%. Note that the US had net 0% inflation from 1800-1914, while growing from subsistence farming to superpower.

>I'm amazed that propaganda of a sweet spot gets so heavily embedded into the popular wisdom.

Because that sweet spot is very similar to the benefits liquidity confers to the holder of liquidity. Come on grandpa, please don't tell me all the people "bringing their wares to the market" are doing so at no cost and that the holders of liquidity aren't benefitting from stores optimistically stocking goods.

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

#378

Post by tsimionescu »

JamesianP wrote: post #367
magicalhippo wrote: post #356

Earlier quoted context omitted.

> So demand goes down elsewhere driving down other prices. Right, but given that those other things were non-essentials, it surely don't matter as much? I mean, you need food. You don't need a lap dance. So you stop spending money on lap dances, using it on food instead. Prices on lap dances go down. But you still need food, not lap dances, so the reduction in price for a lap dance doesn't make you suddenly start buy…

Strippers need to eat too though. Maybe I missing your argument. Isn't the point of lowering one's lap dance prices to get more customers to buy them?

That's the hope, but it doesn't mean it will happen. There is no law that says you'll find a price point that keeps your business afloat: changing economic conditions can just tank your business; the less critical the good or service is, the more likely it is to happen.

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

#379

Post by erichocean »

tastyfreeze wrote: post #264
scarecrowbob wrote: post #206

Earlier quoted context omitted.

That doesn't match my experiences; IME cars do last longer now. I have owned and spent substantial time driving a 1978 Buick Regal and a 1968 Westphalia VW van. I don't think that you're gonna see 200K miles out of either of those vehicles. The Buick had about 120K on it and was clearly on its last legs. It's likely been scrapped. The VW only runs because I sold it to a mechanical engineer who wanted to have a projec…

Shout out to Toyota making 200k miles the new 100k. The Toyotas I have owned have been over 150k with very little issue.

My 2001 4Runner has over 350K miles, and is still rocking 4x4 action on the North Carolina beach daily.

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

#380

Post by hunterb123 »

forgetbook wrote: post #357
mrb wrote: post #286

Earlier quoted context omitted.

The 2022 Maverick has an engine literally twice more powerful than the 1962 F-100 (270 vs 135 hp). With your logic, picking on one tech detail of many, I could argue the 1962 model is "not really a pickup truck" with such a puny engine of weak towing abilities ! What this shows is that Ford merely decided to trade 18 inches of pickup box space for a second row of seat, a more powerful engine, and many other higher-en…

The one tech detail chosen is pretty relevant to the economic (as opposed to style) use-case here. Being able to carry a 4x8' sheet is the difference between a productive vehicle or not for a significant chunk of the contracting tradesman market. Sure, lots of users want trucks for other reasons where a short box does fine or a second row of seat is the winning feature regardless of box space, but the logic being app…

Learn to use straps, really easy to haul a 4x8' in a short bed.

Noone wants a normal bed. They want a crew cab short bed. Supply and demand.

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