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?

#431

Post by watersb » Wed, Oct 05, 2022, 10:53 AM UTC

saurik wrote: post #395

consp wrote: post #354

Earlier quoted context omitted.

Doesn't that practically mean the rich get richer and the poor stay poor? If it would be net 0 everything would stay the same?

Is that surprising? Alternatively, do you have a fix in mind? Having power means you can build more things that give you more power faster than someone with less power. You can't change this using inflation, as people will just hold something else instead of cash (and, in fact, inflation seems to most punish the people with the least power, as those people are spending a much much greater proportion of their income o…

Can't hold more than roughly $5000 of real assets and qualify for Medicaid (subsidized healthcare).

Keeping that cash in the mattress is a very real option for many people with huge responsibilities (child care) and very little power.

[citations needed] - I don't know what the savings limits are as of October 2022.

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

#432

Post by m0llusk » Wed, Oct 05, 2022, 10:57 AM UTC

0xy wrote: post #375

Negitivefrags wrote: post #208

Earlier quoted context omitted.

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.

CA HSR is moving ahead. Major infrastructure projects are more difficult and expensive in the US because we have far stronger property rights than China or European nations.

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

#433

Post by simonebrunozzi » Wed, Oct 05, 2022, 10:57 AM UTC

pas wrote: post #430

mrjin wrote: post #406

The only thing we learnt from history was that *we learn nothing from the history*. For the past decades, what were the central banks all over the world doing? Nothing but printing money. Whenever there was a (economical) crisis, the only measure was printing money, *nothing but printing money*. Were the problems resolved ever? Never!!. They event pretended to be innocent by asking "why there were no inflation". Of c…

CPI has asset components, like housing. Central banks have one universal lever, and they use it. (This is by design, so it can be mostly independent.) The responsibility is on the fiscal side to spend it on shit that actually matters. Sending people money without means testing is dumb, but politics in this age is dumb. Unfortunately harping half-truths about central banking won't help with the situation :/ Your comme…

Most of the spike in energy costs for the consumers is caused primarily by how energy markets are designed, not by hikes in gas prices (which could only justify a small part of the price hike).

See this long, but well explained, video on the topic [0].

[0]: https://www.youtube.com/watch?v=NicE0-N9ux0

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

#434

Post by giantrobot » Wed, Oct 05, 2022, 10:57 AM UTC

0xy wrote: post #373

bushbaba wrote: post #226

Earlier quoted context omitted.

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.

Government debt is not like personal debt. Governments debt is structured and has fixed predictable rates (bonds etc). There's no incentive to pay down debt because the debt holders want long term structured repayment.

The only time government debt is bad is when the government can't make the payments.

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

#435

Post by drchiu » Wed, Oct 05, 2022, 10:58 AM UTC

dkrich wrote: post #417

The most dangerous thing that can happen to an advanced economy is credit markets grinding to a halt. It was the panic of 1907 that created the federal reserve in the first place. Over the ensuing decades there was a very awkward path to eventually figuring out that at the moments where a complete halt to credit markets looks imminent, the fed should step in and release the jam. What we’ve learned is that just the kn…

This is perhaps one of the best explanation of the dynamics between the fed and the market as it actually happens.

If I recall, those fed chairs tend to be Wall St alumni unfortunately.

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

#436

Post by suoduandao2 » Wed, Oct 05, 2022, 10:58 AM UTC

m0llusk wrote: post #429

mrjin wrote: post #406

The only thing we learnt from history was that *we learn nothing from the history*. For the past decades, what were the central banks all over the world doing? Nothing but printing money. Whenever there was a (economical) crisis, the only measure was printing money, *nothing but printing money*. Were the problems resolved ever? Never!!. They event pretended to be innocent by asking "why there were no inflation". Of c…

This is clearly an oversimplification because the crisis of 2008 was met with extreme money printing which did not cause a burst of inflation and was reeled in with relative ease as the economy restored itself. If money printing were the variable then it should cause inflation every time but it does not.

I think the GP is saying, 2008's money printing did cause a burst of inflation in stocks, which would have otherwise fallen even further. Measuring CPI by excluding assets like growth stocks hides the true effect of this money printing by glossing over what most already wealthy spend money on.

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

#437

Post by m0llusk » Wed, Oct 05, 2022, 10:58 AM UTC

Aeolun wrote: post #386

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...

Giving people a one-time bonus never made sense to me. They’ll feel rich, spend it all, and be back in their previous situation next month.

Limited available evidence shows that people are extremely conservative with spending windfalls with much of it going to pay down debt.

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

#438

Post by autoexec » Wed, Oct 05, 2022, 10:58 AM UTC

KptMarchewa wrote: post #399

rightbyte wrote: post #364

Earlier quoted context omitted.

> 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.

And you get fired from your job because demand for it disappears. Amazing.

Demand doesn't disappear. People still want the things they want. They just might not be wiling to pay as much as others would like them to. Lower the prices, and suddenly those people can justify (or even simply afford) satisfing the demand that never went away. People spending leads to more jobs.

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

#439

Post by blagie » Wed, Oct 05, 2022, 10:58 AM UTC

dkrich wrote: post #417

The most dangerous thing that can happen to an advanced economy is credit markets grinding to a halt. It was the panic of 1907 that created the federal reserve in the first place. Over the ensuing decades there was a very awkward path to eventually figuring out that at the moments where a complete halt to credit markets looks imminent, the fed should step in and release the jam. What we’ve learned is that just the kn…

I'm kind of inclined to agree.

We want to avoid structural damage: Lost jobs, bankrupt businesses, lost mortgages, and so on. Structural damage leads to loss of real productivity, and real harm to people's lives. The only way I knew to get through COVID shutdowns was to devalue currency by about as much as we've done.

I didn't mind the short-term money printing, and I expected inflation to result. The inflation is painful, but the alternative is much more painful. My income buys less than it did two years ago, but I'm thankful I have a job. I was even more thankful when jobs were easy to come by. If my employer went under or I lost my job, I'd be profoundly unhappy.

The right approach now would be to accept a dollar is worth less than it was before, and to give an honest estimate of how much less.

Aggressively trying to control inflation by raising interest rates is a lost cause, and will do a lot of real harm. The outcome here seems to be that rather than mitigating the harm of COVID shutdowns, we've delayed them, and did a lot more harm along the way.

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

#440

Post by suoduandao2 » Wed, Oct 05, 2022, 11:01 AM UTC

gitfan86 wrote: post #411

mrjin wrote: post #406

The only thing we learnt from history was that *we learn nothing from the history*. For the past decades, what were the central banks all over the world doing? Nothing but printing money. Whenever there was a (economical) crisis, the only measure was printing money, *nothing but printing money*. Were the problems resolved ever? Never!!. They event pretended to be innocent by asking "why there were no inflation". Of c…

At this point the fed seems to be saying that those days are over, they will continue to increase rates until inflation hits 2%. Obviously this cannot go on forever because it becomes impossible to service the debt and you have to print money to pay it off. But it gives you more time and prevents hyper-inflation and we can hope that by then AI and other technological advances have made what we consider "economics" mo…

>we can hope that by then AI and other technological advances have made what we consider "economics" mostly irrelevant.

Is there a serious hope that AGI will invent a replicator soon after coming online? It seems likeliest to me that if a greater-than-human intelligence comes online it won't have a circumvention for the laws of thermodynamics and there still won't be such a thing as a free lunch.