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?

#501

Post by saurik » Wed, Oct 05, 2022, 4:50 PM UTC

Shaanie wrote: post #467

dsign wrote: post #424

Earlier quoted context omitted.

That blows my mind. I'm allowed to spend $10 in a bottle of alcohol or a packet or cigarettes, no questions asked, but I'm not allowed to spend those $10 in stocks of a tiny company unless I'm able to demonstrate that I sleep with the founders or make their lunch or run their accounting, or that I have so many millions on my name that investing $10 without doing any of the above really could not harm me.

It's not like accreditation exists to ensure poor people stay poor, framing it like that is disingenuous. Small-time investors are unlikely to be able to even semi-accurately estimate the value of a company, so they're much much more likely to be tricked into overpaying.

It isn't that it exists for that reason, it merely has that effect as a callous side effect of not really caring about the power imbalance it causes on said poorer people. "The road to hell is paved with good intentions" 100% applies to people trying to protect other people from none other than themselves.

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

#502

Post by filoeleven » Wed, Oct 05, 2022, 4:56 PM UTC

compumike wrote: post #17

It may also help to see the cumulative inflation picture: https://totalrealreturns.com/s/USDOLLAR?normalize=end (disclosure: my side project) The 1974 and 1980 peaks from the article correspond to the steeper slope regions in those same years on my graph. (I'm plotting 1/[CPI-U price level], while the article is plotting d/dt [CPI-U price level]) On my y-axis is the purchasing power of a US dollar, relative to curren…

I had no idea that kids in 1962 were spending $100 on one piece of licorice. Kinda puts the “millennials and their avocado toast” thing in perspective, huh?

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

#503

Post by wpietri » Wed, Oct 05, 2022, 5:06 PM UTC

WalterBright wrote: post #174

wpietri wrote: post #167

Earlier quoted context omitted.

This is a straw man: > what law of economics changed in 1914 Again, you're just ignoring the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. I understand that goldbuggery is a religion, which like many religion requires ignoring inconvenient facts. You're welcome to keep pr…

> the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. Milton Friedman in "Monetary History of the United States" shows with graphs and charts that the instability was higher under the stabilizing hand of the Fed. What the Fed brought was an upward bias to it. > I understand…

Ah yes, the religious person cites religious texts:

> Monetary History of the United States

That book covers only through 1960, ending 20 years before the low-inflation era I'm talking about. Friedman retired from teaching before the era even started.

So yes, I am definitely done here.

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

#504

Post by jelliclesfarm » Wed, Oct 05, 2022, 5:09 PM UTC

californical wrote: post #340

jelliclesfarm wrote: post #295

Earlier quoted context omitted.

I wasn’t virtue signalling. Over supply of money will make inflation worse, but constriction would bring down spending. A labourer making daily wages and supplemented by govt dollars will spend all of it. A millionaire with a few millions in the bank is not going to spend any of it. Especially during an overheated inflationary period. It’s better spent to the most vulnerable to pay for their food, gas and utilities.…

But you just explained why this causes more inflation. In your words, it was money in the banks of wealthy people, meaning not being spent. Money that isn’t spent doesn’t cause inflation because it’s not competing for goods and services. By redistributing to poor people, that previously stationary money is now being used to compete for goods, since poor people generally spend all of their money. So more money is now…

Non wealthy people and poor people spend on necessities. You want the money to be spent on commodity goods and generally traded goods like grain, cotton, utilities etc.

We need healthy enough money supply and sufficient money supply in circulation to keep the economy alive. If anything, this isn’t ‘charity’…it is to ensure minimum money supply to keep the economy healthy and prevent it from collapsing. But not too much to cause inflation. To deal with this, interest rates will go up.

It is more like electrolytes needed to keep the economy upright. It is not a lavish meal at a Michelin starred restaurant.

Also helpful to understand Phillips Curve and relationship between unemployment and inflation.

https://www.khanacademy.org/economics-finance-domain/ap-macr... : here is a good tutorial.

The govt is trying to bring down inflation to cool the economy after all the excess money supply during pandemic. That was necessary too.

So expect unemployment rates to rise in the short term. This money will help poor people and those looking at unemployment in the coming short term to survive. This is necessary. We still want them to be able to buy food and pay for gas and electricity as the correction goes underway.

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

#505

Post by lowercased » Wed, Oct 05, 2022, 5:20 PM UTC

michaelcao wrote: post #265

lowercased wrote: post #212

Earlier quoted context omitted.

I'm not sure Mark Twain actually said all that... :)

I mean Mark Twain said “History never repeats itself, but it does often rhyme".

To quote Mark Twain, "I know. It was a joke.

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

#506

Post by ac29 » Wed, Oct 05, 2022, 5:41 PM UTC

watersb wrote: post #431

saurik wrote: post #395

Earlier quoted context omitted.

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.

There a a lot of exemptions to the asset limit, including primary house and car, which are often the two most valuable assets many Americans own.

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

#507

Post by logifail » Wed, Oct 05, 2022, 6:07 PM UTC

yywwbbn wrote: post #404

logifail wrote: post #387

Earlier quoted context omitted.

> They likely just want a safer car Are modern pickup trucks objectively safer than modern cars, or is it more about the perception of driving something that feels it's half way to being an armoured vehicle? In Europe almost no-one drives around in a truck. Even the tradespeople (carpenters, plumbers, roofers, gardeners, heating installers, you name it) all drive light vans, not trucks.

> Are modern pickup trucks objectively safer than modern cars In a collision with a significantly lighter/smaller car? Usually

> In a collision with a significantly lighter/smaller car? Usually

Can you give a source for that?

I'm struggling to find anything up to date which isn't blatantly biased, so here's something (old!) from Berkeley Lab:

'Those who think that driving big is driving safe, or that lightweight, fuel-efficient vehicles are inherently more dangerous than their heavyweight counterparts, need to think again. A researcher with Lawrence Berkeley National Lab (Berkeley Lab) has teamed with a researcher from the University of Michigan in a unique risk analysis study which shows that, contrary to conventional wisdom, vehicle quality is a much more important safety factor than weight for the drivers of vehicles involved in a crash.

"Most cars are safer than the average sports utility vehicle [SUV], while pickup trucks are much less safe than all other types. Minivans and import luxury cars have the safest records," states the report, "An Analysis of Traffic Deaths by Vehicle Type and Model," which was prepared by Tom Wenzel, an energy analyst with Berkeley Lab's Environmental Energy Technologies Division, and Marc Ross, a professor in Michigan's Applied Physics Department.'

https://www2.lbl.gov/Science-Articles/Archive/EETD-SUV-Safet...

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

#508

Post by WalterBright » Wed, Oct 05, 2022, 6:22 PM UTC

colinmhayes wrote: post #476

WalterBright wrote: post #169

Earlier quoted context omitted.

> I know of at least one instance where your version was incorrect(2008/2009). One one hand, we have thousands of years of history with what causes inflation. On the other hand, we have one instance. I'd say one has to examine the one counterexample for something missed. (Your cite makes no mention of 2008/2009.) Extraordinary claims require extraordinary evidence. Recall my other post here about how making loans cre…

Thousands of years of pre Adam smith history where the concept of macroeconomics did not exist. Obviously a naive implementation of monetary expansion causes price inflation, that doesn’t mean a well implemented monetary expansion does though.

The Law of Supply & Demand is there whether it is recognized or not.

> that doesn’t mean a well implemented monetary expansion does though

Then none of them are well implemented, because all examples of fiat money exhibit endemic inflation. The reason is straightforward - the whole point of a fiat money system is to inflate it.

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

#509

Post by WalterBright » Wed, Oct 05, 2022, 6:24 PM UTC

lottin wrote: post #269

WalterBright wrote: post #133

Earlier quoted context omitted.

Fiat money (or anything that increases the supply of money, like gold rushes) is the common factor with all instances of inflation. There are thousands of years of examples of this. You're right on one point, the Law of Supply & Demand. It is an emergent property of many individual actions, though each might be completely ignorant of the big picture.

Another common factor in all cases of inflation was the moon orbiting the Earth, so clearly the moon is causing inflation.

Your theory doesn't explain deflation. Mine does.

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

#510

Post by JamesianP » Wed, Oct 05, 2022, 6:24 PM UTC

colinmhayes wrote: post #479

JamesianP wrote: post #317

Earlier quoted context omitted.

Seems more like a good thing you've turned upside down. As long as some R&D has an average payoff that outperforms the rate of deflation, people will be motivated to take the risk. Deflation would disproportionately hurt risky investments, whereas inflation causes worse and worse choices to become increasingly attractive. I'd say we already got way more stupid investments than we needed in the last few decades of low…

Deflation forces real interest rates up which kills investment and immediately lowers gdp. It is unequivocally an awful thing that leads to massive unemployment.

Lowering prices is a good thing for consumers and businesses who need to buy those things. There's nothing "unequivocal" about the argument here. Including the value of speculative investments (good investments will still pay better than real interest rates) or the position of economists as you surely are aware. And by the way those historic periods of massive unemployment had other causes with deflation as a side effect, not the cause. Other times in history had deflation during periods of growth.