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Financial anxiety: The alarming side effect of inflation

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Re: Financial anxiety: The alarming side effect of inflation

#31

Post by wing-_-nuts »

toomanyrichers wrote: post #25
wing-_-nuts wrote: post #16

I used to have a lot of financial anxiety when I was younger. These days I thought I was pretty well set but the increase in prices for everything has been kind of a wake up call, especially housing! Kind of shocking when SFH's in my southern suburb went from costing ~ 400k in 2017 to ~ 800k now. What blows me away is that it appears to have no bearing to what people can actually afford? I make multiples of the local…

> What blows me away is that it appears to have no bearing to what people can actually afford? If the houses aren’t sitting on the market, people can afford them. I think what actually happened is people realized that housing was underpriced . Which is insane in terms of the raw numbers, but it’s the truth: lack of supply along with increasing numbers of buyers means that the market really is that hot. Sucks to be la…

Building a little cabin out in the woods with starlink is looking increasingly tempting honestly...

Re: Financial anxiety: The alarming side effect of inflation

#32

Post by HPsquared »

datadrivenangel wrote: post #12

I visited Argentina earlier this year, and the psychological effects of years of inflation were very real. The exchange rate has gone from 5 pesos per USD, to 350 officially in the last 10 years. The unofficial rate is up to almost 900 pesos per USD. In March the unofficial rate was half of that, so the currency has lost 50% of its value in the last 6 months. Everybody prefers to be paid in dollars, and if you're get…

Sounds like society is continuing, on a USD basis. Society ≠ government. They're usually orthogonal, and often go against each other.

Re: Financial anxiety: The alarming side effect of inflation

#33

Post by earthscienceman »

StuntPope wrote: post #14

They talk about inflation like it comes from a comet out of deep space. Not one mention that inflation is caused by the government and central banks expanding the money supply.

That is one lens with which to view the situation. But it's a simple lens when inflation is a large forceful re-structuring of the economic pyramid that is impacted by the attempts of central authorities to manage money.

Inflation is just a word that we have for changes between the costs of various goods and services and the amount of money that people are being paid for the work they do (averaged across various parameters to make communication simple). Those changes happen for many reasons, because people aren't making enough money... because people are hording money... because the govt et al increase the supply of money to counteract those phenomena... because the economic chain of supply has shifted... and for some massive combination of all those things and more. The economy is a complex machination that you're deeply oversimplifying with this two sentence comment. Although the government trying to predict such things and get involved can be deeply flawed, the alternative is the crushing burden of unemployment and crumbling structures.

As such, pointing the finger strongly at big government and saying "how dare you get involved" is myopic and heavy handed. We could also easily point the finger at the financiers and real-estate moguls who have brought us into a world where the average worker has little income and extreme "expenses" that filter into the coffers of wall street.

Re: Financial anxiety: The alarming side effect of inflation

#34

Post by 3seashells »

datadrivenangel wrote: post #12

I visited Argentina earlier this year, and the psychological effects of years of inflation were very real. The exchange rate has gone from 5 pesos per USD, to 350 officially in the last 10 years. The unofficial rate is up to almost 900 pesos per USD. In March the unofficial rate was half of that, so the currency has lost 50% of its value in the last 6 months. Everybody prefers to be paid in dollars, and if you're get…

[flagged]

Re: Financial anxiety: The alarming side effect of inflation

#35

Post by dingnuts »

gjsman-1000 wrote: post #11
lesuorac wrote: post #8

Earlier quoted context omitted.

Perhaps more importantly and that during inflation/shrinkflation the median income has _decreased_ so not only do you get less for your money you also have less money! I will say though on inflation we should shoot the messenger. Inflation is a disease; it describes a symptom (increased prices). The word inflation does not describe at all why prices increased. Did oil get more expensive so the cost of revenue increas…

I also can't stand, when it comes to inflation, that the media talks about a low-inflation quarter as though it is "relief for consumers." What about it is relieving? Prices haven't gone down, prices aren't going down, we're supposed to feel relieved that prices are still going up, just slower ? I honestly dare the bankers on the Federal Reserve, and frankly, all of Congress, to live on a 20th percentile income. They…

The measures the government needs to take to end inflation aren't politically popular.

For instance, student loan forgiveness and the pause on interest payments are almost certainly a major driver of inflation.

Would you say canceling forgiveness and resuming payments for all borrowers in order to cull inflation is a position that will win elections?

Re: Financial anxiety: The alarming side effect of inflation

#36

Post by voisin »

andrewmutz wrote: post #27
gjsman-1000 wrote: post #6

Earlier quoted context omitted.

Don't shoot the messenger. If anything, inflation and shrinkflation's effects on the average American are, in my opinion, understated; and Thomas Jefferson (if you've ever read his comments about inflation) would've been calling for hangings. Also, worth remembering, the median American income is $40,480 /yr., while median household is $74,580 /yr. Half of Americans make less than that per year. 20th percentile incom…

In inflation-adjusted terms, the lowest income americans have done the best over the last few years, with their wages rising 9%: https://www.epi.org/publication/swa-wages-2022/ > Between 2019 and 2022, hourly wage growth was strongest at the bottom of the wage distribution. The 10th-percentile real hourly wage grew 9.0% over the three-year period. When we look across the wage distribution, we see wage growth declinin…

For context about just how well “the best” have done:

> The 10th-percentile wage in 2022 was $12.57, or $26,145 annually for a full-time worker.

9.0% real wage growth is still not remotely close to livable.

Re: Financial anxiety: The alarming side effect of inflation

#37

Post by makomk »

gjsman-1000 wrote: post #6
michaelteter wrote: post #4

Financial anxiety: Media - the primary instigator It's one thing to feel financially tight. It's another thing to have endless news articles and publications and posts warning of how bad the global economy is and how inflation is running out of control. Not only does this constant negative message directly cause stress on the viewers, but it can cause fear in business which can lead to "precautionary" retractions...…

Don't shoot the messenger. If anything, inflation and shrinkflation's effects on the average American are, in my opinion, understated; and Thomas Jefferson (if you've ever read his comments about inflation) would've been calling for hangings. Also, worth remembering, the median American income is $40,480 /yr., while median household is $74,580 /yr. Half of Americans make less than that per year. 20th percentile incom…

The BBC is a British institution though, and the British media has treated the effects of inflation here very differently to how the American media did, with endless front-page coverage of every last detail and prediction and problem whereas the American media downplayed the issue and how badly people were doing in day-to-day terms and instead told readers that inflation was some partisan Republican narrative.

Re: Financial anxiety: The alarming side effect of inflation

#38

Post by voisin »

gjsman-1000 wrote: post #11
lesuorac wrote: post #8

Earlier quoted context omitted.

Perhaps more importantly and that during inflation/shrinkflation the median income has _decreased_ so not only do you get less for your money you also have less money! I will say though on inflation we should shoot the messenger. Inflation is a disease; it describes a symptom (increased prices). The word inflation does not describe at all why prices increased. Did oil get more expensive so the cost of revenue increas…

I also can't stand, when it comes to inflation, that the media talks about a low-inflation quarter as though it is "relief for consumers." What about it is relieving? Prices haven't gone down, prices aren't going down, we're supposed to feel relieved that prices are still going up, just slower ? I honestly dare the bankers on the Federal Reserve, and frankly, all of Congress, to live on a 20th percentile income. They…

20th percentile means 20% of people earn the same or lower. 80th percentile would mean 80% earn the same or lower. So you were correct in the first place.

Re: Financial anxiety: The alarming side effect of inflation

#39

Post by unethical_ban »

andrewmutz wrote: post #27
gjsman-1000 wrote: post #6

Earlier quoted context omitted.

Don't shoot the messenger. If anything, inflation and shrinkflation's effects on the average American are, in my opinion, understated; and Thomas Jefferson (if you've ever read his comments about inflation) would've been calling for hangings. Also, worth remembering, the median American income is $40,480 /yr., while median household is $74,580 /yr. Half of Americans make less than that per year. 20th percentile incom…

In inflation-adjusted terms, the lowest income americans have done the best over the last few years, with their wages rising 9%: https://www.epi.org/publication/swa-wages-2022/ > Between 2019 and 2022, hourly wage growth was strongest at the bottom of the wage distribution. The 10th-percentile real hourly wage grew 9.0% over the three-year period. When we look across the wage distribution, we see wage growth declinin…

If someone makes 25k and gets a 2.5k (10%) raise over a few years, they still aren't as well off as someone who made $200k in 2018 and got laid off and now only makes 120k.

I know you were responding to a comment about raises but seeing "done the best" in any context for the lowest earning workers feels odd.

Re: Financial anxiety: The alarming side effect of inflation

#40

Post by voisin »

earthscienceman wrote: post #33
StuntPope wrote: post #14

They talk about inflation like it comes from a comet out of deep space. Not one mention that inflation is caused by the government and central banks expanding the money supply.

That is one lens with which to view the situation. But it's a simple lens when inflation is a large forceful re-structuring of the economic pyramid that is impacted by the attempts of central authorities to manage money. Inflation is just a word that we have for changes between the costs of various goods and services and the amount of money that people are being paid for the work they do (averaged across various para…

> Although the government trying to predict such things and get involved can be deeply flawed, the alternative is the crushing burden of unemployment and crumbling structures.

This is a little overstated, no?

I agree the economy is more complicated than simply money supply, but subscribe to Hayek’s view of the pretence of knowledge - that the central bank can possibly manage the economy better than the economy can manage itself. The problem with a small elite managing the money supply is that it isn’t predictable. We see them saying rates will be low for the foreseeable future and then a few quarters later start jacking up interest rates at the fastest rate in 40 years. Well, I guess it just sucks to be anyone that listened to the “low for long” guidance. But this uncertainty has a cooling effect on economic activity. If anything we should trust money supply to a predictable, simple equation rather than the whims of men behind closed doors.

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