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The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

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Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#21

Post by BriggyDwiggs42 »

rayiner wrote: post #4

The denial is amazing. Real wages are down three years into Biden’s presidency: https://jacobin.com/2023/12/real-wages-joe-biden-administrat... . and the loss in purchasing power is understated by CPI, because it has hit areas where people have little flexibility to reduce spending without reducing standard of living: food, transportation, etc. According to Redfin, the house we live in (purchased during the 2016 elec…

It was hilarious to me that they described it as easy to get a job, as I’ve recently watched several friends and my partner struggle to get minimum wage jobs. I refuse to believe that the numbers aren’t carefully chosen to save face.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#22

Post by oivey »

rayiner wrote: post #17
toomuchtodo wrote: post #16

Earlier quoted context omitted.

With regards to real estate price inflation, I agree with you. Homeowners originated mortgages at 2-3%, allowing real estate prices to run wild at those cheap money rates. It will take years for sellers to make peace with forward looking asset prices at the current benchmark rate (some real estate prices can be supported by cash buyers, but investor demand will be low with the risk free rate where it is at, and incom…

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

> I don’t understand the resistance to acknowledging that inflation is the predictable effect of money printing.

Because it only tells a fraction of the story, if any. Again: why didn’t inflation explode between 2008 and the pandemic when way, way more money was being printed into the economy by quantitative easing?

You hand waived it away as due to cheap labor/imports/whatever. Pandemic induced supply chain collapses, not money printing, had a massive amount to do with inflation going through the roof. Businesses realizing they can gouge consumers who have no real recourse did, too.

Why only point at the stimulus while ignoring other money printing activities and downplaying all the other contributors to inflation?

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#23

Post by [deleted] »

zenbob wrote: post #13
darth_avocado wrote: post #5

It is an interesting phenomenon, depending on what numbers you chose to look, things can paint a different picture. For example, labor force participation percentages would tell you all those jobs that are being added, are probably going to the same people, as they get to work more than one job to support themselves. https://fred.stlouisfed.org/series/CIVPART

Seems like an aging population explains most or all of the post-2000 downturn, no? We're currently at a 20 year high of the 25-54 age group's employment: https://fred.stlouisfed.org/series/LNS11300060

[deleted]

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#24

Post by defrost »

rayiner wrote: post #17
toomuchtodo wrote: post #16

Earlier quoted context omitted.

With regards to real estate price inflation, I agree with you. Homeowners originated mortgages at 2-3%, allowing real estate prices to run wild at those cheap money rates. It will take years for sellers to make peace with forward looking asset prices at the current benchmark rate (some real estate prices can be supported by cash buyers, but investor demand will be low with the risk free rate where it is at, and incom…

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

> It’s a textbook outcome from easily identifiable policy choices.

There's no wide agreement that either MMT or Fiat currency is that predictable.

The case for MMT and "printing money" (right or wrong) is made in popular books such as Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy

https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy...

and explored in documentaries such as Finding the Money (https://www.imdb.com/title/tt27513787/) and PIIGS (https://en.wikipedia.org/wiki/Piigs)

These may or may not convince you, but they might assist in understanding the opposing viewpoint.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#25

Post by fragmede »

rayiner wrote: post #17
toomuchtodo wrote: post #16

Earlier quoted context omitted.

With regards to real estate price inflation, I agree with you. Homeowners originated mortgages at 2-3%, allowing real estate prices to run wild at those cheap money rates. It will take years for sellers to make peace with forward looking asset prices at the current benchmark rate (some real estate prices can be supported by cash buyers, but investor demand will be low with the risk free rate where it is at, and incom…

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

because it isn't that simple. details matter and the way PPP loans were implemented is why there was such bad inflation, and it's not just the printing of money itself. we want the world to be explainable by tidy neat rules but unfortunately reality is a lot more complicated and we can't go back in time and run an experiment with a different 2022 so we're left trying to reason about things and with a system as complex as the US economy, the simple answer doesn't account for all the variables that went into the system to cause inflation. Which is to say, I believe that a different president, with a different implementation of PPP loans would not have resulted in the same inflation. The amount of fraud and graft that happened soaked the system leading to inflation that didn't have to happen.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#28

Post by gfourfour »

BriggyDwiggs42 wrote: post #21
rayiner wrote: post #4

The denial is amazing. Real wages are down three years into Biden’s presidency: https://jacobin.com/2023/12/real-wages-joe-biden-administrat... . and the loss in purchasing power is understated by CPI, because it has hit areas where people have little flexibility to reduce spending without reducing standard of living: food, transportation, etc. According to Redfin, the house we live in (purchased during the 2016 elec…

It was hilarious to me that they described it as easy to get a job, as I’ve recently watched several friends and my partner struggle to get minimum wage jobs. I refuse to believe that the numbers aren’t carefully chosen to save face.

Yeah, it’s not easy to get a job. At all. Maybe I’m insulated in a white-collar bubble, but it seems like there’s a pervasive sense of ‘quiet desperation’ across all industries.

Re: The U.S. economy's big problem? People forgot what 'normal' looks like (2023)

#30

Post by rayiner »

oivey wrote: post #22
rayiner wrote: post #17

Earlier quoted context omitted.

Lack of supply is the cause in some popular metro areas. But that’s not the whole story. Prices are exploding even in places that are experiencing virtually no population growth. Or where growth is below historic trends. The price of my house has doubled, in a country where population growth has been like 1% annually (and it’s a red county with lots of farmland where building housing is relatively cheap and easy). Th…

> I don’t understand the resistance to acknowledging that inflation is the predictable effect of money printing. Because it only tells a fraction of the story, if any. Again: why didn’t inflation explode between 2008 and the pandemic when way, way more money was being printed into the economy by quantitative easing? You hand waived it away as due to cheap labor/imports/whatever. Pandemic induced supply chain collapse…

> between 2008 and the pandemic when way, way more money was being printed into the economy by quantitative easing?

The very helpful correction in a sibling comment notes that the majority of the change ($11 trillion) was from an accounting change.

But even then, M1 money supply increased from $1.6 trillion to $4 trillion gradually from 2008 to 2020. It then increased from $4 trillion to (20-11.4 = 8.6 trillion) from February 2020 to June 2022. So that’s $2.4 trillion over 12 years due to QE, and $4.6 trillion over two years due to the pandemic response. How is that still not the obvious cause of the inflation?

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