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

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

#11

Post by mc32 »

avgcorrection wrote: post #8
mc32 wrote: post #7

Earlier quoted context omitted.

I gotta say, I should not be surprised at people advocating for inflation. But I am. High inflation has been the boogeyman, foe and underminer of economies world-wide, left-leaning and right-leaning, so I didn't see it coming. But here we are, people advocating for the erosion of purchasing power! But, if it were a wining combination I guess we can expect Biden to embrace Inflation, Advocate for it and pronounce that…

You are not saying anything.

What is there left to say when someone advocates for something so far outside common understanding?

It defies belief.

But, if most economists are wrong and Biden is right, well, we can look forward to his administration proudly proposing higher inflation.

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

#13

Post by DoingIsLearning »

Is there a historic precedent for Quantitive Easing?

Is there a historic precedent for Quantitive Tightening?

We have been at it since 2008 that means there is little historic data to draw any preemption from, we are on unchartered waters at this point.

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

#14

Post by Alupis »

mc32 wrote: post #11
avgcorrection wrote: post #8

Earlier quoted context omitted.

You are not saying anything.

What is there left to say when someone advocates for something so far outside common understanding? It defies belief. But, if most economists are wrong and Biden is right, well, we can look forward to his administration proudly proposing higher inflation.

Perhaps I'm too cynical - but I think we're going to see that boogeyman trotted out in full swing if the election doesn't go a certain way.

What interesting times we live in... even inflation has been politically weaponized now.

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

#15

Post by WalterBright »

History teaches us that inflation will continue as long as the government keeps printing fiat money with no backing.

For a historical example, the Confederacy had high inflation. The printing press was in Richmond. When Richmond was threatened with a siege, the Confederacy hustled the printing press out to get it to a new, safer location.

Confederate inflation paused during the move.

The reason is pretty simple - the Law of Supply & Demand. The more currency there is flooding the economy, the less value that currency has.

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

#16

Post by ForHackernews »

mc32 wrote: post #7
seydor wrote: post #2

Weren't the high inflation years also some of the most progressive, with some of the lowest inequality in recent decades?

I gotta say, I should not be surprised at people advocating for inflation. But I am. High inflation has been the boogeyman, foe and underminer of economies world-wide, left-leaning and right-leaning, so I didn't see it coming. But here we are, people advocating for the erosion of purchasing power! But, if it were a wining combination I guess we can expect Biden to embrace Inflation, Advocate for it and pronounce that…

Assuming wages rise (they are), debtors benefit from inflation as their debts become less onerous in real dollar terms.

Most Americans are debtors.

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

#17

Post by compumike »

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 current level. So when the y-axis shows 9.813 on 1962-10-04, this means that sixty years ago, a one-dollar bill would buy a basket of goods that today would cost $9.813.

It certainly "feels scary" when the purchasing power is eroding quickly (i.e. a fast-declining slope on my purchasing power graph, or a peak on the article's year-over-year derivative graph).

All data from BLS: https://www.bls.gov/news.release/cpi.nr0.htm

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

#18

Post by baggy_trough »

seydor wrote: post #9
missedthecue wrote: post #3

Earlier quoted context omitted.

Who wants the poor to be poorer so long as the rich are a little less rich? How is that a good thing?

Is that meant to be ironic or not? It is a fact that [real] incomes have not risen for decades, and now , at least in europe, we are facing catastrophic consequences https://www.newyorker.com/news/john-cassidy/pikettys-inequal...

It is by no means whatsoever a fact.

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

#19

Post by ForHackernews »

nsxwolf wrote: post #12

Print lotsa money, get lotsa inflation.

Yes, but why now?

They have been printing money for a long time.

This is a question I have never seen these inflation hawks answer: If printing money triggers inflation, why is there a 14 year lag on that effect?

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

#20

Post by foobarian »

WalterBright wrote: post #15

History teaches us that inflation will continue as long as the government keeps printing fiat money with no backing. For a historical example, the Confederacy had high inflation. The printing press was in Richmond. When Richmond was threatened with a siege, the Confederacy hustled the printing press out to get it to a new, safer location. Confederate inflation paused during the move. The reason is pretty simple - the…

> 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 raising interest rates was a pretty good start, if a bit late in the game.

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