This just in, investment firm thinks there should be more investment into the economy. More on this story and other, at 6PM pacific time.
It’s mostly a demand shock, not a supply shock, and it’s everywhere
111–120 of 478 posts
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#112Earlier quoted context omitted.
Housing is not in CPI. They use "owners' equivalent rent" which is a subjective (cooked) metric.
So what housing cost metric should be looked at? The cost for a retiree living in their paid off home? The mortgage payment for brand new homeowner with minimal down? The cost to split an apartment for 2 people? What objective measure should be used?
All of them? The government has this data already it just needs to be aggregated by someone motivated.
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#113For anyone scratching their head on what "MP3" is: monetary policy 3, i.e. "helicopter money," i.e. "the government be handin out them stimmies," i.e. the government injected COVID-19 relief funds into the economy, giving an across-the-board increase in demand for goods & services, but there aren't enough "goods & services" to keep up with this demand.
The government didn't even grant people a months worth of rent in my city. Not sure how that lead to such a huge infusion of demand that continues to persist, unless there are just that many people with very little rent who are driving this demand. Seems like such a small amount in the grand scheme of things considering most people even working a minimum wage job might see more money back on a tax return than the mea…
It isn’t just direct stimulus to private citizens.
It’s the near zero interest rate policy, the literally illegal purchasing of mortgage and corporate bonds by the fed and so much more that is flushing the entire economy with trillions of dollars.
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#114Earlier quoted context omitted.
No, it hasn’t. As money spirals deeply into inflation, crypto holdings and equities will have to be liquidated so that people have money to live off of. This will only feed into the inflation more. Investments haven’t absorbed inflation. They’ve delayed it slightly.
If 10000 people buy bitcoin at 60k per coin as an investment and later have to sell at 10k per coin to make ends meet, I somehow doubt that the guy that pocketed the difference will contribute to inflation as much as the 10000 guys trying to put up a meal for tomorrow. It feels like saying Elon Musk will make make your next stop at the grocer's more expensive, because selling his 10% of shares for $20 billion will co…
Unlike most billionaires, we have a fair idea of what he’s going to buy with it: more employee wages in companies like SpaceX
I wonder about the price of real estate in Brownsville though
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#115Earlier quoted context omitted.
Thank god we have crypto & NFTs to help people use all this free cash
It doesn’t work like that though. If I buy BTC at 60k then someone is selling BTC at the same price. The fiat is just moving from one account to the next. The people getting cash-rich from crypto are either spending it (on lambos) or putting it back into the stock market.
Depends who you are buying it from and which country they are spending in
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#116Earlier quoted context omitted.
What everyone is going to have a real hard time wrapping their head around for the next few years: We built a highly efficient economy for a set of behaviors. A shock happened that caused a lot people to change their behaviors (probably for a long time, since they've had 2 years of 'practice'). Our economy, which was built for those old behaviors (living in cities, riding public transit, eating at restaurants, travel…
Turo* is AirBnb for cars. I’ve used it a few times and it worked well. * http://www.turo.com
Yeah I imagine Turo is exploding. When I traveled this summer my options for a 5 day rental were $2,200 from all the rental car companies, or $375 from Turo.
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#117I'm honestly surprised inflation hasn't been worse than what we've already seen. 10-year treasury yields are still well below their 2019 levels and are currently below their levels from Q2 of this year.
I’m not an economist, but it’s hard to shake the feeling that the CPI is gamed somehow, or at least the official government numbers do not reflect the bubble of the US I live in. My friends and family are seeing record wages and investment growth, but when my generation cohort looks at housing and all the numbers there are proportionally even higher, and people are selling 3 year old cars for nearly the nominal price…
Housing in your area might get vastly more expensive, but housing somewhere else might not see the same price increase. The CPI is for the entire country
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#118Earlier quoted context omitted.
Fuel would be hard to game. It’s just fuel. Other components are trickier to calculate, like aggregate food prices or things involving hedonic regression. If there is gaming, you’d have to look at the tricky parts.
Well if you don’t think we’ve gamed fuel but do think we’ve gamed CPI significantly (ie several percentage points per year for decades), then we have made REMARKABLE progress in reducing fuel costs over the last 40 years, with fuel efficiency improvements on top of that.
I don’t doubt that. Oil was expensive in the seventies for geopolitical reasons. Production has since become much more predictable and secure.
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#119What this doesn’t really address is the why? Yeah there’s more money floating around, so perhaps more people want to spend it, but why? Most people aren’t getting materially more stuff or even need that much more stuff, consumption’s already god damn conspicuous. Maybe everyone can afford a jet ski all of a sudden? No, the stims didn’t really do /that/ kind of wealth expansion. To me, this still looks like the bullwh…
>No, the stims didn’t really do /that/ kind of wealth expansion.
Of course they did, but indirectly. By propping up the economy by keeping an artificial demand for treasuries, it caused a securities bubble.
I bought a bigger house, and so did plenty of my friends, and so did everyone else my real estate agent was working with, which meant I needed a new couch, bed, desk, curtains, speakers, tv, etc.
All of the move up buyers who moved some of their money from the stock market into housing likely also spent money buying more 'stuff' for the bigger space.
Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere
#120Earlier quoted context omitted.
Actually, that's a good point. Inflation would be even worse if that cash was going into physical goods and services. The government now has an incentive to leave crypto alone aside from providing clarity.
I mean what percentage of all money being spent is being spent on cryptocurrency stuff? Surely that’s gotta be approximately 0%.
Don't know if percentage of money being spent is a good metric, but Bitcoin is 92.45% the market cap of silver, and 11% the market cap of gold.