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Inflation is differential and restructuring (2021)

economicsfromthetopdown.com

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Re: Inflation is differential and restructuring (2021)

#121

Post by helen___keller »

lbriner wrote: post #89

The problem is that politicians and armchair critics prefer simple sound-bites like "government spending caused this problem" or perhaps "a lack of government spending caused this problem", I can't imagine how many frowns you would get in parliament/congress if your explanation of why inflation is so high was as long as the article, even if it was much more accurate than a sound bite. People don't like the fact that…

This is why political discussion, and partisan discussion in particular, is almost universally worthless.

Such discourse can be compared to memes, in the literal sense of the word. One sentence digs that seem to ring true get shared and thrown at political opponents. Nothing of value is created in such discourse, but the more effective memes proliferate through society and give advantage in voting season.

Re: Inflation is differential and restructuring (2021)

#122

Post by yxhuvud »

emptysongglass wrote: post #18

How should tech workers be negotiating yearly raises taking inflation into account and should they even wait a year before approaching HR? What are some counter-arguments I should prepare myself for?

You do it by comparing how much more money you would get if you would change jobs. Inflation by itself is quite uninteresting unless you are negotiating for a large group of people.

Re: Inflation is differential and restructuring (2021)

#123

Post by FuriouslyAdrift »

This article conflates monetary inflation with the EFFECTs of monetary inflation...

Inflation within the context of state level economics is the reduction in relative value of current monetary holdings.

That's it.

There's nothing magical, hidden, or complicated about it.

How it arrives, how it is dealt with, and how much is desirable for specific effects is all up for debate and the article has some great info and analysis there.

The most common reasons are monetary expansion and scarcity changes in resources. The most common methods of adjustment are monetary contraction and increases in resources.

Re: Inflation is differential and restructuring (2021)

#124

Post by [deleted] »

dividedbyzero wrote: post #58
pjc50 wrote: post #48

Earlier quoted context omitted.

> said in a lot of places that then went through extreme political turmoil Well, yes; inequality and shortages that the elite refuse to address lead to a lot of the classic Latin American revolutions, as well as the earlier Chinese revolution and Russian revolution. This is the concept referred to as "redistribution is insurance against pitchforks". > wilful ignorance on the part of the elites This really characteris…

> but the money is simply deleted What an interesting idea. Is there any historical precedent for actually deleting/destroying money?

[deleted]

Re: Inflation is differential and restructuring (2021)

#125

Post by Turing_Machine »

throw0101a wrote: post #95
frankfrankfrank wrote: post #57

Earlier quoted context omitted.

The thing that has nagged at you as it has me, is the simple fact that not only was “economics” conjured and molded by and for the interests of the upper echelon of society, to control the language and thoughts about its terms; but that at the core of it, it’s nothing more than fraud, deception, con artistry. That’s all inflation is too, fraud that if you would commit it, e.g., you added filler to some product you de…

> You are given currency coupons in exchange for your work, and then more of those coupons are just forged than correspond to actual work having been done, thereby defrauding you out of the value of your work, also commonly called theft of service. All currency is made up. Even gold, or bitcoin, or giant rocks: * https://en.wikipedia.org/wiki/Rai_stones The only thing that has "inherent" value to humans is air/oxygen…

> All currency is made up. Even gold, or bitcoin, or giant rocks

Yes, but gold, bitcoin, and giant rocks can't be inflated at will, which is what the OP was complaining about.

Simulated pieces of green paper can.

Even with the formerly-used real pieces of green paper, there's a physical limit to how fast printing presses can run.

With simulated pieces of green paper, you can just type some numbers into a computer and suddenly there are twice as many of them as there were before. Or a hundred times as many. Or a trillion times as many...

Re: Inflation is differential and restructuring (2021)

#126

Post by makomk »

TheOtherHobbes wrote: post #26
roenxi wrote: post #15

If this perspective carries the day - which is plausible - then all it will reveal is that basically nobody in the voting public should care about inflation: 1) Inflation is not a useful metric for financial planning. If your investments are keeping pace with inflation then you have completely failed to position yourself correctly relative to the massive money creation going on. The gold price trend is posting consis…

Inflation is covert politics. As everyday items - especially including housing - become less and less affordable, the political system looks more and more like a plutocracy with power concentrated within an oligarchy, and less and less like a democracy. That's the baseline reality. The rest is just misdirection and handwaving. If this seems implausible, consider that the governor of the Bank of England recently said…

The baseline reality is that there is not enough fuel being produced globally to support people's current levels of consumption, for reasons that have nothing to do with energy monopolies in the UK. Years of environmental campaigning in western countries and optimistic beliefs about a green revolution meant that new production hasn't been coming online. Then a couple of years of Covid lockdowns followed by nasty whiplash as factories tried to make up for lost production and consumed more energy than usual ate up the remaining slack, and everyone trying to switch away from Russian gas after they invaded Ukraine made things even worse. There's some reason to believe that fuel producers in totalitarian dictatorships are deliberately making this worse for profit and political gain, but there's not much that can be done about that.

This explains everything that you're chalking up to some conspiracy by plutocrats. The massive price hikes which make fuel unaffordable are because there's not enough being produced to satisfy demand at the original pricing, and fuel demand is price inelastic enough mean that large price increases are required to get fuel consumption down to a level that can actually be supplied. Profits are at record highs because the money has to go somewhere, and it's going to those who did invest in fuel production (an action we probably do want to reward, since having more production makes us all better off). The Bank of England is worried about workers pursuing pay rises on a large scale since this won't make people better off in real terms - it does nothing about the underlying supply limitation that actually affects how much people can afford to consume - and it will make inflation worse, which is something they'll have to deal with, probably with consequences that will make workers worse off in real terms judging from past experience.

Re: Inflation is differential and restructuring (2021)

#127

Post by helen___keller »

lesam wrote: post #120
helen___keller wrote: post #114

Earlier quoted context omitted.

> When inflation is just abnormally high (~8%), your debt doesn't get deflated to nothing, but you're getting a ~6% discount. That’s only true for fixed rate debt, which is common to think about for Americans due to the popularity of the 30 year fixed rate mortgage but in many countries ARMs are more popular or most popular. In theory, fixed rate debt products should be priced in to reflect interest rate risk as well…

Creditors definitely do lose money when they price debt at 2% but inflation runs at 7%. Talking about mortgages misses the larger fixed rate bond market (government and company long term debt).

Yes but what I’m saying is all fixed rate debt prices in interest rate risk. Any one creditor could be in a bad spot, but a creditor holding lots of fixed rate debt can / should be hedging against that risk.

When we’re talking about institutions with billions of dollars (and not joe lending Bobby $20), I wouldn’t call them a loser unless they specifically failed to properly hedge their positions.

Re: Inflation is differential and restructuring (2021)

#128

Post by bko »

simonh wrote: post #109
frankfrankfrank wrote: post #57

Earlier quoted context omitted.

The thing that has nagged at you as it has me, is the simple fact that not only was “economics” conjured and molded by and for the interests of the upper echelon of society, to control the language and thoughts about its terms; but that at the core of it, it’s nothing more than fraud, deception, con artistry. That’s all inflation is too, fraud that if you would commit it, e.g., you added filler to some product you de…

So you seem to be adding your voice in support for the article which, er, directly contradicts your views about money printing and current inflation. Right now we know for a fact that current inflation is a genuine global shortage of actual stuff. Crude oil, cooking oil, wheat, Chinese products. Plus American government overspending, to be fair, but that's just a US phenomenon. Of course that's inconvenient if you re…

> Plus American government overspending, to be fair, but that's just a US phenomenon.

That's not true. US spent the most, but Europe spent €3.2 trillion. US spent $12 trillion but they had to "shore up" a lot of global banks because that's just what they do. About half went into asset purchases and liquidity measures.

I take a simple approach. What would you expect to happen if you just created trillions out of thin air and distributed it? Arguing nothing would happen is the economic equivalent of a perpetual motion machine. It just doesn't pass the smell test to me because you can just create global wealth from changing some numbers in a computer with no repercussions. It's alchemy. Can I "prove" that there are negative consequences that in the long run outweigh the benefits? No. But I can say that I cannot find a single case of high inflation that did not coincide with government printing money. Printing a lot of money doesn't always cause inflation, but any time there is inflation there has been a lot of money printing.

Sure what happens may not be predictable, but its obvious that you're messing with a complex system and effects aren't instantaneous or uniform. That's why you see things like product X is going up 50% while product Y is going up 5%. And the people that point this out think they're debunking something.

With complex systems its best to keep things simple. You can get lost in the data from all the noise and overconfidence will bite you in the ass. Which is why it's not a smart idea to increase the money supply by 30+% in a year and dump it into the market.

https://www.weforum.org/agenda/2020/04/european-union-financ...

https://www.covidmoneytracker.org/

Re: Inflation is differential and restructuring (2021)

#129

Post by sylware »

Prices increase because some human beings do increase prices.

It is not "mother nature": there are moneraty/economic "rules" made/enforced by a few humans to organise(oppress?) others humans. Don't be fooled.

To deal with inflation is to deal with those humans who are increasing prices.

Re: Inflation is differential and restructuring (2021)

#130

Post by kcatskcolbdi »

dskloet wrote: post #37
bojangleslover wrote: post #13

Why can't it be both monetary and non-monetary? Say it's a vector, one element per CPI category. Throw housing in for good measure. The direction of this vector can change due to non-monetary stuff like Russia and oil. But if all of the categories, especially those without clear non-monetary drivers, rise, then it's also monetary. So maybe X = p_monetary + Q_nonmonetaty where p is a scalar and Q is a vector. I think…

They aren't things you can add up, one is a cause of the other. Monetary inflation is an increase in the money supply which happens when more money is borrowed, usually as a result of lower interest rates. Price inflation is in increase in the prices of good and services. Monetary inflation causes price inflation and other things can also cause price inflation. But it's meaningless to add up monetary inflation and pr…

I think in this scenario you would be adding together the price inflation caused by monetary inflation with the price inflation caused by other things. If all sides are measurable you could then start identifying which side is driving price inflation primarily.
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