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It’s mostly a demand shock, not a supply shock, and it’s everywhere

bridgewater.com

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Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#181

Post by jolux »

01100011 wrote: post #171
jolux wrote: post #137

Earlier quoted context omitted.

Nobody thinks inflation is a good thing ceteris paribus. The main questions are whether it’s better than the alternative, and whether it will be transient or not. “Any inflation at all is bad” is not a view held by any serious economist these days, especially not after the Fed has been below target for so long. I described Sahm and Krugman as dovish and I think that’s more than fair to people who disagree about what…

First off you have to define 'transient'. Fed supporters seem to define it as the level of inflation going up for a while and then reverting to a historical norm, leading to permanently higher prices. Fed critics define it as a temporary rise in prices followed by deflation back to pre-inflation prices. Fed critics like that definition because it lets them more easily paint the fed in a bad light. They claim the fed…

I take the first view of transience, and I would be a lot more concerned about the current level of inflation if we weren’t seeing significant wage growth and job growth. What made the 1970s a nightmare was inflation without wage growth. I think as of yet there’s little evidence that we risk such an eventuality, but at the end of the day I’m just a programmer reading econ papers, not a professional economist.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#182

Post by asdff »

neltnerb wrote: post #179
gruez wrote: post #125

Earlier quoted context omitted.

How do you combine them into one number, in a way that isn't "cooked"? Proposing we mash up all data ever into one figure, without detailing how, is useless

Why would they necessarily be combined? If you look at the Bureau of Labor and Statistics they will happily provide you with more detail, for instance the median salary in a field for the top 10% of employees versus the top 90%. I don't know how you'd keep that updated though, you can hardly say "the amount the richest 10% spend is the rich CPI" because it's a silly statistic. I don't know how you can reasonably say…

I don't think they have to ask anyone. IRS and other agencies could pull all this information. IRS knows how much rent my landlord makes. County knows how many units are on the parcel my landlord owns and the landlords property tax burden. Lender reports mortgage data to the government, now you know my landlords mortgage. By aggregating just this info, most of which like the county parcel data already being public, you can get the true costs towards housing paid by everyone in the country living in housing.

For income once again you can turn to IRS tax return data. I believe IRS can also sum your accounts as well as review transaction history. Creditors also report debts to IRS.

All told I believe the federal government can access all the information needed to know exactly what almost every American is paying for housing, how much they are being paid, how much they are spending, and how much debt they have.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#183

Post by qPM9l3XJrF »

JamisonM wrote: post #178
ODILON_SATER wrote: post #123

Earlier quoted context omitted.

Claudia Sahm? Krugman? I rather listen to the hedge fund guys, at least they have skin in the game, don't they? Claudia Sahm is extremely partisan, and so is Krugman. You know it's going to be bad when we are starting to hear from the media that inflation is actually a good thing --because people have more disposable income to spend on things. First, it was just a blip, then they told us it would go away in half a ye…

"I rather listen to the hedge fund guys, at least they have skin in the game, don't they?" Not really, right? They make a lot of money even after they get it wrong? "Right now, it feels like the supply issue cannot be remedied or solved because of heavy regulations and a stagnant productivity." This supply issue has existed for, what, a few months? We can literally see the containers piled up on the coasts, is there…

>Not really, right? They make a lot of money even after they get it wrong?

If they get it wrong clients may move their money elsewhere

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#184

Post by qPM9l3XJrF »

PaulDavisThe1st wrote: post #174
ODILON_SATER wrote: post #123

Earlier quoted context omitted.

Claudia Sahm? Krugman? I rather listen to the hedge fund guys, at least they have skin in the game, don't they? Claudia Sahm is extremely partisan, and so is Krugman. You know it's going to be bad when we are starting to hear from the media that inflation is actually a good thing --because people have more disposable income to spend on things. First, it was just a blip, then they told us it would go away in half a ye…

> Claudia Sahm? Krugman? I rather listen to the hedge fund guys, at least they have skin in the game, don't they? Claudia Sahm is extremely partisan, and so is Krugman. "Hedge funds guy" are extremely partisan, in that they will fight hard to prevent any kind of legislative or other systemic change that would threaten their rent-seeking. They invariably favor the status quo and/or anything that increases their abilit…

Ray Dalio, billionaire founder of Bridgewater, has recently written a book "Principles for Dealing with the Changing World Order" where he advocates systemic change, including effective government action to address inequality.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#185

Post by Jensson »

asdff wrote: post #135
Jensson wrote: post #25

Earlier quoted context omitted.

USA never stopped consuming, they just import more and more. Trade balance is even more negative now than before the great depression, there should be a correction happening real soon: https://tradingeconomics.com/united-states/balance-of-trade

We can't afford not to import goods. The cost of manufacturing in the U.S. are too high relative to other parts of the world. Can't do anything about that on our end of the deal short of tarriffing ourselves into total economic isolation and being forced to produce everything nationally.

But you can't just import goods without exporting anything forever, at some point USA needs to start to deliver value back to the rest of the world. Note that the trade balance includes services like ads etc, that is the entire thing.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#186

Post by forgotmyoldname »

jolux wrote: post #91

Just a warning that this is an article by a hedge fund expressing a view of our current inflationary period that I would argue is heterodox among the economic mainstream. I suggest reading Paul Krugman and Claudia Sahm for dovish views, or Adam Ozimek for a more critical view. In particular, the idea that “inflation expectations” can perpetuate inflation via a self-fulfilling prophecy effect has been called into ques…

I also highly suggest reading Paul Krugman, and turning all his "wills" into "won'ts" and "won'ts" into "wills." His insights are worse than political talk between a couple drunk guys at a bar.

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#187

Post by qPM9l3XJrF »

Jensson wrote: post #25
zz865 wrote: post #9

I can remember when a year ago everyone agreed they were happy with consuming less and spending time with the family. Looks like that didn't last long, everyone is out shopping again.

USA never stopped consuming, they just import more and more. Trade balance is even more negative now than before the great depression, there should be a correction happening real soon: https://tradingeconomics.com/united-states/balance-of-trade

What sort of correction?

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#188

Post by qPM9l3XJrF »

anm89 wrote: post #65
dustintrex wrote: post #13

The article doesn't answer the obvious question though: what next? The various pandemic subsidy packages are by and large being wound down, which implies that demand should start dropping quite soon as well.

Bridge water is very much on the record saying what they think comes next. Inflation, low rates, poor performance for bonds, poor performance for many assets.

Where are they investing then?

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#189

Post by Jensson »

BenoitEssiambre wrote: post #160
surrealize wrote: post #37

Demand growth is what we want. Our economy has been largely demand-limited for a while. Demand growth boosts GDP growth. Corporations are sitting on huge piles of cash, so they're not investment-limited. Any labor market tightness raises wages, which have been mostly stagnant for a long time (until very recently). Wage growth is also good. If wage growth squeezes profits, then that's also good from a wealth inequalit…

Exactly, this is what a functional economy that is not crippled by financial logjams looks like. It's possible to overdo it but that is much less damaging than under doing it like in the 2010s.

You are wrong, 2010 wasn't enough, and now it is back to worse than 2007, USA is currently consuming goods from other countries and doesn't produce enough to sustain it, and it hasn't produced enough to sustain its consumption for 50 years now. USA is just continuing to borrow from the rest of the world (printing a reserve currency is the same thing as borrowing/taking), shipment after shipment of goods gets sent to USA but little is sent back. This includes services like ads, what you are seeing now is just the effect of USA leeching of the rest of the world.

At some point the rest of the world will tire at working for USA's consumption, I wouldn't be surprised if that crash gets much worse than the great depression.

https://tradingeconomics.com/united-states/balance-of-trade

Re: It’s mostly a demand shock, not a supply shock, and it’s everywhere

#190

Post by omalleyt »

arthur5005 wrote: post #68

What 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…

If that were true, inventories ("domestic stock") should be very high. Actually, they are at historic lows
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