US inflation jumps to 31-year high amid global supply chain crisis • Hacker News Board

Re: US inflation jumps to 31-year high amid global supply chain crisis

#181

Post by nostrademons » Wed, Nov 10, 2021, 5:21 PM UTC

zzleeper wrote: post #130

dtwest wrote: post #80

Earlier quoted context omitted.

They were going up a couple of years ago. https://fred.stlouisfed.org/series/FEDFUNDS

What happened in 2019?

Corporate debt. Fed raised rates and then when it came time to roll over their debt, a lot of major corporations said "Uh, if interest rates keep going up, we are going to go bankrupt because of the higher costs of debt service." The markets had a taper tantrum (the S&P 500 dropped by about 18% in the second half of 2018), and then the Fed reconsidered and started dropping rates again.

Situation is worse now, because it's highly likely that the U.S. Government would go bankrupt if they had to roll over their debt at higher rates, given that the U.S. debt-to-GDP ratio skyrocketed from 105% in 2020 to 130% now.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#182

Post by logfromblammo » Wed, Nov 10, 2021, 5:21 PM UTC

option_greek wrote: post #144

starkd wrote: post #123

Earlier quoted context omitted.

It doesn't have to reach hyperinflation to have a seriously disabling influence. People look ahead for potential impediments to being able to get the goods they need. Hopefully, it won't amount to inflation, but historically, hyperinflation always tends to come out of nowhere. It's very hard to control once it gets going.

Not even as difficult as that. As the prices rise with a regular periodicity, people stock up more goods with expectation that in future their money will buy them less. Which causes more price increases and corresponding increase in stocking. Obviously 6% won't do that but at higher levels its the complex dynamics driving inflation than good old supply demand balance. And don't think that exports will solve hyper inf…

Somebody has to stock up. Just-in-time delivery didn't, and that's why we're in this supply chain situation.

In the future, not only is it possible your money will buy you less, it is also possible that no amount of money, no matter how large, can obtain what you need.

For instance, anything with a silicon chip in it. For some goods, every known upstream retailer is out of stock, with no idea when it will be replenished, and the resellers are doing business at way above MSRP.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#183

Post by ItsMonkk » Wed, Nov 10, 2021, 5:22 PM UTC

paganel wrote: post #180

nightski wrote: post #57

Earlier quoted context omitted.

It's not the prices people are necessarily scared with, it's the rate of increase. It's higher than was anticipated. What's also concerning is that the velocity of money is really low while M2 money supply is very high. If the velocity picks up we could be in a world of hurt.

> the velocity of money is really low For those curious (like I was) about the exact numbers for that I quickly found this chart [1] from the St Louis Fed that strongly demonstrates OP's point. Only partially related to this, the sustained downward trend starting with about 2006 is really interesting, I'm wondering if there are any (relatively) recent papers written about this phenomenon. [1] https://fred.stlouisfed.…

M2 * M2V = GDP

With GDP being mostly the same trend it has been this chart is just tracking the surge in M2.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#184

Post by wbsss4412 » Wed, Nov 10, 2021, 5:23 PM UTC

lazide wrote: post #138

wbsss4412 wrote: post #119

Earlier quoted context omitted.

This isn’t even the biggest inflation shock in the last 50 years. A lot of the inflation we are seeing is due to base effects from last year. Oil prices literally went negative at one point and are only back to pre fracking boom levels.

The last shock in the 70’s caused large scale socio economic changes and power shifts, and the ‘currency’ was brand ‘new’ at the time (less than 20 years since Bretton Woods, still riding high on post WW2 prosperity, etc) The demand collapse and now demand spike we’re seeing only started occurring very recently (less than 6 months ago for the spike), and we don’t know what will happen. We’ve never had anything like i…

The situation is absolutely unprecedented and it’s going to be a real challenge for policymakers to get the balance right.

In retrospect, some level of inflation was going to be inevitable. The question is how to balance it with employment and growth going forward.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#185

Post by HappyTypist » Wed, Nov 10, 2021, 5:23 PM UTC

r00fus wrote: post #140

zzleeper wrote: post #130

Earlier quoted context omitted.

What happened in 2019?

Politics. Rates had to go down for the re-election effort.

Rates went down because the underlying economy was seeing slowing growth; particularly due to impacts of the trade war.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#186

Post by BitwiseFool » Wed, Nov 10, 2021, 5:25 PM UTC

alphabettsy wrote: post #97

BitwiseFool wrote: post #67

Earlier quoted context omitted.

Yes, they are running stories about inflation. I think the key difference is how they're going about doing it. I sense that they are intentionally covering the situation in non-inflammatory way. This is a departure from how the NYT and WaPost will cover a story when they have an ideological axe to grind. For instance, they bring on experts to talk about inflation in an clinical and analytical way. They talk about the…

> I sense that they are intentionally covering the situation in non-inflammatory way. We want more of this though right? I sense that many people can't understand the difference between opinions or editorials and news. I sense that many people actually enjoy the inflammatory way news is sometimes covered unless it's different from the way they'd like to see it. I sense that people can't understand how a single new ou…

>> I sense that they are intentionally covering the situation in non-inflammatory way.

>We want more of this though right?

Yes, in principle, but with the caveat that they don't do this in a partisan and selective way. For instance the whole "Kids in Cages" phenomenon is still happening but we never hear about it anymore - in fact they're just called "Child Migrant Facilities" by the press secretary and the media is basically silent compared to the fervor they were covering the situation previously. To me at least, the fact that they calmed down isn't a consolation because I sense they're just doing it because their preferred team is in charge now.

I think journalists are masters of rhetoric and can spin a situation in so many diverse ways while still being almost entirely accurate and truthful. It all depends on what facets of the situation they want to present and the insinuations that come along with it.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#187

Post by missinfo » Wed, Nov 10, 2021, 5:25 PM UTC

simonsarris wrote: post #13

I've mentioned before [1] but these prices still don't seem that serious. Most prices have still not beat their highs made in 2008-2014 (crude oil, global energy price, eggs, milk, sugar, rice, chicken, pork chops). Ground beef is an outlier, however. And US price per kwh is back at its peak, though it declined in these October numbers to be below... 2014 numbers again. [2] So while the climb up is bad, the prices th…

From the CEO of Square who access to real world data at scale:

Hyperinflation is going to change everything. It’s happening.

https://twitter.com/jack/status/1451733913961783299

Re: US inflation jumps to 31-year high amid global supply chain crisis

#188

Post by wbsss4412 » Wed, Nov 10, 2021, 5:25 PM UTC

wayoutthere wrote: post #165

wbsss4412 wrote: post #72

Earlier quoted context omitted.

> If we get hyperinflation This isn’t hyperinflation, nor is it on the precipice. It’s not in the same ballpark, it’s not in the same league. The only way the US experiences hyperinflation is if the petrodollar system completely collapses along with several other shocks to the system at the same time. Not impossible, but completely separate and distinct from current fed policy.

COVID, climate change, and near-term high inflation in the dollar are all system shocks that will unravel the petrodollar in pretty short order. We’re following the Argentina school of monetary policy, so it shouldn’t surprise us if we get the same hyperinflation here.

Yes, but those are generally long term structural factors, where near term fed policy isn’t the primary driver.

The petrodollar system was always going to come to an end at some point, the problem has been that we’ve governed over the last 40 years as though it was a fact of nature.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#189

Post by rackjack » Wed, Nov 10, 2021, 5:26 PM UTC

BitwiseFool wrote: post #19

argentinian wrote: post #10

Earlier quoted context omitted.

It's incredible. It's the same strategy that some politicians use in Argentina: they find any kind of thing to blame for inflation, except for monetary policy. Americans, please don't imitate Argentina, keep a healthy economy.

I know that if Red Team had won the election Blue Team would be running news stories every day about the dangers of inflation and how it is hurting the middle class. Instead, we are seeing pundits downplay inflation as either something 'transitory' or something beneficial: "Why the inflation we're seeing now is a good thing" -MSNBC tweet that got deleted. Edit: "Yes, inflation is back, and you should probably be reli…

I kind of wish we had near 0% inflation rate like Japan. I understand there are downsides to this, and one of the most concerning ones to me is the need to compete with China for economic dominance, since no other country really comes close to America in terms of economic power except maybe China.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#190

Post by WarOnPrivacy » Wed, Nov 10, 2021, 5:27 PM UTC

rsj_hn wrote: post #172

podgaj wrote: post #164

Earlier quoted context omitted.

Poor people, which is a large majority of the United States, can only afford processed food. You neoliberals in your whole foods crap make me nauseous.

Poor people are a large majority ? Like, 2/3? 3/4? Median family income is 80K in 2021. The median HH income for 2021 will come out soon, but it will be north of 70K.

> Poor people are a large majority? Like, 2/3? 3/4?

Over the last generation, indications are far over half experienced regular struggles.

2019 - nearly 70 percent of Americans have less than $1,000 stashed away https://www.statista.com/chart/20323/americans-lack-savings/

2021 - Firehosing cash directly to the public helped some: 25% had no emergency savings, 26% say they have some emergency savings https://www.cnbc.com/2021/07/28/51percent-of-americans-have-...