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U.S. Inflation Accelerates to 40-Year High

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Re: U.S. Inflation Accelerates to 40-Year High

#191

Post by JaimeThompson »

mFixman wrote: post #164
jesusthatsgreat wrote: post #110

Earlier quoted context omitted.

Absolutely. If cost of goods goes up 7.8%, most companies will round prices up by 10%. Increased costs is a great excuse to not only pass costs on to the consumer, but sneak in some additional "while we're at it" price rises too.

Most goods didn't go up in price in the years before the pandemic despite consistent ~2.5% inflation. Companies try to raise prices as little as possible, which means accounting for inflation in previous and following years.

Lots of things have been reduced in size / quality which is approximately the same as raising prices.

Re: U.S. Inflation Accelerates to 40-Year High

#192

Post by redisman »

jbay808 wrote: post #143
jquery wrote: post #57

Earlier quoted context omitted.

Armchair financiers on HN are always full of energy. Considering what we were threatened with at the beginning of the COVID-19 pandemic (total economic meltdown), 7.5% inflation is downright relaxing.

It would be easier to dismiss online commenters as "armchair" if the experts at the wheel, with all the data, the models, and the PhDs at their command, were making more accurate predictions than them.

The consensus seems to be that “it’s transitory” still. I’ll believe it when I see it

Re: U.S. Inflation Accelerates to 40-Year High

#193

Post by corpdronejuly »

abernard1 wrote: post #85
eldavido wrote: post #27

Earlier quoted context omitted.

> a good reason to never let rates get this low in the first place My brother-in-law remarked that "the fed is overdue to raise rates". My reply: asset prices don't matter to ordinary people. You already know this, but the Fed's mandate is "price stability and full employment". Full employment is going great -- the job market is tight, low-end labor is seeing lots of wage growth, everyone who wants a job is getting o…

> My reply: asset prices don't matter to ordinary people. They do. A large percentage of the population has 401Ks, and many public sector pension plans have equity components. Housing prices are also assets, and inflation in that sector has priced out many people from affording homes, despite low financing costs. > Full employment is going great -- the job market is tight We are nowhere close to full employment. We'r…

The job market seems to be tight because the folks hiring are unwilling to pay folks to keep up with the inflation we're seeing. It's not worth it for many people in a family to take outside work when childcare costs so much more.

Re: U.S. Inflation Accelerates to 40-Year High

#194

Post by redisman »

titzer wrote: post #102
ck2 wrote: post #88

Earlier quoted context omitted.

Rents are 18-21% higher now as leases expire. It's massive, some people more than $100 per month increase. The waves of homelessness and people living out of their cars starts in a few months. https://www.apartmentlist.com/research/metro-rent-changes-18...

Some places are ahead of the curve. Los Angeles is already not looking good in terms of homelessness.

West coast hasnt looked good in homelessness for decades

Re: U.S. Inflation Accelerates to 40-Year High

#195

Post by bitshiftfaced »

marricks wrote: post #14

Inflation is a good thing for people with a lot of debt but not a lot of money. Think of the millions of student debt borrowers. Even if student debt isn't cancelled, it may get effectively cancelled one way or another. Which just goes to show, if WSJ or Bloomberg say something is bad, it may not actually be bad for you. Let's just hope the pressure stays up so wages keep on increasing. EDIT: I'd like to add, wage gr…

> I'd like to add, wage growth is outpacing inflation[1]. So those middle class family's with mortgages, lower middle class folks still with student debt, poor folks with credit card debt. This is a GOOD THING.

Median real wages have been declining. https://fred.stlouisfed.org/series/LES1252881600Q

Re: U.S. Inflation Accelerates to 40-Year High

#196

Post by voisin »

tagoregrtst wrote: post #189
redisman wrote: post #174

Earlier quoted context omitted.

How much did they pay for that house though?

they paid more than double then what they bought it for. Interest at 11% over 30 years is larger than the principle.

Why not refinance when rates decline?

Re: U.S. Inflation Accelerates to 40-Year High

#197

Post by radford-neal »

bryanlarsen wrote: post #50

There are many competing theories for this inflation: 1. The increase in money supply. 2. Supply chain bottlenecks. 3. Corporate greed & tech monopolies. 4. Fundamental supply constraints. (mostly in the housing sector) Anybody trying to tell you that it's only or primarily one of them has a political motivation. It's all 4, with the first 2 being primary and both being important. To effectively solve inflation we ne…

"To effectively solve inflation we need to attack all 4."

Why do you think that? You've listed four conceivable reasons for inflation. One could probably list another 20 after a bit more thought. That doesn't mean that these are all plausible. It seems entirely possible that just one of them accounts for just about all of the inflation. You haven't made any argument against this.

Of the four you list, (3) and (4) seem implausible. Why would corporations suddenly have become more greedy? Have fundamental constraints on the housing sector (you mean zoning restrictions, maybe?) suddenly increased?

Re: U.S. Inflation Accelerates to 40-Year High

#198

Post by voisin »

InTheArena wrote: post #55
bko wrote: post #16

This is clearly a result of the monetary base expanding at unprecedented levels due to covid (~40% in 2 years). Around $12 trillion was allocated for covid measures and around $10 trillion disbursed. About half was legislative (income support, state local funding, loans) and another half was Fed mostly benefiting banks (asset purchases and liquidity measures). So far we've seen crazy asset inflation (weird the market…

We've been pumping money into the economy with no regard to long term inflation since the Obama administration. We've gotten so use to it, we've even started to come up with financial theroies that debt spending a increasing monetary supply doesn't matter - print what you need. Modern monetary theory ain't. Ask the Romans, the Spanish and the Germans how well that worked for them.

> We've been pumping money into the economy with no regard to long term inflation since the Obama administration.

Correct, and _even_ in this context, the printing in the last two years is shocking.

Everyone points to the slow down in the velocity of money as justification, but look at what has happened as long as the fed has been tracking money supply and velocity of money - no matter what time period, once velocity picks back up the fed _never_ decreases the money supply in response. The printer didn’t come with a shredder.

Re: U.S. Inflation Accelerates to 40-Year High

#199

Post by abernard1 »

corpdronejuly wrote: post #193
abernard1 wrote: post #85

Earlier quoted context omitted.

> My reply: asset prices don't matter to ordinary people. They do. A large percentage of the population has 401Ks, and many public sector pension plans have equity components. Housing prices are also assets, and inflation in that sector has priced out many people from affording homes, despite low financing costs. > Full employment is going great -- the job market is tight We are nowhere close to full employment. We'r…

The job market seems to be tight because the folks hiring are unwilling to pay folks to keep up with the inflation we're seeing. It's not worth it for many people in a family to take outside work when childcare costs so much more.

How do you suppose to quantify that? How do you suppose the Fed should quantify that? How do you suppose the parent poster can justifiably say we're at full employment without a hand-wavy appeal to authority?

I won't agree or disagree with your comment, I will just say that the parent poster's comments are all unsupported by data. Clearly, we had a realm only two years ago with (1) millions of people more in the labor market, (2) inflation at 1/4 of what it is now.

We also have been told for two years that inflation like this was impossible, despite editorial after editorial from non-Keynesians saying that we should expect high inflation and supply shocks. This is because supply shocks inevitably happen when capital is mispriced and aggregate demand is forced via government spending. The notoriously smooth supply chains (ha ha) of Soviet command economies was not a historical aberration generated via inflation.

So I won't be listening to the people who have been wrong for two years. Their economic model is wrong, and we can expect their predictions to look like the "Cloud of Points" section of the Phillips curve from the 1970s [1].

[1] https://www.stlouisfed.org/open-vault/2020/january/what-is-p...

Re: U.S. Inflation Accelerates to 40-Year High

#200

Post by RC_ITR »

recursivedoubts wrote: post #151
RC_ITR wrote: post #106

Earlier quoted context omitted.

Yeah, I mean, talk to any stock-picking hedge fund and ask them how much the 10Y treasury yield factors into their discount rate (I'd say not a single one would say it does at all). Classic HN 'Confidence = knowledge' comment.

i know my gp comment reads w/ a lot of confidence, but I really have no idea what's going to happen I do believe that even stocks, in the long run, will be discounted against a general opportunity cost and that really low interest rates make small movements really significant in that regard we'll see

The part you're missing is the 'Equity Risk Premium' which historically has behaved independently of the risk-free rate.

https://learn.robinhood.com/articles/5FDKWbZjnNFHfEPYRNhLtE/...

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