You have to feel for them. Estonia is already a country with a low wage to price level ratio. A lot of people there take a full time job and a part time job just to support their families
Estonia clocks fastest inflation in the Eurozone at 20.1 percent
261–270 of 349 posts
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#262I don't understand inflation. I understand that it's a measure of the price of things, but for me there should be two types of inflations 1. a dilution of money. Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too, and the overall effect is neutral 2. some prices increase due to change in supply or demand (e.g. gas or cereal), but salaries and everything el…
You're going down the ladder instead of up. We measure inflation via CPI where CPI is really just an indicator. When CPI hits 8.1% we know inflation is above expectations but that doesn't mean inflation is literally 8.1%. Only that it's within that order of magnitude. Going down the ladder to contributing statistics like money supply gives you even less of the true picture. Inflation is systemic can't really be boiled down to a number at all.
We have the same argument over "true unemployment". There absolutely isn't any possible way to come up with a number to accurately represent the massively complex employment situation. We use U3 as a key indicator.
Think about it like measuring how smart you are via your SAT score. It's a good indicator but it's not the whole story. And when there are sudden shifts it implies something is wrong.
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#263Earlier quoted context omitted.
An increase in the supply of money doesn't correlate to the distribution of that increased supply into the hands of consumers (by way of salaries). Prices go up, and the cost burden of those prices are unequally distributed. Raw materials prices are usually first to increase in price and labor costs usually lag. Labor costs are usually determined by supply and demand of available labor rather than underlying raw mate…
As far as labor competition, that only works if there are a wide variety of employers, rather than a few primary employers (Amazon, Walmart) who can effective set wages prices. Labor competition has also gone international, driving labor wages down in the US. Factors like these account for the relatively flat growth in bottom-level wages relative to CEO/shareholder wages, which have skyrocketed throughout the past 40…
> instead of giving it all to large banks and corporations, who use it for things like stock buybacks.
this is nonsense and has no basis in reality, as far as I know
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#264Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#265Earlier quoted context omitted.
If energy usage is removed, then surely there is enough oil and gas in other countries to supply Germany.
People like you look at these things as if you just shift numbers around on an excel sheet. There is still physics and geography involved here. German industry is already hardly competitive in terms of price, what do you think happens when those raw materials are 10 times more expensive? Now there is a price crunch for LNG tanker charters further pushing up prices. Also it's so disingenuous. Indians are now refining…
With oil the solution is trivial. Switch to electrical cars while generating electricity for them with modern efficient coal plants using German coal. Not only it will be cheaper and reduce geopolitical risks, but it will drop CO2 emission as well.
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#266I don't understand inflation. I understand that it's a measure of the price of things, but for me there should be two types of inflations 1. a dilution of money. Let say a central bank injects a lot of new money, then all prices will be higher, but salary will be higher too, and the overall effect is neutral 2. some prices increase due to change in supply or demand (e.g. gas or cereal), but salaries and everything el…
Mathematically if the supply of money stays fixed there cannot be general inflation. Some prices could go up but the overall level of spending must be constant (so buyers would substitute or else other prices would decrease).
Mathematically if the supply of goods and services go down, but the supply of money stays fixed, prices will go up.
I would expect that reducing the supply of oil (and to a lesser extent natural gas) would cause that sort of things, by reducing the ability to transport goods, to manufacture all kind of things, and even to grow food (besides tractors running on oil, most fertilizers are made from natural gas).
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#267Estonian here, the situation is getting quite bad indeed, particularly when it comes to petrol/energy prices, which of course has the domino effect of driving up other goods and services in the mid to long term. However, in true Estonian fashion, a lot of people (probably majority) might complain within their familily/friend circle, but will mostly just suffer through it. In fact, 10 years ago, two local comedian-act…
I've personally experienced inflation of greater magnitude -- in a developing country in the 1980's. It affected behavior in ways that in hindsight were very counter-productive to economic stability: Every adult person and every business simultaneously tried to spend less, earn more, and hoard more -- which is impossible in the aggregate, because every expense by one person or business is income for another person or…
Spending less and saving is exactly the opposite of what is typical in a high inflation society.
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#268Earlier quoted context omitted.
Exactly. If you notice, the second and third place are taken by Lithuania and Latvia respectively. A lot of 'cheapness' in all kinds of sectors came from RUS/UKR/BEL somewhere upstream. Building materials being a prime example. So, a combined effect of energy prices, sanctions on RUS, a war raging in Ukraine. But then, as Estonian prime minister said recently - sure, gas is expensive, but freedom is priceless.
> gas is expensive, but freedom is priceless. Typical politicians excuse, tbh. It's not like this has any relation to actual freedoms, only bs political slogans.
I like your comment, too bad it is no longer visible on comments to article, only when I see your comments history.
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#269Earlier quoted context omitted.
I can agree with this but basket substitution is the dirty little secret of economists. If the cost of meat goes up so much that everyone starts eating dog food, the inflation print will barely rise at all. It's not a real measure for QoL which I hope most people would accept as being what societies actually strive for. In fact most measures like GDP and a few others have no real bearing on increased living standards…
It's not much of a secret when even in high school economics class I was taught about different substitution methods (Paasche, Laspeyres[1]) with various drawbacks. It's done because factually consumers buy different and producers produce different things over the years, and it's hard to impossible to observe/measure which substitutions are by necessity and which by preference. [1] https://en.wikipedia.org/wiki/Price…
The average person in society doesn't have the knowledge of a high school economics student though. Even those that learnt eventually forget it.
There's always an implicit older == smarter bias in society but I doubt many people who passed with good grades in high school economics are good at the basic concepts into their 30's.
Not to mention the MMT experiments that have been undertaken in the west over the last few years. I'm not even sure MMT proponents understand the consequences of such things. There's been a lot of resource misallocation that no one seems able to take responsibility for.
GDP, inflation, interest rates, etc are oft considered the main KPI's for politicians by the people who vote for them. It's a dismal science even for those well versed in its ways.
Re: Estonia clocks fastest inflation in the Eurozone at 20.1 percent
#270Earlier quoted context omitted.
> However, in true Estonian fashion, a lot of people (probably majority) might complain within their familily/friend circle, but will mostly just suffer through it. I think this is a generally post-soviet thing.
Eh, this is the attitude in most of Western Europe as well
Can confirm for Germany. We complain about too much complaining as well.