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It's a plausible theory, but it doesn't explain the long queues of container ships waiting to be unloaded.
Certainly shutting down the economy is a factor too.
For anyone else thrown off by the use of "MP3" to refer to anything other than the file format, here's https://medium.com/alpha-beta-blog/the-three-stages-of-monet...
It's a plausible theory, but it doesn't explain the long queues of container ships waiting to be unloaded.
Check the graphic here - https://www.bbc.com/news/58926842
Earlier quoted context omitted.
Thank god we have crypto & NFTs to help people use all this free cash
This is not even a joke. Crypto has absolutely helped absorb the inflation.
I'm honestly surprised inflation hasn't been worse than what we've already seen. 10-year treasury yields are still well below their 2019 levels and are currently below their levels from Q2 of this year.
I’m not an economist, but it’s hard to shake the feeling that the CPI is gamed somehow, or at least the official government numbers do not reflect the bubble of the US I live in. My friends and family are seeing record wages and investment growth, but when my generation cohort looks at housing and all the numbers there are proportionally even higher, and people are selling 3 year old cars for nearly the nominal price…
CPI calculations are very tricky. Deflation in telecoms, for example, has been very understated because how do you compare a data plan with a voice plan (in the UK, they had to adjust two decades of CPI numbers because of this calculation error). Imo, we place far too much reliance on CPI which is, after all, only one measure of inflation. Everyone seems to believe that prices are rising faster than CPI, and they would probably be right (I am in the UK, food prices in Canada particularly are...out of this world...particularly for meat, which seems to cost at least 3x the price here).
Also, economic growth depends on the ability to remove bottlenecks and improve productivity. Yes, there is always another bottleneck. But idea that removing one bottleneck is pointless because there will be another one seems like giving up on growth?
In particular, it seems unlikely that there is no way to build more housing.
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 inequality point of view.
Seems like all that free money and no one working has definitely caused a supply issue ... yet everyone has tons of money furthering pushing up demand yet supply to meet the demand has shrunk. For those who push for a universal basic income where large groups of people do not work ... do not help produce the supply only push up the demand. Why do you think UBI is still a good idea and you are perfectly fine with how…
It's similar to the old argument over slavery. Yes, removing slavery causes large realignments in the economic system. But overall removing slavery grows the economy, both by encouraging automation of jobs people don't want to do and by increasing the number of people buying stuff and performing more productive labor. Add in additional points about recognizing basic human dignity as needed.
Earlier quoted context omitted.
You may be right on the negative real yield. My thinking was that, ceteris paribus, if expected inflation is rising I would expect interest rates to rise as well. QE has likely been playing a large role in muting this effect.
The metric you want is the breakeven rate, the difference between nominal Treasury yields and TIPS yields (which are indeed very negative). https://fred.stlouisfed.org/series/T10YIE The Fed is artificially holding real yields negative on the short end for years at a time to enable money-losing ventures to "prosper" in order to "stimulate" the economy. It gets people working and society running but the long-term misal…
I can believe that QE had a positive portfolio effect in the early 2010s. But no-one really acknowledged the downsides (it took them most of the 2010s to work out why QE "worked").
So we have the amazing situation where you will get funding for a project, but only if you promise to lose money. Investment into real assets is extremely low, chemicals and O&G are trading on mid-single digit P/E ratios, and are furiously trying to return capital...whilst we have massive shortages...it is a very unusual situation. And, imo, the cause of this is the shortage of risk-free assets (because creating this shortage, due partly to regulatory restrictions, did not mean that investors suddenly started making investments into the real economy...most couldn't...they just had to buy more "risk-free" assets from corporates who already had too much money or PE funds that were playing the capital cycle...ofc, no central banker understands that some institutions are limited, the textbook doesn't teach that, they don't understand it).
Who was asked, and who did the asking to arrive at "most say"?