It’s mostly a demand shock, not a supply shock, and it’s everywhere • Hacker News Board

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

#321

Post by RobertoG » Tue, Nov 09, 2021, 11:35 AM UTC

fallingknife wrote: post #291

neilwilson wrote: post #274

Earlier quoted context omitted.

Only because you haven't taken the time to understand what is being said - just the twisted version that isn't actually the case. Every financial debt has a corresponding financial asset. Why follow the 'debt' and not the 'asset'? Because you have a psychological anchor on the word 'debt' that causes an emotional reaction? All money is somebody's debt. That's how the accounting works. Rather than looking at the books…

When you go to the casino and change your cash for chips you are in credit with the casino. If that casino started handing out more chips without taking in cash, those people would be in credit with the casino too. Would you want to be in credit with that casino? You can create an accounting "asset" with the stroke of a pen but not a real one.

You get your chips in order to play in the casino. Without chips nobody can play.

What is a 'real asset', when nothing exist outside the casino? At most, you could change your chips for another casino's chips.

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

#322

Post by noneeeed » Tue, Nov 09, 2021, 11:40 AM UTC

multjoy wrote: post #312

throaway46546 wrote: post #299

Earlier quoted context omitted.

>Some lockdown policies directly affect your 'need for stuff' I think this was the root cause of the toilet paper shortage. People who normally spend a large portion of the day at the office were now spending that time at home. There was a popular viral video at the time of a man driving around on a forklift in a warehouse full of toilet paper laughing about the shortage, but it was all commercial toilet paper not wh…

The root cause is that toilet paper is bulky and the stores simply didn’t carry as much of it as (say) tinned goods. It didn’t take a big demand increase to start seeing gaps in shelves, and once that happened a degree of panic took hold and even though there was plenty in stock in warehouses, it wasn’t able to be distributed fast enough. The difficulty is that the big supermarkets have got their supply chain down to…

People really underestimate how small the slack is/was in parts of the supply chain.

I remember a couple of years ago when we had a lot of snow (for England) and it kiboshed the supply of things like milk and bread for about a week, even once all the roads were clear.

You only need a chunk of people to buy a few more toilet rolls than they usually would "just in case" and suddenly the shelves are empty.

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

#323

Post by Joeri » Tue, Nov 09, 2021, 11:41 AM UTC

locallost wrote: post #319

I did not read too deeply into the article, but there are some things that don't add up. 1) if it's only a demand shock and production of goods is sky high, why are all the goods missing? Apple missed its projections and blamed it on supply issues. Did e.g. TSMC crank the production up, but failed to deliver for Apple? Hard to imagine. So if there's enough goods it implies that e.g. Apple didn't sell as much as expec…

You can have a record supply and still not have enough supply to meet demand. Apple is selling record numbers of products, they have trouble getting the additional supply to meet the extra demand.

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

#324

Post by evrydayhustling » Tue, Nov 09, 2021, 11:49 AM UTC

locallost wrote: post #319

I did not read too deeply into the article, but there are some things that don't add up. 1) if it's only a demand shock and production of goods is sky high, why are all the goods missing? Apple missed its projections and blamed it on supply issues. Did e.g. TSMC crank the production up, but failed to deliver for Apple? Hard to imagine. So if there's enough goods it implies that e.g. Apple didn't sell as much as expec…

I also had trouble with this, especially as it got to the supply chain, where one company's demand is another's supply.

One explanation that fills some gaps for me is that the shift itself reduced efficiencies. They give an example of this at the consumer level, where spending moved from services to goods, putting a new kind of pressure in raw materials and shipping. Another I'm aware of is in energy, where disruptions and shifts in use case for energy are forcing use of less efficient types of energy production.

Reduced efficiency doesn't show up cleanly in supply and demand curves because it happens in between the transactions where you measure them. And after thinking once about it, it's impossible to unsee all the ways a sudden shift reduces operating efficiency of almost every kind of economic unit.

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

#325

Post by speeder » Tue, Nov 09, 2021, 11:59 AM UTC

summm wrote: post #304

grayfaced wrote: post #206

Earlier quoted context omitted.

That's the stated purpose. But it has no teeth. Last year we saw aisles empty of meat and lots of news about meat shortages. But during that time domestic pork supplies were down 40% in the same period that pork exports to China quadrupled. Those subsidies failed in their stated purpose of resiliency. During the bad times, all that mattered is where more profit could be found.

Meat can be easily substituted, so I'd consider that discretionary spending. Furthermore, producing meat consumes many times the plants, than if humans directly consumed those plants. So in an emergency, just stop producing meat and you'll have plenty of plant-based food left.

Can you eat grass? I know I can't...

Yes, producing meat requires animals eating a ton of plants and they also need a lot of water.

Except that can be mostly grass (that humans don't eat), and the water is just rainwater (that the animals in question will piss later, so it will end on the ground anyway).

The reason why animal-based farming exists is because it is the only way we have to get any food in certain parts of the planet where the only thing that grow naturally is grass.

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

#326

Post by simonh » Tue, Nov 09, 2021, 12:05 PM UTC

Jensson wrote: post #204

rsj_hn wrote: post #199

Earlier quoted context omitted.

> at some point USA needs to start to deliver value back to the rest of the world First they already receive something of value, which is our money. No one forces them to sell their stuff for our money. Nor does selling us $1 of goods entitle them to get anything above and beyond $1 of our money. They have already been paid with sufficient value. Now they must spend that dollar in America somewhere. So they have a ch…

> The moment they stop doing b) and start doing a), the trade deficit will be balanced. And a rate of a trillion worth of goods per year will stop flowing into USA, that is the current trade deficit, you don't think that will cause some sort of crash? Your explanation here is like saying "This isn't a bubble, people wanted to pay this much for stocks, if stocks don't deliver people will sell and prices goes down, tha…

The thing to watch for is not the balance of trade, it's the balance of trade and investment. As long as investment balances out trade, and enough of that investment is going into productive assets, it's all good.

Many countries, including the US, have run trade deficits in the past for multiple decades and it's been fine. In those cases where it's not fine it's because the economy had nothing (or not enough) foreigners wanted, e.g. Russia in the late 90s.

Yes if your economy collapses for some reason you'll have a deficit problem, but in fact past deficits don't affect that. They don't matter because the deficit was already invested in domestic assets. Since those assets change in value as your economy changes, it nets out. The foreigners already invested their money in your economy and they suffer as you suffer. However the past deficit isn't going to cause any such collapse. There would have to be some other additional factor.

That's what history tells us actually happens, anyway.

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

#327

Post by leereeves » Tue, Nov 09, 2021, 12:14 PM UTC

RC_ITR wrote: post #216

rsj_hn wrote: post #214

Earlier quoted context omitted.

I'm not the one ranting here. Biden has 1) put a moratorium on oil and gas leases in Federal lands and waters 2) cancelled one pipeline already and is about to cancel another (which means prices go up as trucks need to ship in the fuel) The above makes oil and gas more costly to extract and to ship, which raises the price. Moreover he is lobbying to remove all investment tax deductions for Oil and Gas (even though ot…

What to Submit On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity. Off-Topic: Most stories about politics, or crime, or sports, unless they're evidence of some interesting new phenomenon. Videos of pratfalls or disasters, or cute animal pictures. If t…

Biden shutting down natural gas pipelines is certainly relevant and on-topic in a discussion of the supply shock and why, as you said, "Natural gas [is] extremely expensive".

Trying to bury relevant facts because they're politically inconvenient is trampling curiosity.

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

#328

Post by cslarson » Tue, Nov 09, 2021, 12:17 PM UTC

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…

Crypto has added a lot to aggregate wealth over the past 12m.

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

#329

Post by Maarten88 » Tue, Nov 09, 2021, 12:18 PM UTC

Freskis wrote: post #262

throwaway894345 wrote: post #200

Earlier quoted context omitted.

I sympathize with this, but if climate experts are to believed, we’ve stalled to the point where we have perhaps a decade to get emissions under control in order to meet targets, and most countries haven’t even begun to make significant changes. At some point there will be pain. The question is, “do we want a little pain now or a lot of pain down the road?”. And to be clear, “wearing a coat inside during winter” may…

"we have perhaps a decade to get emissions under control" Every year we're told it's our absolute last chance. Environmental brinkmanship hasn't work and the tune needs to be changed. Literally no economies are planning for mass famine or wars because no-one actually believes that is going to happen, except religious cults.

> no-one actually believes that is going to happen

That is the problem exactly. We do not listen to scientists, because it's more convenient to ignore it. And when their models become reality, we'll just blame them for it, as they "knew" and did not prevent it.

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

#330

Post by naveen99 » Tue, Nov 09, 2021, 12:20 PM UTC

ODILON_SATER wrote: post #123

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…

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…

> supply issue cannot be remedied or solved because of heavy regulations and a stagnant productivity.

Atleast the labor supply is artificially constrained in the usa by immigration restrictions. All they have to do is loosen some (they wouldn’t need to be completely removed).