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Inflation is at a 40 year high. What can history teach us?

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Re: Inflation is at a 40 year high. What can history teach us?

#381

Post by imtringued »

rightbyte wrote: post #364
stopping wrote: post #348

Earlier quoted context omitted.

Dismissing a contrary position as "propaganda" only stifles debate, and you haven't presented an argument against "sweet spots". It's a good mental model for many situations. What makes you think there doesn't exist an optimal inflation rate? 0% inflation is generally not a safe target. In an economy you want to avoid deflation at all costs. If consumers expect future price drops, demand can dip significantly and ind…

> If consumers expect future price drops, demand can dip significantly and induce further drops in price Sounds awesome? Saves resources. People save money for a rainy day. Lending goes down.

Money is necessary to conduct transactions. If people are incapable of transacting because some people play a hoarding game like with Bitcoin then real people's real basic needs like food or housing won't be met. You will get wholly pointless homelessness.

How do we make sure that money cannot be abused to doom the rest of the economy into an inability to transact? You make people pay for the benefits they receive by holding onto money. People hate free markets, they are against paying for the costs they cause.

Re: Inflation is at a 40 year high. What can history teach us?

#382

Post by imtringued »

Aunche wrote: post #290
ryanisnan wrote: post #62

Earlier quoted context omitted.

I'm not very versed in economics, but can you explain "No inflation is bad because the economy stops."?

Zero inflation is fine, but a small hiccup would cause it to spiral into deflation. Deflation sounds good in a micro-scale because money gets more valuable. However, this is actually a terrible thing because the only way this can happen is when money gets destroyed through defaults, which is why you only see deflation during a financial crisis. When technology increases increases productivity and society has a fixed…

There is also the problem that if you pay off your debts at a faster rate than people spend off their savings your debt will shrink at the rate others are spending their money, not at the rate you are paying it off. If we expect people to be personally responsible why do we treat them as if they aren't when they do the right thing?

This is why we can't have nice things.

Re: Inflation is at a 40 year high. What can history teach us?

#383

Post by magicalhippo »

JamesianP wrote: post #367
magicalhippo wrote: post #356

Earlier quoted context omitted.

> So demand goes down elsewhere driving down other prices. Right, but given that those other things were non-essentials, it surely don't matter as much? I mean, you need food. You don't need a lap dance. So you stop spending money on lap dances, using it on food instead. Prices on lap dances go down. But you still need food, not lap dances, so the reduction in price for a lap dance doesn't make you suddenly start buy…

Strippers need to eat too though. Maybe I missing your argument. Isn't the point of lowering one's lap dance prices to get more customers to buy them?

> Isn't the point of lowering one's lap dance prices to get more customers to buy them?

Of course, that's why they lower prices. But you spent all your money on food, so you don't have any left for a lap dance.

edit: My point is that not all goods are equal. In normal times, if the price of a lap dance is too high I'll find some other entertainment with a price I find reasonable. But when food gets expensive, I still need some.

Re: Inflation is at a 40 year high. What can history teach us?

#384

Post by JamesianP »

tsimionescu wrote: post #378
JamesianP wrote: post #367

Earlier quoted context omitted.

Strippers need to eat too though. Maybe I missing your argument. Isn't the point of lowering one's lap dance prices to get more customers to buy them?

That's the hope, but it doesn't mean it will happen. There is no law that says you'll find a price point that keeps your business afloat: changing economic conditions can just tank your business; the less critical the good or service is, the more likely it is to happen.

Ok. Now the stripper can't afford to buy food and there's less demand for essentials after all. I'm still not getting how this helps?

Re: Inflation is at a 40 year high. What can history teach us?

#385

Post by gizmo »

marcosdumay wrote: post #121
ForHackernews wrote: post #24

Earlier quoted context omitted.

Ok, but why now? Why not 14 years ago, or 10 years ago, or 5 years ago? We've been in a zero-interest-rate, QE world for quite a while. Somehow I do not think it is as trivial as your 8th grade econ textbook might suggest.

Have you noticed that every investment instrument saw its price go up, and up, no stop, until it had no relation to how much return it would get you, or how much money the people that wanted it for using in a secondary market could spend, and then it kept going up the same way for 2 more decades? Yep, that's inflation too. But since the money was mostly circulating there, and the official measurements of inflation do…

Stocks/real estate are mostly owned by richer people (and 401ks). There was plenty of inflation in luxury goods. Watches, private jets, art. Prices went through the roof.

Covid boom put money into the hands of regular people, and that -- combined with a supply shock -- made all the difference.

Re: Inflation is at a 40 year high. What can history teach us?

#386

Post by Aeolun »

beerdoggie wrote: post #54

In California, people fitting certain economic criteria are now being issued $1000 checks for inflation relief. This is beyond ludicrous. We have printed so much money, the only solution is to... print more? It's almost like it is all a sneaky backdoor to letting the government redistribute wealth without real oversight...

Giving people a one-time bonus never made sense to me. They’ll feel rich, spend it all, and be back in their previous situation next month.

Re: Inflation is at a 40 year high. What can history teach us?

#387

Post by logifail »

washywashy wrote: post #251
rdtwo wrote: post #134

Earlier quoted context omitted.

Yeah but that’s not the whole picture… in 1962 the ford truck was $2000 now is around 40,000 so while a new one is better you still have to earn 2x as much to get the most basic one available

And most people rarely need a pickup truck for its specifically design utility. They likely just want a safer car which is essentially an arms race at that point. I think less pickup trucks on the road would be a good thing considering how the majority of people drive.

> They likely just want a safer car

Are modern pickup trucks objectively safer than modern cars, or is it more about the perception of driving something that feels it's half way to being an armoured vehicle?

In Europe almost no-one drives around in a truck. Even the tradespeople (carpenters, plumbers, roofers, gardeners, heating installers, you name it) all drive light vans, not trucks.

Re: Inflation is at a 40 year high. What can history teach us?

#388

Post by imtringued »

rolisz wrote: post #270
foobarian wrote: post #147

Earlier quoted context omitted.

Certainly I was wrong if you take those words literally. You got me. At the end of the day hopefully you got positive insight out of it. :-)

No, I didn't get it either. People will still need food, electricity, gas, clothing. Buildings will need maintenance. Are you saying people will decide to not eat because deflation? Or not fix their broken windows?

They will decide to not eat because the medium of exchange is scarce. Some rich people see their big bank accounts go up in value and keep it there but poor people will keep spending until they have no money. Because the medium of exchange is blocked they can't sell their labor to obtain a medium of exchange which they can then use to buy food.

Deflation is like turning off the internet and no longer being able to pay with your credit card but it also affects paper money. The problem isn't a lack of productivity or a lack of capable workers.

If the medium of exchange didn't act as a gatekeeper people would keep trading in some beautiful purely theoretical economic model via barter.

How do we keep money flowing without inflation?

Re: Inflation is at a 40 year high. What can history teach us?

#389

Post by KptMarchewa »

0xy wrote: post #371
abeppu wrote: post #330

Earlier quoted context omitted.

Elsewhere in this subthread I pointed out that California is not printing money; it's spending surplus from 2021. California cannot print money bc we use US dollars and not CA dollars. But I think a more interesting aspect of this is the cynical way language around the same idea has changed. The Franchise Tax Board is calling them a "tax refund", though your "refund" is based on your income being low, rather than you…

In this case they're using debt, because while they may have had a surplus in a single calendar year, they're still over $150bn in debt. So it isn't spending surplus, because they're massively underwater and a "profit" is meaningless.

They are just not overpaying debt, which makes no sense when the rate of outstanding debt is way below inflation.

Re: Inflation is at a 40 year high. What can history teach us?

#390

Post by KptMarchewa »

imtringued wrote: post #327
abeppu wrote: post #321

Earlier quoted context omitted.

But in the Californian case, it's not printing money. The state government doesn't have the ability to make US dollars. The state must balance its budget, and cannot rely on debt the way the federal government does. The inflation checks are only possible because of a giant, historic budget surplus from 2021. Had inflation not gotten this bad, the checks would have still gone out in some other form (earlier in 2022 we…

Complaining about printing money is like complaining about the internal combustion engine in an electric vehicle. This is especially annoying when what people are really asking for is a speed limit. But since everyone keeps talking about the wrong thing nothing will get done just like how an ICE mechanic isn't going to fix your EV.

>how an ICE mechanic isn't going to fix your EV

Unless the problem is with your wheels.

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