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Have we been thinking about inflation all wrong?

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Re: Have we been thinking about inflation all wrong?

#481

Post by efdee »

TacticalCoder wrote: post #98
efdee wrote: post #15

Earlier quoted context omitted.

When you say the wealthy are immune because their wealth is in things that go up with inflation, what exactly are you thinking about? Not stocks for sure. Maybe those who have money invested in property for hire, but even then whether your income goes up with inflation strongly depends on where you are location. Interesting to know: in some countries (eg. Belgium) wages are automatically adapted to inflation, so "the…

> ... in some countries (eg. Belgium) wages are automatically adapted to inflation Only certain wages. Like public servant wages. Private companies paying normal people regular wages aren't forced to give them a raise. The minimal wage may inflate but if you're paid above minimal wage, there's no guarantee you'll see a raise.

No, not just minimal wage - that's my point. Almost all companies (that are big enough to have a union, or be part of a joint committee) are forced to give raises.

Re: Have we been thinking about inflation all wrong?

#482

Post by efdee »

imtringued wrote: post #275
efdee wrote: post #15

Earlier quoted context omitted.

When you say the wealthy are immune because their wealth is in things that go up with inflation, what exactly are you thinking about? Not stocks for sure. Maybe those who have money invested in property for hire, but even then whether your income goes up with inflation strongly depends on where you are location. Interesting to know: in some countries (eg. Belgium) wages are automatically adapted to inflation, so "the…

Inflation is actually terrible for stocks because inflation has to be earned via revenue which only applies to quality stocks. It's not the same as a bull market where everything goes up.

Indeed.

Re: Have we been thinking about inflation all wrong?

#483

Post by efdee »

usefulcat wrote: post #22
efdee wrote: post #15

Earlier quoted context omitted.

When you say the wealthy are immune because their wealth is in things that go up with inflation, what exactly are you thinking about? Not stocks for sure. Maybe those who have money invested in property for hire, but even then whether your income goes up with inflation strongly depends on where you are location. Interesting to know: in some countries (eg. Belgium) wages are automatically adapted to inflation, so "the…

Why would you not expect stocks to increase with inflation? Most of the time, stocks have far outpaced inflation for several decades now.

If they increase, it's despite of inflation - not with inflation.

Simplified example: the value of most stock companies depends on their projected gains in the next few years. A projected gain of $X in 5 years will devaluate over time as inflation increases, simply because $X in 5 years time will be worth considerably less than $X today. As inflation rises above a healthy 2-3%, it hurts the actual gains and thus the connected stock. You can counter such things by keeping interests low (as they've been doing for a while now) but that party has to end someday.

Re: Have we been thinking about inflation all wrong?

#484

Post by efdee »

GeekyBear wrote: post #340
colinmhayes wrote: post #332

Earlier quoted context omitted.

You can't compare the pre change derivative to the post change one, because they are literally measuring different things.

There wasn't 1.9 Trillion dollars in additional Federal spending at the second inflection point in the graph of the money supply? The Fed certainly expected at least some inflation from that much spending, although they seem to have missed the size of the increase. >President Joe Biden's $1.9 trillion American Rescue Plan is contributing to elevated inflation but it isn't expected to overheat the economy, a new resea…

Inflation is currently high everywhere, not just the US. Can't blame that on the current administration. It might influence it a little, but things like energy pricing (which has gone x4 in just a year or so) has a lot more to do with it.

Re: Have we been thinking about inflation all wrong?

#485

Post by Spooky23 »

merpnderp wrote: post #471
Spooky23 wrote: post #459

Earlier quoted context omitted.

The point is, instead of giving investors risk free returns, inflation is effectively a tax on the people and entities hoarding wealth with no productive purpose, and it benefits debtors. We’ve had a carnival ride of cheap debt forever, which has powered and established many really dumb businesses. IMO, we’d benefit from a few years of 5-10% inflation.

You only have to look at how the US faired in high inflation periods in the past to realize how awful this is for normal working people. I'm amazed at how many people are so flippant about something with hard data showing how destructive it is.

Look at how we are fairing with 30 years of no inflation, fueled by collusive bank consolidation, creating “too big to fail” institutions and unlimited capital.

How much of our economy is dominated by direct government spending, explicit or implicit support?

IMO, the longer this status quo continues, the worse the outcome will be.

Re: Have we been thinking about inflation all wrong?

#486

Post by randmeerkat »

quadrangle wrote: post #475
randmeerkat wrote: post #466

Earlier quoted context omitted.

> Up and down are perceptions that we evolved specifically to indirectly sense gravity. I disagree. We evolved to orient ourselves in the environment that we operate in. Does a giant squid perceive up / down based on gravity or pressure differences in the water depth..? > it's like saying that thermometers have nothing to do with temperature I also disagree with this analogy. Gravity is a force of nature, unlike a th…

I don't know how squids perceive things, but obviously water pressure is correlated with gravity in their case. There's no way to have up and down without gravity. It's meaningless. It's not that gravity can't exist without up and down. Gravity exists independently of anyone perceiving anything. But up and down do not exist without gravity. Either up and down are the perception of gravity, even though indirectly thro…

If you’re in a room with no windows in space in zero gravity with a table glued to one of the “floors” you’ll perceive anything else as being up, because up / down is a perception that exists outside of gravity. When people discuss the gravitational pull of the moon on the earth no one discusses whether or not the moon is facing up or down.

Re: Have we been thinking about inflation all wrong?

#487

Post by hparadiz »

dnautics wrote: post #400
hparadiz wrote: post #259

Earlier quoted context omitted.

Bought a house 4 months ago and suddenly all this inflation stuff is basically just telling me I can pay it off much faster than I thought.

Sadly it doesn't work that way, unless you can get pay raises that match inflation. Remember, inflation is a policy choice to screw you out of your wages because you have "sticky" preferences. So, if you are getting pay raises that match inflation, the policy isn't working.

I got a significant bump well over inflation numbers just by switching jobs. The current inflation situation and shortage of qualified engineers coupled with my experience is giving me insane leverage when negotiating.

Re: Have we been thinking about inflation all wrong?

#488

Post by hparadiz »

HarryHirsch wrote: post #265
hparadiz wrote: post #258

Earlier quoted context omitted.

I remember gas hitting $4 during the Bush administration on the east coast when I was still in high school. Meanwhile I'm currently paying 4.50 at costco for Premium gas. Given recent inflation I think that we're actually paying less for gas than we did during the Iraq war.

Under Bush II you could actually afford a roof over the head, that's why you didn't notice the energy prices quite as much. Commutes might have been shorter as well then.

Under Bush II I was still in high school. Now I own a house. Never had a problem affording rent. I work remote so my commute went down to zero. Energy prices for me are becoming less and less of an issue as I'm getting solar and battery backup put in this year.

I don't know where you live but if it's not in LA, SF, or NYC you can probably afford a mortgage no problem with even a modest tech salary.

Re: Have we been thinking about inflation all wrong?

#489

Post by oonerspism »

TameAntelope wrote: post #470
oonerspism wrote: post #417

Earlier quoted context omitted.

The numbers were symbolic to illustrate proportional effect. I'm not seeing a great deal of causation in your theory. The same amount of food is being produced, thus the same amount of work is done - so extra employees are not required. If anything, in your closed system theory, the food producer is going to laugh and pocket extra profits.

The same amount of food is not produced, more food is produced because it's the only way the food company can keep up with inflation.

Who is buying and eating the extra food? Did human stomach volume increase proportional to inflation?

https://www.nzherald.co.nz/business/the-conversation-inflati...

Show me which countries have wage growth for lower socioeconomic demographics currently matching or outpacing CPI? It is not happening.

Re: Have we been thinking about inflation all wrong?

#490

Post by diob »

rhacker wrote: post #377
diob wrote: post #230

Earlier quoted context omitted.

This seems like an alarmist take, the truth is wages haven't been going up much and yet inflation was occurring regardless. What caused inflation then? Why do folks only ever worry about inflation when it comes to increasing the bottom wages?

They haven't? All I have been hearing for the last 2 years are minimum wage going to 15, and now 18 is the next target.

If you look up the stats (hearing is just anecdotes and alarmist takes by Fox to rile their base), there hasn't been a whole lot of movement. And inflation has been going on a lot longer than the last 2 years, so still it wouldn't be correlated as much as something else pushing it behind the scenes.

for ref: https://www.statista.com/statistics/238997/minimum-wage-by-u...

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