It's called "The Cantillion Effect".
Thanks for that.
Investopedia has a good primer on it.
Financial anxiety: The alarming side effect of inflation
51–60 of 107 posts
Re: Financial anxiety: The alarming side effect of inflation
#52Earlier quoted context omitted.
In inflation-adjusted terms, the lowest income americans have done the best over the last few years, with their wages rising 9%: https://www.epi.org/publication/swa-wages-2022/ > Between 2019 and 2022, hourly wage growth was strongest at the bottom of the wage distribution. The 10th-percentile real hourly wage grew 9.0% over the three-year period. When we look across the wage distribution, we see wage growth declinin…
For context about just how well “the best” have done: > The 10th-percentile wage in 2022 was $12.57, or $26,145 annually for a full-time worker. 9.0% real wage growth is still not remotely close to livable.
For real. Who the heck can live off $26k a year. That's peanuts.
Re: Financial anxiety: The alarming side effect of inflation
#53Earlier quoted context omitted.
Perhaps more importantly and that during inflation/shrinkflation the median income has _decreased_ so not only do you get less for your money you also have less money! I will say though on inflation we should shoot the messenger. Inflation is a disease; it describes a symptom (increased prices). The word inflation does not describe at all why prices increased. Did oil get more expensive so the cost of revenue increas…
I also can't stand, when it comes to inflation, that the media talks about a low-inflation quarter as though it is "relief for consumers." What about it is relieving? Prices haven't gone down, prices aren't going down, we're supposed to feel relieved that prices are still going up, just slower ? I honestly dare the bankers on the Federal Reserve, and frankly, all of Congress, to live on a 20th percentile income. They…
In the fall of 1972, President Nixon announced that "the rate of increase of inflation was decreasing". Probably the first time a sitting president used the 3rd derivative to increase the chances of reelection.
https://twitter.com/fermatslibrary/status/117538523116095897...
Re: Financial anxiety: The alarming side effect of inflation
#54Financial anxiety: Media - the primary instigator It's one thing to feel financially tight. It's another thing to have endless news articles and publications and posts warning of how bad the global economy is and how inflation is running out of control. Not only does this constant negative message directly cause stress on the viewers, but it can cause fear in business which can lead to "precautionary" retractions...…
It's not as applicative in this case, at least for the UK.
As a software developer based in the UK, the inflation mentioned in the article is felt very deeply by myself. The article cited 7.2% as the price inflation rate, which is close to the rate of 7.6% calculated by the Office for National Statistics based on my household spending[1] and is consistent with my personal experience.
On top of that, the UK Treasury adjusted the personal tax threshold policy back in April this year, basically freezing the tax bands to no longer rise with the inflation, which caused a direct 3.3% hit on my income. This freeze is estimated to be the largest over 50 years according to BBC[2], but since we are discussing media sensationalism, so maybe that's not something that would convince you.
Anyway, maybe the situation is different elsewhere, but I do find this article more truthful than not from where I stand.
[1]: https://www.ons.gov.uk/economy/inflationandpriceindices/arti... [2]: https://www.bbc.co.uk/news/business-67031930
Re: Financial anxiety: The alarming side effect of inflation
#55They talk about inflation like it comes from a comet out of deep space. Not one mention that inflation is caused by the government and central banks expanding the money supply.
>Not one mention that inflation is caused by the government and central banks expanding the money supply. The recent inflation is more because of unfettered capitalism. Supply chain issues? Ok let's just keep on raising prices as much as we can. Things back under control? Ok, well we are still going to claim we have issues and just keep on raising prices. Workers want more money? Ok instead of us shareholders taking…
That is not a plausible explanation. Capitalists were no less greedy 10 years ago. So, something else must have changed.
Re: Financial anxiety: The alarming side effect of inflation
#56They talk about inflation like it comes from a comet out of deep space. Not one mention that inflation is caused by the government and central banks expanding the money supply.
>Not one mention that inflation is caused by the government and central banks expanding the money supply. The recent inflation is more because of unfettered capitalism. Supply chain issues? Ok let's just keep on raising prices as much as we can. Things back under control? Ok, well we are still going to claim we have issues and just keep on raising prices. Workers want more money? Ok instead of us shareholders taking…
Central Banks have allowed for the creation of tens of trillions of dollars / euro into a bases that were only in the tens of trillions.
That glut of new money took a flight to quality in banks and things like tech companies. Such firms, and all the people that contract with them or are employed by them as downstream from this money thus had a warped cost to capital compared to everyone else.
It wouldn’t make sense to operate a business and not choose the customer who can support a higher price point over the lower one with an identical cost, and with such a large delta, increasing margin as a matter of price increase made fundamentally more sense than investing in cost reductions.
The fact is that Central Banks had the largest role to play here assuming that choosing to make more money over less money by simply raising prices is not inherently evil.
Re: Financial anxiety: The alarming side effect of inflation
#57Inflation affects the poor the most mental wise.
Re: Financial anxiety: The alarming side effect of inflation
#58Financial anxiety: Media - the primary instigator It's one thing to feel financially tight. It's another thing to have endless news articles and publications and posts warning of how bad the global economy is and how inflation is running out of control. Not only does this constant negative message directly cause stress on the viewers, but it can cause fear in business which can lead to "precautionary" retractions...…
Laying off then hiring should be a positive. Presumably the laid-off were your worst talent and workers, while the new hires are at least randomly distributed and should be selected towards the upper end of the talent range.
Re: Financial anxiety: The alarming side effect of inflation
#59I used to have a lot of financial anxiety when I was younger. These days I thought I was pretty well set but the increase in prices for everything has been kind of a wake up call, especially housing! Kind of shocking when SFH's in my southern suburb went from costing ~ 400k in 2017 to ~ 800k now. What blows me away is that it appears to have no bearing to what people can actually afford? I make multiples of the local…
> What blows me away is that it appears to have no bearing to what people can actually afford? If the houses aren’t sitting on the market, people can afford them. I think what actually happened is people realized that housing was underpriced . Which is insane in terms of the raw numbers, but it’s the truth: lack of supply along with increasing numbers of buyers means that the market really is that hot. Sucks to be la…
I don't buy this at all. There are shoddy houses in my area that were sold in 2021 for $100k that are now on the market for $250k in 2023. We're in a bubble.
Re: Financial anxiety: The alarming side effect of inflation
#60Financial anxiety: Media - the primary instigator It's one thing to feel financially tight. It's another thing to have endless news articles and publications and posts warning of how bad the global economy is and how inflation is running out of control. Not only does this constant negative message directly cause stress on the viewers, but it can cause fear in business which can lead to "precautionary" retractions...…
The media sensationalism isn't the underlying problem, it just exposes it. The modern economy runs primarily on the confidence and emotions of the market participants. It is at the mercy of an irrational mix of evolved ape behavior.