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

bridgewater.com

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

#61

Post by throwawaygh »

hammock wrote: post #55
a_bonobo wrote: post #50

Earlier quoted context omitted.

Exactly! The data makes the opposite point. https://hbr.org/2021/09/who-is-driving-the-great-resignation >Employees between 30 and 45 years old have had the greatest increase in resignation rates, with an average increase of more than 20% between 2020 and 2021. >Interestingly, resignation rates also fell for those in the 60 to 70 age group

That's not the opposite.

GP quote suggests on-time retirement (65+) while OP suggests not just not-retirement-age but actually prime-earning-age. Those seem pretty opposite to me?

Anyways, raising a kid with two earners is too damn hard. That's what's really going on.

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

#63

Post by anm89 »

P00RL3N0 wrote: post #4

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.

It is worse than what we've already seen if what we've already seen is CPI

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

#64

Post by Maximus9000 »

dustintrex wrote: post #13

The article doesn't answer the obvious question though: what next? The various pandemic subsidy packages are by and large being wound down, which implies that demand should start dropping quite soon as well.

Also, as the pandemic fades, people will probably start spending more money on services and less money on goods.

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

#65

Post by anm89 »

dustintrex wrote: post #13

The article doesn't answer the obvious question though: what next? The various pandemic subsidy packages are by and large being wound down, which implies that demand should start dropping quite soon as well.

Bridge water is very much on the record saying what they think comes next. Inflation, low rates, poor performance for bonds, poor performance for many assets.

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

#66

Post by kristjansson »

iJohnDoe wrote: post #24

Are there any pre-COVID models predicting this occurrence? Do you think China started predicting an increase in demand before anyone else or do you they were surprised too?

The argument is that the monetary policy response to the pandemic caused the demand shock, so seems unlikely that it would have been predicted ex ante.

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

#67

Post by ClumsyPilot »

surrealize wrote: post #37

Demand growth is what we want. Our economy has been largely demand-limited for a while. Demand growth boosts GDP growth. 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 inequalit…

Corporations and capital class had huge piles if cash, that douubled while real Economy stuttered during the pandemic. Noone is talking about the fact that share price and real estate is inflating. But for once there is pressure on wages, and suddenly people are running for the hills

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

#68

Post by arthur5005 »

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 bullwhip effect, which is expected to have an outsized effect on demand over at least a year or two.

Buyers, who got used to “just in time” shipping, got spooked by shipping delays and shortages from their suppliers, because of supply demand imbalances during shutdowns, and as a response they all put in orders for 2 to 3 times the amount they usually buy from their suppliers with the intent of rebuilding domestic stock so they don’t miss out on sales.

All of a sudden, aggregate demand explodes.

Shocking.

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

#69

Post by sokoloff »

surrealize wrote: post #37

Demand growth is what we want. Our economy has been largely demand-limited for a while. Demand growth boosts GDP growth. 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 inequalit…

I suspect the second half of this is where a lot of the cheap money will flow towards:

> Addressing this imbalance will mean placing upward pressure on wages to entice more workers to work longer as well as requiring investment to improve productivity.

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

#70

Post by tharkun__ »

IAmGraydon wrote: post #34
nine_zeros wrote: post #27

Earlier quoted context omitted.

This is not even a joke. Crypto has absolutely helped absorb the inflation.

No, it hasn’t. As money spirals deeply into inflation, crypto holdings and equities will have to be liquidated so that people have money to live off of. This will only feed into the inflation more. Investments haven’t absorbed inflation. They’ve delayed it slightly.

If 10000 people buy bitcoin at 60k per coin as an investment and later have to sell at 10k per coin to make ends meet, I somehow doubt that the guy that pocketed the difference will contribute to inflation as much as the 10000 guys trying to put up a meal for tomorrow.

It feels like saying Elon Musk will make make your next stop at the grocer's more expensive, because selling his 10% of shares for $20 billion will contribute to inflation because of all the stuff he's gonna buy with that money.

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