U.S. Inflation Accelerates to 40-Year High • Hacker News Board

Re: U.S. Inflation Accelerates to 40-Year High

#71

Post by skdlllaaa » Thu, Feb 10, 2022, 5:12 PM UTC

jquery wrote: post #57

rwj wrote: post #25

Earlier quoted context omitted.

Yes, clearly, because Covid hasn't disrupted anything else. /s I suspect that the causes are more complicated.

Armchair financiers on HN are always full of energy. Considering what we were threatened with at the beginning of the COVID-19 pandemic (total economic meltdown), 7.5% inflation is downright relaxing.

> 7.5% inflation is downright relaxing

COVID didn't cause inflation. Helicopter money did. My liquid net worth almost doubled in the middle of a crisis and my inflation hedge (my house) is worth twice what I bought it for.

The average blue collar person doesn't have the benefits we do and can't play the game. 7.5% "inflation" (if you want to call CPI that) is panic inducing for basically anyone else.

Re: U.S. Inflation Accelerates to 40-Year High

#72

Post by staticman2 » Thu, Feb 10, 2022, 5:12 PM UTC

commandlinefan wrote: post #38

marricks wrote: post #14

Inflation is a good thing for people with a lot of debt but not a lot of money. Think of the millions of student debt borrowers. Even if student debt isn't cancelled, it may get effectively cancelled one way or another. Which just goes to show, if WSJ or Bloomberg say something is bad, it may not actually be bad for you. Let's just hope the pressure stays up so wages keep on increasing. EDIT: I'd like to add, wage gr…

It also works out _sort of_ well for homeowners - at this rate, my house payment is going to end up being a minor inconvenience instead of my largest fixed payment. Of course, I'll still have to pay property taxes and insurance on the newly inflated value of the house.

About 45% of my housing expenses is expected maintenance, taxes, and HOA dues, all of which I expect to track inflation.

Re: U.S. Inflation Accelerates to 40-Year High

#73

Post by iamricks » Thu, Feb 10, 2022, 5:12 PM UTC

teraflop wrote: post #49

As usual, take headlines about inflation with a grain of salt. Yes, the year-over-year inflation reached a new peak. But the month-over-month inflation rate has actually been declining since last October: https://www.bls.gov/news.release/cpi.nr0.htm So when organizations publish a new article every month saying inflation is "accelerating", they're being incredibly misleading.

Thanks for this source, i believe in the last fed meeting JP said he expected us to be on track for 2% this year but i don’t see how that’s possible if we are already at .6 a month in, maybe it will drastically keep going down MoM for this year and average down to 2%?

Re: U.S. Inflation Accelerates to 40-Year High

#74

Post by Railsify » Thu, Feb 10, 2022, 5:13 PM UTC

commandlinefan wrote: post #38

marricks wrote: post #14

Inflation is a good thing for people with a lot of debt but not a lot of money. Think of the millions of student debt borrowers. Even if student debt isn't cancelled, it may get effectively cancelled one way or another. Which just goes to show, if WSJ or Bloomberg say something is bad, it may not actually be bad for you. Let's just hope the pressure stays up so wages keep on increasing. EDIT: I'd like to add, wage gr…

It also works out _sort of_ well for homeowners - at this rate, my house payment is going to end up being a minor inconvenience instead of my largest fixed payment. Of course, I'll still have to pay property taxes and insurance on the newly inflated value of the house.

as long as your income rises that will be true

Re: U.S. Inflation Accelerates to 40-Year High

#75

Post by legitster » Thu, Feb 10, 2022, 5:13 PM UTC

bko wrote: post #30

marricks wrote: post #14

Inflation is a good thing for people with a lot of debt but not a lot of money. Think of the millions of student debt borrowers. Even if student debt isn't cancelled, it may get effectively cancelled one way or another. Which just goes to show, if WSJ or Bloomberg say something is bad, it may not actually be bad for you. Let's just hope the pressure stays up so wages keep on increasing. EDIT: I'd like to add, wage gr…

Believe it or not, but wealthy people have more debt relative to income than the poor. For instance, I have a mortgage that is several multiples above my annual income. Most other wealthy people also have debt because it makes sense due to low rates and good credit. The poor often have a tough time getting credit. If you're not making a lot of money it's tough to get debt at multiples of your annual income. That's wh…

OP didn't necessarily said the poor are better off than the wealthy. The broader point is that if you are in favor of debt forgiveness.. well, this is certainly one way to get it done.

Re: U.S. Inflation Accelerates to 40-Year High

#76

Post by danielmarkbruce » Thu, Feb 10, 2022, 5:14 PM UTC

recursivedoubts wrote: post #7

We are in a tough spot. The Fed has held interest rates at 0 (negative, real terms) which makes all cash flows effectively infinite net present value. When rates are this low, small perturbations can be catastrophic for the NPV of, well, pretty much everything. I expect a lot of chaos with the economy whipping between inflation and deflation over the next few years as the Fed tries to ride the tiger. It's a good reas…

This isn't right.

The fed basically controls the very short end of the curve. The 30 year rate is above 2 (it briefly touched around 1.3 or something during the start of the covid panic). No one is/was discounting cashflows 10 years into the future at 0 so "all cash flows" didn't have infinite net present value.

Re: U.S. Inflation Accelerates to 40-Year High

#77

Post by legitster » Thu, Feb 10, 2022, 5:14 PM UTC

macinjosh wrote: post #48

jquery wrote: post #39

Earlier quoted context omitted.

Take out some debt. I’m serious. That “free” money is there for you to take risks and invest with.

Hyperinflation begins when everyone decides this is wise and starts taking too many loans.

Until interest rates raise to balance out demand for debt.

Re: U.S. Inflation Accelerates to 40-Year High

#78

Post by toomuchtodo » Thu, Feb 10, 2022, 5:14 PM UTC

recursivedoubts wrote: post #59

arcticbull wrote: post #52

Earlier quoted context omitted.

> i don't think the fed's real mandate is price stability and full employment, those are nice to haves and they have to say that so they aren't run out of town on a rail but No that's literally their mandate. The Federal Reserve Act mandates that the Federal Reserve conduct monetary policy "so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." [1] https:/…

Right. I know they have to say that. But I think they are lying. many such cases

You are both right. The Fed has its public mandates (which it uses the coarse tool of interest rates to manage), but also protects US commercial banks through their refusal to issue narrow bank licenses and their refusal to issue a CBDC or FedAccounts without being shoved by the legislative and executive branches (just like they dragged their feet on FedNow until Congress lit a fire under them because Zelle, owned by the largest banks, was acting anti competitively with smaller community banks).

Lots of Fed criticism to go around for everyone’s enjoyment.

Re: U.S. Inflation Accelerates to 40-Year High

#79

Post by noisefridge » Thu, Feb 10, 2022, 5:14 PM UTC

InTheArena wrote: post #55

bko wrote: post #16

This is clearly a result of the monetary base expanding at unprecedented levels due to covid (~40% in 2 years). Around $12 trillion was allocated for covid measures and around $10 trillion disbursed. About half was legislative (income support, state local funding, loans) and another half was Fed mostly benefiting banks (asset purchases and liquidity measures). So far we've seen crazy asset inflation (weird the market…

We've been pumping money into the economy with no regard to long term inflation since the Obama administration. We've gotten so use to it, we've even started to come up with financial theroies that debt spending a increasing monetary supply doesn't matter - print what you need. Modern monetary theory ain't. Ask the Romans, the Spanish and the Germans how well that worked for them.

I'm not an expert on MMT, nor a proponent. I don't have a sufficiently informed opinion to say whether it's good or bad.

But, I think what the US government is doing isn't MMT.

MMT proponents seem to be arguing that creating money is good if and only if you ensure it is spent on the right things - like infrastructure. Then you can get net wins for the economy.

According to MMT it's bad if you, for instance, create a situation where institutions, investors, and giant companies have an unlimited supply of dollars that never lose value.

Re: U.S. Inflation Accelerates to 40-Year High

#80

Post by lordnacho » Thu, Feb 10, 2022, 5:14 PM UTC

legitster wrote: post #62

recursivedoubts wrote: post #44

Earlier quoted context omitted.

i don't think the fed's real mandate is price stability and full employment, those are nice to haves and they have to say that so they aren't run out of town on a rail but their real mandate is: "protect the banks" at this point, that may be changing to "protect their necks" rock and hard place, we'll see what happens

The dual mandate is literally described on their website: https://www.chicagofed.org/research/dual-mandate/dual-mandat...

The Queen is literally the ruler of the UK. It says so in the laws.

The GP is saying that the Fed has other objectives than the ones that are formally stated.