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83% of Americans Are Belt Tightening Due to Inflation Pressures

forbes.com

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Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#91

Post by dragonwriter »

wolverine876 wrote: post #87
dragonwriter wrote: post #69

Earlier quoted context omitted.

> The headline confuses me: If that large proportion were 'tightening their belts', economic activity would decline and there would be no inflation. 83% at the bottom could tighten their belts, and the 17% at the top who control far more wealth could loosen theirs and economic activitt would increase. > and there would be no inflation. Even if we assume the first incorrect statement were true, this would still be wro…

You talk about ways that the headline could be reconciled with inflation, but even if true, the headline certainly doesn't describe an inflationary situation. > inflation is an increase in consumer price levels That's a common and well-known symptom (because everyone can see it), but that doesn't define inflation. From Britannica: Inflation, in economics, collective increases in the supply of money, in money incomes,…

> You talk about ways that the headline could be reconciled with inflation, but even if true, the headline certainly doesn't describe an inflationary situation.

The headline describes a response to inflation, not a cause. You are criticizing it because the response it describes does not explain the cause. Which is a silly criticism; responses aren’t supposed to explain causes.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#92

Post by tediousdemise »

AnimalMuppet wrote: post #81
thrwawy12345 wrote: post #36

Earlier quoted context omitted.

> Which means we must have narrowly averted a truly horrific situation as a country. Citation needed. I don't understand the logic here.

Adding $10 Trillion should have created a great deal of inflation - much more than we see. Therefore, if it were not added, we probably would see much worse than no inflation - we would see significant deflation. That's far more ruinous than mild inflation is.

Inflation is so low right now because the Fed is artificially forcing low interest rates. Dollars in circulation has little impact on it.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#93

Post by imtringued »

newaccount2021 wrote: post #16
zardo wrote: post #11

Earlier quoted context omitted.

I don't think anyone is going to argue that "supply-chain issues" don't cause price inflation. If less stuff is available the price of stuff goes up.

If you really think this is merely a supply-chain issue, you haven't been watching the continuous stream of Fed easing that has been happening since the GFC, and arguably almost since the end of the .com burst. The Fed is buying $120 bln in debt per month, every month. Is this because lumber isn't in stock at Home Depot? The Fed now purchases 40% of the debt produced in the economy...maybe it really is because of the…

It took a pandemic to reach 4% inflation. If you are the president of the central bank and your mandate is 2% it is a fantastic show of incompetence.

> If you really think this is merely a supply-chain issue, you haven't been watching the continuous stream of Fed easing that has been happening since the GFC, and arguably almost since the end of the .com burst.

The Fed mostly did two things, set low interest rates (not low enough since the market clearing rate is negative) and give banks more reserves so that they can lend more. When the Fed creates new money it does so via debt, all that new money has to be returned one day so as soon as you raise interest rates we'll automatically get deflation as people pay their debts back.

A lot of the QE money is "hot air" because you have to borrow money to tap into it and large businesses and mortgages get much better terms than consumers and startups. The pandemic is special because the new money actually reached everyone.

One big problem that the Fed faces is that the easy money is being taken by unproductive companies and the ease of access to loans makes it easier for these unproductive companies to survive leaving less room for the productive ones that may not need as much funding. Zombie companies are fine in the short term because they employ people and you get the helicopter money effect. Once you have full employment you get rising wages and inflation, which means it is time to kill off zombies by raising interest rates. However, if it takes 10 years of low interest and inflation to get back to full employment those zombies will have time to gain market share and when it's time for them to go, they may take a big chunk of the market with them.

The benefit of helicopter money is that people spend the money on things they personally need. No need for a government to decide what to spend the money on. No need for companies to do market research on what consumers want.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#94

Post by thrwawy12345 »

AnimalMuppet wrote: post #81
thrwawy12345 wrote: post #36

Earlier quoted context omitted.

> Which means we must have narrowly averted a truly horrific situation as a country. Citation needed. I don't understand the logic here.

Adding $10 Trillion should have created a great deal of inflation - much more than we see. Therefore, if it were not added, we probably would see much worse than no inflation - we would see significant deflation. That's far more ruinous than mild inflation is.

Why is deflation worse than inflation? I like it when the things that I buy get cheaper.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#95

Post by sjg007 »

new_realist wrote: post #64
blacksqr wrote: post #50

Earlier quoted context omitted.

Yes but the article explicitly states that the vast majority of consumers don't have more cash to spend. So the cause of the inflation must be something else.

Yes, it is caused by something else: the 28% of consumers who do have more cash to spend.

That's not enough to move the needle. I think we are seeing "inflation" due to short term supply chain stop and restart.

As incomes are still fixed and there are cheaper substitutes for almost everything you want to eat people will modify and reduce.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#96

Post by halsom »

anotherman554 wrote: post #30

"6% indicated they experience price increases on everyday goods and services. Notably, they pointed to on groceries (96%), gas (93%), dining out (57%), and clothing (42%)" This is a poorly conducted survey if it's trying to show inflation is a problem. This response would be accurate even if inflation was just 2%. The concern isn't inflation but the amount of inflation.

It’s a propaganda piece. The point is to instill poor people with a fear of inflation to promote sentiment against redistribution, which is done by relating it with their everyday lives. Quality reporting is not the priority.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#97

Post by wolverine876 »

dragonwriter wrote: post #91
wolverine876 wrote: post #87

Earlier quoted context omitted.

You talk about ways that the headline could be reconciled with inflation, but even if true, the headline certainly doesn't describe an inflationary situation. > inflation is an increase in consumer price levels That's a common and well-known symptom (because everyone can see it), but that doesn't define inflation. From Britannica: Inflation, in economics, collective increases in the supply of money, in money incomes,…

> You talk about ways that the headline could be reconciled with inflation, but even if true, the headline certainly doesn't describe an inflationary situation. The headline describes a response to inflation, not a cause. You are criticizing it because the response it describes does not explain the cause. Which is a silly criticism; responses aren’t supposed to explain causes.

The response and cause are inputs in the same system. An economy of belt-tightening is not inflationary.

> silly

Enough said.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#98

Post by kbelder »

anotha1 wrote: post #6

I'll take "inflation" if it means trillion dollar spending packages are more likely to reach human citizens instead of corporations.

Inflation increases prices cumulatively, forever. Spending packages are one-shot boosts.

If you schedule recurring spending packages to compensate, you'll accelerate inflation by the same amount.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#99

Post by makomk »

lainga wrote: post #25
halsom wrote: post #7

Earlier quoted context omitted.

Most of those trillions were delivered to the ruling/corporate class who has used it to secure assets instead of create value. That is the source of this inflation. For example: https://www.msn.com/en-us/news/us/koch-e2-80-99s-foundation-...

How does buying up assets lead to price increases in "groceries (96%), gas (93%), dining out (57%), and clothing (42%)"? Are the Koch Brothers hitting up Costco every day?

Obviously it doesn't. In fact, one common long-running justification for why we should helicopter-drop money to ordinary people rather than businesses and banks is precisely that ordinary people will spend it on goods and services whereas the wealthy will not - and it seems like we're seeing the consequences of actually doing this right now.

The trouble is that there's a strong strain of left-wing populism in the US based around a view of the economy that is simple, gives someone convenient to blame (the evil wealthy corporate class sitting on all the wealth like dragons on hoards), and bears almost no resemblance to the way the world really works. Which is why you still get people pushing for wealth redistribution as a solution to this inflation, even though the very argument that was being used to call for it before means that it will make the inflation problem worse.

Re: 83% of Americans Are Belt Tightening Due to Inflation Pressures

#100

Post by lumost »

imtringued wrote: post #66
lumost wrote: post #21

Earlier quoted context omitted.

It's surprisingly plausible that wages would not rise and inflation would speed up. This can occur because companies lay off employees due to rising costs and lack of demand (while raising their own prices) or because the money is going to some alternate consumption. Food prices could increase today simply because one or more of the beneficiaries of those trillions of dollars has allocated it to land acquisition. Ret…

Take Germany as an example of stagflation. Last year we had to fell a lot of trees because bark beetles. Everyone was dumping their bad lumber. A CDU politician introduced a 85% quota so that the markets can recover but now the situation has reversed and some forest owners are not allowed to harvest their lumber despite high prices. For small businesses losing those last 15% may make it unprofitable to harvest at all…

Anecdotally, I've become skeptical of US business investment and production metrics. Companies can ramp up investment into assets or expand production of assets without producing consumer/b2b goods.

We capture increased production and investment in speculative assets as economic growth when it may not yield any new production.

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