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The complaints of inflation are insane.

Discussion in 'Off-Topic' started by Hygro, Feb 16, 2022.

  1. Hygro

    Hygro soundcloud.com/hygro/

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    Where I live, we've had like 5-10% annual inflation for years. It's not an issue. However, the rest of y'all are now experiencing the same level of inflation that we had ignored, because it doesn't matter.

    The current inflation is right in that range. 7.5% or so. Let's discuss the causes:

    1) Cause 1: coronavirus interrupted the supply of goods and services, from the supply-chain to the work to finish and serve them, making them scarcer.

    That's it.

    Only half joking, because cause 2 is a subset of cause 1:

    2) In order to keep everyone fed and in homes, congress spent a few trillion into existence. Now, this was enough to end the year-to-year chronic demand shortage we faced since, I dunno, 1999? It would not have been significantly inflationary without the covid-driven supply shortage. Nor will it be when covid is over and we resume trade and and commerce fully.

    The inflation is transitory.

    But what about all those idiots who make fun of it being called transitory, by writing "tRaNsItOrY"? Pay them no heed, transitory means TIME_OF_EVENT + EVENT_UNWIND_PERIOD. So that means the years of covid plus a couple more years. That's transitory. Months-long oil crises in the 70s (there were 2) each caused about three years of inflation.


    What should we do about the inflation?
    Nothing.

    Seriously, why would we cause a recession and make people default on their loans just to artificially keep prices down for those who can keep their jobs and loans during the recession? Like, it doesn't make sense humanistically, and it doesn't make sense economically. Unless you're a class-eugenicist or otherwise social-darwinist who wants people to lose when the government decides a number shouldn't budge.


    Isn't inflation making us poorer?
    No, but the cause of inflation is, and stopping the inflation doesn't stop the cause. Either that cause will make you have less spending power represented in inflation that we all share, or that cause will risk your job, cause your business to receive fewer sales, reduce your wage/employment bargaining power, and otherwise make you poorer on the income side.



    However, just I predicted, when I predicted the inflation back in March of 2020, I predicted the political discussion would turn toward treating the inflation like an economic crisis. It is not.
     
  2. El_Machinae

    El_Machinae Colour vision since 2018 Retired Moderator

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    I've been prepping my friends, warning them that inflation was part of the price of surviving a crisis and that the alternative was worse.

    But I want you to think about that 7% number. In nine years, you've functionally lost half your money. We definitely have to do better than that, and I've learned that investing in crypto can lose half your money in just a year.
     
  3. Kaitzilla

    Kaitzilla Lord Croissant Supporter

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    Azem.Ocram and Hygro like this.
  4. Zardnaar

    Zardnaar Deity

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    Housing went up 20-30% back to back years here;)
     
  5. Birdjaguar

    Birdjaguar Hanafubuki Super Moderator Supporter

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    Are you invoking the rule of 72?
     
  6. El_Machinae

    El_Machinae Colour vision since 2018 Retired Moderator

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    Yes, but missing the 0.5% decimal in the first post. But, I was mostly building up to a punchline.
     
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  7. Hygro

    Hygro soundcloud.com/hygro/

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    The Fed can absolutely raise interest rates to stop this inflation. They shouldn’t.

    This isn’t a reckoning moment from years of buildup, this is a “sudden” change brought on by a global pandemic causing supply to drop against demand. Solve the pandemic and you solve inflation. It will subside.

    For years on this site I’ve been saying that big inflation comes from supply shortages. If you were yelling inflation during the Obama years well you whiffed on that one. We could have had 10 years of harsh austerity leading up to the pandemic, ceteris paribus, and we would have had supply driven inflation. More with a simultaneous stimulus of course, a lot more. But that same stimulus would not have caused big inflation 3+ years ago.
     
    Bestbank Tiger likes this.
  8. Birdjaguar

    Birdjaguar Hanafubuki Super Moderator Supporter

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    @El_Machinae Interesting approach on a not so solid foundation. :)
     
  9. Hygro

    Hygro soundcloud.com/hygro/

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    Great thread! I have been explaining this clearly for almost a decade I see. @Whomp makes the point that hyperinflation has always been a supply shortage and never caused by central banks.
     
    Samez likes this.
  10. Kaitzilla

    Kaitzilla Lord Croissant Supporter

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    Well, this inflation thread will be a slow burn of course.
    Bump it once per month.

    Thanks for making it!


    I guess the 1st casualty will be the people who have thousands of price stickers to constantly update. :cringe:


    Next is pandemic measures ending and restoring supply.

    How long is China planning on maintaining Zero Covid?
    Every time they shut down a whole city or port I cringe a little.
     
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  11. Birdjaguar

    Birdjaguar Hanafubuki Super Moderator Supporter

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    @Takhisis knows about hyper inflation.

    I put it in the temporary basket.
     
  12. Kaitzilla

    Kaitzilla Lord Croissant Supporter

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  13. amadeus

    amadeus Techbrophobe

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    As long as Xi is at risk of getting it and there’s the political convenience for the CCP to do so. We can weather a couple of years of higher inflation, but the next virus, I’m not so sure about.
     
  14. Hygro

    Hygro soundcloud.com/hygro/

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    Domestic industry would be nice. Enough that it could scale for crises.
     
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  15. Samson

    Samson Deity

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    I have been hesitant to point it out in other threads, but I am not experienceing inflation at all. Over the pandemic I have been doing most of my shopping online, and kept an eye on the prices. They have all stayed the same or gone down. I am sure it is some form of privilege.

    Spoiler Details of my spending habits on the off chance anyone wants the details :
    My main expenditures, other than rent which is about 80% of my outgoings:
    • Sweetheart Cabbage: 2020 price 65p, 2022 price 47p
    • Butternut Squash: 2022 price £1.5/kg, 2022 price £1.5/kg
    • Cheap beer: 2022 price £1/4 cans, 2022 price £1/4 cans
    • Sheep Hearts (not online, local butcher): 2022 price £3.75/kg, 2022 price £3.75/kg


    This is only true if you kept your money under the mattress.
     
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  16. amadeus

    amadeus Techbrophobe

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    I mean the next weaponized virus.

    Price inflation can be managed well enough through public policy means, perhaps one net positive here is the further discrediting of MMT.
     
  17. Bamspeedy

    Bamspeedy CheeseBob

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    Sure, some things haven't changed in price (yet). Some things gradually changed in price, and some things saw a drastic change (literally overnight price shot up 20% or more).

    Pay has been going up everywhere as businesses struggle to keep anybody, because workers are being wowed with higher pay and sign on bonuses at other companies. Seemed like only a year ago there was a push for '$15/minimum wage, now it seems like $30 is a common talking point (not officially from any kind of labor org, but from social media).

    With higher pay comes inflation. I'm lucky, in that I'd put a Biden "I did that" sticker on my paycheck because it went up higher than the inflation rate.

    But that doesn't help those whose paychecks didn't go up.

    Shopping online, well comparison shopping much easier to do from comfort of home than driving all over town like in the old days. I suggest some amazon users check prices on some things once in a while:

    https://www.inc.com/kelly-main/amaz...ange-perk-now-im-saving-over-1000-a-year.html
     
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  18. Lexicus

    Lexicus Deity

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    This is 'inflation' caused completely by the fact that just-in-time production/supply chains are great for profitability and terrible for, you know, actually distributing goods to meet human needs. Prove me wrong

    In what way do you imagine anything that is happening right now discredits coherent, stock-flow consistent models of the monetary economy?

    It's almost like there are these things called unions that can bargain collectively for higher wages
     
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  19. Snowygerry

    Snowygerry Emperor

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    We've legislated it - would not try this at home though, it is almost communism :D

    Belgium Salary Indexation 2020 - activpayroll
     
  20. Hygro

    Hygro soundcloud.com/hygro/

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    What discrediting?
     

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