Are We in Danger of Hyperinflation??

[Gimmesometruth]

It depends on how you define inflation. I did take a few economics classes. Rising prices is not inflation, money supply expansion is inflation. Too much money chasing too few goods could cause large price rises but i think its not likely to happen in the near future.

You post this....right after the Krugman article.

Sigh....

 

[highroller]

You post this....right after the Krugman article.

Sigh....

Inflation is an increase in the velocity of money because nobody wants it.

 

[Slartibartfast]

According to the libertarians, we are always on the verge of hyperinflation (especially of a democrat is in the presidency), at least that seems to be the common refrain.

 

[Kushinator]

Rising prices is not inflation, money supply expansion is inflation.

If money supply increase doesn't lead to inflation... who the **** cares?

Too much money chasing too few goods could cause large price rises but i think its not likely to happen in the near future.

Again... who cares about monetary inflation of it doesn't equate to price increases?

 

[Kushinator]

Inflation is an increase in the velocity of money because nobody wants it.

Inflation is the result of output (GDP) growing faster than productivity (GDP/hrs worked).

 

[jpn]

It depends on how you define inflation. I did take a few economics classes. Rising prices is not inflation, money supply expansion is inflation.

Directly above your post is an easily understood article written by a Nobel-prize winning economist who renders your post nonsensical.

Oh, and there's this:

What Is Inflation?​

Inflation is the decline of purchasing power of a given currency over time. A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.​

And this.

a. A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money.​

And this:

How Does Money Supply Affect Inflation?​

Inflation can happen if the money supply grows faster than the economic output under otherwise normal economic circumstances. Inflation, or the rate at which the average price of goods or serves increases over time, can also be affected by factors beyond the money supply.​

 

[jpn]

According to the libertarians, we are always on the verge of hyperinflation (especially of a democrat is in the presidency), at least that seems to be the common refrain.

You'd think that after a while they'd understand that singing the same tune over and over, no matter how discordant with reality it is, just undermines their credibility.

I've learned that the only times Libertarians are right are those infrequent occasions where reality happens, by chance, to mesh with their ideology.

 

[Objective Voice]

Came across a disturbing article from last May:

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go

The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

www.usatoday.com

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go
The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

What is Hyperinflation?
In economics, hyperinflation is used to describe situations where the prices of goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation.
Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American economics professor Phillip Cagan first studied the economic concept in his book, “The Monetary Dynamics of Hyperinflation.”

Causes of Hyperinflation
Hyperinflation commonly occurs when there is a significant rise in money supply that is not supported by economic growth. Simply put, it is caused by dramatically increasing the amount of money in an economy.

The increase in money supply is often caused by the government printing and infusing more money into the domestic economy. rise.https://corporatefinanceinstitute.com/resources/knowledge/economics/hyperinflation/

I don't know why it never occurred to me that the US was printing money at a record rate to stem the impact of Covid. This is a situation that may haunt us. I'm curious if anybody has any thoughts, as I'm not savvy on the subject. Thanks!!

Keynesian economics -vs- Melton Friedman economics.

I know Republicans don't like the former but when the normal day-to-day consumerism and investments by the free market can't spur the economy, it's left to government to inject an infusion of capital into the marketplace. Money being "circular" will get spent and flow back into the banking system where it will be determined how good or bad the flow of the money supply is on our economy.

As long as the bean counters at the Federal Reserve are doing their job, inflation, deflation, stagflation or hyperinflation can all be dealt with in a timely and sufficient manner.

 

[Objective Voice]

Right wingers only claim inflation happens when the Poor have too much money to spend not the Richest.

I was going to say something along the same lines. It's like 2 things always happens when a new Democrat President is in office:

1. Some world event happens that he has to get involved with, i.e., recent airstrikes in Iraq/Syria.

2. Republicans start crying about inflation, the debt and deficits.

Republicans never complain about those things until a Democrat is in office. Then suddenly it's priority #1.

 

[Logophile]

I was going to say something along the same lines. It's like 2 things always happens when a new Democrat President is in office:

1. Some world event happens that he has to get involved with, i.e., recent airstrikes in Iraq/Syria.

2. Republicans start crying about inflation, the debt and deficits.

Republicans never complain about those things until a Democrat is in office. Then suddenly it's priority #1.

You almost had me until you started the partisan diatribe. Apparently the "Objective Voice" isn't quite so objective. No surprise there. Look. this isn't about "party," it's about how much we are willing to convince ourselves that math doesn't matter, just our insistence that our perceived reality can continually defy fundamental economic laws. Two plus two is going to equal four, no matter what we say, what our former president said or what the current president says. And continued borrowing to buy stuff with money that isn't ours so that we become so satiated that we don't want for anything more will put the US and globe in a difficult economic situation. Not to mention, on the way there, we're paying more and more for it. Thanks!!

 

[Visbek]

You almost had me until you started the partisan diatribe. Apparently the "Objective Voice" isn't quite so objective. No surprise there. Look. this isn't about "party...."

Yeah, it is. Even if it isn't partisan for you, it's all about partisanship for millions of Americans.

it's about how much we are willing to convince ourselves that math doesn't matter, just our insistence that our perceived reality can continually defy fundamental economic laws.

Our "fundamental economic laws" make it very, very clear that this isn't actual inflation. It's just a temporary increase in selected prices as a result of massive supply and demand shocks, hitting companies all around the world that emphasized efficiency and profits over preparation and robustness for handling exogenous shocks.

It's also nowhere near as bad as the howls and screeches of the uninformed proclaim.

And if any real inflation happens, the Fed has made it clear it will take action -- and it has several big and effective tools at its disposal, most obviously raising interest rates.

And continued borrowing to buy stuff with money that isn't ours so that we become so satiated that we don't want for anything more will put the US and globe in a difficult economic situation.

sigh... No, it won't. Borrowing does not cause inflation. How long are you going to cling to that nonsense? Yeesh.

In fact, Americans are saving money and paying down debt during the pandemic. Funny how you missed that bit. How did that happen?

I have to ask, what are you going to say when prices start to fall later this year? Will you be in a total panic about the disastrous deflation? Gotta say, somehow I doubt it.

 

[jdog]

Came across a disturbing article from last May:

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go

The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

www.usatoday.com

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go
The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

What is Hyperinflation?
In economics, hyperinflation is used to describe situations where the prices of goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation.
Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American economics professor Phillip Cagan first studied the economic concept in his book, “The Monetary Dynamics of Hyperinflation.”

Causes of Hyperinflation
Hyperinflation commonly occurs when there is a significant rise in money supply that is not supported by economic growth. Simply put, it is caused by dramatically increasing the amount of money in an economy.

The increase in money supply is often caused by the government printing and infusing more money into the domestic economy. rise.https://corporatefinanceinstitute.com/resources/knowledge/economics/hyperinflation/

I don't know why it never occurred to me that the US was printing money at a record rate to stem the impact of Covid. This is a situation that may haunt us. I'm curious if anybody has any thoughts, as I'm not savvy on the subject. Thanks!!

Hyperinflation and regular inflation are not the same, and are caused by different circumstances. Hyperinflation is not caused by monetary policy or printing, it is caused by supply disruptions that cause very serious shortages. In every instance of hyperinflation, the supply of goods has been altered in some way to create supply side shortages.
Regular inflation is caused by credit and debt purchasing by both government and the public. We all have the ability to cause inflation by just using our credit cards. At the point you use credit the money for that purchase is created right there at the point of purchase. In addition, unless we pay that card off every month, we cause more inflation because of the interest paid on that purchase.

 

[Visbek]

Hyperinflation and regular inflation are not the same, and are caused by different circumstances. Hyperinflation is not caused by monetary policy or printing, it is caused by supply disruptions that cause very serious shortages. In every instance of hyperinflation, the supply of goods has been altered in some way to create supply side shortages.
Regular inflation is caused by credit and debt purchasing by both government and the public. We all have the ability to cause inflation by just using our credit cards. At the point you use credit the money for that purchase is created right there at the point of purchase. In addition, unless we pay that card off every month, we cause more inflation because of the interest paid on that purchase.

Well, someone is deeply misinformed.

Hyperinflation is usually caused by monetary policy, usually the government churning out massive amounts of currency and immediately injecting in into circulation. E.g. Zimbabwe had years of utterly insane hyperinflation because Mugabi's government printed up money in order to pay for government expenses, primarily military spending.

Hyperinflation is across the board -- all prices go totally nuts. Shortages of specific goods don't do that, instead you just get price increases in related goods. Even a shortage of oil wouldn't create years of hyperinflation, you need sustained government mismanagement of currency to cause that.

No, regular inflation isn't caused by debt. If that was the case, then we should have seen massive inflation for the past several decades. Instead, it has hovered around 2%.

The idea that interest payments cause inflation is 100% wacky. It makes absolutely no sense whatsoever.

Where are you coming up with this garbage? ZeroHedge?

 

[RealityNow]

Came across a disturbing article from last May:

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go

The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

www.usatoday.com

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go
The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

What is Hyperinflation?
In economics, hyperinflation is used to describe situations where the prices of goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation.
Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American economics professor Phillip Cagan first studied the economic concept in his book, “The Monetary Dynamics of Hyperinflation.”

Causes of Hyperinflation
Hyperinflation commonly occurs when there is a significant rise in money supply that is not supported by economic growth. Simply put, it is caused by dramatically increasing the amount of money in an economy.

The increase in money supply is often caused by the government printing and infusing more money into the domestic economy. rise.https://corporatefinanceinstitute.com/resources/knowledge/economics/hyperinflation/

I don't know why it never occurred to me that the US was printing money at a record rate to stem the impact of Covid. This is a situation that may haunt us. I'm curious if anybody has any thoughts, as I'm not savvy on the subject. Thanks!!

Some inflation is due to people BEING GREEDY... because of the money put into the system for COVID Relief. One can never count out American Business People from turning anything into a opportunity to gouge the people and screw up systems and society to feed their greed.

That's the result of a nation where people measure their life based on "how much money they can hoard".

There is absolutely no justifications for the price increase that we are seeing across the entire commercial marketplace.

I ignore advertisements, and if I want or need something, I let the situation of the days process bring that to my attention. Not, being led by commercials on TV, Internet and every place that is saturated with marketing and sales advertisements.
I don't care about Amazon Prime Day, Holiday this or Holiday that... because its all based on creating a "sales event", and then claiming they can sell something cheaper than the over-inflated price that is marked on it. I certainly do rush out to buy the newest and latest model of anything. And many who do chase that, find out, it has glitches, recalls, or is not as advertised and they have to wait for an update or upgrade to become available to fix various issues and problems.

Basic necessities, yes, we need those things... so, we can't avoid getting ripped on some things, because the system of greed won't get changed until the generation of kids that are in grade school become leaders, because they are growing up with a whole different set of self measure values, that is not about "hording money" and "fleecing society".

I say, manage what we buy, take care of what we get, and don't buy too many high dollar items that can do nothing but rapidly depreciate in value.

Other than that... the simple premise of money is, it's a tool... "it's not much good if it does not circulate".

 

[Visbek]

Some inflation is due to people BEING GREEDY... because of the money put into the system for COVID Relief.

Yet more nonsense. Stimulus payments, funded by borrowing, doesn't cause inflation.

The only way stimulus payments could possibly cause inflation of any sort is if the government literally printed up the money to pay for them... and even that would take years before causing inflation.

There is absolutely no justifications for the price increase that we are seeing across the entire commercial marketplace.

Hello? Yes, there is. It's called a global pandemic.

Businesses all around the world were forced to slow down, or chose to slow down in expectation of reduced economic activity. Since they spent decades getting as lean as possible, they weren't robust enough to handle a global extraneous shock like this. As a result, they aren't producing enough, so some prices are rising as a result.

For example, there's a shortage of computer chips, which are used in (among other things) autos. Since manufacturers can't make enough new autos, the demand for used cars is going through the roof, which drives up prices.

Companies are so obsessed with efficiency that even a single ship getting stuck in the Suez Canal for a week causes months of supply disruptions. Ikea and Lenovo, for example, had hundreds of millions worth of inventory on the Ever Given, which is still being held (along with the entire shipment) in Egypt as part of the legal wrangling over the incident.

Or perhaps you believe that everything you buy is magically made by Oompa Loompas, that never get sick, don't need any raw materials, and are delivered to retail stores by unicorns...?

I ignore advertisements, and if I want or need something, I let the situation of the days process bring that to my attention....

Cool story bro

Back in the real world, most people are actually paying down debt and socking money away during the pandemic. What a concept.

Ironically, everyone saving too much, and not spending enough, causes big problems for an economy. High savings rates are a contributor to Japan's deflation issues.

And as a reminder: Mild deflation is actually worse for an economy than mild inflation....

 

[Logophile]

Yeah, it is. Even if it isn't partisan for you, it's all about partisanship for millions of Americans.




Our "fundamental economic laws" make it very, very clear that this isn't actual inflation. It's just a temporary increase in selected prices as a result of massive supply and demand shocks, hitting companies all around the world that emphasized efficiency and profits over preparation and robustness for handling exogenous shocks.

It's also nowhere near as bad as the howls and screeches of the uninformed proclaim.

And if any real inflation happens, the Fed has made it clear it will take action -- and it has several big and effective tools at its disposal, most obviously raising interest rates.



sigh... No, it won't. Borrowing does not cause inflation. How long are you going to cling to that nonsense? Yeesh.

In fact, Americans are saving money and paying down debt during the pandemic. Funny how you missed that bit. How did that happen?

I have to ask, what are you going to say when prices start to fall later this year? Will you be in a total panic about the disastrous deflation? Gotta say, somehow I doubt it.

Americans are NOT SAVING MONEY OR PAYING DOWN DEBT. Look around you!! You are citing a news agency that is full of bull or worse, reporting on information that is totally outdated. We are lurching out of the pandemic and as a result, people are borrowing like no tomorrow to buy real estate at absurdly inflated prices, and gizmos that are ridiculously overpriced. We have a dearth of services, so people are paying a premium for window washing - for example - while businesses are forced to cater to the whims of a very small labor market. Everything IS becoming more expensive, regardless of what you think, and in some cases, doubling and tripling in price. I buy hay. It's up two bucks a bale since March, when they weren't even harvesting. On coastal hay, that's up twenty percent in three months. And it's going up again. With gas prices, it will be up thirty or more percent. That will make it VERY expensive to feed cattle when there's no longer grazing. So what do you think is going to happen to beef prices?? No, ranchers are NOT going to take a loss and flood the market with steaks, if that's what you're thinking. Grain and soy will be bought up to feed all kinds of livestock, particularly feed lots, until it's no longer viable which will literally drive food up MORE at the supermarket because soy, etc. is so fundamental to human consumption. And guess how people are going to afford all these increases?? Borrowing. Thanks!!

 

[Visbek]

Americans are NOT SAVING MONEY OR PAYING DOWN DEBT.

Yes. They are. The personal savings rate soared once the pandemic hit.

Look around you!!

You can't determine savings rates or debts paid off by looking at your lawn.

In fact, the evidence makes it clear that a lot of people are saving money, because despite slightly higher than normal unemployment rates, people aren't desperate for work. That's mostly because they have enough savings to hold off for better jobs.

You are citing a news agency that is full of bull or worse, reporting on information that is totally outdated.

Incorrect.

Savings rate data is from the BEA. Three month old reports aren't "outdated."

Americans paid off a record $83 billion in credit card debt in 2020

Because of the coronavirus crisis, consumers are paying down debt and saving more than they have in decades.

www.cnbc.com

We are lurching out of the pandemic and as a result, people are borrowing like no tomorrow to buy real estate at absurdly inflated prices, and gizmos that are ridiculously overpriced.

lol

Yes, we are "lurching out of a pandemic." That's why some prices have gone up -- and are starting to fall. However, total debt grew much slower than inflation in recent quarters; credit card debt fell by $49 billion according to the Fed.

Housing prices have gone up -- but the number of sales have also gone down, because people generally didn't want to sell during the pandemic, so inventory shrank. Most mortgage activity recently is people refinancing.

We have a dearth of services, so people are paying a premium for window washing....

Seriously? That is your proof that people aren't saving?

Everything IS becoming more expensive, regardless of what you think, and in some cases, doubling and tripling in price.

Oh, good grief. Lots of things aren't increasing in price, too, but you just ignore them. We've been over this ad nauseum.

I buy hay. It's up two bucks a bale since March, when they weren't even harvesting.

OMG NOOOO!!!!

On coastal hay, that's up twenty percent in three months. And it's going up again. With gas prices, it will be up thirty or more percent. That will make it VERY expensive to feed cattle when there's no longer grazing. So what do you think is going to happen to beef prices?? No, ranchers are NOT going to take a loss and flood the market with steaks, if that's what you're thinking.

sigh

Yet again... Almost all of this is temporary. Gas prices rise and fall all the time; when adjusted for inflation, gas was more expensive in 2010 and 2011 than it is today (and... prices fell shortly thereafter... what a shock) Hay prices too. And guess what? Yup, beef prices too. In fact, adjusted for inflation, beef was more expensive in 2014. And yet, when prices fell in 2015, no one screamed bloody murder about deflation.

Guess how people are going to afford all these increases?

With wage increases.

That's how it works. When consumer prices increase, people demand higher wages. We're already seeing that happening in the lower end of the labor market.

Or, they will buy less. And we're seeing evidence of that too, both in savings and consumer expenditure rates. But, of course, knowing that requires actually looking at data, instead of freaking out because someone charged you extra for hay.

 

[highroller]

With wage increases.

That's how it works. When consumer prices increase, people demand higher wages. We're already seeing that happening in the lower end of the labor market.

Or prices will go down. Supply and demand works as a function of income in a society.

 

[Logophile]

Yes. They are. The personal savings rate soared once the pandemic hit.

View attachment 67340687


You can't determine savings rates or debts paid off by looking at your lawn.

In fact, the evidence makes it clear that a lot of people are saving money, because despite slightly higher than normal unemployment rates, people aren't desperate for work. That's mostly because they have enough savings to hold off for better jobs.


Incorrect.

Savings rate data is from the BEA. Three month old reports aren't "outdated."

Americans paid off a record $83 billion in credit card debt in 2020

Because of the coronavirus crisis, consumers are paying down debt and saving more than they have in decades.

www.cnbc.com

lol

Yes, we are "lurching out of a pandemic." That's why some prices have gone up -- and are starting to fall. However, total debt grew much slower than inflation in recent quarters; credit card debt fell by $49 billion according to the Fed.

Housing prices have gone up -- but the number of sales have also gone down, because people generally didn't want to sell during the pandemic, so inventory shrank. Most mortgage activity recently is people refinancing.


Seriously? That is your proof that people aren't saving?


Oh, good grief. Lots of things aren't increasing in price, too, but you just ignore them. We've been over this ad nauseum.


OMG NOOOO!!!!


sigh

Yet again... Almost all of this is temporary. Gas prices rise and fall all the time; when adjusted for inflation, gas was more expensive in 2010 and 2011 than it is today (and... prices fell shortly thereafter... what a shock) Hay prices too. And guess what? Yup, beef prices too. In fact, adjusted for inflation, beef was more expensive in 2014. And yet, when prices fell in 2015, no one screamed bloody murder about deflation.

View attachment 67340703


With wage increases.

That's how it works. When consumer prices increase, people demand higher wages. We're already seeing that happening in the lower end of the labor market.

Or, they will buy less. And we're seeing evidence of that too, both in savings and consumer expenditure rates. But, of course, knowing that requires actually looking at data, instead of freaking out because someone charged you extra for hay.

You're wrong almost every which way. And your snarky, silly jibes only serve to discredit you. AND, you don't rely on current information. You keep harping back to the "good ol days" instead of the here and now, which makes your argument irrelevant. Months ago set the stage but has little to do with what's current in the marketplace. Perhaps you should look at YOUR lawn for a glimpse at the real world, given the fact that you are willing to cite just about anything or anybody - as long as its partisan - to bolster your pie in the sky economics. As far your the insults, they just go with the shaky ground your on. Thanks!!

 

[Visbek]

You're wrong almost every which way.

How am I wrong?

It is a fact that the savings rate increased sharply when the pandemic hit. Do you have any evidence that the BEA is wrong?

There is clear evidence of people paying down debt. Do you have any evidence to the contrary?

Gas prices rise and fall. Adjusting for inflation, they were higher in 2010 and 2011 than they are today, and fell after hitting those peaks. Do you have any proof to the contrary?

Beef prices rise and fall. It's right there. Do you have any proof that the IMF is wrong?

You chide me for citing "news articles," but what research are you looking at? You didn't name any, just "look around," which is a completely meaningless assertion.

When costs go up, people renegotiate wages. That's how it works. (It's also one reason why mild inflation actually isn't as awful as everyone insists.)

AND, you don't rely on current information. You keep harping back to the "good ol days" instead of the here and now, which makes your argument irrelevant.

Incorrect. All the data and charts and claims in my last post are current.

Months ago set the stage but has little to do with what's current in the marketplace.

That is wildly incorrect.

The economy doesn't run on magic. There was a massive global exogenous shock last year, and almost every company had to scale back production (because they couldn't operate anywhere near full capacity without risking getting employees sick) and/or chose to scale back production (as they expected a huge recession). Further, companies spent years (if not decades) getting as lean as possible to maximize profits, meaning they don't carry much inventory or raw materials.

That's why there were shortages of toilet paper for several weeks at the start of the pandemic. Everyone panicked for no reason, thinking there wouldn't be any TP (even though production was fine), and once people started to see empty shelves they lost their ****ing minds and bought whatever they could. In order to maximize profits, TP manufacturers chose not to have a lot of excess capacity or extra inventory, so they were unable to meet demand. Even if they wanted to produce more, it would have taken months -- assuming they could get parts and hire people (which they couldn't).

(What happened? Eventually people had enough TP, demand fell, manufacturers caught up, prices fell, and everything went back to normal.)

Plus, the pandemic isn't over. Potential and current employees are still worried about COVID. Many nations that normally produce or buy US goods are still getting hit. Vaccination rates are nowhere near high enough.

And again, even when producer prices go down, it takes MONTHS for retail prices to go down.

So yes, it going to take time -- a lot of time -- for the economy to right itself. The idea that the economy isn't affected by events from a few months ago is just... insane.

 

[Kushinator]

Americans are NOT SAVING MONEY OR PAYING DOWN DEBT.

No data. No surprise....

Other than to point out your rather obvious false claim, the rest of your post isn't worthy of any consideration.

 

[Logophile]

How am I wrong?

It is a fact that the savings rate increased sharply when the pandemic hit. Do you have any evidence that the BEA is wrong?

There is clear evidence of people paying down debt. Do you have any evidence to the contrary?

Gas prices rise and fall. Adjusting for inflation, they were higher in 2010 and 2011 than they are today, and fell after hitting those peaks. Do you have any proof to the contrary?

Beef prices rise and fall. It's right there. Do you have any proof that the IMF is wrong?

You chide me for citing "news articles," but what research are you looking at? You didn't name any, just "look around," which is a completely meaningless assertion.

When costs go up, people renegotiate wages. That's how it works. (It's also one reason why mild inflation actually isn't as awful as everyone insists.)


Incorrect. All the data and charts and claims in my last post are current.


That is wildly incorrect.

The economy doesn't run on magic. There was a massive global exogenous shock last year, and almost every company had to scale back production (because they couldn't operate anywhere near full capacity without risking getting employees sick) and/or chose to scale back production (as they expected a huge recession). Further, companies spent years (if not decades) getting as lean as possible to maximize profits, meaning they don't carry much inventory or raw materials.

That's why there were shortages of toilet paper for several weeks at the start of the pandemic. Everyone panicked for no reason, thinking there wouldn't be any TP (even though production was fine), and once people started to see empty shelves they lost their ****ing minds and bought whatever they could. In order to maximize profits, TP manufacturers chose not to have a lot of excess capacity or extra inventory, so they were unable to meet demand. Even if they wanted to produce more, it would have taken months -- assuming they could get parts and hire people (which they couldn't).

(What happened? Eventually people had enough TP, demand fell, manufacturers caught up, prices fell, and everything went back to normal.)

Plus, the pandemic isn't over. Potential and current employees are still worried about COVID. Many nations that normally produce or buy US goods are still getting hit. Vaccination rates are nowhere near high enough.

And again, even when producer prices go down, it takes MONTHS for retail prices to go down.

So yes, it going to take time -- a lot of time -- for the economy to right itself. The idea that the economy isn't affected by events from a few months ago is just... insane.

Of course the pandemic was the catalyst. Everybody knows that. But what you are aggressively defending is a house of cards because you want to ignore the here and now. The current fiscal policy of the US government is not tenable, and creating the potential for not only extreme inflation but ultimately a depression that will affect the global economy. The way to avoid it is to stop subsidizing those that do not want to work - which is extremely important because it's establishing a lasting sense of entitlement - and if anything, the government should be bolstering small private sector business, not hampering it with "relax at home, no work required" policies. Tax incentives are more conducive to a healthy economic engine than giveaways, especially because the fed doesn't have the money to keep throwing it at nonproduction. We also need to up the interest rates NOW in nominal increments, not make the same mistake as Carter, who was forced to raise them to a precipitative level in order to stem the tide of extreme inflation. In addition, we need to encourage American manufacturing on American soil, not threaten it with corporate tax hikes. If there's anything that scares entrepreneurs, it's the inability to reinvest in business because of Uncle Sam's hand in their wallet. Now - off topic I suppose - we do need single payer - not this imbecilic oligarchic program that's now quasi in place - but the funding necessary that system overhaul will have to come by virtue of limited funding elsewhere, and essentially, will take a few years. No more pork. Thanks!!

​

 

[cabse5]

Came across a disturbing article from last May:

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go

The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

www.usatoday.com

US is `printing' money to help save the economy from the COVID-19 crisis, but some wonder how far it can go
The Federal Reserve is creating dollars from scratch at an unprecedented rate, one of many tools to rescue the economy amid the coronavirus pandemic.

What is Hyperinflation?
In economics, hyperinflation is used to describe situations where the prices of goods and services rise uncontrollably over a defined time period. In other words, hyperinflation is extremely rapid inflation.
Generally, inflation is termed hyperinflation when the rate of inflation grows at more than 50% a month. American economics professor Phillip Cagan first studied the economic concept in his book, “The Monetary Dynamics of Hyperinflation.”

Causes of Hyperinflation
Hyperinflation commonly occurs when there is a significant rise in money supply that is not supported by economic growth. Simply put, it is caused by dramatically increasing the amount of money in an economy.

The increase in money supply is often caused by the government printing and infusing more money into the domestic economy. rise.https://corporatefinanceinstitute.com/resources/knowledge/economics/hyperinflation/

I don't know why it never occurred to me that the US was printing money at a record rate to stem the impact of Covid. This is a situation that may haunt us. I'm curious if anybody has any thoughts, as I'm not savvy on the subject. Thanks!!

SIAP. Inflation is a tax on everyone...The rich and the poor...The man and the woman. Biden will be known as one of the biggest tax hikers in the history of US presidents.

 

[highroller]

SIAP. Inflation is a tax on everyone...The rich and the poor...The man and the woman. Biden will be known as one of the biggest tax hikers in the history of US presidents.

I thought that was the last Democrat… Oh well another one got elected so he’s obviously the worst ever

 

[Visbek]

Of course the pandemic was the catalyst. Everybody knows that. But what you are aggressively defending is a house of cards because you want to ignore the here and now.

I'm doing nothing of the sort. In fact, almost all of the indicators of the "here and now" are positive.

Unemployment is down (and recovering faster than the 2008 recession)
GDP is up (and recovering faster than the 2008 recession)
Savings rates are up
Wages are up (and recovering faster than the 2008 recession)
Wealth inequality is slightly down (better than after the 2008 recession)
Consumer confidence is back to pre-COVID (and recovered faster than the 2008 recession)
Loan delinquency rates are down (and recovered faster than the 2008 recession)
People are not desperate to take any job they can (in no small part because they saved enough money during the downturn/pandemic)

The only "bad" thing is inflation -- which is a) moderate and b) almost certainly going to drop back to normal by the end of the year.

If anyone is ignoring things, it's you -- as you seem to think that anything that happened more than 3 weeks ago is irrelevant.

The current fiscal policy of the US government is not tenable, and creating the potential for not only extreme inflation but ultimately a depression that will affect the global economy.

Sorry, but that is nonsense. The current fiscal and monetary policies PREVENTED a massive global depression. Those policies are a big part of the reason why the US has rebounded so fast from the huge hit last year.

The way to avoid it is to stop subsidizing those that do not want to work....

Again, incorrect. Aside from the fact that the US had a huge jobs report last month, and a pretty good one the month before that: Only a small percentage of people are not working because of "subsidies." Less than 10% of people who aren't urgently seeking work feel that way because of unemployment insurance -- mostly it's still concern over COVID (reminder: the pandemic isn't over) or they have a financial cushion.

Tax incentives are more conducive to a healthy economic engine than giveaways, especially because the fed doesn't have the money to keep throwing it at nonproduction.

Tax incentives aren't necessary for hiring, as last month's jobs report clearly shows. They also won't fix issues in the global supply chain, or convince more people to get vaccinated.

We also need to up the interest rates NOW in nominal increments, not make the same mistake as Carter, who was forced to raise them to a precipitative level in order to stem the tide of extreme inflation.

It is way too soon to increase interest rates. The Fed is watching this very carefully, and has already signaled it will raise rates if needed.

"Carter" didn't raise interest rates; Presidents don't control the Fed. Paul Volcker made that decision; he was appointed by Carter, kept on by Reagan, and is almost universally applauded for raising interest rates. Volcker's monetary policy cracked the "stagflation" of the 1970s, which caused a brief recession, but reduced unemployment and got the economy back on track.

In addition, we need to encourage American manufacturing on American soil, not threaten it with corporate tax hikes.

US manufacturing output recovered quickly, and is at record highs:



We have plenty of jobs, in fact more job openings than job seekers. No one is "threatening" manufacturing with tax hikes.

If there's anything that scares entrepreneurs, it's the inability to reinvest in business because of Uncle Sam's hand in their wallet.

The past year shows that people are slightly more afraid of dying than of the IRS.

More importantly, decades of evidence makes it screamingly obvious that:
- Higher corporate tax rates does not discourage reinvestment
- Higher corporate tax rates does not discourage entrepreneurship
- Cutting corporate taxes does not encourage investment (most obviously shown with the Trump tax cuts -- which companies almost entirely used to buy back stock or merely increase their profit margins)