How to Control Inflation

[jonny5]

The fraction that contributes to actual change in real circumstances, sure.

Sure, youre fraction of reality leads to the conclusion you want. I beleive thats called confirmation bias.

 

[KingLeo]

Well the best thing to do would be to stop infusing trillions of debt into the economy. At least then it wouldnt get any worse. But theyve already added another 400bn in the first fiscal quarter just in federal debt, so thats unlikely. I dont even know where to find what the Fed is doing.

There isn't an automatic link between federal spending and inflation, but the stimulus checks and other spending policies have clearly provided a big boost to demand at a time when supply is still constrained. In the short term at least that is usually going to lead to higher prices.

 

[rahl]

Sure, youre fraction of reality leads to the conclusion you want. I beleive thats called confirmation bias.

Did you miss the citations provided which show exactly why inflation is happening? Do you realize that the thoughts that bounce around in your head don't actually change reality, nor are they evidence of the claims you keep making which have been objectively disproven?

 

[SkyChief]

. . . Banks create money, not people. When people create money, they often get a visit from the secret service.

Actually, it's the FBI who goes after individuals who create money - - not the Secret Service. But your point is taken.

Banks create too much money because it is so easy for them. They just type some numbers on a bank ledger, hit ENTER, and POOF! - - billions of dollars magically appear - ready to be loaned.

Banks then lend out the (magical) money to the U.S. government which in turn offers securities to foreign investors (in the form of Treasury Bonds).

The whole thing is a scam. And unsustainable. We are now seeing the very real effects of too much money chasing too few goods (aka inflation).

 

[Slartibartfast]

Actually, it's the FBI who goes after individuals who create money - - not the Secret Service. But your point is taken.

Banks create too much money because it is so easy for them. They just type some numbers on a bank ledger, hit ENTER, and POOF! - - billions of dollars magically appear - ready to be loaned.

Banks then lend out the (magical) money to the U.S. government which in turn offers securities to foreign investors (in the form of Treasury Bonds).

The whole thing is a scam. And unsustainable. We are now seeing the very real effects of too much money chasing too few goods (aka inflation).

Yup, that's how it works and it wouldn't matter if money was still gold and silver, money is just a social construct anyway.

But yes, the number of goods is down due to the supply chain issues, I would agree that there is inflation. I disagree as to why and believe it is primarily caused by supply constraints primarily though. Especially as we are seeing stupid stuff like not being able to find regular special k cereal lately (at least in my location).

 

[rickc]

Well to me it looks like corporate america saw a good opportunity to raise prices. Was it necessary due to their cost rising? Their profit margins sure don't reflect it.

They will suffer for their greed along with the rest of us as the FED tackles inflation.

Redirect Notice

• A report from FactSet found that firms in the S&P 500 are on track for near-record high profit margins.
• 
  
• Corporate profits have been skyrocketing since the start of the pandemic, and margins keep getting fatter.

And the wealthiest among us increased their wealth by 1.8 trillion dollars.

U.S. Billionaires Got 62 percent Richer During Pandemic. They’re Now Up $1.8 Trillion.​

U.S. Billionaires Got 62 percent Richer During Pandemic. They're Now Up $1.8 Trillion. - Institute for Policy Studies

Billionaire wealth gains made during the COVID-19 pandemic could pay for half of Biden's $3.5 trillion budget package.

ips-dc.org

 

[SkyChief]

Yup, that's how it works and it wouldn't matter if money was still gold and silver, money is just a social construct anyway.

But yes, the number of goods is down due to the supply chain issues, I would agree that there is inflation. I disagree as to why and believe it is primarily caused by supply constraints primarily though. Especially as we are seeing stupid stuff like not being able to find regular special k cereal lately (at least in my location).

If the U.S. dollar was still backed by gold, then money couldn't be created out of thin air like it is today. There would need to be physical metals locked in vaults to back each dollar being created. Reckless borrowing and spending would come to a screeching halt.

The reason Nixon took us off the gold standard in 1971 was so he could print funny money to pay for the tremendous monetary losses incurred in the Vietnam war. It was "intended" to be a temporary measure, but when they discovered that people still had faith in the U.S. dollar, they kept on printing and never looked back.

As the Fed pumps more and more money into the economy, the purchasing power of the dollar will continue to decline. This won't hurt people who are working and get raises periodically. But it really hurts the working class folks and the elderly on fixed incomes. They see their retirement savings being depleted by the inflation.

 

[Slartibartfast]

If the U.S. dollar was still backed by gold, then money couldn't be created out of thin air. There would need to be physical metals locked in vaults to back the money being created.

The reason Nixon took us off the gold standard in 1971 was so he could print funny money to pay for the tremendous monetary losses incurred in the Vietnam war. It was "intended" to be a temporary measure, but when they discovered that people still had faith in the U.S. dollar, they kept on printing and never looked back.

As the Fed pumps more and more money into the economy, the purchasing power of the dollar will continue to decline. This won't hurt people who are working and get raises periodically. But it really hurts the working class folks and the elderly on fixed incomes. They see their retirement savings being depleted by the inflation.

I am aware of the history and situation. It doesn’t change my previous comment.

 

[SkyChief]

I am aware of the history and situation. It doesn’t change my previous comment.

Well its just wrong.

it wouldn't matter if money was still gold and silver, money is just a social construct anyway

Gold and silver are certainly NOT social constructs. They are very real and tangible.

Fiat money (what we have today) is a social construct. Its only value is the trust people have in it.

Gold and silver are valuable everywhere on the planet, no matter how much trust the person who you are trading with puts in you.

 

[Slartibartfast]

Well its just wrong.



Gold and silver are certainly NOT social constructs. They are very real and tangible.

Fiat money is a social construct.

They are, perception of monetary value is the construct. If people perceive that fiat money has value then it does.

 

[MrWonka]

Well the best thing to do would be to stop infusing trillions of debt into the economy.

Wait, I'm confused. I seem to remember back in 2010-2013 or so when President Obama wanted to infuse trillions of dollars in debt into the economy in order to help stimulate it, and back then Republicans said that would stimulate the economy at all.

So, how is it possible that doing that exact thing overstimulated the economy today?

I mean, the problem back then was we didn't have enough jobs for all the people, and inflation wasn't happening fast enough.
So, if the government spending of the last year (which is basically identical to what Obama wanted to do back then) caused Sooooo many jobs we don't have enough workers, and a ton of inflation, it sounds like Obama's plan from 2010 was a good one and Republicans blocked it?

 

[jonny5]

Well its just wrong.



Gold and silver are certainly NOT social constructs. They are very real and tangible.

Fiat money (what we have today) is a social construct. Its only value is the trust people have in it.

Gold and silver are valuable everywhere on the planet, no matter how much trust the person who you are trading with puts in you.

Why are they valuable?

 

[SkyChief]

Why are they [gold & silver] valuable?

Because it takes great amount of physical effort and energy to mine them, refine them and form them into bullion, ingots, coins, etc.

It takes ZERO effort to print fiat money. Today's (fiat) money is just numbers on a ledger. If the ledger is destroyed, then the money disappears.

Silver and gold cannot be destroyed - they can only change states (solid/liquid/gas). You can melt them, you can combine them with other metals (alloys), but they don't go anywhere - they still exist.

The main thing is that gold and silver cannot be manufactured - - but they have many uses in industry and medicine. These metals will always have value.

 

[jonny5]

Because it takes great amount of physical effort and energy to mine them, refine them and form them into bullion, ingots, coins, etc.

It takes ZERO effort to print fiat money. Today's (fiat) money is just numbers on a ledger. If the ledger is destroyed, then the money disappears.

Silver and gold cannot be destroyed - they can only change states (solid/liquid/gas). You can melt them, you can combine them with other metals (alloys), but they don't go anywhere - they still exist.

The main thing is that gold and silver cannot be manufactured - - but they have many uses in industry and medicine. These metals will always have value.

So then if gold had no practical user, would it still be valuable? It takes a lot of effort to dig a really big hole, why isnt that valuable? Some would argue tossing a ball in a hoop either takes a lot of effort or very little, but yet we give people a lot of gold for it.

That would imply the effort is irrelevant. Absent a practical use then the value of a metal is social. In that we beleive we can exchange it for something useful. Which is also why its price varies greatly.

 

[rickc]

Can't eat it.

Only had value in a society wealthy enough to value it. I would say jewelry is its biggest use.

The Aztec really liked it. Got them all killed.

Of course it does make high quality, long lived electrical connections

 

[neil]

Simple: toss the Fed in the trash & switch to using bitcoin (and/or many other cryptocurrencies).

 

[code1211]

Simple: toss the Fed in the trash & switch to using bitcoin (and/or many other cryptocurrencies).

That might cause other problems that we don't want to face.

Greece joined the EU. Their currency was retired. Their ability to print money was ended. As a result, their ability to run their country also ended.

If our system was not run by lying thieves that assure that more lying thieves are being drafted to take over, your suggestion here might work.

The lying thieves cannot function in a system that does not promote the lying and stealing that defines them.

 

[ttwtt78640]

Well to me it looks like corporate america saw a good opportunity to raise prices. Was it necessary due to their cost rising? Their profit margins sure don't reflect it.

They will suffer for their greed along with the rest of us as the FED tackles inflation.

Redirect Notice

• A report from FactSet found that firms in the S&P 500 are on track for near-record high profit margins.
• 
  
• Corporate profits have been skyrocketing since the start of the pandemic, and margins keep getting fatter.

And the wealthiest among us increased their wealth by 1.8 trillion dollars.

U.S. Billionaires Got 62 percent Richer During Pandemic. They’re Now Up $1.8 Trillion.​

U.S. Billionaires Got 62 percent Richer During Pandemic. They're Now Up $1.8 Trillion. - Institute for Policy Studies

Billionaire wealth gains made during the COVID-19 pandemic could pay for half of Biden's $3.5 trillion budget package.

ips-dc.org

Neither of those links (dated November and August 2021) support (or even mention) the ‘Putin price increase‘ political spin being put forth by the Biden administration.

 

[Cynical]

Probably the best thing we can do, given the current situation being mostly caused by supply chain issues, is more domestic production and raw materials investment, investments in automated trucking (especially if trucker attitudes about safety regulations continue to be a problem), and finding more land to put ports on. This will not be a quick fix though.

Regarding automated trucking, what insurance company will touch that with a ten foot pole anytime soon?

 

[Uncle_Phil]

Anyone who has studied economics can answer this. Fiscal and Monetary policy. In other words, less government spending and higher interest rates.

 

[Slartibartfast]

Regarding automated trucking, what insurance company will touch that with a ten foot pole anytime soon?

The ones where the actuaries have the risk figured out and deals are made with the manufacturers.

 

[brianpatrick]

Well theres plenty of developing countries where things could be built with some effort. Like Africa. But yes, the startup cost would be a problem. Ideally we need to lower labor costs in the USA though. Instead we are increasing them.

We could raise the standard of living in other countries. Then there would be no more cheap labor. Well, there still would be, but we could phase out business with those countries.

If capitalism can’t work on a level playing field we’ll have to figure something else out.

 

[jonny5]

We could raise the standard of living in other countries. Then there would be no more cheap labor. Well, there still would be, but we could phase out business with those countries.

If capitalism can’t work on a level playing field we’ll have to figure something else out.

We cant raise the standard of living in other countries, though it does happen when they start to produce wealth. They have labor, we need it.

 

[C.A.C.]

we had a huge problem with negative inflation in Denmark, easy solution print more money, except it didnt work. Inflation isnt what it used to be, the US, I believe, hovers around 7-8 percent inflation that isnt so bad for a post crisis period, build some roads and it will drop again!

 

[The Mark]

control? are you guys for true capitalism or not??

What do you mean when you say "true capitalism"?

If you mean capitalism without controls, that won't work and will kill itself.