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Inflation Causes

Please pick the one you feel has the greatest effect.


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rickc

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Well since the end of the covid lockdown we have had quite a boost to inflation. Below is a list of the causes of our present inflation. Please pick the ones you feel have had the greatest effect.
 

ttwtt78640

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Well since the end of the covid lockdown we have had quite a boost to inflation. Below is a list of the causes of our present inflation. Please pick the ones you feel have had the greatest effect.

What date are you using for that (bolded above) event?
 

Gatsby

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All of these things are at least partly responsible for high inflation. (Some of them aren't necessarily bad though.)
  • Biden's policies
  • The bipartisan covid relief bill
  • FED monetary policies
  • Pent up demand from the lockdown
  • Supply chain problems related to covid lockdowns (China)
These things are not major drivers of inflation:
  • Profit taking by our corporations
  • Oil prices
  • PUTIN'S WAR
The biggest driver of inflation overall is pent-up demand after COVID. The biggest drivers of the extra inflation in the United States, above and beyond the inflation bump everyone else got, is the Fed being slow to raise interest rates and our yawning deficit in 2021.
 

Antiwar

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Profits. There's one tiny group of people that are able to raise prices for what they provide. 'Everybody knows' that some of them, especially the larger ones, will use any and every crisis as cover for raising prices so they can increase profits, thereby transferring more wealth from others to themselves. Are the other things factors? Yes.
 

The flaming lib

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The Chinaman

18A97C1A-4353-456C-8654-7655FCA30824.jpeg
 

rickc

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Profits. There's one tiny group of people that are able to raise prices for what they provide. 'Everybody knows' that some of them, especially the larger ones, will use any and every crisis as cover for raising prices so they can increase profits, thereby transferring more wealth from others to themselves. Are the other things factors? Yes.

Owens and her colleagues embarked on a project to monitor corporate earnings calls since last summer. Early on, she says, CEOs “were a little surprised that consumers were forking over money at these higher price points.” But now she says the view of business leaders is we are "capitalizing on this phenomenon, we're exploiting it and we're pressing it to the hilt and we're going to take it until we touch the stove.”

Slightly different historical measures of corporate profits finds profit-levels in the last decade have been well above historical averages, meaning 2021 was likely the best year for corporate profits since World War II or longer
 

Felis Leo

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Well since the end of the covid lockdown we have had quite a boost to inflation. Below is a list of the causes of our present inflation. Please pick the ones you feel have had the greatest effect.
I chose all of the above, though the biggest drivers have been supply chain issues and oil prices.
 

Ishm

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Inflation 'post' covid is a global phenonenom. The question isn't - 'did Biden cause it?' The question is - 'could he do more to ease it?'

The causes are pent up demand, higher than normal saving levels, strong house price growth, and covid ravaged supply chains from production and inventory through to shipping and delivery.

The problem facing Biden, and other leaders, is to judge when to pull the 'interest rate card' and other monetary tightening moves to contain inflation. With the country still in covid recovery mode the fear is that tightening too early could trigger a collapse in confidence when the economy is still very vulnerable. Some short term inflation is the price being paid for taking a safer economic approach. Inflation is also taking $trillions off the effective US debt, so a little upside from that as well.

Other similarly structured countries have already started the money supply tightening process to curb inflation, but whether they or Bidens team have it right isn't obvious yet. Low unemployment is a key 'trigger' for supporting tighter monetary policy, so expecting to see something more happening soon if employment reports stay strong. Then of course some people will moan that the cost of all the money they borrowed has gone up due to Bidens incompetence .........
 

rickc

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Inflation 'post' covid is a global phenonenom. The question isn't - 'did Biden cause it?' The question is - 'could he do more to ease it?'

The causes are pent up demand, higher than normal saving levels, strong house price growth, and covid ravaged supply chains from production and inventory through to shipping and delivery.

The problem facing Biden, and other leaders, is to judge when to pull the 'interest rate card' and other monetary tightening moves to contain inflation. With the country still in covid recovery mode the fear is that tightening too early could trigger a collapse in confidence when the economy is still very vulnerable. Some short term inflation is the price being paid for taking a safer economic approach. Inflation is also taking $trillions off the effective US debt, so a little upside from that as well.

Other similarly structured countries have already started the money supply tightening process to curb inflation, but whether they or Bidens team have it right isn't obvious yet. Low unemployment is a key 'trigger' for supporting tighter monetary policy, so expecting to see something more happening soon if employment reports stay strong. Then of course some people will moan that the cost of all the money they borrowed has gone up due to Bidens incompetence .........

The only thing you have wrong is Biden does not control the Fed. If you substitute Fed for Biden I agree.
 

Taylor

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The choice to stimulate more demand post shutdown under supply constraints was a huge blunder. Biden didn't want a repeat of Obama's lethargic recovery and overcompensated.

It's mind boggling how out of touch they are with much of their base. It's taken them months to figure out why people are so upset about the economy as they tout Wall St and implore people who can't afford gas to buy Teslas.

The Democrats are going to have to focus hard on issues people really care about if they want to win elections.
 

multivita-man

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Multiple causes. The most important one being the pandemic, which led to widespread fear of the virus. In turn, that led to shutdowns, which forced the Congress & the Trump administration and the Fed to act quickly in order to prevent widespread economic shock. It's honestly hard to predict what stimulus and pent-up demand is going to do in a situation like this. I don't fault the Fed, Congress, or the Trump administration for their initial reaction.

I think Biden's stimulus bill might have contributed somewhat to the inflation, but at the same time, many of the existing benefits and protections that were implemented expired and Biden didn't really try to push their extension either, to the chagrin of hard progressives in his party.

I think most of the fault lies with supply disruption, and I don't think there's much Biden could have done about that. He did his absolute best to push for maximum vaccination, and many of his political critics tried to disrupt that, so when scores of port workers, rail workers, and truckers got sick with COVID and further disrupted supply chain because they were too chickenshit to get a shot, who's ****ing fault is that?

I do think there's a case to be made that the Fed acted too slowly in decreasing its balance sheet, but they seem to be moving in the right direction now. Unfortunately, a pretty consequential war just started.
 

multivita-man

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The choice to stimulate more demand post shutdown under supply constraints was a huge blunder. Biden didn't want a repeat of Obama's lethargic recovery and overcompensated.

I don't disagree that it was a blunder, but I think the Fed probably made the bigger blunder, both in terms of not tightening the amount of money circulating through banks and also by not raising rates. Shit they could have reduced the balance sheet last year without doing anything to interest rates. As it stands now, there's a chance they might have to sharply raise interest rates going into 2023, and that is going to hurt borrowers of all stripe, including small to mid-size business owners and first-time home buyers.
 

Gimmesometruth

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The choice to stimulate more demand post shutdown
Um, the CARES and ARP in 2020 and 2021 were primarily to shore up income declines, and for many were an absolute lifeline. Further, they did not make up for the income declines. To characterize them as "demand stimulus" is disingenuous..
 

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The only thing you have wrong is Biden does not control the Fed. If you substitute Fed for Biden I agree.
Yes, I knew that when I wrote the post. Most developed countries have a reserve bank that is mostly independent, but I believe that they are still mostly reactive to the govts leads.
 

Surrealistik

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Well since the end of the covid lockdown we have had quite a boost to inflation. Below is a list of the causes of our present inflation. Please pick the ones you feel have had the greatest effect.
You forgot systemic corporate gouging:



 

Taylor

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Um, the CARES and ARP in 2020 and 2021 were primarily to shore up income declines, and for many were an absolute lifeline. Further, they did not make up for the income declines. To characterize them as "demand stimulus" is disingenuous..
The ARP was hotly contested at the time, with the admin scoffing at the idea it could lead to inflation - and Biden himself saying "you can't do too much, you can only do to little." They were wrong.

And so are you. If it were to "primarily shore up income declines" it would have provided targeted aid rather than a shotgun approach (good lord, they were mad that the direct payment checks were "only" $1,400!!) the purpose of which was to provide a Keynsian macroeconomic boost.
 

Gimmesometruth

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The ARP was hotly contested at the time, with the admin scoffing at the idea it could lead to inflation - and Biden himself saying "you can't do too much, you can only do to little." They were wrong.And so are you.
Anyone that believes a piece of legislation causes inflation before monies are dispersed shouldn't be discussing macroeconomics. You are basing your argument on ignorant rhetoric without looking at the changes in cpi or the timing of the checks. CPI bottomed out in May of 2020, and increased as the economy opened after the ending of the recession in April. The checks for the ARP were not even in the mail until March of 2021, a YEAR later.

CPI 2018-22.jpg

If it were to "primarily shore up income declines" it would have provided targeted aid rather than a shotgun approach (good lord, they were mad that the direct payment checks were "only" $1,400!!) the purpose of which was to provide a Keynsian macroeconomic boost.
Uh, both, the Trump CARES and the Biden ARP issued checks to all. If the argument is that they caused inflation because those that didn't need them caused inflation, there is an argument against that. The propensity to spend is greater for lower quintiles, and the evidence to support this historical econ principle is that median and high quintiles either saved or paid down debt with their checks.

Key Survey Statistics:​

  • 84% of respondents said their credit card debt decreased or stayed the same in 2020.​

  • Nearly 60% of respondents who received a stimulus payment used it to add to their personal savings.​

  • 32% of respondents who received a stimulus payment used it to pay down credit card debt.​


 

Taylor

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Anyone that believes a piece of legislation causes inflation before monies are dispersed shouldn't be discussing macroeconomics.
Nobody made any such claim.
You are basing your argument on ignorant rhetoric without looking at the changes in cpi or the timing of the checks. CPI bottomed out in May of 2020, and increased as the economy opened after the ending of the recession in April. The checks for the ARP were not even in the mail until March of 2021, a YEAR later.
Pretty much everyone understands by now that the economy was already recovering before the ARP went into effect. It unecessarily fueled demand, greatly exacerbating inflation.

Uh, both, the Trump CARES and the Biden ARP issued checks to all. If the argument is that they caused inflation because those that didn't need them caused inflation, there is an argument against that. The propensity to spend is greater for lower quintiles, and the evidence to support this historical econ principle is that median and high quintiles either saved or paid down debt with their checks
Yes, we had already passed a bunch of spending bills. A third behemoth bill was completely unecessary, as many pointed out at the time.
 

Gimmesometruth

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Nobody made any such claim (that legislation causes inflation before monies are dispersed).
Um, YOU did, don't you even remember what you wrote?

"ARP was hotly contested at the time, with the admin scoffing at the idea it could lead to inflation"



Pretty much everyone understands by now that the economy was already recovering before the ARP went into effect.
As usual, a meaningless argument, "recovering" means "not in the worst GDP decline ever" (2Q2020, 6 months prior), and lets remember how Fox covered the 4Q2020 report:

But the headline figure often obscures the whole picture because the Commerce Department calculates the GDP on a quarter-over-quarter basis as if that level of growth were sustained for a full year; in times of huge swings up or down, it can exaggerate both the decline in growth and the subsequent rebound.

Looking at the quarterly data, the nation's GDP grew 1% from the third to the fourth quarter, compared with an increase of 7.48% between the second and third quarters, marking a substantial slowdown as a resurgent virus forced a fresh wave of business closures and lockdown measures.




Yes, we had already passed a bunch of spending bills. A third behemoth bill was completely unecessary, as many pointed out at the time.
Are you still trying support an argument with nothing but unsupported revisionist bullshit and the already debunked idea that inflation was caused by stimulus not even dispersed?

Yes, you are.
 

HIP56948

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You forgot systemic corporate gouging:



Excellent informative post! :)
 
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