Noted Economist Explains What Is Really Driving Inflation

[newpublius]

Team Transitory is dead. The government and the miserable leftists on this board who are pro-government apologists will do many things. Allow the government to take responsibility for creating the inflation that is currently being experienced is not one of them.

The first point about supply chain disruption is that relative price changes when money supply stable has to be offset somewhere. Even today we can see countries subject to very similar supply situations but laboring under different inflation rates.

The pandemic led to extraordinary amounts of money creation. That money comes in and after a lag it starts hitting the general price level and that's exactly what we're seeing now. Fortunately the Y/Y growth in the Divisia M4 broad money supply is absolutely slowing down. August into September was even negative, September into October, the rate of growth for that month was back up again. And there's always a lag. The golden growth rule for the US changes but right now its about 6-7% to achieve 2% +/- https://www.omfif.org/2021/05/us-inflation-surge-is-harbinger-of-whats-to-come/



"The dramatic growth of the US money supply began in March 2020. It will do what increases in the money supply always do. Money growth will lead in the first nine months to asset‐price inflation. Then, a second stage will set in. Over the 18 months after a monetary injection, economic activity will pick up. Ultimately, the prices of goods and services will increase. That usually takes between one and two years after the injection. Given this sequence, it’s clear that more — perhaps much more — inflation will enter the system."

After that if the trend from Jun 2021-Sep 2021 holds, inflation will plateau, if the Sept-Oct 2021 itself establishes a new trend we will have inflation proportionate to that.

 

[mrjurrs]

God help us if they are able to pass Biden's
3.5 trillion monstrous nightmare.
This inflation is kid stuff compated to what will happen.

And yet you seem unconcerned that DoD gets twice the BBB spending each year?

 

[jdog]

Long standing can also mean it has proven itself to be correct over time. Since your characterizations are false, then "clearly erroneous" only refers to your strawmen.

Nope. Hedonic regression is quality adjustment for changes in items when the change in quality can't be directly measured. The adjustments, up or down are based on regression analysis of the price differences. If a good goes up in price by $5 but hedonic regression shows the quality has gone down by 50 cents, the price increase would be calculated as a $5.50 increase because you're paying more for less.


Wrong again. In the last year, chicken parts have gone up 10%, while whole chickens have gone up 6%. So I no longer buy chicken parts, only whole chickens, but I buy more pounds of chicken. my expenditure on chicken is about 8.5% more. So if it were assumed I didn't change at all then it would be recorded the cost of chicken went up 10%, when I am only spending 8.5% more and I am no worse off. The reverse is also true....if NY Strip goes up by more than ribeye, then I'll substitute to the more expensive ribeye.



And third strike. Weighting is based entirely on proportions bought.

I think the main difference here is I understand the math and the concepts. I've read the research and I've done the math. You're getting your info from people who deliberately distort, exaggerate, and often lie.

The thing you have to admire about liberals is their complete lack of shame when they are making blatantly false statements.
Long standing means nothing, it is a logical fallacy that has nothing to do with the correctness of anything, it is often used by propagandists to attempt to lend credibility to something which has none.
Hedonics are basically lies. You said yourself that the "quality can not be measured" and yet they do. It is more smoke and mirrors to attempt to hide the fact that inflation steals the value of both money and labor. It is the method by which those who do not produce, steal from those who do.
Substitution is another lie, making an asinine assumption that one item is equal to another, your examples are moronic, as the entire premise that you can ignore the inflation of items by substituting a completely item. By that idiotic reasoning, if the cost of cars, and gasoline double, you can simply say people will prefer to walk and ignore the inflation altogether.
Weighting is not based on actual sales, that is a lie. It is based on a arbitrary formula concocted by the same lying bureaucrats that lie about everything else.

 

[jdog]

You're still not following my statement.

COVID-19 changed consumer behavior. Post-lockdown consumer sentiment emerged with a stronger emphasis on durable goods while services rebounded at autonomous levels. Furthermore, the economy is looking to grow at its fastest annual pace in over 30 years (real and nominal GDP). Pent up demand combined with economic stimulus has created a tremendous tailwind for prices. Given that a rather large chunk of goods production is representative of a global supply chain, this is an instance where shifts in demand have not been met with congruent shifts in supply.

So you can provide no evidence whatsoever that your opinion has any basis in fact. The economy is in the toilet. Inflation it out of control, and the lies about it being transitory makes the Fed and the Biden administration a laughing stock. That is really not hard though, especially when the idiot in chief sh*ts his pants, and rambles incoherently like a crazy person....

 

[rahl]

So you can provide no evidence whatsoever that your opinion has any basis in fact. The economy is in the toilet. Inflation it out of control, and the lies about it being transitory makes the Fed and the Biden administration a laughing stock. That is really not hard though, especially when the idiot in chief sh*ts his pants, and rambles incoherently like a crazy person....

 

[Mithros]

So you can provide no evidence whatsoever that your opinion has any basis in fact. The economy is in the toilet. Inflation it out of control, and the lies about it being transitory makes the Fed and the Biden administration a laughing stock. That is really not hard though, especially when the idiot in chief sh*ts his pants, and rambles incoherently like a crazy person....

Economic Forecast for the US Economy

Monthly update of The Conference Board's forecast for the US economy

www.conference-board.org

Economy is in the toilet? What are you talking about? It's estimated that we'll end up with 5.0-5.5% growth over an entire year. You have to go back to 1984 to find a better year.

 

[jdog]

That rebuttal must have taken 100% of your knowledge on the subject....

 

[rahl]

That rebuttal must have taken 100% of your knowledge on the subject....

no, it was just all the stupidity in that post deserved as a response, as literally every single thing you posted has been repeatedly refuted.

 

[Kushinator]

So you can provide no evidence whatsoever that your opinion has any basis in fact.

I didn't push opinion.

The economy is in the toilet.

The economy growing by 8% and 3.7% for the first three quarters of 2021 state otherwise.

Inflation it out of control

Nah... 6.5% inflation is not out of control. It does seem that the COVID-19 virus continues to get out of control. But this level of inflation, while higher than expected (i myself was thinking a little higher than 5%), is entirely necessary.

 

[jdog]

no, it was just all the stupidity in that post deserved as a response, as literally every single thing you posted has been repeatedly refuted.

No it hasn't but you are not capable of refuting any of it so you have to say something, even if it is untrue.

 

[jdog]

I didn't push opinion.

The economy growing by 8% and 3.7% for the first three quarters of 2021 state otherwise.

Nah... 6.5% inflation is not out of control. It does seem that the COVID-19 virus continues to get out of control. But this level of inflation, while higher than expected (i myself was thinking a little higher than 5%), is entirely necessary.

The divergence between the governments lying inflation statistics and the real statistics is currently about 6.5 pts. That wipes out all growth and in fact puts us in recession which corresponds to the consumer confidence numbers which say we are probably already in recession. Lowest numbers since 2016. Black Friday sales were down this year, even from 2020 which was down from 2019. Even online sales were down this year for the first time ever. The dollar that was worth 100 cents in 1913, is down to about 3.8 cents today and with government spending completely out of control, it will without a doubt fall much more in the next few years. Food banks are begging for donations as people have curtailed their donations and more people than ever are showing up looking for food.
On the bright side though, the FED now admits that their talk about inflation being "transitory" was complete bullshit, so we have this run away inflation built into the economy for years to come. Look for your dollar to shrink to the value of a penny under Democrat policies.
Not good times, Not even close.

 

[bluesmoke]

So you admit its buying votes. Progress.

I admit that there are people who because the receive money in some way, be it tax relief or direct, because of a politician passing such legislation, they then for that reason vote for that politician. I also believe there are politicians who pass legislation to get people to vote for them, which in any form is a way of "buying" votes. I prefer politician do such for the avg American and those with less because the rich and large corps have no need for more money or favors of whatever kind. Do you admit the rich and large corps do not need more tax breaks? Or the one Trump gave? And that doing so bought campaign contribution?

 

[OpportunityCost]

I admit that there are people who because the receive money in some way, be it tax relief or direct, because of a politician passing such legislation, they then for that reason vote for that politician. I also believe there are politicians who pass legislation to get people to vote for them, which in any form is a way of "buying" votes. I prefer politician do such for the avg American and those with less because the rich and large corps have no need for more money or favors of whatever kind. Do you admit the rich and large corps do not need more tax breaks? Or the one Trump gave? And that doing so bought campaign contribution?

The problem to me is tax tricks like what Bezos uses. He buys a company, spends a ton on R&D, takes losses from the purchase while incorporating it into Amazon operations then writes the losses off against his current companies profits. Its not even the tax breaks as it is gaming the system. Then when the company purchase generates profit he looks for another sector to infiltrate.

The old Robber Barons used to operate like this only they generally started companies to shore up sectors where they felt they were spending too much on their primary company. Bezos is simply buying up sectors, whereas the other retail giant, Wal-Mart simply drives all the mom and pops out of business if they can. But they have also began acquiring companies for e-commerce growth.

The largest companies don't need tax breaks but I could find an argument for smaller companies trying to compete against enormous economies of scale.

 

[MTAtech]

Team Transitory is dead. The government and the miserable leftists on this board who are pro-government apologists will do many things. Allow the government to take responsibility for creating the inflation that is currently being experienced is not one of them.

The first point about supply chain disruption is that relative price changes when money supply stable has to be offset somewhere. Even today we can see countries subject to very similar supply situations but laboring under different inflation rates.

The pandemic led to extraordinary amounts of money creation. That money comes in and after a lag it starts hitting the general price level and that's exactly what we're seeing now. Fortunately the Y/Y growth in the Divisia M4 broad money supply is absolutely slowing down. August into September was even negative, September into October, the rate of growth for that month was back up again. And there's always a lag. The golden growth rule for the US changes but right now its about 6-7% to achieve 2% +/- https://www.omfif.org/2021/05/us-inflation-surge-is-harbinger-of-whats-to-come/

View attachment 67362970

"The dramatic growth of the US money supply began in March 2020. It will do what increases in the money supply always do. Money growth will lead in the first nine months to asset‐price inflation. Then, a second stage will set in. Over the 18 months after a monetary injection, economic activity will pick up. Ultimately, the prices of goods and services will increase. That usually takes between one and two years after the injection. Given this sequence, it’s clear that more — perhaps much more — inflation will enter the system."

After that if the trend from Jun 2021-Sep 2021 holds, inflation will plateau, if the Sept-Oct 2021 itself establishes a new trend we will have inflation proportionate to that.

You assertion is that a rise in the money supply is causal to inflation. Yet, we have gone more than a decade with a rising money supply with roughly 2% inflation, which completely undercuts your assertion.

Your rant against 'miserable leftists on this board who are pro-government apologists' is noted.

Jerome Powell, the chair of the Federal Reserve, testified before Congress recently and said, “The connection between monetary aggregates and either growth or inflation was very strong for a long, long time, which ended about 40 years ago …. " What Powell didn’t point out was that while there was historically a strong correlation between growth in the money supply and other economic indicators, in many cases the causation ran from the economy to the money supply rather than the other way around. This was especially true during the Great Depression.

 

[danielpalos]

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they'd cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.

But strange enough, this isn't happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts' earnings forecasts, according to Refinitiv. Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.

How can this be? For a simple and obvious reason: Most don't have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money. The underlying structural problem isn't that government is over-stimulating the economy. It's that big corporations are under competitive.

Noted economist explains what's 'really driving' inflation

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down...

www.rawstory.com

That is why equality and equal protection of the laws matter. Solving simple poverty via existing legal and physical infrastructure can help solve our homeless problem and turn all those persons into market participants while automatically stabilizing our economy in the process.

The Law must be this Majestic:

“The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.”

― Anatole France

 

[rahl]

No it hasn't

why do you think you can make things up and get away with it?

 

[Visbek]

Team Transitory is dead.

The first point about supply chain disruption is that relative price changes when money supply stable has to be offset somewhere. Even today we can see countries subject to very similar supply situations but laboring under different inflation rates.

Actually, we're seeing pretty much the same inflation around the world, with the exceptions of the usual suspects (nations that had a propensity to inflate currency long before the pandemic.

The pandemic led to extraordinary amounts of money creation.

There is basically no correlation between "money creation" in the US and inflation during the pandemic.

Let's look at just the past few years. Notice how M4 was flat for all of 2018, but inflation bobed upp and down and then plummeted in early 2020 anyway? Notice how inflation dropped slightly in 2020, while increases in M4 were still high? Notice how increases in M4 returned to normal 7 months ago, while monthly inflation continued to climb? The correlation coefficient of those two is 0.014, which means... "no correlation." Even if I offset inflation by 6 months, the correlation is only 0.44.

"The dramatic growth of the US money supply began in March 2020. It will do what increases in the money supply always do...."

Spare us the grade-school economics.

The Fed is doing the same thing that they did after the 2008 financial crisis. It didn't cause inflation then, and it isn't causing inflation now.

After that if the trend from Jun 2021-Sep 2021 holds, inflation will plateau, if the Sept-Oct 2021 itself establishes a new trend we will have inflation proportionate to that.

Or... Since supply chains are still impacted by the pandemic, and Americans are still flush with cash and buying tons of unnecessary junk for friends and relatives, we will continue to see moderate inflation until at least next spring.

 

[bluesmoke]

Sure:



The post i was responding to was built on deceptive reasoning, i.e. people are so much more worse off because the dollar has lost x purchasing power in the past y years. If you want to point out income inequality within the past 30 years... that's fine. But please do not respond to me as though i'm trying to push some kind of partisan narrative. I will take offense to that.

The measure is not deceptive... the measure is just a measure. I was not in any way using it in a deceptive manner. I was using it to respond to a deceptive post.

Never argued otherwise. However, the post i was responding to was not speaking of inequality i can assure you.

Your reply did not incl any quotes of mine to back up that I was not paying attention and that you were being deceptive. Plus, my calling a measure based on an avg of all incomes “deceptive” is reasonable assertion based on the facts I stated.

What you take offense to is in your imagination. Again, you’re making an allegation you can’t prove, that I responded to you as though you’re “trying to push some kind of partisan narrative.” I stated facts to support what I said and said nothing you can quote that accused you of pushing partisan narrative.

That you say you “Never argued otherwise” regarding my claim “The fact is, for those of higher income and wealth, that excess has been far greater than those in the lower income and wealth levels.” Changes the implication of your claim “You miss the point. Over the span of 6 decades, real disposable personal income per capita has increased by 262%.”, which implies a rising tide that floats all boats, when in an avg does not reflect the reality of a large section of workers that have missed out on the avg increase per capita because it is skewed by high income earners.

That the post to which you were responding does not speak of inequality doesn’t matter. Your post implies everybody making more and further supported by a later post of yours stating “…income and wealth growth has grown far in excess…”. That you’re not speaking of inequality is rather convenient. Which is why I brought up that fact.

 

[Kushinator]

Your reply did not incl any quotes of mine to back up that I was not paying attention and that you were being deceptive. Plus, my calling a measure based on an avg of all incomes “deceptive” is reasonable assertion based on the facts I stated.

What you take offense to is in your imagination. Again, you’re making an allegation you can’t prove, that I responded to you as though you’re “trying to push some kind of partisan narrative.” I stated facts to support what I said and said nothing you can quote that accused you of pushing partisan narrative.

That you say you “Never argued otherwise” regarding my claim “The fact is, for those of higher income and wealth, that excess has been far greater than those in the lower income and wealth levels.” Changes the implication of your claim “You miss the point. Over the span of 6 decades, real disposable personal income per capita has increased by 262%.”, which implies a rising tide that floats all boats, when in an avg does not reflect the reality of a large section of workers that have missed out on the avg increase per capita because it is skewed by high income earners.

That the post to which you were responding does not speak of inequality doesn’t matter. Your post implies everybody making more and further supported by a later post of yours stating “…income and wealth growth has grown far in excess…”. That you’re not speaking of inequality is rather convenient. Which is why I brought up that fact.

Pedantic posts will fall on dead ears and blind eyes.

 

[MrWonka]

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices.

Sorry, but no. I don't buy that at all. If even two or three companies are forced to compete that has the necessary effect of driving down prices.
From the average good, you buy on Amazon, Walmart, or Target the company itself likely gets less than a nickel of profit.

 

[Phys251]

The thing you have to admire about liberals is their complete lack of shame when they are making blatantly false statements.

Everything righties accuse others of doing, they do or enable themselves. Everything.

 

[Fishking]

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When the prices of their supplies rose, they'd cut their profits before they raised prices to their customers, for fear that otherwise a competitor would grab those customers away.

But strange enough, this isn't happening. In fact, even in the face of supply constraints, corporations are raking in record profits. More than 80 percent of big (S&P 500) companies that have reported results this season have topped analysts' earnings forecasts, according to Refinitiv. Obviously, supply constraints have not eroded these profits. Corporations are simply passing the added costs on to their customers. Many are raising their prices even further, and pocketing even more.

How can this be? For a simple and obvious reason: Most don't have to worry about competitors grabbing their customers away. They have so much market power they can relax and continue to rake in big money. The underlying structural problem isn't that government is over-stimulating the economy. It's that big corporations are under competitive.

Noted economist explains what's 'really driving' inflation

The biggest culprit for rising prices that's not being talked about is the increasing economic concentration of the American economy in the hands of a relative few giant big corporations with the power to raise prices. If markets were competitive, companies would seek to keep their prices down...

www.rawstory.com

It's amazing that somehow printing off trillions and handing out checks didn't rank high on the cause. I bet this economist is a Keynesian, and we all know their economic ideology is utter trash.

 

[Visbek]

It's amazing that somehow printing off trillions and handing out checks didn't rank high on the cause.

That's because... it doesn't.

First, no one "printed trillions" in order to "hand out checks." The federal government borrowed huge sums (from people who were basically throwing their money into the most secure asset in the world) and spent it.

Second: Unemployment soared, and spending cratered, last spring. All that spending only partially filled the gigantic hole in the economy caused by the pandemic.

If we hadn't provided UI, UI bonuses and stimulus checks, then the economy would have tanked -- and we still would have the same inflation because... wait for it... the current inflation is caused not by monetary or fiscal policies, but by supply chain shocks.

I bet this economist is a Keynesian, and we all know their economic ideology is utter trash.

Right, except for that part where Keynesianism actually works. In fact, it works so well, that even Republicans voted in huge numbers for those stimulus and UI checks....

 

[Fishking]

That's because... it doesn't.

First, no one "printed trillions" in order to "hand out checks." The federal government borrowed huge sums (from people who were basically throwing their money into the most secure asset in the world) and spent it.

that's what people mean when they say that. They aren't saying that the money was literally printed. Guess what? That money didn't/doesn't exist. It's imaginary based only promises and was thrown out into circulation.

Second: Unemployment soared, and spending cratered, last spring. All that spending only partially filled the gigantic hole in the economy caused by the pandemic.

If we hadn't provided UI, UI bonuses and stimulus checks, then the economy would have tanked -- and we still would have the same inflation because... wait for it... the current inflation is caused not by monetary or fiscal policies, but by supply chain shocks.

Yeah...so Keynesians say. They never believe the oversupply of currency causes any problems.

Right, except for that part where Keynesianism actually works. In fact, it works so well, that even Republicans voted in huge numbers for those stimulus and UI checks....

Haha...Keynesians are wrong so often that it's ****ing hilarious. It's funny watching the times where Ron Paul and Krugman were on opposing sides of economic issues and Krugman was always wrong and Paul would always be right.

 

[Visbek]

that's what people mean when they say that. They aren't saying that the money was literally printed. Guess what? That money didn't/doesn't exist. It's imaginary based only promises and was thrown out into circulation.

...no, what I'm doing is describing the actual processes that the federal government and Federal Reserve engaged in over the past two years.

You apparently have the US confused with Zimbabwe.

I'd also add that money which doesn't exist can't cause inflation because... it doesn't exist.

Yeah...so Keynesians say. They never believe the oversupply of currency causes any problems.

**bzzt** wrong. They're well aware that if a government actually does generate currency and uses it to purchase goods and services, that's going to cause inflation. That is exactly what happened in Zimbabwe -- and it didn't cause 6% YoY inflation, it caused 800% YoY inflation.

Keynesians are also aware that there are enormous deflationary pressures during a downturn. Thus, policies that might normally cause some inflation are actually countering the deflationary pressures.

They're also aware that the anti-Keynesians keep predicting

Haha...Keynesians are wrong so often that it's ****ing hilarious. It's funny watching the times where Ron Paul and Krugman were on opposing sides of economic issues and Krugman was always wrong and Paul would always be right.

Such as.... the decade plus where Ron Paul predicted hyperinflation, and it didn't happen?

What did Ron Paul predict in 2002, over the next "5 to 10 years?"
An international dollar crisis will dramatically boost interest rates in the United States.

Price inflation, with a major economic downturn, will decimate U.S. Federal Government finances, with exploding deficits and uncontrolled spending.

Federal Reserve policy will continue at an expanding rate, with massive credit expansion, which will make the dollar crisis worse. Gold will be seen as an alternative to paper money as it returns to its historic role as money.

Ron Paul's Predictions - LewRockwell

Predictions by Congressman Ron Paul, MD Our government intervention in the economy and in the private affairs of citizens, and the internal affairs of foreign countries, leads to uncertainty and many unintended consequences. Here are some of the consequences about which we should be concerned. I...

www.lewrockwell.com

3 concrete predictions, all consistent with Ron Paul's views, all dead wrong. (That article, by the way, is jam-packed with failed predictions.)

Back in the real world, Krugman is generally pretty accurate -- and unlike the inflation hawks who keep getting it wrong, he actually admits it when his predictions are wrong.