Inflation

[CordMcNally]

Even an uber driver in NC can get the inflation that the fed is trying hard to downplay.

There was this Indicator from Planet Money episode where they did an episode on inflation. The 50 year old lady in Hendersonville saw more pay and more tips averaging 10% but she could not afford to do the job because the gas prices rose by 30% for her to fill a tank of gas in her fuel efficient Honda. From $22 to $32 or so. She kept receipts to show the reporter.

Sometimes these average Joe gets the economy better than the smart economists in their Ivory tower, cocooned from real world reality.

The average American knows how much groceries are. They know how much gas is. They know these things because small swings can significantly impact their financial livelihoods. The average American would dominate any Fed on any of the Price is Right games where they have to know the price of groceries. If you want to here about inflation, don't listen to the Feds. Listen to the waiters/waitresses, listen to school bus drivers, listen to the cashiers. When these people start feeling the crunch then it's past the time the country starts paying attention.

[jacoavlu]

it went from there will not be excess inflation to its transitory to blaming it on external forces to well actually inflation is good for you and the most recent one i saw was blaming it on the saudis. and oh don’t say hyperinflation because just saying it might bring it about, like candy man. and oh we need to pass this trillions spending bill to lower prices

they are pissing on us and telling us it’s raining. and most people believe them

you know in weimar germany everyone thought they were getting rich

[CordMcNally]

it went from there will not be excess inflation to its transitory to blaming it on external forces to well actually inflation is good for you and the most recent one i saw was blaming it on the saudis. and oh don’t say hyperinflation because just saying it might bring it about, like candy man. and oh we need to pass this trillions spending bill to lower prices

they are pissing on us and telling us it’s raining. and most people believe them

you know in weimar germany everyone thought they were getting rich

If I were a meme maker I would make a meme of a recent headline I saw. The frontwoman for the band Brass Against pulled a fan up on stage and then urinated on him. He was, weirdly, a willing participant. There's some correlation there between the Fed and the public.

[nephron]

I was listening to Larry Summers on a cnn podcast from this weekend and his article back in February seems prescient:

https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/

When you inject an additional 2 trillion dollars of cash into an economy via deficit spending when not that many people are working, you are going to create a spike in demand (people have cash to spend) while supply is short (businesses are unable to produce things due to a lack of labor). That podcast went nicely with the planet money podcast that I listened to next describing how people are quitting because they have enough cash to coast for a few months/a year. I'm no economist but it seems like a pretty simple recipe to create run away inflation.

[jacoavlu]

the internet always wins lol

https://archive.md/2021.11.08-215859/https://twitter.com/MSNBC/status/1457804650162253828

of course msnbc deleted the tweet

[Brains428]

The rate of increase is probably transitory. But the wage increases are sticky, which will make higher prices sticky.

I don't foresee substantial rate increases as long as those older than 65 run the country.

[Antares]

The rate of increase is probably transitory. But the wage increases are sticky, which will make higher prices sticky.

I don't foresee substantial rate increases as long as those older than 65 run the country.

Whatever one makes of that, I think it’s notable that there are now several generations of investors who have never lived through significant inflation. The 70s and early 80s were scary and difficult times in that respect.

[CordMcNally]

Whatever one makes of that, I think it’s notable that there are now several generations of investors who have never lived through significant inflation. The 70s and early 80s were scary and difficult times in that respect.

There’s a not insignificant number of people who began investing over the last 18 months and thinks this is normal.

[Tangler]

I always find it funny that no matter whatever economic policy a news article is talking about, they always mention that 'top economists' support whatever policy. You can find 'top economists' to probably support any kind of economic policy you can come up with so it's pointless to even put that in there unless you're writing with an angle. It's like how the fed refuses to come out and admit that inflation is here and they're likely undershooting real inflation. They kick the can own the road.

"Inflation is transitory."
"We're going to talk about possibly talking about inflation being hypertransitory."
"We're want to see how the next few months settle to see if inflation is a reality."

People are tired of their bull ************************ and I think the general public can see through it. I understand that monetary policy is over the head of the average American (me included) but I think if they would just start treating the American people like adults then I think we could all move forward a little better. I wonder if they'll put out another tweet for Thanksgiving similar to the 'the cost of 4th of July cookout in 2021 is down $0.16 this year'?

Inflation sucks.

They should stop printing $ and raise rates.

The fed + government

Agree, they are a bunch of self serving dishonest turds.

I think what is most annoying is the hubris and insincerity.

I guess the meaningful question is what can one do?

No control.

Best to carry on and just ignore the narrative.

News = partisan noise. I should ignore.

Hard to ignore price increases that seem ubiquitous.

I did buy some I-bonds.

Try to avoid looking at stock market. think there will be a big painful drop at some point when they feel they have no choice but to raise rates.

Yes, I don’t fully understand it, but my bs meter alarms every time it is discussed by politicians and fed reserve.

I love it when someone who thinks they are smart says something like:” BBB will drastically decrease inflation and boost the economy and create jobs, 17 Nobel laureate economists agree”

and they say it in a condescending tone and I think, I know I don’t fully understand this and I am not an economist but how is spending $ going to lower prices?

Wouldn’t that be more demand?

Why don’t they explain to this “amazing plan” to this dumb doc?

Why? How? Fairy dust?

BS meter in the red zone.

Inflation is going to suck for a while.

Transitory my @$$!

[MPMD]

I have been kind of surprised at the number of people here who seem to downplay the concurrent surge in the stock and housing market during a freaking global disaster as based on the life stage and savings of millennials. Perhaps the average age here is younger than those of us who lived through the .com and then housing bubble? It is always different this time and yet not. None of this makes sense to me. The current climate of spending every last penny of stimulus money on flat screen TVs and buying a new house during a clear seller's market while simultaneously deciding to quit their jobs wreaks of disaster in my opinion.

i think you are pretty obviously conflating 3 distinct trends that probably have little actual overlap.

[MPMD]

The average American knows how much groceries are. They know how much gas is. They know these things because small swings can significantly impact their financial livelihoods. The average American would dominate any Fed on any of the Price is Right games where they have to know the price of groceries. If you want to here about inflation, don't listen to the Feds. Listen to the waiters/waitresses, listen to school bus drivers, listen to the cashiers. When these people start feeling the crunch then it's past the time the country starts paying attention.

i really am impressed by people's ability to talk about these trends in isolation.

being a working class american has been nearly impossible for decades now. it's not like a cashier or waitress was doing fine and then all of a sudden 5-6 months of above avg inflation came along and ruined everything. we had a black swan event that is going to have killed a million people before it's over.

working poor in america live on the edge due to multiple policy decisions we've made over almost a hundred years. if it wasn't covid it was going to be something else.

a really great question to ask in this discussion is "what should be done?" no one knows, and those who will benefit from this politically don't even pretend to have an answer (see also health care). the fact that literally everyone just loudly repeats their priors is pretty revealing. i don't know how to fix inflation, but i can guarantee you that many on this forum would think that tax cuts for high earners would be a key part of any plan to do so.

[Tim]

Whatever one makes of that, I think it’s notable that there are now several generations of investors who have never lived through significant inflation. The 70s and early 80s were scary and difficult times in that respect.

I think YOU, need to realize that the recent rate of change in this one factor has recently changed. It has been “absent” from the wall of worries for decades. It is only one factor. Yes significant and many multipliers and impacts. Please note the Fed, did not and does not “cause” economic growth, inflation, wealth, stock market gains, changes in real personal income or increase in investments.
The unsettling part is inflation was very acceptable at 3%, but 6% is a disaster? If it was stable, the reaction is different than uncertainty. A 100% change is huge. What is next? However, the Fed only controls the short term bank interest rates. The rest is what is the impact (multiplier) ripple effect. That ripple effect is the unknown. Macroeconomics tries to predict the impact. The money multiplier impact would expect a huge expansion and inflation surge with a half point cut in rates by the Fed. Didn’t happen. We have been near zero and inflation was below 3% and stayed there. But OMG, raise it a half point and NOW the multiplier kicks in? The point is, the Fed doesn’t control inflation. The interest rates are a tool to raise the cost of debt relying on the multiplier to slow borrowing and hopefully upward price pressures. That is unknown and the rate of change has become destabilized.

Simple example comparing micro economics to macro economics.
Micro: Peleton raised prices something like 50%. Guess what? Demand doubled, per unit costs stayed the same, price elasticity didn’t work(reduced volume), and profits went through the roof and the stock price tripled!
Raising prices helped the company but did it hurt the consumer, employees, or market?
How about natural gas prices? Brings to mind the Texas freeze and the Colonial Pipeline shutdown. Makes the impact and solutions much more complicated. The New Green Deal vs “winterizing” and the question of who pays for it and when.

You are looking at inflation from a micro economic perspective, it’s impact on you on your costs and investments. Inflation didn’t bother me in the 70’s. The gas lines and prices did. Inflation didn’t bother me in the 80’s. The 13% mortgage rate did.

Your guess is as good as any economist.
3% to 6% in a year is unexplainable except for pandemic and government spending. Consumer, employees and companies will all react. I just can’t predict how, when or who gets shafted. Doubling is a new worry, that has raised its head. Volatility creates risk. There are no economic laws like in the sciences.
Study as much as you want.
Inflation impacted you and I much more in the COL in the 70’s and 80’s than on the market.
Read this.
https://awealthofcommonsense.com/202...n-in-30-years/
There is absolutely no actionable conclusions you can reach by studying macro or micro economics.
Your guess is just that, a guess. Keep your debate on the Internet and not in your portfolio.

[Random1]

If "they" down there in Washington, did not want high inflation, they could do something about it. The problem is the "something" they can do about it is not pleasant for politicians and the average American. This would including increasing short term borrowing rates and stop flooding the market with $. What you get is marginal business going down the tubes. Larger business , tightening their spending and a recession right before 2024, which is never good for a incumbent party. So what you do, is play games and kick the can down the road, until it is unbearable to the American public. These policies are done by design.

[CordMcNally]

i really am impressed by people's ability to talk about these trends in isolation.

being a working class american has been nearly impossible for decades now. it's not like a cashier or waitress was doing fine and then all of a sudden 5-6 months of above avg inflation came along and ruined everything. we had a black swan event that is going to have killed a million people before it's over.

working poor in america live on the edge due to multiple policy decisions we've made over almost a hundred years. if it wasn't covid it was going to be something else.

a really great question to ask in this discussion is "what should be done?" no one knows, and those who will benefit from this politically don't even pretend to have an answer (see also health care). the fact that literally everyone just loudly repeats their priors is pretty revealing. i don't know how to fix inflation, but i can guarantee you that many on this forum would think that tax cuts for high earners would be a key part of any plan to do so.

You are correct that it’s not a simple task and it’s not easily fixed and does impact those in the lower socioeconomic classes more. Thankfully, many (but not all) in the lower socioeconomic classes tend to move up through their working lives.

Also, for starters, I would quit printing money to help fight inflation. And our economic issues weren’t directly caused by the virus. It was caused by our reaction to the virus. We can Monday morning quarterback it all we want but our government is largely to blame (from last administration into this one) with where we’re at now.

[Lordosis]

i really am impressed by people's ability to talk about these trends in isolation.

being a working class american has been nearly impossible for decades now. it's not like a cashier or waitress was doing fine and then all of a sudden 5-6 months of above avg inflation came along and ruined everything. we had a black swan event that is going to have killed a million people before it's over.

working poor in america live on the edge due to multiple policy decisions we've made over almost a hundred years. if it wasn't covid it was going to be something else.

a really great question to ask in this discussion is "what should be done?" no one knows, and those who will benefit from this politically don't even pretend to have an answer (see also health care). the fact that literally everyone just loudly repeats their priors is pretty revealing. i don't know how to fix inflation, but i can guarantee you that many on this forum would think that tax cuts for high earners would be a key part of any plan to do so.

Why would tax cuts help inflation? Inflation is sorta= too much money
Taxes destroy money
More taxes would be likely to help inflation. So would making money more expensive by raising rates.

Both are politically harmful and not great for the economy.