[HN Gopher] Consumer prices rose 8.5% in March - highest since 1981
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Consumer prices rose 8.5% in March - highest since 1981
Author : arbuge
Score : 375 points
Date : 2022-04-12 12:56 UTC (10 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| nofunphil wrote:
| So, I think it's time to build solutions that directly address
| the problem (inflation). An interesting idea would be an NFT (I
| know...bear with me)that breeds a "child NFT" when CPI(inflation)
| rises past a threshold. Owner can sell child to cover inflation
| costs. Child becomes a parent when transferred, and similarity
| breeds based on CPI increases. Cycle repeats...
|
| Would love to hear why it won't work, how to improve it, etc.
|
| Instead of asking governments to stop printing so much dang
| money, or, starting wars, both of which cause inflation, we can
| now say fuck it and build economic tools that protect people from
| the crushing lose in purchasing power. Let's do that!!
| erdos4d wrote:
| Maybe ditch the NFT part and do it with actual children and you
| might be on to something.
| FYYFFF wrote:
| When you print more money in a year than in an entire century,
| its going to cause inflation. Trump printed 3+ trillion and gave
| most of it away to the banks and Wall St. That money found its
| way first into the bond and stock markets, then mid last year
| into consumer assets. We are never going back. Trump's tariffs
| and his tax breaks will be with us until your great, great-
| grandkids are 50... Electing a idiot who lost his entire
| inheritance, is not smart. Be smarter America.
| shostack wrote:
| I'm confused why this administration isn't hammering that
| point. If you eat the entire bag of Halloween candy in one
| night, you will face consequences. Cause and effect.
| mardifoufs wrote:
| Because everyone can see right through that narrative.
| Blaming trump for policy decisions that the democrats were
| extremely supportive of, to the point where they were pushing
| for much more spending is ridiculous. They scolded the
| Republicans for _not_ going far enough and the entire
| negotiations were very public. Not only that but they came up
| with even more bills and grand spending plans the moment they
| were elected.
|
| Blaming trump for everything just won't work, not when you
| have control of the house, senate and the presidency. What is
| even more ironic was that Biden repeatedly attacked trump for
| deflecting blame, and promised the "adults in the room" won't
| make excuses. If by the mid terms nothing has changed, the
| electorate won't be receptive to the mental gymnastics
| required to connect the situation to Trump.
|
| The only thing they will see is that Biden's admin is
| completely impotent and everything is worse than it was 2
| years before. (Even covid numbers are incredibly higher under
| the Biden admin). So let's hope a miracle happens in the next
| 6 months because this is has been a slow motion disaster, and
| no amount of "actually this is perfectly normal but even if
| it wasnt the presidency cannot be blamed" damage control will
| magically make things better.
| TYPE_FASTER wrote:
| After reading the definition of how the gas price factors into
| the CPI [0], I don't think fuel use is included because it's a
| price index, not a use index. As average mileage improves[1], and
| WFH continues, I wonder if usage will either plateau or
| decline[2][3], resulting in the price of gas having less of an
| impact.
|
| [0] - https://www.bls.gov/cpi/factsheets/motor-fuel.htm
|
| [1] -
| https://www.epa.gov/system/files/styles/large/private/images...,
| from https://www.epa.gov/automotive-trends/highlights-
| automotive-...
|
| [2] -
| https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...
|
| [3] - https://www.statista.com/statistics/188448/total-us-
| domestic...
| gruez wrote:
| >I don't think fuel use is included because it's a price index,
| not a use index.
|
| Theoretically this should be adjusted via lowering the basket
| weight for fuels (if consumption indeed does drop).
| typeofhuman wrote:
| Limiting the production of oil in any sense is going to increase
| the price. Biden has said no more drilling on public land and
| imposed new regulations on pollution.
|
| https://www.marketwatch.com/investing/future/crude%20oil%20-...
|
| Here we can see the price of oil futures going back a few years.
| We can see they start an upward trend once Biden gets into
| office. and long before the Ukraine conflict.
|
| There are two parts of this, what Biden has done, and what people
| fear he might do.
|
| There is a trade off between using goods now, and using them
| later. The higher the return for using them later, the higher the
| return for using them now has to be in order to justify consuming
| it.
|
| If Biden says, no more drilling on public land, you are right,
| that would not impact supply immediately, but it would impact the
| expected supply and price of oil in the future. Which means that
| in order for the oil to be consumed now, the price has to be
| higher.
|
| If you add to that the expected regulations to come in the
| future, further restricting or taxing fossil fuel use, it pushes
| this even higher.
|
| So because it is expected that the price of oil will be more
| expensive in the future, both because of what Biden has done
| already, and because of what he has promised to do, then the
| price of oil has to increase now. Do you understand what I'm
| trying to convey?
|
| FURTHER EXPLANATION
|
| Let's say you have 10 barrels of oil to sell. You can sell those
| barrels now for $100 dollars, or you can sell them in a year for
| $200 dollars.
|
| The more the price of oil in the future increases, so too does
| your incentive to wait to sell.
|
| In response to this, the price of oil has to increase in the
| present, to compete with the prices promised in the future.
|
| So if the future price rises to $250, the present price might
| increase to $130 in order to incentivize producers to sell now,
| rather than wait for higher returns in the future.
|
| What Biden has done is send signals that in the future, the
| supply of oil will be lower, and the price higher, which
| incentivizes producers to wait for those higher returns, which as
| a result increases the prices now, in order to compete.
| tootie wrote:
| Tough to say because Biden is also pushing policy to curb
| demand and EVs are rising rapidly. I'm not sure if markets have
| fully absorbed the world of falling supply and falling demand.
| Or if they actually believe demand will fall appreciably in the
| near future.
| roamerz wrote:
| Yup hard to say. Thankfully citizens are seeing the reality
| of his anti-American policies and will make their displeasure
| felt at the polls this November.
| typeofhuman wrote:
| Without endorsing all that is Trump, what I did like about
| his tenure is that I had more money in my pocket to make
| decisions for myself. Whether that be buying more energy
| efficient appliances or perhaps an EV. Now I have less
| money, appliances are more expensive, and we're being told
| "don't like the price at the pump, just buy an EV lol".
| roamerz wrote:
| As a person Trump was a shitshow. Had he listened to
| feedback from his advisors and I dare say the general
| public he would still be in office. His policies which
| include foreign relations, immigration, energy and
| monetary though were pro American and good for the USA as
| a whole.
| typeofhuman wrote:
| The policies were good for America and NATO.
|
| He told Germany and other NATO leaders that dependence on
| Russian oil was a major threat to their economies. He
| told them they should focus on other avenues. But they
| didn't listen. He was tough on Russia.
| tootie wrote:
| https://www.vox.com/policy-and-
| politics/2019/1/15/18183759/t...
|
| He wasn't advising Germany to divest from Russia because
| it would strengthen NATO. He was saying NATO was
| corrupted because of Russian oil and therefore was
| worthless. This is based on the same fallacious
| perspective that Putin employs. Namely that NATO exists
| to be Russia's adversary. NATO exists for the defense of
| politically-aligned democracies against aggressors.
| Russia is only the enemy of NATO because they choose to
| be. Trump's behavior towards Ukraine was not only
| grotesquely unethical and breach of his Constitutional
| obligations but seriously weakened their position when it
| came to resisting Russia.
| roamerz wrote:
| I would counter with the comment that threatening to
| leave NATO was his strategy to get them to contribute
| more of their GDP to the military budget.
|
| https://breakingdefense.com/2020/10/trump-admin-sets-
| allied-...
|
| I at the time thought that was a very wise strategy.
| Recent events have proven that true.
| tootie wrote:
| Based on all his public statements and all the insider
| accounts from both career civil servants and even his own
| political appointees, Trump never bothered to understand
| the subtlety of NATO or really any other policy. Just
| read what Fiona Hill and John Bolton among others have to
| say. He wanted out of NATO. He respected the word of
| Putin, he hated Ukraine and it was 100% personal. He
| refused to press Putin on election interference when he
| met him in Finland, but withheld Congressionally
| appropriated aid to Ukraine unless they did him a favor
| to help his own electoral fortunes.
|
| The 2% defense spending target was negotiated by Obama
| and agreed by NATO members before Trump took office.
| Trump took that cue and railed that America was paying
| for NATO as though it were a dues-based organization.
| When he went to Brussels to push for compliance, he
| raised the prospect of 4% as a new spending target even
| when the US was tracking to drop below 3%. While he may
| have achieved a policy victory here and there it was only
| ever by coincidence. I've not seen any indication has
| understands or even cares about any policy whatsoever and
| only says things that get him attention.
|
| https://www.nytimes.com/2018/07/12/opinion/editorials/tru
| mp-...
|
| https://www.cnbc.com/2018/07/11/obama-and-bush-also-
| pressed-...
| tootie wrote:
| That's nonsense. The president doesn't even set monetary
| policy. Monetary policy is explicitly designed to be
| apolitical yet it didn't stop him from threatening the
| fed chair with retaliation if he didn't set negative
| rates. Thankfully Powell ignored him or inflation would
| be substantially worse.
| tootie wrote:
| More money in the pockets of already affluent people
| doesn't spur much new consumption. Only policies that put
| energy efficiency in the hands of everyone are going to
| make a dent.
| wiz21c wrote:
| > Limiting the production of oil in any sense is going to
| increase the price.
|
| That's a fallacy. If you limit the production, then you have
| less oil. The fact that the price increase is due to competing,
| individual, interests.
|
| If you limit the production, limit the demand too. Doing it
| with the price is the worst possible way to do it because
| speculation turns on...
| brandmeyer wrote:
| Are you arguing for a command economy? Doing it with prices
| is the best possible way, because it empowers distributed
| decision-making.
| nukemaster wrote:
| This is extremely reductionist. It's like saying untying a
| balloon doesn't cause it to deflate, the deflation is caused
| by the random motion and collisions of the air molecules.
| rgbrenner wrote:
| Completely wrong. When covid hit and the lock downs started,
| oil demand took a nose dive, and shortly afterward producers
| reduced output because of the lack of demand. The reduction in
| demand was more than the entire oil production of the united
| states: 15m barrels per day.
|
| During the recovery, consumer demand increased at a faster rate
| than the production increase... leading to rising prices. It
| continues to be higher than world production. Right now, demand
| is back to pre-pandemic levels, but production is still a few
| million barrels (per day) short.
|
| You can see that clearly in the first chart on this page:
| https://www.eia.gov/outlooks/steo/report/global_oil.php
| JacobThreeThree wrote:
| >but production is still a few million barrels (per day)
| short
|
| That fits perfectly with what OP said. If the production
| wasn't limited, there would be more production.
| colinmhayes wrote:
| Except oil producers stopped producing on their own because
| prices were literally negative. THe government had nothing
| to do with that.
| xadhominemx wrote:
| Production is limited by the choice of the oil and gas
| companies. There are plenty of sites available for
| extraction, but they are not being exploited because
| producers have been burned multiple times investing into a
| short-term spike in prices. If prices remain elevated for a
| while, they will start to drill.
| rgbrenner wrote:
| The US oil production COVID low was 9.7m bpd.. we're
| currently at 11.4m bpd. We're already the #1 producer in
| the world. If you added the current global shortfall, it
| would put us way past record levels. Your belief that the
| US alone can make up this shortfall is entirely based on
| speculation and the belief of unlimited US production.
|
| Again, the COVID dip was larger than the entire US
| production. It's silly to believe a global problem can be
| solved entirely by the US.
|
| And the issue with OPS analysis is that he wants to blame
| biden, when his own chart clearly shows prices rising since
| the COVID dip... something that happened before he was
| elected. This has nothing to do with politics.
| [deleted]
| randyrand wrote:
| Can they really not add YoY in the title? It's 3 characters.
| erdos4d wrote:
| Does anyone here know how high interest rates need to be to
| finally see a military spending cut?
| wonderwonder wrote:
| Inflation outpacing traditional stock market returns. Even if you
| do everything right; if you earn an average salary you are
| doomed.
| defterGoose wrote:
| ...and all so Bezos can take a 50's popgun ride and pop
| bottles.
| skybrian wrote:
| Normally the difference from a year ago is reported, but you
| might also want to look at the level graph:
|
| https://fred.stlouisfed.org/series/CPIAUCSL
| bryanlarsen wrote:
| The best cure for inflation is to increase taxes. This removes
| money from the economy, and can be targeted towards the areas of
| the economy with too much money.
|
| Raising interest rates paid to the Fed are another way of
| removing money from the economy, but are a broader brush,
| although the Fed is a much better steward than Congress.
| Increased interest rates cause stock market declines, so they
| also tend to act as a wealth tax.
|
| Cutting spending is another way, but it's slow acting. It's more
| of "don't make things worse" than attacking the core problem of
| "too much money".
|
| So if you hear somebody screaming about inflation, ask them if
| they support increased taxes.
| vorpalhex wrote:
| How does increasing taxes bring down fertilizer, meat, gas and
| housing?
| bryanlarsen wrote:
| It doesn't work against transitory, sectoral inflation, no.
| But HN consensus and the top comment here insist that the
| inflation is general and permanent.
| vorpalhex wrote:
| How does raising taxes help against permanent inflation?
| carlgreene wrote:
| I scream about inflation and I do not support increased taxes.
| The US government is wildly inefficient with the tax dollars I
| already give them. Until they can show some discretion I'll
| tell them to kick rocks whenever there's a tax increase on the
| ballot.
| bryanlarsen wrote:
| So given the choice between recession, increased taxes or
| inflation you choose recession? That's a valid choice, as
| long as you acknowledge it.
| AnimalMuppet wrote:
| So if the money I have is worth less, your response is to _take
| away more of my money_? Yeah, that may work to stop inflation.
| It may have a _few_ other consequences, though...
| bryanlarsen wrote:
| All inflation cures are painful. The standard cure is
| recession and high unemployment. Increasing taxes on the rich
| is much less painful. Better to take a little bit of your
| money away than to lose your job.
|
| Or you can learn to live with the inflation.
|
| Rock and a hard place is the standard expression for the
| situation we're in.
| [deleted]
| tomatowurst wrote:
| and right at the top of CNBC we see BREAKING
| Stocks rebound on hope inflation is peaking, Nasdaq adds 1%
|
| On top of the defaults with China now looking like it won't be
| able to avoid Russia's fait down the line, with no end in
| inflation (prices keep going up across the board), with Shenzen
| and Shanghai in indefinite lockdown impacting supply chains, with
| BRICS + OPEC signaling they want alternative to USD +
| crypto/stablecoins impacting financial markets.
|
| We are headed for unprecedented market deflation.
| spacemadness wrote:
| They make up some correlation to sell a daily stock news
| update. They have no idea why it went up. It hasn't even
| recovered from yesterday. Day to day movement means nothing
| most of the time and the stock market is detached from how the
| average American experiences the economy anyway.
| eunos wrote:
| Shenzhen lockdown already ended.
| laluser wrote:
| Not ended. They were eased. https://apnews.com/article/covid-
| technology-business-health-...
| pgwhalen wrote:
| Rule of thumb: if an equity market move is ever less than 1.5%
| in either direction, the headlines about why it happened are
| completely made up. Financial news has to assign a narrative
| even when there is none.
| tomatowurst wrote:
| I've favorited this comment but why 1.5%? Why not 2 or 3%? I
| guess that is a big enough move to suggest some shift in
| fundamentals or some major event in FANG
| pgwhalen wrote:
| I tried to be intentionally conservative, but I agree
| there's an argument for it to be higher. As someone who
| watches markets a decent amount, 3% seems far more likely
| to be in clear reaction to some event, or a continuation of
| a recent major trend.
|
| To be clear I'm referring to the whole market, not a move
| in a single stock.
| ShivShankaran wrote:
| That's because most of retail and individual investors had puts
| or shorted the market. The institutional traders are not going
| to give up their profits so easily and stock always moves to
| crush the retailers
| tomatowurst wrote:
| it seems they read wallstreetbets as well
| bequanna wrote:
| > most of retail and individual investors had puts or shorted
| the market
|
| Most retail investors absolutely do not own puts nor are they
| net short the market.
|
| The actual situation over the past few months seems to be the
| exact opposite of what you mention. It would seem that
| institutional investors have been using their retail facing
| market commentators to urge the public to "buy the dip" while
| the institutional smart money is selling every uptick:
|
| - https://www.zerohedge.com/markets/jpmorgans-resident-
| permabu...
|
| - https://www.zerohedge.com/markets/pain-trade-remains-
| higher-...
| [deleted]
| thepasswordis wrote:
| I'd just like to add to this: I find it absolutely reprehensible
| that The White House is trying to blame this on Russia, even
| coining a phrase "the putin price hike".
|
| Inflation is hurting Americans, and the war in Ukraine is
| _killing_ Ukrainians. The idea that these people would try to use
| one of these things to advantage themselves politically instead
| of addressing the suffering that their policies are causing (and
| changing course) is reprehensible to me.
|
| There is a daily White House press briefing that I suggest
| everybody watch (you can 2x speed through it). Here is a link to
| today's: https://www.youtube.com/watch?v=07-AMwJbXQY
|
| Just the way that they talk about this is so...vile. 8.5%
| inflation is a nightmare. You're in charge. Take ownership of
| that, and for the love of god stop trying to use the massacre of
| innocent people in Ukraine is a political tool for youself.
| Consultant32452 wrote:
| ncmncm wrote:
| My threshold for what must be considered reprehensible White
| House activity has shifted by an alarming degree over the past
| 5 years.
|
| Under current conditions, this is just politics. I was never
| impressed with Biden's integrity, and this does not change my
| estimation, but anything that might help keep out-and-out
| grifters out of government is looking like a win, nowadays.
|
| The perfect is the enemy of the good, but likewise the not-
| great is the enemy of the disastrous. That's where we are now.
| misiti3780 wrote:
| It really does suck, but when the choice is between Biden and
| Trump, two totally incompetent leaders, you cant expect much
| better.
|
| The US already has a law that requires the minimum age of the
| president (35). They should change the law and add a maximum
| age set to ~65. Could solve a lot of our problems.
| txsoftwaredev wrote:
| Based on just the current state of the economy I would LOVE
| to have Trump back in office.
| mjmsmith wrote:
| "Just" is doing a lot of work here if it means "ignoring
| him being an existential threat to democracy".
| crypot wrote:
| All of Trump's policies were inflationary. Tax cuts, trade
| war with China, limiting immigration and threatening to
| leave NATO.
|
| The only good thing would be that OPEC+ would almost
| certainly be producing more oil since Saudi Arabia much
| prefers Trump. They even recently invested $2 billion
| dollars in his son in laws fledgling investment fund.
| ErikVandeWater wrote:
| You forgot his reduction of regulations, of which at the
| very least some were deflationary.
| qqqwerty wrote:
| Trump pressuring the Fed to keep interest rates low is
| exactly why we are in this mess in the first place. Had he
| done the responsible thing and allowed the Fed to raise
| rates while the economy was hot, then we would have had
| more wiggle room when covid hit.
|
| If you truly think Trump could resolve this issue, then
| please explain exactly what he would do to resolve it. I
| hate to break it to you, but more liberal tears are not a
| solution to higher inflation.
| thehappypm wrote:
| Trump lowered interest rates to near 0%, what are you
| talking about exactly?
| JoeAltmaier wrote:
| Just wrong.
|
| https://www.statista.com/statistics/187616/effective-
| rate-of...
| thehappypm wrote:
| ...
| misiti3780 wrote:
| Biden's spending policies are also to blame.
| qqqwerty wrote:
| The CARES Act was signed by Trump and was $2.2 trillion.
| The American Rescue Plan was signed by Biden and was $1.9
| trillion. And yet you blame Biden?
|
| Meanwhile the current Fed chair, a Trump nominee, has way
| more control over inflation and was responsible for
| raising interest rates way too late. And yet you blame
| Biden?
|
| I am still waiting on an answer as to what exactly Trump
| would do to curb inflation if he were in office. As far
| as I understand, wishful thinking and partisanship does
| not impact wheat prices.
| thehappypm wrote:
| American Rescue Plan may not have been necessary. Biden
| became president when vaccine rollout was already
| happening; we were entering a new pandemic phase of hope
| and recovery. I fully blame ARP for inflation being 8%
| and not 5%.
| shmatt wrote:
| you mean the guy who had his personal signature added to the
| _free printed money_ sent to every single US citizen around
| the world (yes, even expats got the _free printed money_ ,
| nothing inflationary here...)
| misiti3780 wrote:
| this response doesnt really make sense. i said both
| presidents were incompetent - so of course i dont think
| trumps checks made sense.
| throwawayboise wrote:
| I'd almost go farther and say 20 years lifetime cumulative
| limit in federal office.
|
| The geriatric retreads we get to choose from every election
| cycle is just maddening.
| belter wrote:
| Want to blame somebody, blame these guys:
| https://www.federalreserve.gov/
| [deleted]
| shmatt wrote:
| So I guess some Americans do think the U.S is just a single
| isolated bubble in the world
|
| Is this also your take on the car shortage? The fact people are
| paying 40% higher prices on used cars?
|
| Is your official response to that - Hey, theres a chip shortage
| in Asia, but who cares? you're in charge! start making the cars
| without the chips!! start making chips at home!! vroom vroom!!
| makomk wrote:
| People blame the UK government for the fact that the same
| thing is happening here, and we're a lot smaller and more
| tightly connected to other countries than the US is. Of
| course people in the US are going to think their government
| is to blame and dismiss what's happening in the rest of the
| world; the US is big enough that people can easily just never
| leave it, and it's a lot more realistic for them to be self-
| sufficient.
| matheusmoreira wrote:
| > start making chips at home!!
|
| This is what every country should do. Reduces interdependency
| and foments high tech industry.
| hintymad wrote:
| This is a graph of US inflation:
| https://en.wikipedia.org/wiki/File:Inflation_data.webp. I fail
| to see how this inflation is " _the_ Putin price hike ". And
| what happened in 2021 Jan?
| memish wrote:
| "The Party told you to reject the evidence of your eyes and
| ears. It was their final, most essential command."
| colinmhayes wrote:
| > And what happened in 2021 Jan?
|
| People started getting vaccinated and returning to normal? I
| know a few people got it in december, but January is when
| things really ramped up.
| jcadam wrote:
| And even that 8.5% number is heavily manipulated. Just like the
| unemployment rate.
| arcticbull wrote:
| So Russia provides a ton of oil. Oil is an input into basically
| everything you've ever owned. The instability and lack of
| supply of oil as a result of the war is driving an increase in
| the price of oil, which is driving an increase in the price of
| goods. An increase in the price of goods means a decrease in
| the purchasing power of the dollar. This is how inflation is
| calculated.
|
| Ergo, the Russians launching the war in Ukraine significantly
| contributes to inflation.
|
| Is it solely responsible? Of course not. Does it contribute? Oh
| most definitely.
| fallingknife wrote:
| Oil price is up 66% vs a year ago, and only 10% since the war
| in Ukraine started. So this is only responsible for a small
| fraction of the price increases.
| usr1106 wrote:
| Because energy and other resource prices have risen globally
| Russia has more income today than before Feb. 24 to finance
| their war. Of course Russian citzens are harmed by the
| sanctions, but the government's capability to finance their
| war not so much.
|
| Source: "Der Spiegel" yesterday citing a US research
| institute.
| mise_en_place wrote:
| I think 1.4 Trillion in asset purchases by the Fed has more
| to do with inflation than Russia invading Ukraine. You could
| make an argument it impacted wheat prices. But the oil market
| already priced the invasion in, it's in backwardation with
| farther months trading lower and lower.
| space_fountain wrote:
| I'm not sure what you mean by saying the oil market had
| already priced in the invasion. Certainly there was a huge
| jump in oil prices when the invasion started
| (https://tradingeconomics.com/commodity/crude-oil). I think
| it's at this point clear that stimulus has had something to
| do with inflation, but also undeniable that the Russian
| invasion helped raise oil prices
| [deleted]
| arcticbull wrote:
| There's really no basis to think that asset purchases are
| responsible for this. Asset prices didn't cause shipping
| prices across the pacific to explode almost 10X [2]. Asset
| purchases didn't cause the Port of LA to back up (ships
| still wait in port _18 days_ [3]). Asset purchases didn 't
| cause a lack of supply of IC manufacturing [4], including
| due to bad weather. Asset purchases didn't cause COVID
| outbreaks [5]. Asset purchases didn't cause labor supply
| issues [6].
|
| I agree the oil market is in backwardation, but this is
| retrospective CPI, not December 2023 CPI.
|
| [edit] Check out the graph on page 7 (11th page in the PDF)
| [1] It shows you just how little global central bank
| balance sheets are in terms of the market. It's less than
| 8.9% of global financial assets, and while it increased a
| lot recently (for obvious reasons) on average over the last
| 20 years it's not super dramatic.
|
| [1] https://www.fsb.org/wp-content/uploads/P161221.pdf
|
| [2] https://unctad.org/news/shipping-during-covid-19-why-
| contain...
|
| [3] https://www.wsj.com/articles/container-ship-backup-at-
| southe...
|
| [4]
| https://asia.nikkei.com/Business/Tech/Semiconductors/Chip-
| pr...
|
| [5] https://www.cnbc.com/2022/04/11/china-covid-outbreak-
| guangzh...
|
| [6] https://www.cbsnews.com/news/long-covid-labor-market-
| missing...
| whimsicalism wrote:
| I'm not a big Fed scaremonger, I actually think early in
| the pandemic they executed quite well.
|
| But you are wrong on a number of fronts.
|
| > Asset prices didn't cause shipping prices across the
| pacific to explode almost 10X [2].
|
| Monetary policy has a _massive_ influence on aggregate
| demand by consumers.
|
| > Check out the graph on page 7 (11th page in the PDF)
| [1] It shows you just how little global central bank
| balance sheets are in terms of the market
|
| You're focusing on the wrong thing. What matters is
| money/assets changing hands and bidding up the price of
| things. Fed policy absolutely has a massive impact on
| this, nobody denies this empirically.
| MegaButts wrote:
| Your points are valid about there being truly unusual
| geopolitical factors right now which fuck up supply
| chains, shipping routes, and overall availability of
| goods.
|
| But it's ignoring something much simpler: if you print
| more money, you're directly obfuscating supply and demand
| by devaluing your currency. The notion that it's not
| money printing because it's held by financial
| institutions is as credible as trickle-down economics.
| There's still more money in the system, and that system
| is purposefully using the extra cash to prop up the stock
| market. You know what the best hedge against
| unsustainable debt is? Devaluing the currency.
|
| Yes, I am making some simplifications. If you really want
| to get into the details of quantitative easing in the US
| we can, but honestly it's just noise. You can't escape
| the concept of supply and demand no matter how opaque
| your policies are. The M2 money supply has had an
| enormous increase in just the past few years.
|
| https://fred.stlouisfed.org/series/WM2NS
|
| I admit I have not had a chance to look at all your links
| as of writing this comment.
| arcticbull wrote:
| Japan has been printing money hand over fist for decades
| - more than tripling the money supply since 1990 - but
| their CPI has been dead-ass flat. [1] Money supply
| matters, but more money doesn't immediately mean higher
| prices. More money doesn't necessarily mean each unit is
| worth less than before because it doesn't exist in
| isolation. What you do with that money matters.
|
| [edit] Concrete example: if I print money to build a new
| port, and that new port leads to a decrease in shipping
| costs? Then prices go down, meaning each dollar is worth
| more than before I increased the supply. New money is an
| investment. It's the liability side of the books. The
| asset side of the books (what we got for it) matters too!
|
| [1] https://fred.stlouisfed.org/series/JPNCPIALLMINMEI
| aww_dang wrote:
| >if I print money to build a new port...
|
| This is where the argument breaks down in my view. You
| cannot effectively centrally plan an economy. Granting
| these special favors for pet projects creates malign
| incentives. Those who are closest to the money spigot
| benefit disproportionally as compared to those who
| receive the newly printed money later. See also: Richard
| Cantillon.
|
| The decentralized market price discovery mechanism is
| disrupted by the malign incentives created by the money
| printers. Even if central planners could acquire enough
| information to effectively plan an economy, the problem
| of corruption and malign incentives remains.
|
| That said, central planners cannot effectively out-
| compete the decentralized price discovery mechanism of a
| generally unhampered market. They are limited and
| fallible bureaucrats, where the market participants are
| legion. Institutional group-think is yet another
| obstacle.
|
| Finally, even if you could conclude that your centrally
| planned port was not a bad investment, can you measure
| the cost of lost innovation? The opportunities not taken
| by the market because capital was misallocated by central
| planners for a port?
| MegaButts wrote:
| Fair. I'm not an expert on the economy of Japan (although
| I know a little bit). But in this case the money being
| printed is being used to prop up the stock market. It's
| essentially creating an artificial bubble.
|
| So yes, you're right. How you use the money matters. But
| the US government isn't using it to help consumers, it's
| using it to help corporations.
|
| I did not articulate this in my original comment, and
| concede you're (mostly) right. I maintain that "the money
| printer goes brrrr" is the main issue in the US, but
| admittedly I'm not providing as much data as you and your
| arguments aren't bad.
| arcticbull wrote:
| btw to be clear, I don't think that the increase in money
| supply has had zero impact. I think it's actually a key
| part. Folks saved a bunch of money - to your point,
| invested it in the stock market - and then when
| restrictions lifted, they went out and bought stuff. This
| spike in demand contributed to inflation, no doubt, and
| it was in part created by new money. I'm not sure that
| the alternative - at least from the Fed's perspective -
| of allowing the US to enter a deflationary spiral in 2020
| would have done us better.
|
| I also think that these issues are transient, and caused
| by a very poor transition out of COVID lockdowns and into
| normalcy. It's taking longer than I thought to resolve,
| but I do think that not taking too much dramatic action
| and letting the market sort it out is the path forward.
| MegaButts wrote:
| > I also think that these issues are transient
|
| I think the _amplification_ of these issues is transient,
| but that the overall trend is still up. I believe CPI
| will come down again soon, but then start to trend up
| again without drastic measures from The Fed (much more
| than raising rates by 25 basis points a few times a year
| like they 're currently discussing).
|
| The world economy is complicated though. Nobody was
| predicting covid a few years ago. Not many people were
| predicting a war last year. Who knows what crazy wrench
| reality will throw in the system soon.
| nightski wrote:
| The Yen is not the world reserve currency and does not
| have the status of the petrodollar.
| arcticbull wrote:
| ... which would give printing more Yen outsize impact.
| There's demand for new US dollars all over the world.
| There's far less demand for the Yen. The Yen, for what
| it's worth, is the preferred Asian reserve currency. And
| the 'petrodollar' is a consequence of US power, it
| doesn't give the US power.
| criddell wrote:
| Why do some see using the Euro or other money for oil as
| a threat to the value of the US dollar?
| steve76 wrote:
| Manuel_D wrote:
| > Concrete example: if I print money to build a new port,
| and that new port leads to a decrease in shipping costs?
| Then prices go down, meaning each dollar is worth more
| than before I increased the supply. New money is an
| investment. It's the liability side of the books. The
| asset side of the books (what we got for it) matters too!
|
| Only if that new port resulted in value added equal to
| the money printed. If the port only adds, say, half the
| value it's going to lead to inflation.
|
| If you just print a bunch of money to give to unemployed
| people, it's going to lead to inflation.
| dyndos wrote:
| Japan is a bit of a special case. They had
| extraordinarily high private-sector credit growth before
| their bubble burst. Now their private-sector debt has
| been dramatically shrinking, which would have led to
| deflation.
|
| Basically, Japan's public-sector debt growth is
| offsetting private-sector debt shrinkage.
|
| This dynamic is unique to Japan.
| imtringued wrote:
| >But it's ignoring something much simpler: if you print
| more money, you're directly obfuscating supply and demand
| by devaluing your currency.
|
| Is this even a logical proposition? If people save $100
| dollars, what's wrong with adding $100 dollars to the
| economy, assuming no price controls like the massively
| distorting zero lower bound that artificially keeps
| interest rates from entering negative territory to signal
| overabundance of capital. This artificial price control
| forces all capital to be utilized at capacity (endless
| growth fallacy) or destroyed (broken window fallacy) to
| reduce the abundance of capital.
|
| After all, if every product has a price at which it is
| guaranteed to be sold, there is going to be an interest
| rate that guarantees that capital will be accepted by
| someone even if that interest rate is negative.
|
| Imagine if you produced trash that costs $10 to dispose
| of, or in other words, the price of that trash is -$10
| but then the government stepped in and guaranteed to buy
| that trash for $0. Suddenly a lot of people will keep
| producing more trash.
|
| >There's still more money in the system, and that system
| is purposefully using the extra cash to prop up the stock
| market.
|
| That's what happens when you disable market signals like
| negative interest rates. Since you have obligated
| yourself to buy the trash your economy slowly turns into
| a bigger and bigger trash heap. Before you say nonsense
| like negative interest rates prop up the stock market,
| think about how a reduction in the money supply is
| supposed to prop the stock market up, it's completely
| illogical.
|
| >You know what the best hedge against unsustainable debt
| is? Devaluing the currency.
|
| No, the best solution against unsustainable debt is to
| tell the owners of financial capital that they have
| accumulated financial assets beyond your desire to be in
| debt, i.e. the interest rate that you would consent to is
| not positive anymore. As it stands right now. That market
| signal is completely dead. There is nothing in this
| market that can say "I've had enough of the debt
| nonsense, I do not want further debt, I will not accept
| further debt" as a 0% interest rate allows people to keep
| saving more and more endlessly which means others must be
| more and more in debt unless they want a recession or
| depression and lose their job.
|
| When you think about it, all these rich savers are just
| lying to themselves by saving beyond the desire of
| society to let them save which is obviously going to lead
| to inflation. After all, you have these tokens and no
| meaningful agreement on the other side that they are
| worth anything, you just forced that obligation upon them
| but that doesn't mean they will actually fulfill it, it's
| not like they agreed to do that. The interest rate that
| they would agree to isn't positive.
| [deleted]
| steve76 wrote:
| rafaelero wrote:
| > Asset prices didn't cause shipping prices across the
| pacific to explode almost 10X [2]
|
| Why not? Fload the economy with dollars and people will
| demand goods. This increased demand will affect shipping
| prices.
| empraptor wrote:
| from what I understand, the increased demand was at least
| partly due to shift in spending from services so goods
| during the pandemic.
| rafaelero wrote:
| Then service prices should be deflating, which doesn't
| seem to be the case.
| [deleted]
| evrydayhustling wrote:
| That's not what backwardation means. Backwardation means a
| recovery of supply is priced in. And we may well see those
| future "roll up" the curve if war continues to constrain
| supply. The high prices at the front of the curve are the
| ones we are experiencing, and they are both driving up the
| CPI directly (since oil is a component) and indirectly
| adding costs to other goods since you need actual oil, not
| oil futures, to undertake production.
| imtringued wrote:
| QE turns illiquid treasuries into liquid treasury soup. No
| new treasuries are created through QE. The Fed has no
| control over how much bank reserves banks want to own and
| how many treasuries the government issues to borrow money.
|
| The reason why QE doesn't lead to inflation is so utterly
| boring it surprises me that people even think it can cause
| inflation. Once interest rates fall below liquidity
| preference, people would rather keep their money liquid
| than invested in fixed term assets (treasuries or
| certificates of deposit) which means banks need liquid
| assets (reserves) to match their now increasingly liquid
| liabilities (your deposits).
|
| Banks have learned from 2008 and aren't lending to risky
| borrowers anymore which means the government is acting as
| the borrower of last resort.
| randomdata wrote:
| _> You could make an argument it impacted wheat prices._
|
| Bids jumped by about 30% when the war began, but the price
| of wheat was already up by nearly 100% over pre-pandemic
| levels when we still thought there was little chance of war
| breaking out.
| samhyde69 wrote:
| rajeshp1986 wrote:
| The consumer inflation was around 6% before the Ukraine
| conflict started in March. Its understandable that oil price
| hike is caused by sanctions on Russia and will affect other
| commodities too but blaming all the inflation on solely
| Russia-Ukraine conflict is nothing but a blame game and
| inability to take control of the situation by WhiteHouse.
| quickthrowman wrote:
| The White House does not have tools to fight inflation. The
| best they can do is not add new spending.
|
| The Federal Reserve Bank's job to control inflation (and
| unemployment)
| UncleOxidant wrote:
| > inability to take control of the situation by WhiteHouse.
|
| I see this sentiment a lot here, but it's really unclear
| what the WhiteHouse can do about it. Maybe they should take
| Gerald Ford's lead and start printing up "Whip Inflation
| Now!" buttons? Maybe you want a wage and price freeze a la
| Richard Nixon? The Federal Reserve is where your ire should
| be aimed. They left rates way too low for way too long
| kicking the can down the road and now the next kick of the
| can could reveal it to be a bomb. The way to deal with
| inflation is the way Paul Volcker dealt with it in 1980:
| raise interest rates _significantly_ - not these piddly 1
| /4% raises.
| gonzo wrote:
| Ford took office in August 1974 amidst one of the worst
| economic crises in US history. Inflation had risen to
| 12.3% that year following the 1973 oil crisis.
| tsss wrote:
| They can't do a whole lot because they already fucked up
| monetary policy in the last 10 years. They spent the last
| decade dismantling the breaks from the car to get it
| going and now that it's going, they can't slow down
| anymore.
| arcticbull wrote:
| That makes no sense, of course they can, they can raise
| interest rates which decreases the supply of money. The
| thing is that would hurt the economy and their goal is to
| maximize employment.
| UncleOxidant wrote:
| Maximizing employment is _one_ goal. The other is to keep
| inflation in check.
| arcticbull wrote:
| I'm aware but really their goal is to do both at the same
| time not to sacrifice one at the expense of the other.
| ac29 wrote:
| > The way to deal with inflation is the way Paul Volcker
| dealt with it in 1980: raise interest rates significantly
| - not these piddly 1/4% raises.
|
| The market is pricing in a 87% chance the next hike is 50
| bps, and a roughly 95% chance of the rate being at least
| 2.25-2.5% by the end of the year.
|
| https://www.cmegroup.com/trading/interest-
| rates/countdown-to...
|
| The market isnt always right, and even a series of back
| to back 50 bp hikes might not be enough. We'll see.
| codebolt wrote:
| There is so much leverage in the economy that an abrupt
| shift towards anything approaching Volker-level rates
| would mean a catastrophic level of defaults in all
| sectors. By keeping rates so low for so long what they've
| really done is paint themselves into a corner.
|
| The best case I see is that they raise rates by 1-2 pct
| and accept a few years of elevated inflation followed by
| a gradual normalization towards a long term mean. I
| really don't believe hyperinflation is a big risk.
| ac29 wrote:
| There was an abrupt shift in the bond market already. BND
| fell by 8% this year, which is a terrible 3.5 month
| return for an intermediate bond fund (prices move
| inversely to market interest rates). Corporate bond funds
| have fallen even more.
| mmarq wrote:
| > anything approaching Volker-level rates would mean a
| catastrophic level of defaults in all sectors
|
| That's the point: raise interest rates until they cause a
| recession, that suppresses demand and so kills inflation.
| jayspell wrote:
| What they could have done is not cancel the Keystone
| pipeline. Enact common sense energy policy instead of
| pushing all their chips into green technology, a key
| component of which is battery based and whose supply
| chain is heavily linked to Russia.
| mywittyname wrote:
| You realize that the original pipeline is still there?
| KXL was a shortcut that would save some money.
|
| Also, the fuel processed from the pipeline is chiefly an
| export, so it wouldn't have affected prices in the USA.
|
| Lastly, the XL pipeline was a huge risk to the American
| agriculture industry. There was opposition to it it on
| the right, particularly from ranchers in the region. Do
| you really think it's wise to put the beef and wheat
| industries in the north at risk just so refineries can
| sell oil overseas at a slightly lower cost?
| coredog64 wrote:
| > Also, the fuel processed from the pipeline is chiefly
| an export, so it wouldn't have affected prices in the
| USA.
|
| Oil is (mostly) fungible. An export from Canada is
| additional capacity that doesn't compete for American oil
| that can stay in America.
| elihu wrote:
| What key part of the battery supply chain is Russia
| involved in?
| UncleOxidant wrote:
| Probably they meant Ukraine and Nickel.
| UncleOxidant wrote:
| The Keystone pipeline isn't the issue here. We still get
| that Canadian oil, it just comes by train instead of
| pipeline. As I understand it oil producers are currently
| sitting on oil leases that they could take advantage of
| to increase production, but they aren't because the
| investors think this oil bump is going to be too short-
| lived especially as we're transitioning more in the
| direction of EVs.
| arcticbull wrote:
| The Fed's contribution is small. What an be done avoiding
| dramatic intervention re: monetary policy, working to
| unclog ports, fix supply chains and shore up domestic
| manufacturing of silicon for next time. And potentially
| leverage the defense production act to make more oil.
|
| Then sit back and wait as it blows over. It's already
| blowing over, prices are stabilizing. Month over month
| 0.3% increase in CPI is 3.6% annualized inflation.
| UncleOxidant wrote:
| > working to unclog ports, fix supply chains and shore up
| domestic manufacturing of silicon
|
| Much of this is outside of the purview of the US
| president. These are areas where the private sector has
| to take the lead. AFAICT there have been efforts to
| increase domestic manufacturing of semiconductors - Intel
| is taking a big lead here, but it's going to take at
| least a couple of years (probably closer to 3 or 4) to
| get these new fabs online. There's not much a US
| president can do about that. And much of what he
| could/can do is limited by congress passing laws.
|
| > The Fed's contribution is small.
|
| It's not. ZIRP has had a huge impact on this inflation
| and fueled lots of market speculation both in housing and
| the stock market (not to mention crypto). With interest
| rates closer to their historical mean this speculation
| wouldn't have happened.
| arcticbull wrote:
| Again your speculation about low interest rates is
| unfounded. Housing prices are driven by zoning as
| evidenced by the Japan housing CPI being dead flat with
| similar interest rate policies. Housing prices across the
| US on an inflation adjusted $/sqft basis are the same as
| they were in the 70s. Outside metros the average new
| house is twice as big; and inside councils refuse to
| allow supply to meet demand - these are both zoning
| issues.
|
| There aren't really "historical average" interest rates,
| they've been going down continuously for like 40 years.
|
| Crypto is the same kind of speculation that drew folks to
| beanie babies. The entire crypto world market cap is like
| 2/3 of apple, it's really not a big thing.
| rcpt wrote:
| > Housing prices are driven by zoning
|
| All the tax cuts that give real estate advantages over
| other investments have arguably more to do with it.
| People don't leverage 5x their net worth into a single
| asset in a single location that produces nothing but for
| housing that's the norm.
| UncleOxidant wrote:
| Historically the mean rate on a 30 year mortgage is right
| around 7%. We've been under that for a good 20 years now
| and we've been _way_ under that for a good dozen years
| now.
|
| > they've been going down continuously for like 40 years.
|
| Cycles. They go down... they go up.
|
| I don't disagree about zoning playing a part, but again,
| this is something the US President has little control
| over. Yes, he should probably be using the bully pulpit
| to support building more affordable housing, but it's not
| something that's going to result in a quick reduction of
| inflation.
|
| > Japan housing CPI being dead flat with similar interest
| rate policies
|
| Japan has an aging, declining population with essentially
| no immigration. Of course their housing prices have been
| essentially flat, they're experiencing a decline in
| household formation.
| arcticbull wrote:
| > Cycles. They go down... they go up.
|
| They do but the cardinal directionality has been down and
| to the right.
|
| > Japan has an aging, declining population with
| essentially no immigration. Of course their housing
| prices have been essentially flat, they're experiencing a
| decline in household formation.
|
| Totally! What you're describing there is the equilibrium
| of supply and demand. In their case, demand went down. In
| our case, demand is going up _and_ we 're refusing to add
| supply. It's the same thing. Or at least, two sides of
| the same coin. We're both arguing that housing prices are
| fundamentally - primarily - driven by supply and demand
| of housing, not supply of money.
|
| > I don't disagree about zoning playing a part, but
| again, this is something the US President has little
| control over. Yes, he should probably be using the bully
| pulpit to support building more affordable housing, but
| it's not something that's going to result in a quick
| reduction of inflation.
|
| This is where we disagree! We should federalize zoning
| rules yesterday. The federal government has the right to
| do this, for instance Chicago residents ability to
| install satellite dishes is already governed by _federal_
| law. [1] Time to stop obstructionist city councils from
| the top and maximize the freedom of individuals to build
| housing as they see fit.
|
| [1] https://www.chicagotribune.com/news/ct-
| xpm-2005-03-06-050306...
| UncleOxidant wrote:
| > They do but the cardinal directionality has been down
| and to the right.
|
| You expected that to last forever?
|
| > driven by supply and demand of housing, not supply of
| money.
|
| Yes, it's driven by supply and demand, but easy money
| means more demand than there would be with higher
| interest rates and tighter monetary policy.
|
| > We should federalize zoning rules yesterday. The
| federal government has the right to do this, for instance
| Chicago residents ability to install satellite dishes
|
| I suspect this Chicago instance has more to do with FCC
| than anything else. Federalizing zoning would likely be
| an uphill battle that would go to the SCOTUS and I'm
| going to guess with the current composition they won't
| look favorably on that.
| arcticbull wrote:
| Ok but more demand for housing plus more supply means an
| amazing economic growth opportunity right? Nerfing supply
| means keeping ourselves from it. This is why low interest
| rates are good - the stimulate development!
|
| And yes I see little appetite for federalizing zoning
| however it's both an option with precedent and would
| actually help unlikely raising interest rates :)
| weezin wrote:
| The month over month was 1.2% though? And .3% month over
| month is 4% annualized because of compounding. and 1.2%
| is 15% annualized inflation so not slowing at all.
|
| edit: my bad 3.66% my calculator rounded to 4.
| thepasswordis wrote:
| Is that what Jen Psaki says every single day in front of the
| cameras? Because I watch it every single day and so far I
| don't think I've heard anything remotely approximating "The
| sanctions we have imposed have caused a minor increase in the
| cost of fuel, but the overall trend is due other factors."
|
| Every day it's "Putin Price Hike", and absolutely 0 taking
| responsibility.
| abduhl wrote:
| >> Because I watch it every single day and so far
|
| This may be hard to hear, but you probably shouldn't be
| watching it every single day. They're never going to say
| what you want them to say because it's not true.
|
| Russia's invasion of Ukraine (and associated war crimes) is
| most definitely a root cause for current inflation spikes
| in food and energy. If you're looking for someone to say
| that it's due to other factors then you're looking for
| something that isn't true.
|
| And food/energy prices are most likely going to get worse
| as the conflict drags on.
| arcticbull wrote:
| I didn't say anything like what you claim I did in the
| first paragraph. The cost of gas going up isn't solely due
| to sanctions, either. The war that the Russians launched -
| where they're currently shooting civilians in the street -
| unprovoked, against a global food exporter. That war of
| course led to the world using any and all relevant tools
| including sanctions to punish them.
|
| [edit] Blaming the world for the sanctions they imposed on
| the Russians is like seeing a bully smacking a victim
| yelling "stop hitting yourself" and saying "yeah! why _are_
| you hitting yourself?! "
|
| So yeah, the Russians are responsible for large increases
| in the cost of oil, and food. Are there other factors at
| play? Sure. A global shipping crisis, a COVID outbreak and
| lockdowns in China. A lot of pent-up demand chasing limited
| supply. Snarled supply chains.
|
| I do think we'd be much further along getting out of this
| if the Russians hadn't kicked off their 'special military
| operation.'
|
| What are we blaming the administration for? Continuing the
| bi-partisan Trump-era QE cycle which allowed America the
| fastest-ever exit from a recession event (COVID), saving
| America from a lost decade?
| colinmhayes wrote:
| I'm not sure if you've ever participated in politics, but
| deflecting blame is like rule number 1. Please point to a
| time a prominent politician has ever accepted blame for
| something.
| lostdog wrote:
| Yeah, the current political system and news organizations
| would absolutely punish Biden for taking the blame on
| inflation, so the current "it's someone else's fault and
| also I am fixing it" is just what you get.
|
| ...though the certainty that inflation is definitely 100%
| Biden's fault is a bit unjustified too.
| adventured wrote:
| Biden is already getting the blame regardless. He's one
| of the least popular presidents in US history, in part
| due to the brutal inflationary wave that is mauling wages
| and the standard of living for the average person.
|
| When you walk into your grocery store and see consumer
| basics going up in price so dramatically, it's going to
| prompt the desire to blame, and of course Biden is a big
| target. Regardless of if it's fair for voters to blame
| Biden so heavily, they are and will.
| AnimalMuppet wrote:
| Well, it _is_ unfair. It always is. The president is
| regarded as being responsible for the economy. And the
| Fed is supposed to be independent, free from political
| control, _to keep the politicians from meddling in the
| economy_.
|
| Was Biden running the government response (or the Fed
| policy) when 2008 happened (when QE started, that many
| here are blaming for the inflation)? No, he wasn't. He
| wasn't even running the response for the first part of
| Covid. I seem to remember stimulus checks with Trump's
| signature on them.
|
| One could fault Biden for the anti-drilling and anti-
| pipeline policies. But much of the blame is just "he's
| the guy currently there", so he gets the blame. "The buck
| stops here", and all that. It's unfair. But it happens to
| every president, and it's always unfair.
| dragonwriter wrote:
| > And the Fed is supposed to be independent, free from
| political control, to keep the politicians from meddling
| in the economy.
|
| No, the Fed is supposed to be relatively isolated from
| short-run political influence to put a step of separation
| between government fiscal policy targeting the economy
| (the responsibility of Congress) from monetary policy
| affecting the currency (the responsibility of the Fed)
| except to the extent that the former effects the
| landscape that the latter targets, to maintain confidence
| in the currency by making monetization of debt unlikely.
|
| This is very much not to prevent the elected officials of
| government from intervening in the economy. If anything,
| it _frees_ them to do so, because the barrier against
| monetization of debt not only protects the currency, it
| protects policymakers from the perception that deficits
| will likely be resolved with monetization, which is a
| brake on fiscal policy that involves deficit spending.
| kipchak wrote:
| This seems like an unfortunate consequence of candidates
| being expected to promise everything and the kitchen sink
| on the campaign trail, and the increase in federal power.
| That combined with very high partisanship makes it easy
| to point the finger as to who is responsible. People
| usually aren't presented a more nuanced narrative.
| koolba wrote:
| There isn't much nuance to trillions of dollars of fiscal
| stimulus and rampant inflation. It's kind of economics
| 101.
|
| Claiming they're not responsible, or even worse, claiming
| that an additional $1.85T of spending will reign in
| inflation is beyond ridiculous: https://www.nytimes.com/2
| 021/11/11/business/economy/biden-in...
| colinmhayes wrote:
| Monetary expansion in the face of recession has been the
| feds policy since 2008. Not only is Biden not the one who
| decided to expand the monetary base/keep interest rates
| low, even if he had decided that it would've been in line
| with the last 2 presidents.
| koolba wrote:
| I'm referring to fiscal stimulus, not monetary policy.
| The Fed keeping rates so low for so long is a separate
| (but clearly related).
| UncleOxidant wrote:
| Given the timelines I can't see how Biden is even 10% at
| fault. The previous administration started trade wars
| which began to blow up supply chains even prior to the
| pandemic. They also increased the deficit during a time
| of economic growth when they should have been trying to
| decrease it. So if anything I would break down the blame
| like this: The Fed: 60% (for QE and keeping rates too low
| for way too long), Previous admin: 20% (trade wars,
| increasing deficits when they should've been working on
| reducing them), Putin 15% (for invading Ukraine), Biden
| admin (maybe 5%, but even that is probably a bit high)
| newaccount2021 wrote:
| mbg721 wrote:
| Does Congress get any blame for promising an
| infrastructure bill for at least a decade, treating it as
| a political football, and then loading it up with various
| pet projects?
| dragonwriter wrote:
| > Does Congress get any blame for promising an
| infrastructure bill for at least a decade
|
| Congress isn't a person or even an institution with a
| unitary head, and that's at least 5 separate Congresses,
| several of which didn't have even approximate unity
| between the two houses on the issue.
|
| And most of the promises on that came from the White
| House, not "Congress" (as if there was anyone who could
| speak for "Congress" anyway.)
|
| And Congress passed infrastructure bills in 2009, 2012,
| and 2015 before the one in 2021.
| audleman wrote:
| Isn't the Fed taking directions from whatever
| administration is in power? Or do they have their own
| independent agenda?
|
| I think it's more the former, leading to a circular
| argument on where the blame for that 60% lies.
| giarc wrote:
| Is the government responsible for inflation? Honest
| question. They don't set prices for goods. They have been
| printing money, but that's been going on for 2-3 years now.
| jcadam wrote:
| I blame Nixon.
| newaccount2021 wrote:
| [deleted]
| butlerm wrote:
| Government regulations can affect the cost and supply of
| just about anything, especially housing and energy.
| Tariffs on foreign goods can be a major factor as well.
| Beyond that it is a question of government borrowing and
| central bank money supply.
|
| Government borrowing will be inflationary if it is
| financed by the central bank and it doesn't look like
| there is any credible plan for paying it off. That sort
| of thing is indistinguishable from printing currency to
| pay your bills, which doesn't work out very well after a
| while. Germany in the 1920s and Zimbabwe more recently
| are good examples of that.
| bduerst wrote:
| _Can_ a government be responsible for inflation? Yes.
|
| _Is_ the government responsible for the inflation
| observed right now? That 's a complex answer, of which
| current political adversaries of the executive branch
| leadership would love to pin solely on them.
| caeril wrote:
| Huh? Inflation has been ramping up FAR in advance of the
| Ukraine invasion. Producer costs were already spiraling so
| badly that Powell had to concede that the entire FRB was
| bullshitting us about inflation being "transitory" in _the
| middle of last year_.
|
| Hayekian acolytes and hard money advocates have been warning
| about this on this very site for YEARS, only to be downvoted
| and shouted down by the dominant Keynesian Central Bank
| Worshipper HN zeitgeist.
|
| No, these consequences have been in the making since
| Helicopter Ben launched QE. The supply chain shocks
| introduced by COVID definitely accelerated things, but the
| outcome was always inevitable.
|
| Furthermore, the March print only included a small portion of
| the Ukraine-related inflation, specifically in fuel prices
| only. It's going to take several quarters for these high
| energy costs to filter into the rest of the CPI. So if you
| think this March print is bad, just wait.
| louloulou wrote:
| CPI: 8.9%
|
| Fed funds rate: 0.5%
|
| US gov debt: 125% GDP
|
| HN: the problem is COVID/Putin, there is nothing the WH or
| the Fed can do.
| arcticbull wrote:
| > Huh? Inflation has been ramping up FAR in advance of the
| Ukraine invasion.
|
| Exiting COVID, lots of demand chasing limited supply,
| shipping issues, supply chain issues - especially for core
| inputs like silicon wafers. However, that was well on its
| way to being resolved, which is what you see in the CPI
| data in _spite_ of the Russian war. +0.3% MoM vs expected
| +0.5% MoM. The worst is well behind us.
|
| Lumber is way down, corn is flat, soy is flat, consumer
| discretionary inventories (excluding auto) are up and
| there's word that demand for chips has peaked too.
|
| > No, these consequences have been in the making since
| Helicopter Ben launched QE.
|
| The impact from QE is limited compared to all the above.
| There's a ton of demand for dollars, not just domestically
| but internationally. Monetary policy has some, small,
| impact, but nothing compared to the war, supply chains,
| shipping issues and labor market issues.
| adventured wrote:
| > The worst is well behind us.
|
| How can you accurately predict that the worst is behind
| us, when you don't know the outcome of the Covid tornado
| wreaking havoc in China? You can correctly forecast how
| that's going to play out and how it'll impact
| manufacturing and consumer prices globally? Of course
| not, nobody can.
| arcticbull wrote:
| Nobody can predict anything with 100% certainty however
| they can infer with constant externalities based on
| trends.
| uoaei wrote:
| Oil supply, while still somewhat volatile, is on a stable
| runway going forward. The reason prices are _still_ high is
| no longer the war, but corporate margin-padding (read: price-
| gouging).
| billfor wrote:
| Russia only provides 7% of the oil to the US according to
| https://www.factcheck.org/2022/03/examining-u-s-energy-
| indep..., and Biden has held up fracking leases according to
| https://www.wsj.com/articles/joe-biden-suddenly-loves-
| fracke..., and inflation has started long before the Ukraine
| war (https://www.zerohedge.com/personal-
| finance/extraordinary-us-...) so yeah the Biden
| administration bears some responsibility.
| arcticbull wrote:
| Yes, 7% of US gas imports, I think 3% of oil imports. But
| either way, it doesn't matter because it's a global market.
| While the US' supply isn't threatened because 70% of
| foreign oil comes from the Mexico and Canada (plus a ton of
| domestic production) the _price_ is determined in the
| global markets.
|
| As for fracking leases, oil companies have over 9000
| approved permits they're not using already, and when
| pressed on why, CEOs stated it is because shareholders want
| them to be conservative with capital. I suspect it's
| because they realize this is all transient and there's no
| sense investing in the long run to address a short-term
| spike.
| bduerst wrote:
| Yep, oil is a textbook fungible resource and even if you
| only import <1%, any increases in global price are going
| to affect the remaining 99% of your costs.
|
| It will be interesting to see how energy companies
| respond to this though. Will they play chicken with
| Russia to see how long it will hold on the price
| increase? Or will they start dropping the capex to tap
| the more expensive resources that the higher price point
| has unlocked?
| [deleted]
| babypuncher wrote:
| Russia provides a considerable amount of oil to the rest of
| the world. The US exists in that same market. Countries
| banning Russian oil makes the price for all non-Russian oil
| sources go up.
| Arainach wrote:
| Russia provides oil to other countries. When those
| countries don't have access to Russian oil, they have to
| buy more oil on the market. This means that they're bidding
| against the US and that prices go up.
| Consultant32452 wrote:
| In 2019 a US military funded think tank wrote a prescription
| for how the US could provoke Russia into over-extending
| itself. Ukraine plays a central role. Notably, the "risks"
| section explicitly says that implementing these provocations
| could result in Russia feeling the need to push further into
| Ukraine.
|
| It's an interesting read. I recommend as you read through the
| recommended provocations, try to figure out which ones we
| implemented and what was the result. There's quite a few such
| as withdrawing from peace treaties, arming Ukraine with
| lethal weapons, and performing military exercises on Russia's
| border.
|
| https://www.rand.org/pubs/research_reports/RR3063.html
|
| If anyone perceives this as being "pro-Putin" don't bother
| responding. He's an evil dictator who should be in prison for
| the rest of his miserable life and I'm uninterested in
| hearing you parrot the regime's propaganda that if you
| criticize them you must be pro-Putin.
| mrep wrote:
| Please explain how the US provoked Russia with "risks".
| Nato is too scared to send in our massively bigger military
| to Ukraine because of how many nukes they have. NATO is a
| defensive pack and our wealth is way bigger than Russia
| meaning we have way more to lose so why do you think we
| would ever risk our lives attacking Russia for their shit
| economy?
| xadhominemx wrote:
| This is pro-Putin because you believe his outrageous
| perfunctory justification for the invasion.
| Consultant32452 wrote:
| Putin said he invaded Ukraine to kill the Nazis.
|
| The Rand paper describes why the US military funded
| report believes Russia invaded Ukraine, and it's as a
| result to the provocations we implemented. It's fair to
| disagree with it, but it didn't come from Russia, it came
| from a US military think tank.
| AnimalMuppet wrote:
| No, by your own words the paper describes how a US-
| military-funded report _believed_ the US _could_ provoke
| Russia into invading Ukraine. You still have to show that
| the US did in fact take those steps, and take them with
| the intent of causing Russia to invade.
|
| Also note that the paper is from 2019. Russia's invasion
| of Crimea and Donbass was 2014. So Russia was perfectly
| capable of getting there without the US having to figure
| out how to "provoke" them.
| Consultant32452 wrote:
| I invited you in the OP to do your own research if you
| aren't aware of all the sanctions we added, the multiple
| treaties we withdrew from, or how much deadly weapons we
| provided Ukraine as just a starting point.
|
| I'm not going to bother with semantics arguments around
| whether the US intended for Russia to go further into
| Ukraine vs intentionally kept escalating the behaviors
| that they knew would increase the risk of Russia going
| further into Ukraine but they didn't "want" it to happen.
|
| In 2014, you mean when the US openly supported revolution
| in Ukraine and cherry picked the new administration?
|
| https://www.theguardian.com/commentisfree/2014/apr/30/rus
| sia...
|
| Ukraine had previously had a long-standing agreement with
| Russia to guarantee access to the only warm water port
| Russia had. After the new regime that was picked by the
| US came in, they revoked that relationship. That is the
| reason why Russia took Crimea (warm water port), because
| it was unwilling to be nerfed by the US in this way.
| lalaland1125 wrote:
| > In 2014, you mean when the US openly supported
| revolution in Ukraine and cherry picked the new
| administration?
|
| The idea that the US cherry picked the new administration
| is bonkers. The only "evidence" of this is a phone call
| where some diplomats talk about how effective they think
| the opposition are. If there a phone call where US
| officials say that they think Macron is better than Le
| Pen is that evidence that the US chose Macron to be the
| leader of France?
|
| It's an especially silly accusation when you realize that
| the temporary government just ruled for 6 months until
| they held an election and made no major changes during
| that time.
| rgbrenner wrote:
| _Ukraine had previously had a long-standing agreement
| with Russia to guarantee access to the only warm water
| port Russia had. After the new regime that was picked by
| the US came in, they revoked that relationship. That is
| the reason why Russia took Crimea (warm water port),
| because it was unwilling to be nerfed by the US in this
| way._
|
| If you couldnt make it anymore obvious that you're pro-
| putin... you bring up the Kharkiv pact and then re-order
| historical events to blame putin's actions on the US.
|
| The pact that was terminated BY RUSSIA, AFTER they took
| Crimea.
|
| https://en.wikipedia.org/wiki/Kharkiv_Pact
| oneoff786 wrote:
| Putin lied. Obviously.
| imtringued wrote:
| In my opinion the war is a success if Putin can get his
| hands on luhansk and donetsk. That's the only way this
| can end well for Russia. They take some more coal and oil
| territory, make a few billions of dollars more money and
| then go back to being a dormant threat and gas station
| for Europe. Who cares if you are ruining your country if
| you end up richer in the end?
|
| If Putin actually wanted to get his hands on Ukraine to
| turn it into a puppet state or kick start a neo soviet
| union then he completely failed.
| lalaland1125 wrote:
| > performing military exercises on Russia's border
|
| The primary purpose of those exercises was to signal a
| strong commitment to NATO defense for the Baltics and
| Eastern Europe.
|
| That seems to have been successful as Russia has not
| touched Poland and so the overall scope of conflict of this
| war was reduced to Ukraine.
|
| > arming Ukraine with lethal weapons
|
| This seems to also have been successful. Without those
| weapons, Ukraine would have been overrun and we would have
| seen Bucha 2.0 in Kiev.
|
| I find it hard to believe that giving Ukraine fewer weapons
| would have resulted in no invasion, especially given the
| fact that Russia only invaded because they believed Ukraine
| was weak.
|
| I do agree that this one was risky, which is why we made
| sure to get consent from Ukraine's democratically elected
| government for this policy.
|
| > withdrawing from peace treaties
|
| I assume this is referring to "Withdraw from the INF
| Treaty", which is an arms control treaty, not a peace
| treaty? Or is there some other treaty you are referring to?
| I highly doubt this has had any real effect, given that
| nuclear escalation is so far off the table anyways and any
| missiles of this variety would have been stationed in the
| Baltics / Poland anyways.
| aww_dang wrote:
| Sanctioning Russia, preventing trade and precipitating the
| ensuing shortages is another item which political leaders
| could take responsibility for. Interesting how this has been
| spun.
| aeternum wrote:
| It's quite interesting that we do not consider the
| collateral damage of sanctions to be evil like we do with
| airstrikes.
|
| The US sanctions on North Korea for example have caused
| incomprehensible amounts of starvation, a fate worse than
| being killed in an airstrike, yet people don't seem to
| care.
| arcticbull wrote:
| Nobody owes another country trade. If a country wants to
| act out, then it cannot be surprised that countries will
| stop doing business with them. This is the fault of the
| Russian administration, not the rest of the world for
| wanting to avoid trading with a warmonger.
| aww_dang wrote:
| The question isn't whether Mr. Putin, his administration
| or the Russian state is 'owed' trade. It is whether
| individuals in the west should be able to freely purchase
| petroleum products.
|
| The prohibitions on trade are the fault of those enacting
| the prohibitions on trade.
|
| If you're going to take the realpolitik stance of
| demanding the necessity of the sanctions as a result of
| the Russian administration's actions, then where does
| this train of consequences end?
|
| Did the war in Ukraine happen in a vacuum? Were there no
| precipitating events, no opportunities for deescalation?
| If the invasion was solely the fault of the Russian
| administration, then it should follow that the sanctions
| are solely the fault of those who enacted them.
| arcticbull wrote:
| > The prohibitions on trade are the fault of those
| enacting the prohibitions on trade.
|
| International trade isn't a right, it's a privilege.
| Agreements negotiated _between_ states at the state
| level. You have a _right_ to trade at home, you don 't
| have a _right_ to trade abroad whether that 's at the
| discretion of the state that represents your interests,
| or the state that represents the interests of your
| trading partner.
|
| For instance, the Chinese can't sell fentanyl into the US
| market. Why not? Because trade isn't a right, it's a
| privilege.
|
| > If the invasion was solely the fault of the Russian
| administration, then it should follow that the sanctions
| are solely the fault of those who enacted them.
|
| Other way. If the fault of the invasion was solely on
| Russia then the consequences of those actions are also on
| Russia.
| aeternum wrote:
| Maybe trade should be a right, it was definitely seen
| that way (by the West) at one point in history:
| https://en.wikipedia.org/wiki/Opium_Wars
|
| How fair is it to force starvation upon a populace in
| retribution for the actions of an unelected leader?
|
| As a thought experiment, suppose that Russia did not have
| nukes nor means to retaliate, would you be equally okay
| with the US bombing Russian cities and killing civilians
| in numbers equal to those that will starve due to our
| sanctions?
|
| What if instead of sanctions or bombing we developed some
| kind of chemical weapon that increased the population's
| metabolism such that equal numbers starve. Would that not
| be seen as completely despicable? Yet the outcome is the
| same.
| yywwbbn wrote:
| Is anyone in Russia at the risk of starvation? Also The
| leader of Russia was elected. While their elections were
| not exactly fair (then again US presidential elections
| are also a complete shit show) I'm not sure many doubt
| Putin wouldn't have easily gotten 50%+ even if they were.
| aww_dang wrote:
| Too true.
|
| In this case the citizens who consume the pro-sanctions
| narrative are expected to toe the line while they pay
| higher prices.
|
| "See what Mr. Putin made me do to you, on your behalf!"
| seems a greater leap than saying, "See what Saddam made
| me do to those Iraqis on your behalf!"
| brightball wrote:
| Russian oil was about 8% of the US supply.
|
| EDIT: It was a simple comment, not a lecture of how the
| global economy works. Point was that there is a hell of a lot
| more causing inflation than the supply of Russian oil. Much
| higher prices have had nowhere close to the overall impact on
| CPI that we are currently experiencing.
| BaseballPhysics wrote:
| > Russian oil was about 8% of the US supply.
|
| This comment betrays a deep lack of understanding about how
| pricing works for fungible commodities.
|
| Russian oil is a huge chunk of the _world_ supply, and oil
| is sold on a global market.
| BaseballPhysics wrote:
| Following up on your edit:
|
| > It was a simple comment, not a lecture of how the global
| economy works.
|
| Well, one can only reply to the comment you wrote, and that
| comment, as originally written, was misleading at best.
|
| > Point was that there is a hell of a lot more causing
| inflation than the supply of Russian oil.
|
| No one is claiming otherwise.
|
| But the annualized core inflation rate (6.5%) is dwarfed by
| the headline rate (8.5%) and the key difference between
| those rates is fuel and food, both of which are directly
| affected by Russian actions in Ukraine.
|
| Furthermore, as the article notes: "there were signs that
| core inflation appeared to be ebbing, as it rose just 0.3%
| for the month, less than the 0.5% estimate"
|
| Moreover core inflation, despite factoring out direct fuel
| costs, is still influenced by fuel costs as fuel factors
| into the price of many other goods. So that 0.3% increase
| in core inflation is actually pretty remarkable in that
| it's lower than I would've expected given the brutal
| increase in fuel prices.
|
| The upshot being, were it not for Russian invasion of
| Ukraine, I suspect the headline would be "Growth in
| consumer prices fell slightly in March" as increasing
| interest rates plus an easing of supply chain issues has
| reduced pressure on consumer prices.
|
| But forget all that, it's way more fun to ignore the actual
| facts and just expound about the money supply and how we
| all need to invest in bitcoin and gold.
| maerF0x0 wrote:
| > Inflation is hurting Americans
|
| This is a nuanced thing tbh.
|
| Anyone with a lot of debt (eg lots of student loan debt)
| actually benefits from inflation.
|
| Inflation is hurting _fixed income and currency holders_
| matheusmoreira wrote:
| Yes. Inflation hurts anyone trying to accumulate any amount
| money. They're better off spending it as soon as possible.
| Much harder to get rich by saving money now and it's not like
| corporations are in a rush to give matching raises to
| workers.
| seoaeu wrote:
| > Much harder to get rich by saving money now
|
| No one was getting rich by _saving money_ with interest
| rates basically zero and the stock market posting record
| returns.
|
| > it's not like corporations are in a rush to give matching
| raises to workers.
|
| Inflation is nearly at a 50 year low. Corporations that
| want to fill their hiring targets _are_ giving raises
| butlerm wrote:
| Almost anyone with a wage, salary, or rate that doesn't
| trivially adjust is hurt by inflation - unless of course they
| have more than enough debt to make up for all of that.
| thehappypm wrote:
| I'm not sure why you're being downvoted because it's true. I
| bought a house in 2021 with a 2.6% mortgage interest rate.
| Inflation is making my payment more affordable in real terms.
| overtonwhy wrote:
| Wow a new account that's anti government with the immediate hot
| take getting voted to the top. How refreshing.
| thepasswordis wrote:
| Our accounts are the same age.
| nodesocket wrote:
| Thank you. I'm glad I'm not the only one who is outraged about
| this. This has little if not zero to with Russia and more about
| the current administration's horrific economic and fiscal
| policies.
|
| Just last week they extended the delay on student loan debt
| repayment? Why in heck? That leaves more money in people's
| pockets to go out and buy and spend. Let's stop with this Covid
| charade of outlandish government spending on programs that we
| don't need. In reality Covid is a prop to push through liberal
| fiscal policies.
|
| Another example; the current administration pushing hard for
| Union's at Amazon and Tesla. Once again, rising wages is not
| the policy that helps reduce inflation. It's literally econ
| 101; "to make up for the increase in cost, companies must
| charge more for their goods and services to maintain the same
| level of profitability."
| quickthrowman wrote:
| > Just last week they extended the delay on student loan debt
| repayment? Why in heck?
|
| Because there's an election in November.
| Bud wrote:
| Which "horrific" economic and fiscal policies, specifically,
| do you assert are responsible for the current inflation?
|
| Please cite specifics, with sources.
|
| As an aside, your assertion about covid is utterly ludicrous.
| Consultant32452 wrote:
| Not OP, but I would say there's two major causes for
| inflation at the moment.
|
| One is the extended period of 0% fed rate coupled with
| ludicrous spending. Most of that happened under the
| previous administration and was largely bipartisan. This
| administration still has insanely low fed funds rate and is
| still spending like crazy. Please don't bother explaining
| how the federal reserve works, the buck stops at whoever
| appoints them and/or gives them power.
|
| The second is continually escalating sanctions against one
| of the world's biggest energy and food exporters. This also
| started under the previous administration and was expanded
| during this administration. Again, bipartisan. The
| administration(s) paint pictures of oligarchs losing yachts
| when they talk about sanctions. They conspicuously neglect
| to mention food rationing in Spain, food riots in Peru and
| Sri Lanka, and the looming famine crisis when the crops
| that should be getting planted now don't get planted
| because there's no fertilizer. So in 3-8 months when those
| crops should be getting harvested, it's going to be bad and
| food inflation is going to be much worse and many, many
| poor people are going to starve.
| nodesocket wrote:
| Besides the student loan payment delay, pushing for higher
| wages, and unionizing, which I already cited I'll leave a
| few big ones.
|
| Starting with the first calamity. Biden's American Rescue
| Plan. $1.9 trillion dollars completely unneeded, only done
| for political reasons. In the name of Covid, pushed through
| absurd welfare programs. It's like cashing in $5 chips at
| the casino for $100 loses down the line.
|
| Enacting regulation to limit US production of oil and
| stopping the keystone pipeline. Under Trump the united
| states was energy independent and also for the first time
| in 75 years a net exporter or oil.
|
| Thank god Biden's build back better plan is being held up.
| Another outrageous case of spending that will throw
| gasoline onto the raging fire. Perhaps would be the last
| nail in the coffin.
| [deleted]
| curiousgeorgio wrote:
| Why, of course it's Russia's fault. Couldn't be related to
| this:
|
| https://fred.stlouisfed.org/series/M1SL [1]
|
| /s
|
| [1] Keep in mind, the effects of these changes are often not
| felt in everyday prices for at least 1-2 _years_.
| butlerm wrote:
| M2 includes M1 and it did not move nearly as much, suggesting
| that the nominal change in M1 was much larger than the part
| which had real economic consequences.
|
| https://fred.stlouisfed.org/series/M2SL
| curiousgeorgio wrote:
| Any significant feature in a data set is going to look
| (relatively) smaller when you include that in a much larger
| data set. You can argue that M2 is more relevant to
| inflation (I'd disagree), but it doesn't change the fact
| that M1 has seen drastic increases.
|
| Time will tell how much effect this has on inflation, but
| it's odd that so many of the people complaining about
| inflation insist that it must be related to _anything but_
| the increase in money supply.
| colinmhayes wrote:
| The m1 graph is incredibly misleading to the point of bad
| faith IMO because they changed the definition, causing the
| spike in April 2020. The M2 graph
| https://fred.stlouisfed.org/series/WM2NS still shows that the
| monetary base is expanding (less drastically) without
| effectively lying.
| curiousgeorgio wrote:
| Even putting the graph aside, could we really expect
| anything other than high inflation when the U.S. gov't has
| been injecting _trillions_ (much of which is deficit
| spending) into the economy for the past couple of years?
| colinmhayes wrote:
| Well they were injecting trillions over the decade
| following 2008, so it really wasn't that clear. But yes,
| some inflation was expected following the covid relief
| packages.
| gumby wrote:
| Inflation at the moment is a global phenomenon. It's hard to
| see how any US policy can be responsible for that, except at
| the margins.
| imtringued wrote:
| Inflation is dead in China.
| TameAntelope wrote:
| I agree w/r/t how absolutely... childish... the word choice is,
| and I think folks trying to argue the merits here are missing
| the point.
|
| Yes, Putin's individual actions in Ukraine have had a negative
| effect on the global economy, and yes that negative effect is
| creating additional inflation, but "putin price hike" is so
| obviously a sound-bite crafted explicitly to trick voters into
| not "blaming" the current administration.
|
| I voted for Biden because I wanted an adult in the Oval Office,
| and an adult doesn't talk like that, in my opinion. I
| understand why it can feel necessary to talk like this, but you
| give up the high ground by doing so, and I think that's a
| mistake.
| hintymad wrote:
| I didn't vote for anyone last year. When I watched the talks
| given by Biden in 80s, 90s, and 2000s on foreign policies, on
| racial issues, and on education, and I found him repulsive
| and couldn't believe the projected image of him being "nice
| grandpa", "adult", or "moderate".
| ncmncm wrote:
| "Not an out-and-out grifter" is what carries the day,
| lately, on a good day.
|
| We are left to pray for such good days.
| uoaei wrote:
| Many, many names on the ballot in 2020 fit that
| description.
|
| Electoral reform (approval voting ftw, I don't get the
| obsession with ranked-choice) is a crucial part of the
| solution to these problems, but mandatory voting is
| completely stupid if you keep first-past-the-post. That
| would only serve to enshrine the spoiler effect _in law_
| as an inevitability in US politics forevermore. Great for
| anyone who gets paid by DNC or RNC, terrible for
| literally everyone else.
| TameAntelope wrote:
| Eh, I think of "I didn't vote" as a pretty antagonistic
| position to take at this point in our democracy. I
| personally wish we had mandatory voting laws like in AUS.
| odonnellryan wrote:
| Inflation will kill Americans. It may kill more Americans than
| Ukrainians due to the war. That's hard to say but inflation has
| a strong correlation with increased mortality rates.
| oneoff786 wrote:
| By what mechanism will a small bump to inflation kill more
| Americans than the number of casualties in Ukraine?
| aarontait wrote:
| The Federal Reserve, which is almost completely independent
| from the federal government, is the biggest player in regards
| to controlling inflation. In reality, POTUS doesn't have
| effective levers for controlling general inflation. However, I
| agree that their messaging has been absolutely horrible. They
| could at least create the appearance of doing something about
| it instead of just dismissing it as the Putin price hike.
| dragonwriter wrote:
| > The Federal Reserve, which is almost completely independent
| from the federal government, is the biggest player in regards
| to controlling inflation.
|
| The Federal Reserve Board of Governors, an executive agency
| of the federal government that is "independent" _within_
| government in the same sense as, say, the FCC, and not at all
| independent _from_ the government, is actually the relevant
| actor in inflation-control policy.
| aarontait wrote:
| Aside from appointing governors, what power does the
| president have over the federal reserve board? The
| president can direct/order the FCC to pursue a course of
| action, but as far as I'm aware, the president doesn't have
| executive authority over the fed's monetary policy.
| ajross wrote:
| > the suffering that their policies are causing
|
| Not sure what policies you're talking about here? Most of the
| current inflation drive is (1) a spike to petroleum markets
| which is impacting shipping speculation (you handwave it away,
| but yes: this is the biggest current factor), (2) the reheating
| of the consumption economy in the wake of the pandemic, (3) the
| slower ramping of the production economy to compensate (c.f.
| chip shortage), (4) the tail end of the pandemic savings boom
| caused by in hindsight very generous temporary benefits.
|
| Of those factors, only one is an issue of US government policy.
| And it was wildly popular, almost 100% bipartisan, and passed
| during the prior administration.
|
| To wit: in your horror that the Biden administration would
| blame inflation on Putin, you seem to be rushing to blame
| inflation on the Biden administration with even less
| justification! It's topical right now because of a discussion
| yesterday, but... basically, I'm not completely convinced your
| argument is being made in Good Faith.
| Bud wrote:
| This comment is completely slanted and unjustified.
|
| Accurately characterizing this inflation as being partly the
| result of disruption in the oil markets caused by the war in
| Ukraine is emphatically not the same as taking political
| "advantage". It's simply a statement of fact. Not a "political
| tool".
|
| I think you have an axe to grind and have decided that the
| Biden Administration would be a nice sharpening stone.
| memish wrote:
| That phrase sounds like something McKinsey would come up with.
| Does the White House use McKinsey? Serious question.
| TameAntelope wrote:
| There are _absolutely_ former big3 folks working in the
| current administration, I for a fact know of two.
| xadhominemx wrote:
| It's a catchy political catch phrase man. It's literally a
| multi-thousand year old tradition.
| jollybean wrote:
| The war in Ukraine is a fundamental driver of inflation.
|
| The other is COVID hangover from money printing and screwed up
| supply chain.
|
| It's perfectly responsible to highlight the factors that are
| driving it.
|
| If Biden was lying, it'd be another thing, but he's not.
|
| It's perfectly fair populism.
|
| Putin kicked of a war that is having massive repercussions that
| are just beginning.
|
| You have Ukranian sympathy, but are you willing to pay 2x
| heating bill next winter?
|
| Because Germans are going to have to face that, and their
| sympathy for Ukraine might plummet, there could be riots.
|
| Those are the kinds of things that cause revolutions.
| Lendal wrote:
| Much has been made about the Russian oil & gas situation and
| how it affects the prices of every product or service produced
| downstream of it.
|
| Here's something you might not know. Russia produces 86 billion
| tons of wheat, Ukraine 25 billion tons of wheat annually. Only
| China produces more. The yellow in Ukraine's flag symbolizes
| wheat, it's that important. Much of Russia's wheat has been cut
| and 100% of Ukraine's wheat shipments have been cut from the
| world supply. Several countries get almost all their wheat from
| one of Russia or Ukraine. Not only are their prices
| skyrocketing, but famine is inevitable. It is coming. Inflation
| is only the beginning. Famine is the oncoming train, and people
| have the balls to complain about prices. Just wait. Those
| countries are going to try and buy US or Canadian wheat,
| driving up prices yet again.
|
| You're free to complain about politics, but war is now the
| primary driver of inflation, whether you believe it's
| politically correct or not.
| somewhereoutth wrote:
| Pestilence, War, Famine, Death.
| zacharytelschow wrote:
| > war is now the primary driver of inflation
|
| "Inflation is always and everywhere a monetary phenomenon, in
| the sense that it is and can be produced only by a more rapid
| increase in the quantity of money than in output." -- Milton
| Friedman
|
| All else being equal, a rise in the price of wheat or oil
| would necessitate a decrease in the price of other goods as
| more money than previously is spent on those particular
| goods. If you spend more money on gas, you'll have to spend
| less on something else. The only way [wheat+gas+etc] _and_
| all other goods can rise is if there 's more money created to
| chase those goods.
| jcadam wrote:
| Rationing is coming, guaranteed.
| cheriot wrote:
| > Just the way that they talk about this is so...vile. 8.5%
| inflation is a nightmare. You're in charge. Take ownership of
| that, and for the love of god stop trying to use the massacre
| of innocent people in Ukraine is a political tool for youself.
|
| 1. The President of the United States does not control
| inflation, the price of oil, the price of CPUs, the price of
| new and used cars, or the ports that are backed up. People ask
| a glib question and get a glib answer.
|
| 2. What war in all of human history was not politicized? This
| really should not be surprising.
|
| I get not liking politics, but being outraged at the state of
| the world and directing that at whichever politician is in
| office... is not useful unless you're playing politics
| yourself.
| [deleted]
| tenpies wrote:
| > 1. The President of the United States does not control
| inflation, the price of oil, the price of CPUs, the price of
| new and used cars, or the ports that are backed up. People
| ask a glib question and get a glib answer.
|
| Except he does. Sure he is not holding a dial labeled
| "inflation", but he led a tsunami of poorly thought out
| policy, wasteful spending, and virtue-signalling.
|
| Even if you lay aside how he was actively demonizing O&G
| before winning the election, his first action as POTUS was
| literally to cancel an oil pipeline. Transport costs are a
| factor in oil prices, you cannot pretend they aren't.
| ryukafalz wrote:
| You do remember we have a climate crisis on our hands right
| now too, right? We need to be bringing more nuclear and
| renewable capacity online, not doubling down on fossil
| fuels.
| jcadam wrote:
| There's a simpler solution to your "climate crisis" if
| you have no conscience. What do you think is happening
| right now?
| mhitza wrote:
| It happens everywhere. In Romania the media quickly spinned the
| story of inflation to the war in Ukraine.
|
| Even when our current national bank director stated in early
| January that'll we'll reach double digit measured[1] inflation
| by summer.
|
| [1] felt the need to emphasis measured because they changed the
| way inflation is measured last November, to probably show
| politically better numbers going forward.
| hintymad wrote:
| Yet multiple media simply repeats the talk point of The White
| House. Serious question: I wonder why journalists are so
| aligned with the assessment.
| moffkalast wrote:
| Well part of it is definitely caused by Putin or at least our
| response to his atrocities, but wasn't something of this sort
| definitely expected in any case due to the absurdly high
| spending and economic cratering that covid has caused
| worldwide?
|
| Do you think the US is alone in these hikes? The Eurozone is
| also showing very similar rates. It's unlikely to be something
| one country can fix by itself.
| sixothree wrote:
| You do realize inflation is currently a global issue, and not
| something completely isolated and controllable by the United
| States, right?
| hereforphone wrote:
| Those of us who have lived through several administrations, and
| who aren't ultra-partisan, realize that this would play out
| much differently in the (traditional and social) media if it
| were to occur under a conservative administration.
| karmasimida wrote:
| But this is partly on Putin right?
|
| If he didn't attack the oil price won't go increase further.
| hatware wrote:
| Everything is Russia's fault, haven't you been watching the
| NEWS?
| Barrera wrote:
| > Real worker earnings fell by another 0.8% during the month as
| the cost of living outpaced otherwise strong pay gains.
|
| Most post-WWII recessions were preceded by or coincident with a
| spike in CPI (and not coincidentally by record-low unemployment
| numbers). This point is widely overlooked and plain forgotten. A
| substantial CPI-spike preceded the GFC, for example.
|
| Here's a handy chart to look into this further:
|
| https://fred.stlouisfed.org/series/CPIAUCSL#0
|
| Way too much attention is being focused on the Fed at this point.
| The Fed is pretty much a bystander engaged in a psychological
| operation on the American Public. It talked up the current stock
| market bubble with its pointless QE and now it's in the process
| of talking down the bubble as gently as it knows how.
|
| Meanwhile markets are telling you what's about to happen. The
| inversion of the Eurodollar curve in late 2021 and Treasury yield
| curve more recently are telling you that a recession is on the
| way. The speed with which interest rates have been fluctuating
| tells you that something big could be in the works. The sudden
| appearance of large amounts of housing inventory, partially
| resulting from spikes in long-term rates tells you that market is
| peaking. Overvaluation of the stock market by just about any
| metric (e.g., "the Buffett Indicator") tells you that the bull
| market is transitory.
|
| And of course, there's falling real wages, which the article
| notes. 0.8% MoM decreases in purchasing power are not
| sustainable. Consumer spending makes up the majority of the US
| economy. Give people less to spend and they start going into debt
| to keep up appearances. Take away their job during a recession,
| and they default on those debts.
|
| Every time these kinds of warnings flash, spinmeisters write them
| off as peculiarities of the current situation. Every time,
| there's a reason this time is different. It never is.
| bruce343434 wrote:
| What's GFC, QE?
| bittercynic wrote:
| global financial crisis (2008), quantitative easing.
| dont__panic wrote:
| As someone who's currently feeling left out of the housing
| market and who thinks the stock market has been pants-on-fire
| insane for the last 2 years of covid... I pray for a recession
| so I can actually own a home.
| Barrera wrote:
| When the opportunity presents itself few who think that now
| will want to or even be able to act.
|
| It turns out that buying a house when house prices are going
| down isn't much fun. In fact, it's downright terrifying.
|
| Worse, most of the charm of "owning" a house evaporates with
| even flat prices.
| costcofries wrote:
| Fuel[1] accounted for a substantial portion of the overall lift,
| we've actually come in under expected inflation which is why
| you're seeing markets up today.
|
| Gasoline, unleaded regular - +48.8% (+20.1% over last month)
|
| [1]https://www.bls.gov/news.release/cpi.nr0.htm
| chasd00 wrote:
| > Gasoline, unleaded regular - +48.8% (+20.1% over last month)
|
| i called the bottom on oil during the worst of the pandemic but
| did nothing about it :(
|
| EDIT: i also sold apple at $10/share, i am not good at trading
| hah
| taylodl wrote:
| Yeah but that headline doesn't generate as many clicks! War
| increases inflation! News at 11:00!
| typeofhuman wrote:
| Inflation was steadily rising before Russia invaded Ukraine.
|
| Also a US President who is antithetical to the oil/lng
| industry will drive up the price of oil through the futures
| market. Demand is still high, Biden has constrained supply,
| forcing futures prices to go up. Trump was bullish on
| oil/lng, with the same demand and increased supply, prices
| went down.
| photochemsyn wrote:
| The fact that Obama/Biden worked with Republicans to lift
| the ban on crude oil exports in 2015 is a major factor in
| the rise of gasoline and diesel prices, along with the
| closure of several major domestic refineries since then.
|
| Additionally, there's the push to expand LNG exports to
| Europe.
|
| Both of these are major factors in the price rise. I
| personally don't really care about this as I don't own a
| car, and this will push new buyers towards EVs, but the
| media silence on this is kind of instructive - corporate
| media is owned by the same investors profiting off the high
| energy prices, so there's no incentive for honest
| reporting, not if you want to keep your media job anyway.
| JaimeThompson wrote:
| The oil companies have been a bit slow to increase
| production on some of their existing, approved, active
| leases because why should they? They are making incredible
| profits right now and are buying back billions of their own
| stock.
|
| Seems to me if they wanted to increase production a lot
| they would decrease the stock buy backs and instead
| increase future revenue by increasing current and near
| future production.
| ______-_-______ wrote:
| The biggest perk of being president is the dial under your
| desk you can turn to raise or lower gas prices
| macilacilove wrote:
| That dial exists and it calls the Saudi king and reminds
| him that he wants to increase oil production if he
| prefers himself untoppled.
| JumpCrisscross wrote:
| > _it calls the Saudi king and reminds him that he wants
| to increase oil production if he prefers himself
| untoppled_
|
| America no longer supports the House of Saud. It
| tolerates it. But were it to face a serious threat, apart
| from a Wahhabi fundamentalist, the U.S. would be unlikely
| to intervene. Riyadh knows this, which is why those calls
| aren't very useful.
|
| That said, the President does have dials. They are
| drilling permits and import restrictions.
| cthalupa wrote:
| >They are drilling permits and import restrictions.
|
| I'll focus just on the first half: Less than 10% of oil
| drilling happens on Federal land, and there are thousands
| of unused permits available.
|
| Which isn't to say that these thousands of permits could
| be drilled on tomorrow - they are subject to
| environmental impact studies, lawsuits from locals for
| dozens of reasons, supply chain issues around equipment,
| etc.
|
| Which is a long way of saying: This particular dial is
| _very_ indirect, at best.
| typeofhuman wrote:
| I suggest you read my longer root level comment on this
| post. It'll help you understand how the actions of a
| president can affect oil futures.
| zaroth wrote:
| The market is "up" mostly because the USD is down, not because
| real values are rising.
|
| USD value is going to be hit extremely hard as it loses reserve
| currency status. The days of the petrodollar have come to an
| end. It will be a typical "closing the barn doors after the
| horses have bolted" response which will only make things worse.
|
| This is actively happening now, the big holders are just trying
| to do it quietly to get out as much as possible before the US
| tries to shut it down and USD fully tanks.
|
| As this happens the market valuations will appear to rise in
| nominal values. If you value the market in gallons of unleaded
| or dozens of eggs however you will see a different story.
| There's only so many years the politicians can claim it's a
| "supply shock".
| JumpCrisscross wrote:
| > _the USD is down_
|
| The dollar is approaching a 3-year high [1]. It is up close
| to 9% over the past year.
|
| [1] https://www.wsj.com/market-data/quotes/index/DXY/
| zaroth wrote:
| What do you think that chart is showing? How do you square
| it with a chart of USD value versus an asset which has held
| consistent value for millennia?
|
| https://www.kitco.com/charts/popup/au1825nyb.html
| ChrisLomont wrote:
| Gold has not held consistent value for millennia. Take
| anything that you buy, housing, food, oil, and price it
| in gold, then do the same for the USD. See which is a
| more stable way to price goods.
|
| Gold is terrible for stability, which is why booms and
| busts were more common and longer before every single
| country learned that and dropped gold standards.
| zaroth wrote:
| We haven't had oil long enough to do the exercise.
|
| In 500 B.C. in Babylonia apparently an ounce of gold
| would buy you 350 loaves of bread. It's roughly the same
| today.
|
| Augustus paid his centurions about 40 ounces of gold a
| year in 0 B.C. Today the median wage is about the same.
|
| I don't disagree about the booms and busts, I'm not
| saying that a gold standard is a solution.
|
| The fact that pricing in gold is stable over millennia
| even within an order of magnitude is pretty cool.
| Certainly no fiat currency could say the same even on a
| 100 year scale.
| ChrisLomont wrote:
| >Certainly no fiat currency could say the same even on a
| 100 year scale.
|
| No one holds fiat for 100 years, so it's a silly thing to
| worry about. No one hold currency even 25 years, so
| again, irrelevant. Fiat is designed to make pricing
| predictable and smooth out the booms and busts that gold
| causes. It's designed to be slightly inflationary to
| avoid deflationary spirals. Fiat has been the most stable
| economic basis in history. There never was a goal that a
| loaf of bread is $1 usd for eternity. There is a goal
| that inflation targets around 2%, and the resulting
| stability under this system allows loans to have lower
| interest, for businesses to make longer term financial
| plans, and for solid expansion of economies.
|
| Another way to think of it over those timespans, is gold
| is simply a terrible thing to hold also. If you're
| claiming holding gold for 10,000 years breaks even, it's
| a terrible thing to hold. You might as well hold water or
| dirt. If gold is worth the same now as 100 years ago, you
| should have sold it immediately and invested into
| productive assets, such as Dow Jones index (which over
| the past 100 years returned 132 times the initial
| investment).
|
| Since no one holds currency for long term investments,
| and for likely centuries decent investments have returned
| vastly more than gold, there is nearly zero use for gold.
| The love of gold is simply voodoo.
|
| Currency is more stable for buying and selling and
| pricing over any range people hold currency. If you want
| an investment that has return, pick nearly anything
| except gold.
| JumpCrisscross wrote:
| > _What do you think that chart is showing?_
|
| The U.S. dollar index, "an index (or measure) of the
| value of the United States dollar relative to a basket of
| foreign currencies" [1].
|
| > _How do you square it with a chart of USD value versus
| an asset which has held consistent value for millennia?_
|
| Gold has appreciated relative to the dollar since its
| 2016 low.
|
| Granted, it took until 2020 for gold to regain its ca.
| 2013 price. That doesn't translate into any information
| about inflation in that interval. Nor about U.S.
| export/import balances or the dollar's strength. Unless
| you're in the gold business, gold prices are a facile
| measure of anything economically useful.
|
| [1] https://en.m.wikipedia.org/wiki/U.S._Dollar_Index
| zaroth wrote:
| Gold never appreciates. The value of gold is invariant.
|
| A good suit always costs 1 ounce of gold, since there
| were suits and gold.
| JumpCrisscross wrote:
| > _good suit always costs 1 ounce of gold_
|
| This is clever. One can vary the value of "good" to fit
| any asset. Taken in good faith, I'm curious about the
| suit discounts I missed between 2013 and 2016, when gold
| lost value (relative to the dollar).
|
| > _value of gold is invariant_
|
| Axiomatic arguments work for anything. Bagel is
| invariant. All price relative to bagel. One breakfast
| sandwich always costs one bagel.
| zaroth wrote:
| It's not supposed to be cute, but actually a useful
| historical fact. To be well clothed in any moment in
| human history would take the currency equivalent of
| roughly an ounce of gold. Since gold has been actual
| currency many times throughout human history (and is
| again in Russia as of a few weeks ago) it's more useful
| than, for example, pricing in bagels.
|
| Also note that while the value of the dollar in real
| terms can vary minute to minute and swing percentage
| points day-to-day and many percentage points year to
| year, retail pricing will take time to catch up due to
| the length of the supply chain and the cost of repricing.
| Retail pricing is "sticky".
|
| Keep in mind that over the last 100 years the US dollar
| has lost ~95% of its real value. It will most certainly
| do so again, and my opinion is that it won't take nearly
| as long the next time around.
| adam_arthur wrote:
| Value of the dollar relative to a foreign currency is
| very different metric than value of a dollar relative to
| a real asset.
|
| If foreign currency has 20% inflation, and US has 10%,
| the dollar index will go up. But the USD still lost value
| in absolute terms
| cannonpalms wrote:
| The "value of a dollar relative to a real asset" is
| called inflation.
| mywittyname wrote:
| > Value of the dollar relative to a foreign currency is
| very different metric than value of a dollar relative to
| a real asset.
|
| Which is why it's compared to a basket of currencies
| instead of a single one.
|
| The USD, Yuan, Yen, Euro, GBP, and Rupee cover like 70%
| of the world's GDP. Maybe throw in the CHF because it's
| stable.
| adam_arthur wrote:
| You seem to be missing the point about valuing a currency
| relative to another vs a real good. It's a totally
| different concept/measurement.
|
| The dollar index can strengthen while cost of bread
| doubles in USD terms.
|
| If every government agreed to print 2x the money supply
| overnight, dollar index remains the same but cost of
| everything will double (at equilibrium)
| JumpCrisscross wrote:
| > _dollar relative to a foreign currency is very
| different metric than value of a dollar relative to a
| real asset_
|
| Agreed. Which is why we have different words for each.
|
| Saying "USD is down" unambiguously means the former.
| Inflation unambiguously means the latter. Saying
| inflation is up in response to an article about inflation
| being up is tautological. So, in the spirit of Hacker
| News, I assumed they weren't being flippant but were
| instead factually wrong.
| adam_arthur wrote:
| It's not unambiguous. In fact when people say the dollar
| loses value over time they are almost always talking
| about local currency only, not in relative to foreign
| currency terms.
|
| "USD is down" is only implied to be about foreign
| currencies in a trading/finance context
| JumpCrisscross wrote:
| > _when people say the dollar loses value over time they
| are almost always talking about local currency only_
|
| "Dollar loses value" and "USD is down" are different
| words. The former is ambiguous. The latter is
| unambiguous. Particularly in response to an article about
| inflation. Again, "USD is down" is, given the context,
| either inane or wrong. I'd prefer to be wrong than
| stupid.
| zaroth wrote:
| The comment was relative to why the _market_ was up. The
| point is, in real terms the market is not in fact "up".
| The market is repricing based on future expectations of
| the real value of the USD.
|
| The terms "real" and "nominal" make it abundantly clear
| that I'm not talking about USD versus other currencies.
| Why are other currencies even part of the discussion? I
| can only guess because it was an easy retort to
| "disprove" my statement and derail the discussion.
|
| The meaning should be clear enough from the context of my
| full comment. I'd rather hear feedback and discussion on
| that, than debating something I wasn't even trying to
| claim (e.g. whether other currencies are rising or
| falling faster than the USD).
|
| Countries are beginning to do real volumes of energy
| trade outside of the USD. Countries are also questioning
| the level of USD reserves they want to be holding with
| the Fed. This structural decrease in the demand for US
| dollars will have a very lasting impact that will become
| clear over the next decade. This is a tidal change which
| was a long time coming, but I think the weaponization of
| the USD and SWIFT thru never-before-seen sanctions have
| pushed it over the edge.
|
| It doesn't help to be reaching this point with debt
| levels at 140% GDP and deficit to GDP over 10%...
|
| Because demand for dollars has been so consistently high
| in modern history, we usually think of inflation in terms
| of the US economy being too "hot" or because we've
| printed too many dollars. It can be bizarre to think
| about changing "demand" for a currency, because, who
| doesn't want more money? The light bulb is understanding
| there are many options for storing value, and demand for
| one option versus another shifts through a combination of
| present utility and future expectations.
|
| I believe that the structural reasons driving inflation
| this year and for the next decade have shifted entirely
| into something the US has never seen before, and it's
| very interesting to consider where it will lead. The war
| and COVID are confounding variables which I believe some
| people use to try to ignore the new reality.
|
| A weak USD relative to other currencies isn't an entirely
| terrible thing. It leads to massive re-domestication of
| production for one thing, as imports become too
| expensive. But that depends as much on how quickly
| _other_ countries devalue their currency.
|
| In the near term the biggest hit from debasement of the
| local currency is to anyone with liquid savings, or
| anyone who has stagnant wages (e.g. once yearly wage
| increases become insufficient to not lose significant
| purchasing power).
| JumpCrisscross wrote:
| > _in real terms the market is not in fact "up"_
|
| This is false [1].
|
| > _Why are other currencies even part of the discussion?_
|
| Referring to dollars by their ISO currency code is an FX
| convention. Given the article you're commenting on is
| about inflation being up, which is a more direct way of
| saying dollars have lost value vis-a-vis real assets,
| most people assumed you were (a) using the convention
| correctly and (b) not re-stating the headline.
|
| [1] https://www.multpl.com/inflation-adjusted-s-p-500
| zaroth wrote:
| Did you really just toss out a market graph going back to
| 1880 in a discussion about how the market is reacting to
| news _today_?
|
| Maybe try this one:
|
| http://pricedingold.com/charts/SP500-2006.pdf
|
| It's ok though, I give up on productive discussion today.
| You can "win".
| JumpCrisscross wrote:
| > _a market graph going back to 1880 in a discussion
| about how the market is reacting to news today?_
|
| Centuries and decades (your graph) are similarly useless
| in evaluating intraday reactions. These data are widely
| available [1]. American equities are up, in real terms,
| for almost any reasonable time interval.
|
| Pricing the S&P 500 in gold is a convoluted way of
| looking at it, but for purposes of discussion, even that
| chart shows a 2022 decline followed by a recent rally.
| All up from the last few years. At par with 2006, which
| sounds dismal, until one consider the chart shows the S&P
| 500's price, not total return. The S&P 500 currently
| spits out a 1.45% dividend yield [2].
|
| Someone who bought the S&P 500 in 2006, a terrible year,
| is unambiguously better off than someone who bought gold.
| In nominal terms. In real terms. In gold-priced terms.
|
| [1]
| https://data.nasdaq.com/data/MULTPL/SP500_INFLADJ_YEAR-
| sp-50...
|
| [2] https://www.slickcharts.com/sp500/yield
| UncleMeat wrote:
| Gold has very obviously not held consistent value for
| millennia.
| zaroth wrote:
| What do you mean? Perhaps you're looking at the change
| (inevitably decrease) in the value of fiat currencies,
| not the change in the purchasing power of an ounce of
| gold.
|
| The purchasing power of an ounce of gold in terms of real
| goods that can be obtained is remarkably consistent over
| human history, taking into account productivity increases
| which make everything actually easier to produce (rather
| than making gold or fiat currencies more "valuable").
|
| This is a characteristic of gold in particular (above all
| other commodities), due to a number of factors related to
| its density/portability, longevity, malleability, and the
| consistent rate over history at which it's been
| extractable from the earth. It's a rather peculiar if not
| spectacular equilibrium.
|
| It's a nice benefit that it's also rather pretty, and
| interesting to consider to what degree that matters.
| UncleMeat wrote:
| I mean, if you look at history, the perceived value of a
| lump of gold has changed _a lot_ over time. Even if you
| assume that recent price differences are due to wild
| swings in the value of currency (apparently a dollar was
| worth twice as much in 2000 as in 1990), the claim that
| the value of gold has been consistent over millennia is
| just not true.
|
| The way I know this was because of the giant laugh that
| my historian wife gave when I showed her your comment.
| zaroth wrote:
| I think you'd be hard pressed to find anything else in
| human history with a 10-year or 100-year average value as
| stable as gold.
|
| Do the exercise in terms of housing/lodging, loaves of
| bread, nice attire, annual median wages, etc...
| UncleMeat wrote:
| Sure. "Gold has been an expensive commodity for a very
| large amount of human history, and few commodities have
| this property" and "has held consistent value for
| millennia" are very different claims.
| mpalczewski wrote:
| USD is not down. The dxy index has been going up all year.
| Inflation is a global phenomenon.
| nightski wrote:
| This inflation report directly contradicts your statement.
| It's clearly down quite a bit in purchasing power of
| assets, goods, and services.
| cannonpalms wrote:
| This is not what is meant by the phrase, "X currency is
| down." A decrease in purchasing power of a currency is
| known as "inflation."
| zaroth wrote:
| Sorry if I'm using the wrong vernacular.
|
| The reason why market prices look so high is because it's
| priced in US dollars, and US dollars aren't worth what
| they used to be.
|
| The reason why markets go up when the Fed seems
| completely unconcerned or helpless to stop the worst
| inflation in decades, is because people are betting that
| this trend will continue.
|
| If you re-price the market in another unit of measure,
| like "ounces of gold", you will get an entirely different
| picture.
| mpalczewski wrote:
| > If you re-price the market in another unit of measure,
| like "ounces of gold", you will get an entirely different
| picture.
|
| If you price the dollar in terms of ounces of gold, then
| you would think that the dollar is worth more than it was
| in September of 2011, and you would think that the dollar
| is worth more now than it was in August of 2020. While
| gold is stable over the long term e.g. centuries, its
| price can be quite erratic over the short term.
|
| You can price it in barrels of oil, silver, copper, a
| collection of other currencies, bitcoin, median house
| price and get a different answer each time.
|
| > The reason why markets go up when the Fed seems
| completely unconcerned or helpless to stop the worst
| inflation in decades, is because people are betting that
| this trend will continue.
|
| It's a global phenomenon. We've got less production of
| goods and commodities because of covid and just as much
| if not more demand. So supply down, demand even or even
| up. What do you expect to happen?
|
| While the USD has problems, other currencies seem even
| worse at the moment.
|
| There is not some other fiat currency at the moment that
| is better than the USD. Things that people think are
| hedges BTC(Ponzi scheme), Gold(volatile) don't always
| work well.
|
| e.g. here is real(inflation adjusted) gold prices. https:
| //blogger.googleusercontent.com/img/a/AVvXsEiyWSImAdvN...
|
| it doesn't look all that cheap at the moment.
|
| > If you re-price the market in another unit of measure,
| like "ounces of gold", you will get an entirely different
| picture.
|
| Like this? https://schrts.co/pAKzMCFc
| zaroth wrote:
| "Real price of gold" is an interesting concept, probably
| showing a statistical quirk of backtracing CPI than
| anything useful though? I'd have to study how it was
| calculated.
|
| Yes, your graph at the end showing SPY in gold falling
| below the 200 day MA is exactly what I was talking about.
|
| I absolutely agree gold is volatile in the short term and
| not some magical replacement for fiat currency nor an
| absolute indicator of the level of inflation in an
| economy.
|
| Sometimes however it's important to figure out if the
| "platform" you're taking your measurement from isn't
| actually what's moving, rather than the thing you're
| trying to measure. If you're going to step outside of the
| fiat viewpoint, gold is where I'd usually start.
|
| Maybe a VIX-adjusted price of gold or something like that
| could be useful to smooth it out.
| mpalczewski wrote:
| > "Real price of gold" is an interesting concept,
| probably showing a statistical quirk of backtracing CPI
| than anything useful though? I'd have to study how it was
| calculated.
|
| I agree it's interesting. I'm invested in Gold, so I'm
| basically betting that it's going to go up.
| Instinctively, I'm looking for the best disconfirming
| evidence.
|
| Here's where I got the chart.
| http://scottgrannis.blogspot.com/2022/03/inflation-net-
| worth...
|
| > If you're going to step outside of the fiat viewpoint,
| gold is where I'd usually start. > Maybe a VIX-adjusted
| price of gold or something like that could be useful to
| smooth it out.
|
| yeah, I'm not really sure what the best way to look at it
| is. I believe Adam Smith used minimum price of labor, but
| that's distorted as a signal by minimum wage laws. I find
| the big mac index to be useful-ish. idk, perhaps
| something like median cost of an hour of labor per big
| mac, is a measure of prosperity.
| zaroth wrote:
| Comparing one pile of festering garbage against another and
| saying one smells better... you're still standing in a pile
| of trash.
| [deleted]
| xtian wrote:
| I 100% agree, but is there anything that can be done if you
| aren't a big holder?
| antattack wrote:
| Due to Covid many of us probably drive a lot less (working from
| home) so gasoline prices are not a big deal. However people in
| service sector jobs are likely affected by fuel costs.
| naoqj wrote:
| Covid? What's that?
| tomatowurst wrote:
| this really is a "let them eat cake" sort of attitude.
|
| its really shocking just how far detached most HNers are from
| logistics that is hidden. literally the comfort we enjoy is
| run by people who don't work from home, who are most impacted
| by prices.
| treeman79 wrote:
| Instead of poor people and bread and cake it's now. "Let
| them buy an electric car."
| JaimeThompson wrote:
| The drastically increasing cost of rent, even in areas
| with lots of land, good Internet, an very few building
| restrictions has a much higher impact for most people
| then the price of gas.
| treeman79 wrote:
| I was referring to White House advise on dealing with gas
| prices.
|
| For rent. Oh I'm feeling that myself. Finally got the
| point of, let's move prices are insane. Nothing in a safe
| area that's affordable for 50 miles. Minimal in high
| crime areas.
| JaimeThompson wrote:
| A house near me that is slightly less then mine just sold
| for 100k+ more than typical for this area. Nothing
| special about it or my house, good Internet, lots of
| empty land, little building restrictions, no HOA.
|
| It honestly doesn't make much sense to me.
| typeofhuman wrote:
| Everything you consume is delivered by an 18-wheeler that
| requires heaps of fuel.
| raisedbyninjas wrote:
| Not a big component. For example for the retail price of
| food 4% is for transportation costs. https://www.ers.usda.g
| ov/webdocs/publications/44825/7758_err...
| dragontamer wrote:
| Actually, trains in most cases. The last mile is trucks,
| but the backbone of America is our world class rail system.
| sethherr wrote:
| Indeed, world class _shipping_ rail system.
|
| Our passenger rail is depressingly subpar.
| hadlock wrote:
| Do you have any stats on this? As I have read (casually)
| trucking has been 60-80% of consumer goods delivery (end-
| to-end), and only in the last 3-5 years has rail started
| picking up long haul freight, as shipping dry goods like
| coal has become less lucrative.
| throwaway0a5e wrote:
| >Actually, trains in most cases. The last mile is trucks,
|
| More like last 50-100mi.
|
| Where's your "local" intermodal yard?
| nightski wrote:
| Hmm, CPI rose to 8.5% instead of the 8.4% estimate. Not sure
| where you are getting "under expected" from. Also, inflation
| isn't necessarily bad for markets. What markets don't like is
| if the fed has to respond.
| odonnellryan wrote:
| They are probably referring to core inflation... also fuel
| contributed massively to inflation in March, which was
| expected, but not expected to stay high forever.
| nightski wrote:
| Of course, but the highest contributor was shelter/housing.
| Also if they are referring to core it's kind of important
| to make that distinction. It's not good to be loose with
| terminology around this just to make an argument stronger
| than it really is.
| bachmeier wrote:
| The CPI includes energy prices.
| matwood wrote:
| YoY which everyone knew was going to be high. Core month to
| month shows inflation is slowing.
|
| I think a lot of people have this doom fantasy of runaway
| inflation in the US, but it's likely to slow down quicker
| than people realize. Monetary supply is tightening (mortgage
| rates touching 5% now), and the supply chain is slowly
| getting back to normal. Heck, even gas prices have reversed
| where I am.
| JumpCrisscross wrote:
| > _people have this doom fantasy_
|
| It's a weirdly predictable phenomenon around American
| inflation discussions. Has it always been this way? Is it
| renewed interest in gold bugging or people sour about
| crypto losses?
| the_gastropod wrote:
| I have no idea. But it does seem to coincide with the
| booming interest in cryptocurrencies. I suspect crypto is
| many people's first introduction to basic economics and
| finance. Crypto has a very Hayekian / Libertarian bent,
| so I think it makes sense that this hyperinflation fear
| is so common 'round these parts.
| 01100011 wrote:
| Go look at the number of ships parked off China right now
| and tell me with a straight face that the supply chain is
| getting back to normal.
|
| Europe is having to restructure it's economy to deal with
| reduced energy and materials inputs from aggressor nations.
|
| We still face a massive shortage of workers, particularly
| in logistics.
|
| I suspect we will see inflation remain steady or even
| increase later this year, barring a recession.
| nightski wrote:
| I agree it may be slowing, but that's not what the parent
| asserted. I was just pointing out a mistake in their post.
| No where did they state "core" (unless it has been edited).
| TrispusAttucks wrote:
| The perception of inflation slowing on a month to month
| basis is an illusion caused by the release of oil from the
| us strategic reserve [1].
|
| Just like QE is good as a short term solution to economic
| problems releasing strategic oil reserves to push down
| inflation (as it relates to oil) is a short-term fix that
| will likely exacerbated the problem in the medium to long
| term.
|
| [1] https://www.reuters.com/business/energy/us-strategic-
| oil-sal...
| matwood wrote:
| Release from the strategic reserve is more
| PR/leverage/signal than anything. First, it takes time to
| actually do the release. Second, 180M barrels is nothing
| when then US uses ~20M barrels/day.
|
| So it's more of a signal that the US is about to start
| swinging a bigger stick to get oil production up, than it
| is an illusion.
| tdehnel wrote:
| Is the implication "it's not that bad"?
|
| I'm sorry but I disagree. Do you have an explanation for why
| the increased price of gasoline won't just infect prices for
| all the goods and services which depend on it?
|
| Any business which needs to move people or goods over the road,
| or runs equipment/vehicles on gas is going to be affected. Not
| to mention the fact that consumers will have less disposable
| income to spend on things. And businesses may have to pay their
| workers more to account for that loss of disposable income.
|
| Edit: see "wage price spiral"
| iso1210 wrote:
| Today's US gas price is about $4/gal [0], about 15% up on
| 2011[1], or about 1% per year.
|
| That doesn't sound like rampant inflation, it does sound like
| a market correction.
|
| Now in reality gas prices globally is high because of Ukraine
| and Russia, which hides the massive gas deflation over the
| last decade, but if 2011 businesses could afford gas at
| $3.50, I'm not sure why 2022 businesses can't afford it at
| $4. Wages are up about 30% in the same time period (well by
| 2020) [2]
|
| [0] https://gasprices.aaa.com/
|
| [1] https://business.time.com/2011/12/20/2011-is-priciest-
| year-e...
|
| [2] https://www.ssa.gov/oact/cola/awidevelop.html
| dahart wrote:
| > Do you have an explanation for why the increased price of
| gasoline won't just infect prices for all the goods and
| services which depend on it?
|
| The price of gas is known to be volatile, it has gone up in
| the past without bringing the entire economy along with it,
| and also has gone down many times without making everything
| cheaper. The prices of retail goods don't adjust
| instantaneously, and gas may well be below what it is now by
| this time next year. The price of gas might be a small
| minority fraction of the cost of producing most retail goods
| as well, so there's no reason to assume that consumers will
| tolerate compensatory price hikes that blame gas while the
| price is falling.
|
| This is the reason that the US Department of Labor excludes
| the price of gas as one of the core indicators of inflation,
| because the price of gas does not always reflect inflation,
| and frequently changes for other reasons independent of
| inflation.
| lottin wrote:
| The implication is not that it isn't bad, but that it is a
| supply and demand issue rather than a monetary issue.
| ceejayoz wrote:
| > Do you have an explanation for why the increased price of
| gasoline won't just infect prices for all the goods and
| services which depend on it?
|
| It will, but the price of oil has already dropped
| substantially from the recent peak, and probably will
| continue to do so.
| bko wrote:
| Usually if official statistics and what you see are misaligned,
| its the official statistics that are wrong.
|
| What's your general impression regarding price levels in the
| US? How much has your grocery bill gone up? How about rent?
| What about restaurant bills? Services like haircuts? Whats your
| credit card bill look like, excluding gasoline?
|
| Personally I have seen prices go up well above 10%. Inflation
| metrics are complicated and there is a huge incentive to keep
| the official numbers down as they affect trillions in spending
| in terms of social security and other numbers tied to official
| inflation.
|
| To put this number in context, Congress gave themselves a 21%
| increase in House office budgets to account for inflation
| TameAntelope wrote:
| Going with your experiences over soundly collected data is a
| very risky move prone to bias and discrimination (only
| noticing what affects people like you).
|
| Data, when reported by a reputable organization, is going to
| be substantially more predictive.
| aww_dang wrote:
| Reputability is equally subjective. It is not immune from
| bias and discrimination.
|
| Incentives are another interesting factor to consider.
| TameAntelope wrote:
| Reputability is not equally subjective (though it is
| somewhat subjective), it is based on past performance and
| current utilization through a trust network.
|
| If an institution has a history of providing a certain
| quality of service, and is successfully used to make
| highly consequential decisions, it is _objectively_ more
| reputable than an institution with neither of those
| things.
| dragonwriter wrote:
| > Reputability is not equally subjective
|
| Reputability is the aggregate of individual opinion,
| which is the definition of subjectivity.
| ChrisLomont wrote:
| By that argument, all knowledge and belief and fact is
| the aggregate of individual opinion, so nothing would be
| objective.
|
| More likely there is a continuum, and more reputable
| places have more objective (and hence less subjective)
| output than less reputable places.
| aww_dang wrote:
| Consider the contrast between these statements:
|
| "The Bureau of Labor Statistics is a reputable
| institution"
|
| "A triangle has three sides"
|
| "Governments, politicians and their bureaucrats are
| trustworthy"
|
| "Two parallel lines will never meet"
|
| http://steve-patterson.com/deduction-induction-and-
| axioms/
| TameAntelope wrote:
| Aggregating individual opinion (sometimes) has a washing-
| out effect on bias, which makes it valuable as a tool to
| push towards objectivity. [0]
|
| This is why I _much_ prefer to follow guidance from
| institutions over individuals. There 's also a
| "stewardship" in institutions that seems effective in
| countering other forms of bias (but not all).
|
| Of course there's a whole lot of bias left over that
| doesn't make this a fire-and-forget strategy, but
| comparatively it seems closer to objectivity than to just
| trust one's eyes alone, which has effectively zero
| systemic corrections for bias.
|
| [0] - You may know about this already, but I think of it
| like crowds singing, and if you'll afford me a bit of
| metaphorical license, here's a better explanation of how
| that works than what I could write:
| https://physics.stackexchange.com/questions/382429/in-
| concer...
| ajross wrote:
| > Usually if official statistics and what you see are
| misaligned, its the official statistics that are wrong.
|
| "What you see" is literally what's being measured, though.
| Typical prices for typical commodities grew less than
| expected. The outlier is one particular commodity (petroleum)
| which is experiencing an external shock.
|
| Sanctions on Russia are poorly explained as "inflation",
| obviously.
|
| > Personally I have seen prices go up well above 10%.
|
| On what? Does that not match up with the data in the report?
| If so, document it! You'll be internet famous, if nothing
| else.
| [deleted]
| JumpCrisscross wrote:
| > _Congress gave themselves a 21% increase in House office
| budgets to account for inflation_
|
| For staffers. Not members of Congress [1]. Never officially
| tied to inflation.
|
| [1] https://www.factcheck.org/2022/03/spending-bill-includes-
| pay...
| bko wrote:
| Right, that's what I said. For office budgets. I didn't say
| it was for them. I got the numbers from that exact website.
| It's not "officially tied to inflation" but obviously if
| you increase budgets its due to higher costs.
| jlmorton wrote:
| > but obviously if you increase budgets its due to higher
| costs
|
| That isn't remotely obvious and in this case is very
| obviously not true. This is a chronically underfunded
| program that Democrats have been lobbying to increase for
| years. AOC, for instance, has been pushing for this since
| she first entered Congress, well before any inflation
| showed up.
|
| It's entirely disingenuous to point to a budget increase
| in a single extremely-small Congressional staff program
| and paint it as evidence of broad-based inflation.
| deltarholamda wrote:
| >It's entirely disingenuous to point to a budget increase
| in a single extremely-small Congressional staff program
| and paint it as evidence of broad-based inflation.
|
| Maybe, but it's a perfectly valid data point.
| Congressional staffers are struggling because, in the
| D.C. area, costs are rising very quickly, and the low-
| paid staffers are having trouble paying bills because of
| it.
|
| It's not disingenuous to suggest this is a signal. Also,
| Democrats are always lobbying for an increase in all
| budgets. They got this one through because they were
| going to lose staff who can't make the job work because
| of rising living costs. I.e., inflation.
| ChrisLomont wrote:
| >It's not disingenuous to suggest this is a signal.
|
| So would it disingenuous to point out Xbox prices dropped
| significantly recently then claim it as evidence there is
| no inflation?
|
| Using such simple, single data points is disingenuous
| when there is ample broad based data to point to instead.
| Ask why he picked something with a 21% increase instead
| of something with a 4% increase, then you understand why
| it's disingenuous.
|
| That is the problem with anecdotes versus broad and
| properly computed inflation.
| tomatowurst wrote:
| Across the board? At least 25%, 50% in some sectors like
| foods.
|
| They keep, and some people on HN, keep calling it a
| conspiracy when you mention actual inflation is a lot higher
| than reported, my question is what is this crowd's reasoning?
| Are they so well off that they are not able to see the rapid
| rise in prices because they use maids to do the grocery
| shopping?
|
| Why is it a conspiracy to suggest actual inflation is far
| above and beyond what is reported by the Feds, who are stuck
| between a rock and a hard place when it comes to controlling
| the money markets now?
|
| If they raise rates to match actual inflation they are going
| to cause the asset bubble to burst. If they don't raise rates
| than they are going to find hyperinflation that will
| certainly damage USD's "exorbitant privilege"
| noelsusman wrote:
| The only way your grocery bill is up 50% is if you only eat
| used cars and gasoline.
|
| Official stats say grocery store items are up 10%, which is
| roughly line with my experience. It can vary a lot from
| item to item so it really depends on your diet. White bread
| is up 6% while wheat bread is up 9%. Meats are up 15% while
| fresh veggies are up 6%.
| hn_throwaway_99 wrote:
| > They keep, and some people on HN, keep calling it a
| conspiracy when you mention actual inflation is a lot
| higher than reported, my question is what is this crowd's
| reasoning?
|
| I wouldn't call it a conspiracy, but throwing out random
| number like "25-50%" because you noticed your one specific
| grocery bill is more expensive also isn't an argument I'm
| going to give much credence to.
|
| The government is actually very transparent about how they
| calculate inflation and what goes into it, so if you're
| going to argue that they're bullshitting you need to argue
| one of:
|
| 1. The basket that they use to calculate the price index
| isn't a good representation of most people.
|
| 2. They're fibbing on specific prices.
|
| 3. The "smoothing" they always do can hide some of the
| recent acute inflation.
|
| If you want to make any of those arguments, with data,
| great! Please go ahead. I've certainly seen plenty of good
| arguments related to points 1 and 3, not so much point 2.
| Otherwise, it's fine to say you notice things you buy seem
| a lot more expensive, but that's not an argument that the
| Fed is somehow fudging the numbers.
| omalleyt wrote:
| > 2. They're fibbing on specific prices.
|
| Zillow rent index up 17%, CPI rent index up 5%
| xadhominemx wrote:
| Yes, and if you didn't move your rent/mortgage went up
| much less than that
| GloriousKoji wrote:
| Zillow calculates it's rent based on previous and current
| listed rental prices.
|
| CPI calculates rent by asking people how much they are
| currently paying for rent or how much do they think it
| would cost to rent their place.
| gruez wrote:
| >CPI calculates rent by asking people how much they are
| currently paying for rent or how much do they think it
| would cost to rent their place.
|
| That's OER, which is computed separately from rent.
| kolanos wrote:
| Here's a website that compares CPI today with the way it
| was calculated in the 1990s and 1980s. Suffice to say, it
| appears the government is trying to suppress CPI over
| time. [0]
|
| [0]: http://www.shadowstats.com/alternate_data/inflation-
| charts
| tomatowurst wrote:
| i wasn't talking about groceries when i mentioned that
| number
| hn_throwaway_99 wrote:
| It doesn't matter what you were referencing. As it's said
| a million times on HN, throwing out anecdotes is not
| data. If you have an problem with any of the _specifics_
| of how the CPI are calculated, then make it.
| [deleted]
| kolanos wrote:
| Here's a comparison of CPI based on how it is calculated
| now with how it was calculated in the 1990s and 1980s.
| [0] There's a pretty clear trend here. Maybe the current
| calculation is more accurate. But I doubt it. Looks like
| suppression to me.
|
| [0]: http://www.shadowstats.com/alternate_data/inflation-
| charts
| JumpCrisscross wrote:
| > _Why is it a conspiracy to suggest actual inflation is
| far above and beyond what is reported by the Feds_
|
| The conspiracy is that it's treated as a conspiracy. Local
| inflation varies wildly [1]. In official statistics. And
| inflation is personal, dependent on your basket of goods
| and services. There is no market evidence that inflation is
| endemic, but the market is frequently wrong.
|
| > _so well off that they are not able to see the rapid rise
| in prices_
|
| Many on this forum have equity holdings and/or in-demand
| jobs. Those make one somewhat inflation tolerant.
|
| [1] https://www.bls.gov/charts/consumer-price-
| index/consumer-pri...
| rayiner wrote:
| > Many on this forum have equity holdings and/or in-
| demand jobs. Those make one somewhat inflation tolerant.
|
| Yeah I'm genuinely shocked that people seem so upset
| about inflation. Then again I couldn't tell you if the
| gas price down the road begins with a 3, a 4, or a 5.
| mywittyname wrote:
| >Usually if official statistics and what you see are
| misaligned, its the official statistics that are wrong.
|
| See, I think the opposite. If your numbers differ from the US
| gov. official ones, you're either doing something wrong, or
| measuring a different thing.
|
| The BLS in particular aims for consistency in reporting. They
| ask people what they bought, and for how much, then they go
| around collecting real world pricing information about
| products.
|
| No other entity is putting that much work and effort into
| collecting pricing information. So anyone reporting different
| numbers is less accurate than the official BLS ones.
|
| Even people who complain that they under-report "real"
| inflation use BLS numbers, but they change the weights on the
| various categories such that categories experiencing the
| highest inflation are also weight the highest.
| ChrisLomont wrote:
| >Usually if official statistics and what you see are
| misaligned, its the official statistics that are wrong.
|
| Nope, a few people's unmeasured selection bias is no where
| near as accurate as a professional methodology done like the
| official numbers.
|
| >there is a huge incentive to keep the official numbers down
|
| Also false. If the numbers were gamed, there would be
| significant arbitrage employed in markets to extract value
| from the lie. There are ample papers analyzing this, and no
| one has found a way to do it, since the numbers are the best
| possible.
|
| Also the numbers are done in many places, from Goldman Sachs,
| to the Billion Prices project at MIT, to the Bureau of labor
| and Statistics, and so on.
|
| If you really think the numbers are gamed, do this experiment
| (I have, it's easy to do, and then you'll never claim the
| numbers are gamed again since you methodically checked them).
|
| Take BLS listed inflation for a decent period of time, say
| 20-30 years. Make a basket of goodssplit by how most people
| buy: energy, housing, food, eneterainment, etc.
|
| Pick a list of goods, say same sized apartments, houses,
| foods, etc.
|
| Look at prices now. Write them down. Hide that list so you
| don't cheat.
|
| Look at ads from the beginning of the period. Get prices.
|
| Compute.
|
| Now add say 1% to BLS annual inflation numbers, and compute.
|
| Viola! BLS and rest are very accurate. People's unmeasured
| selection bias beliefs are not.
| esoterica wrote:
| > Usually if official statistics and what you see are
| misaligned, its the official statistics that are wrong.
|
| This is QAnon tier logic. "All my friends voted for Trump,
| therefore the vote count was fabricated!"
| onlyrealcuzzo wrote:
| > What's your general impression regarding price levels in
| the US? How much has your grocery bill gone up?
|
| My grocery bill isn't in a vacuum. Does anyone buy the same
| basket of groceries constantly? My career has been on a
| steady rise and my lifestyle has inflated.
|
| > How about rent?
|
| It's up a TON in many LCOL places - but in many of the most
| expensive places, it's gone up less in the last 3 years
| than normal (and in some places down). Either way - 67% of
| people are homeowners, and their payments went DOWN a lot
| because the Fed allowed everyone to refinance at
| historically low levels.
|
| > What about restaurant bills? Services like haircuts?
|
| My anecdata is that I'm shocked so far none of this has
| gone up. I do expect it HAS to go up probably 10-20-50%
| eventually / soon. But I haven't seen it happen yet.
|
| > Whats your credit card bill look like, excluding
| gasoline?
|
| Again - who's credit card bill is in a vacuum?
| long_time_gone wrote:
| > Personally I have seen prices go up well above 10%.
|
| For what goods/services? Have you been tracking the same
| goods/services over the past year to make this analysis?
|
| > Inflation metrics are complicated and there is a huge
| incentive to keep the official numbers down as they affect
| trillions in spending in terms of social security and other
| numbers tied to official inflation.
|
| You haven't provided anything aside from personal anecdote
| (without any actual data to support it). Your understanding
| is built entirely on your own experience, the official
| numbers are built on a transparent basket of goods that is
| meant to represent the entire country.
|
| For me, housing costs (most people's largest expense) hasn't
| changed in 3 years because I have a 30-year mortgage. Does
| that mean that the 5% CPU measure of housing expenses is
| false? Of course not.
| bluedino wrote:
| > How much has your grocery bill gone up? What about
| restaurant bills?
|
| What's interesting is although fast food prices have went up,
| it doesn't seem like casual dining chains have gone up. So
| even though steak prices have doubled at the grocery store,
| they've stayed the same at the chain steakhouses.
| bnycum wrote:
| The highest end chain place I eat at is Chipotle, but I
| have noticed several increases in local restaurants. One we
| go to regularly went up 25% mid-late 2021, and recently
| went up another 33% on our normal order. Which I guess I
| should be glad about because most other ones have shut
| down.
| refurb wrote:
| If anyone wants to listen to a prescient conversation about the
| feds actions post-2008 and inflation today, take a listen to this
| podcast.
|
| It was recorded in 2009.
|
| https://www.econtalk.org/meltzer-on-inflation/
|
| It's an interview with Prof Meltzer from Carnegie Mellon who has
| done extensive research on the federal reserve system.
|
| Cliff notes:
|
| - As a result of the 2008 crisis the fed expanded the money
| supply to a degree never seen before
|
| - Rather than drive inflation, the "new money's" effect was muted
| due to skittish banks who would decide to just take the funds and
| hold as cash/treasuries (maintaining strong reserves) until more
| positive economic indicators emerged (this process could be
| paused if economic sentiment turned negative)
|
| - Once economic forecasts turn more optimistic, the money will be
| deployed (through lending) into investments and assets leading to
| inflation in those prices
|
| - Eventually the excess supply will spill over into consumer
| spending in the classic indicators of inflation like CPI
|
| - However the fed will be under immense political pressure to not
| drive the "fragile" economy into a recession so any tightening
| will be far too late and inflation will overshoot targets by a
| large degree.
|
| - Similar to the 70's, until strong monetary contraction is
| brought in, inflation will run very hot despite other efforts to
| control it
|
| Pretty accurate so far.
| [deleted]
| elischleifer wrote:
| This is what happens when global shipping supply routes break
| down.
| calvinmorrison wrote:
| And yet people on hacker news or other high income forums seems
| to say "Just buy a EV".
|
| It's the "Let them Eat Cake" of 2022. Poor people driving economy
| boxes and living in a 4th floor walkup apartment with 3 roommates
| aren't buying an EV... even if the savings are better long term.
|
| It's the "Buy a better pair of boots they'll last longer".
|
| And yet - people seem oblivious - like Marie Antoinette that the
| poor class can't simply upgrade to solar and use an EV and avoid
| the gas prices which hit their bottom line pay every week in the
| form of higher prices and higher costs to travel.
|
| Who cares about bread when it costs so much to drive to the gas
| station? Let them get an EV
| helen___keller wrote:
| Who are "people"?
| scop wrote:
| "we can take advantage of the next generation of electric
| vehicles [so] that a typical driver will save about $80 a
| month from not having to pay gas at the pump."
|
| - President Joe Biden, March 31, 2022
| helen___keller wrote:
| I don't think the president qualifies as "people on Hacker
| News"
| fullstop wrote:
| > It's the "Let them Eat Cake" of 2022. Poor people driving
| economy boxes and living in a 4th floor walkup apartment with 3
| roommates aren't buying an EV... even if the savings are better
| long term.
|
| The people living in these situations likely rely on public
| transportation and don't even have an economy box. Gas prices
| will still hit their bottom line as transport costs rise for
| food and other goods.
| sfblah wrote:
| It depends on the level of poverty we're talking about. A
| decently large percentage of undocumented migrants from
| Central America own cars, for example.
| zionic wrote:
| >undocumented migrants
|
| I love this phrase, it's so deliciously orwellian. In other
| news, home invasions are down over 90% YoY. Sharp increase
| in undocumented roommates though.
| sfblah wrote:
| I used it to avoid reflexive downvoting. I'm not sure how
| else to even have a conversation online these days....
| calvinmorrison wrote:
| That's certainly not true. Maybe in New York or DC. But there
| are lots of cities in this country that lack basic public
| transportation. Even in Philadelphia where we have a pretty
| good network of routes, a astounding number of people commute
| out of the city via car to work.
|
| That people are arguing only implies you are bourgeoisie, and
| feel the need to explain how these poor people are really
| effected by X and Y and Z. I have people on my team where
| their weekly bill for travel to work has doubled in the last
| two years. It hits peoples bottom line quite clearly.
| fullstop wrote:
| I think that we can agree that both groups exist, no?
|
| I know people who don't own a car and share an apartment
| with others, and I also know people who struggle to keep
| their vehicles road-worthy. The latter usually have fewer
| room mates, though.
| micromacrofoot wrote:
| You're the only one in this entire comment thread saying this.
| memish wrote:
| Here are some other helpful tips. _mustache twirl_
|
| Try forgoing expensive medical bills.
|
| Try not eating.
|
| You only need some organs.
|
| https://www.youtube.com/watch?v=9ssNtIvD5sc
| ajross wrote:
| > Poor people driving economy boxes and living in a 4th floor
| walkup apartment with 3 roommates
|
| People living in 4+ story apartment buildings have _extensive_
| options for transit that don 't involve driving their personal
| "economy box" around. And to the extent they do, the "poor
| class" in the USA continues to pay lower prices for gas than
| any other industrial democracy, including in places like
| Australia and Canada with comparable per-capita driving
| statistics.
|
| That argument seems like a canard. Yes, higher gas prices suck.
| They suck rather less than land wars in Europe though, so...
| what's the option here? I know there's a partisan angle there
| that says something about fracking, but needless to say short
| term inflation isn't well treated by half decade infrastructure
| projects. Gas is going up because Russia invaded Ukraine, and
| there's nothing anyone in the west can do about that right now
| regardless of whether they drive an EV or not.
|
| (Won't lie though, that I'm totally loving the Tesla right
| now.)
| gtk40 wrote:
| I lived in an apartment in suburban Atlanta that was 4
| stories in a county with no public transit whatsoever. Plenty
| of places in the U.S. have little or no public transit in the
| US but also have the density to support apartment buildings.
| ajross wrote:
| That's not "plenty", that's Fayette county[1]. It's very
| much an outlier, just like current fuel prices. The
| overwhelming majority of urban poor can (and do!) get by
| just fine without personal vehicles.
|
| I have to say this debate is just exhausting. People just
| don't want to accomodate any solutions beyond "We Must Have
| Cheap Gas For Our Trucks In Perpetuity". I mean... that's
| just not the world we live in. And the rest of us
| (including and especially the urban poor!) have been
| looking at alternatives for decades.
|
| [1] Here's Georgia's helpful site. Indeed Atlanta transit
| is sort of a mess, but it's there and it does work. No
| doubt you didn't take the bus when you lived there, but you
| almost certainly had options you weren't aware of.
| https://www.gatransit.org/page/TransitNearMe
| gtk40 wrote:
| I was in Henry County, GA, which has a lot of poor areas
| (including where I was living) with no MARTA in place.
| It's been over a decade since I lived there, but I'm not
| sure what's in place now.
| prescriptivist wrote:
| Plenty of people live in in multi-story walk-up units in
| small and medium sized New England cities that have mediocre
| (if any) public transit that becomes nonexistent if you have
| to commute for work.
| ajross wrote:
| I think you'll find "plenty" of people in Worcester and
| Springfield and New London take that "mediocre (if any)"
| public transit every day. You didn't ride those buses,
| because you chose to have a car. Lots of people choose to
| have cars. People who have cars and don't take public
| transit nor prioritize transit policy, then complain about
| fuel price effects on the people who public transit is
| aimed at, are precisely the problem I was talking about.
| [deleted]
| mrfusion wrote:
| A local restaurant just got rid of their paper menus because it
| was too expensive to reprint every time they wanted to raise
| prices ...
| rootbear wrote:
| I saw paper menus disappearing before inflation started going
| up. I took it as a Covid measure - no physical menus that
| needed to be disinfected after each customer used them.
| enraged_camel wrote:
| Yeah, I haven't seen a paper menu in months. Everyone does QR
| code menus now. I hate them.
| unglaublich wrote:
| No sane person WANTS to look at a display when they try to
| relax in a restaurant or cafe.
| eswat wrote:
| I remember a sushi restaurant near my had purchased stacks
| of tablets, hoping them + digital menu would replace their
| paper menus. This was long before the pandemic.
|
| I'm not sure of the specific reason, but they ditched those
| tablets a few months later.
| maerF0x0 wrote:
| until you're willing to pay a higher price for the
| experience anything YOU want will be stripped away.
| sdfasfdasdfasdf wrote:
| I have been to restaurants where you see the menu using a QR
| code and also place an order and pay over the website. I do
| not like this because, first it seems like its more self
| serve and there's no service really except bringing the food
| from the kitchen and I am still expected to pay the same
| 10-20% tip and second, I am afraid we are perhaps headed
| towards restaurant analytics, impressions/views for menu
| items etc, and perhaps the online retailer behavior of not
| being able to pay without adding a card on file and all the
| dark UX patterns that come with it.
| bern4444 wrote:
| > headed towards restaurant analytics, impressions/views
| for menu items etc
|
| Isn't all this already captured today? Restaurants can very
| easily keep track of what most people are ordering, what
| dishes are being sent back, etc.
|
| I understand it would become easier to collect this data,
| but I'd be surprised if most (decent) restaurants don't
| already track popular dishes, table turnaround, etc.
| sdfasfdasdfasdf wrote:
| Well, do a lot more than just see if a dish sells well or
| gets sent back more. I meant head deeper down that rabbit
| hole. To quickly think of a few things, building customer
| profiles, personalized menus, personalized menu item
| combo pricing, variable and surge pricing perhaps so busy
| hours cost more etc etc.
| bern4444 wrote:
| Hmm, I see.
|
| Yes I've been thinking more and more recently about how
| personalization means fewer shared experiences.
|
| It becomes much harder to remain a cohesive group when
| everyone is getting their personalized version of a
| thing.
|
| I don't think there's much value in this for something as
| small as a restaurant where menus are always limited
| enough that personalization wouldn't impact what is on
| the menu (maybe just how its presented to you).
|
| Personalized pricing (combo or otherwise), surge pricing
| etc for restaurants seems just unlikely IMO. But I can
| see why some might think otherwise.
| photochemsyn wrote:
| A major reason gasoline, diesel and natural gas prices are
| spiking is the push to export more fossil fuels from the USA by
| the oil/gas industry. This was facilitated by the 2015 decision
| to eliminate the ban on crude oil exports, which Obama/Biden and
| Republicans backed. It's simple supply and demand: reduce
| domestic supply by increasing exports to jack up domestic prices
| and increase profits. Around the same time at least one major
| domestic refinery was also closed, adding to the domestic supply
| restriction.
|
| There is some effort to get the ban re-instated as of 2021:
|
| > "Khanna drafted a letter to the White House Monday signed by
| nine Democrats urging the administration to block the export of
| U.S. oil, which has been allowed since 2015 when Congress lifted
| a 40-year-old ban on the practice. Since then, U.S. exports have
| regularly surpassed 3 million barrels a day, more than the
| production of major OPEC members such as Kuwait and Iran."
|
| https://financialpost.com/pmn/business-pmn/lawmaker-says-whi...
| WesleyHale wrote:
| Maybe I'm an idiot, but I don't understand why we'd be
| exporting oil while also importing millions of barrels from
| Russia a month. [1]
|
| Certainly it's more cost effective to obtain it domestically
| than to import it from the other side of the world?
|
| [1]
| https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M...
| citrusybread wrote:
| different compositions. what we call "oil" actually ranges
| through so many configurations you might as well think of it
| the same way we think of juice. sulfur and other impurities
| can change the game dramatically.
|
| it's also the reason Alberta's tar sands have few importers,
| because not everyone is capable of refining it (which leads
| to Canada having to export it, and import foreign oil).
|
| there are refineries in the US that only work effectively on
| Russian oil -- and I'm sure there's similar issues elsewhere
| in the world. they can probably adapt but it's not as uniform
| as we'd think.
| photochemsyn wrote:
| Some of it is simply a regional transport issue. The major
| Russian oil importers appear to be the Pacific Northwest
| states, by far:
|
| https://www.sightline.org/2022/03/04/pacific-northwest-
| state...
|
| > "The refineries do not rely on Russian oil equally. Nearly
| 60 percent of Russian crude imported to Washington went to
| the Tesoro/Marathon Anacortes refinery, and another 29
| percent went to the BP Ferndale refinery. Russian crude made
| up almost 7 percent of all crude refined at the
| Tesoro/Marathon Anacortes refinery from 2009 through 2021."
|
| Getting oil from Bakken or Pennsylvania would likely be
| expensive, and also refineries are optimized to process
| specific grades/types of crude oil. The best solution would
| be for the US government to prioritize the transition to
| renewables in Oregon and Washington.
| TradingPlaces wrote:
| Chart with components. The big news for me is that durables,
| which were leading inflation for a year, are now a net drag in
| the month-over-month
| https://twitter.com/lookinggdlouis/status/151388254299014759...
| drnonsense42 wrote:
| Meat prices are up close to 30% for me in NYC since January. I am
| aware meat prices don't dictate inflation numbers but I'm really
| having a hard time believing any official estimates at this
| point. The actual Covid numbers over the past ~1.5 months (use
| imagination) look extremely "smoothed downwards" as well, not
| that they were ever accurate (although certainly the US was one
| of few countries willing to or capable of providing public
| numbers). The underrated thing about Trump was his administration
| wasn't capable of hiding their incompetence.
| zzleeper wrote:
| Open question: won't inflation lead to mechanically higher stock
| prices, specially if it's demand driven?
|
| Say we give duplicate the amount of money in the economy(M1 M2
| etc) and prices immediately double. Won't that also double firm
| revenue, profits, dividends, and thus firm value in nominal
| terms?
|
| Thus, if stock prices and home prices are +10% in nominal terms,
| with inflation close to 10%, doesn't this mean they are just
| breaking even?
| lottin wrote:
| In short, yes. Inflation is an increase in the price level, and
| as such it only affects nominal prices, not relative prices. So
| the price of goods and services in relation to the price of
| your work (i.e. your salary) remains constant. Nothing becomes
| more expensive/cheaper in real terms, as a result of inflation.
| Although in practice this isn't entirely true.
| JumpCrisscross wrote:
| > _won 't inflation lead to mechanically higher stock prices,
| specially if it's demand driven?_
|
| Yes, to a point. Stocks are priced in nominal dollars because
| revenues are earned and dividends paid in nominal dollars.
| Endemic inflation screws with an economy, however. That reduces
| its productivity. First real returns falter. Then investors
| abandon the market.
| trgn wrote:
| It depends on the underlying valuation of the stock, and the
| industry sector.
|
| Stocks for retail/commodities/food/oil... will generally keep
| up with high inflation, since these industries have low margins
| and profits track closely to prices. There will even be some
| speculation, so it might pop in these environments, only to
| come down when clarity returns.
|
| Growth stock will be obliterated in high inflation environment,
| because they're valued for future profits, which will be worth
| less because money is worth less.
|
| Business services, entertainment, ... kind of wavers in
| between.
| incomingpain wrote:
| >Open question: won't inflation lead to mechanically higher
| stock prices, specially if it's demand driven?
|
| Mechanically higher not-USD things. Crypto, stocks, real
| estate, gold.
|
| >Say we give duplicate the amount of money in the economy(M1 M2
| etc) and prices immediately double. Won't that also double firm
| revenue, profits, dividends, and thus firm value in nominal
| terms?
|
| It wont evenly distribute amongst crypto, stocks, real estate,
| gold, etc
|
| >Thus, if stock prices and home prices are +10% in nominal
| terms, with inflation close to 10%, doesn't this mean they are
| just breaking even?
|
| Oh ya, like you have to compare inflation to GDP to interest
| rates.
|
| If GDP was 15% and inflation was 10% and interest rates are
| 10%. Those are some big numbers but not really a giant problem
| or anything. Social mobility would be fantastic in those
| numbers.
|
| Reality: GDP is 6.9 with previous of 2.3, inflation 8.5%, and
| interest rates are 0.5%. YTD S&P500 is -6.75% while 1y is 7.3%
|
| In reality the GDP figure is fake, temporary boost that wont be
| able to hold on.
| staticman2 wrote:
| That's not how stock prices worked in the 1970s, so no. A lot
| of the stock price is essentially driven by social psychology,
| not earnings.
| sidewndr46 wrote:
| > won't inflation lead to mechanically higher stock prices
|
| I'm reasonably certain that is the point of inflation, since
| everyone seems to measure economic health based off the stock
| market.
| mattnewton wrote:
| Prices don't immediately double. My layman's understanding is
| that it heavily depends on where you put the new doubled money
| in the economy, and it's resulting velocity. If you give it to
| banks they might park it in assets, increasing their prices,
| but then the money "stops" moving through the economy and
| doesn't have a large effect on things like food prices for
| instance. If you give it to people who need to make rent now,
| then they probably spend it immediately, often to people who
| also spend it soon, and it has a higher velocity and broadly
| affects prices before being absorbed into a slower moving asset
| like a bond or long term stock holding.
| datalopers wrote:
| Stocks gave an 88% aggregate return over 2019-2021. I'd say
| official inflation numbers are just now catching up.
| [deleted]
| kobalsky wrote:
| > Open question: won't inflation lead to mechanically higher
| stock prices, specially if it's demand driven?
|
| this has been answered already but I want to add something that
| wasn't mentioned: if you are thinking about it now, the market
| thought about it months before you and it's probably already
| baked in the current price.
|
| so don't expect a 10% increase in 1 year on spy even if
| everything goes up 10%. that 10% was grabbed by the better
| informed the moment the money printers were turned on.
| shostack wrote:
| Which raises the question of how the bogleheads strategy
| weathers an inflationary economy. Since apparently that's all
| Main St. can do.
| lifeplusplus wrote:
| CPI was measured differently back then and I read calculating the
| old way it surpasses 1981
| stuckinhell wrote:
| The government is lying. The CPI index is being manipulated like
| crazy. Real inflation or grocery store inflation is at 20%
| percent min, and it's easy enough to check for most americans.
| Just check your bills and factor in smaller sizes. Cost increase
| of at least 10% plus smaller portions.
| erdos4d wrote:
| 100% agree. Prices where I live are up at least 20% from last
| year on basically everything. The official numbers are just not
| believable.
| sequoia wrote:
| Stepping back from the numbers and into the realm of personal
| anecdotes:
|
| 1. I was listening the radio a couple weeks ago and the DJ
| invited people to call in and talk about the mask mandate being
| lifted (in Toronto). Woman calls in, says she went to the grocery
| store, got three bags of groceries, $146. The dj asks "and...
| were people wearing masks?" "oh yeah, some were" says the woman
| before going on to explain how she paid $14.50 for a roll of
| aluminum foil. The topic was masks and the caller _didn 't even
| want to talk about that_, the cost of goods was her top and only
| issue.
|
| 2. Standing in a park, an older gentleman is walking by with two
| small bags of groceries in his hands. I look at him to greet him
| as he passes, but he walks straight up to me as though he wants
| to address me. He stops in front of me, looks right in my eyes,
| lifts his groceries and says "FORTY DOLLARS! Too much money!!"
| (English was not his first language.) I directed him to the
| discount grocery, he confirmed that's where he is already
| shopping, and it's a green grocer with dry goods so I know his
| bags contained no (costly) meat, just vegetables and maybe some
| bread, pasta, or eggs.
|
| I frequently hear of "inflation" etc. on the news or economic
| reports, but this is different. I have never been approached by
| _strangers on the street_ who are so frustrated and shocked by
| price hikes they couldn 't walk all the way home without telling
| someone, even a stranger. This economic situation is different
| from any I have experienced in my ~40 years.
| jcal93 wrote:
| Oooff.. these are hard-hitting stories for me. I can relate
| similar anecdotal evidence though; my parents called just today
| to vent about the cost of a carton of eggs at the discount
| grocer. We've not noticed it too much yet, save the cost of
| some meats locally. I expect it will catch up here when it's
| not our growing season.
| [deleted]
| kirbyfan64sos wrote:
| I think the article's own title is incorrect?
|
| > Headline CPI in March rose by 8.5% *from a year ago*
|
| Another notable piece:
|
| > core inflation appeared to be ebbing, rising 0.3% for the
| month, less than the 0.5% estimate
|
| which matches the other commenter mentioning that the gas prices
| were a massive contributor to this.
| ren_engineer wrote:
| "if you don't include food, energy, housing, or healthcare
| prices, inflation isn't that bad!"
| noelsusman wrote:
| Oddly enough healthcare has actually experienced some of the
| lowest inflation of any category over the last year.
| JumpCrisscross wrote:
| > _don 't include food, energy, housing, or healthcare
| prices_
|
| Straw man. Core inflation includes housing and healthcare.
|
| If one can't understand why food and energy inflation aren't
| cleanly a monetary phenomenon in the midst of Russia, an
| energy exporter, invading Ukraine, a food exporter, I'm not
| sure how to help.
| spoonjim wrote:
| Why does it matter to actual people what the cause is? If
| you're poor and gas costs $7 you're fucked, regardless of
| whose fault it is.
| lottin wrote:
| Are you still talking about inflation? Inflation is
| change in nominal prices, it doesn't affect the cost of
| living.
| xyzzyz wrote:
| As it turns out, people are paid in nominal dollars, not
| real ones, and what happens id the nominal prices go up,
| while wages stay stagnant in nominal terms, so they fall
| in real terms.
| lottin wrote:
| Prices can only go up if there is buying pressure, which
| means an increase in disposable income must precede the
| increase in prices.
| xyzzyz wrote:
| Yes, printing a whole lot of new money tends to do that.
| As it happens, though, wage workers are not the first one
| who get a hold of that new paper. It does, in a way,
| _trickle down_ to them. It's only after the prices go up,
| and competitors start offering higher wages, they get any
| leverage to get a raise in their current job. This means
| that and wages will, on the whole, lag after inflation.
| anm89 wrote:
| Out of all the arguments I'm seeing on here, this feels
| particularly bad faith. Throughout my maybe decade and a
| half in the macro world I've never heard anyone even
| attempt to make this argument.
|
| Inflation clearly affects cost of living because wages
| are stickier than prices. You don't walk into work every
| monday morning and get your wages increased by CPI.
| lottin wrote:
| If you think prices are going up with a corresponding
| increase in disposable income, you need to explain how
| this is possible at all. I don't think it's impossible,
| but it certainly is incompatible with an often-cited
| theory of inflation.
| dragonwriter wrote:
| > Why does it matter to actual people what the cause is?
|
| Because we live in a representative democracy and policy
| responses are likely to be a significant electoral issue.
| ThunderSizzle wrote:
| If people wanted to vote to keep peace and a stable
| economy, they probably wouldn't have voted for Biden.
|
| Supposedly a majority voted for this and are now
| complaining about what they voted for. Maybe they didn't
| vote for this and voter fraud really did happen...
| shagie wrote:
| The question is how do you fix it?
|
| If you don't understand the cause for it, then attempts
| to fix the not-cause may cause more or bigger problems in
| other parts of the economy.
|
| This is in part complicated because there isn't
| necessarily one cause.
|
| If it was caused simply because the supply chain shock
| from different spending habits of consumers from the
| pandemic, then that would sort itself out as the supply
| chain adapts to the different habits - going from just in
| time to just in case in many places.
|
| If it was caused by an increase in energy prices, then
| increasing supply (and importantly, having the existing
| energy reserves be used).
|
| (and so on)
|
| The other side to this is the managing expectations. If
| you know that you _can 't_ fix it by just adding more oil
| to the market, then that data can be used to manage the
| expectations for all parts of the economy. "No, this
| isn't going to get better for some time" is a valid
| answer.
| jahnu wrote:
| One reason why it matters is so you can make predictions
| and plan accordingly. If it is because of a short term
| shock or a medium term problem or a long term global
| configuration change then your response to $7 gas will
| likely be radically different.
| seanp2k2 wrote:
| I guess... If it's a short-term problem and you're living
| paycheck to paycheck, you're screwed now but might be
| OKish in the future.
|
| If it's a long-term problem and you're living paycheck to
| paycheck you're screwed for longer.
|
| Honestly, what's the play here for someone who doesn't
| own any significant assets and barely makes enough to pay
| bills each month? That's what I read as OP's point.
| prepend wrote:
| One thing is paying a gas bill. In my state, I can lock
| in a price for 6,12,18, etc months. Or I can pay month to
| month.
|
| If I'm living paycheck to paycheck and my current term
| runs up, I would go month to month if this is a short
| term spike since prices should recover soon. But if it's
| long -term, I should go ahead and lock in now because it
| won't get better.
|
| There are tons of those examples. Even people with no
| assets and just living month to month can use this
| information. Obviously, billionaires are impacted more,
| but people might literally be trying to figure out if
| they just skip meat for a month (short term) or buy a
| bicycle (long term).
| kleiba wrote:
| $7? Puh! Last week it was up to $9 over in Germany.
| seattle_spring wrote:
| ... in Germany, a country with actual usable and
| comprehensive public transit alternatives.
| xyzzyz wrote:
| The public transit alternatives in Germany are just as
| expensive. Take a train in Germany and see for yourself.
| seattle_spring wrote:
| The point is that you have the option. Most people in the
| US do not.
|
| I also find it hard to believe that a bus / train pass
| costs as much as car ownership fwiw
| xyzzyz wrote:
| Total cost of ownership of a car will likely be higher
| (especially if it's a nicer car, and you use it in places
| where you need to pay for parking), but public transit
| and cars are not exactly equivalent products.
|
| Public transit can be very cheap and convenient for some
| use cases: for example, if you live close to a stop, your
| destination is close to a stop, there is straight transit
| line between the two places, it runs frequently and has
| few stops on the way, and you usually travel by yourself.
| If all of the above is satisfied, it will likely to be
| more cost effective and similarly convenient to use
| public transit. However, for many other standard use
| cases, public transit is by nature very inconvenient
| compared to cars: for example, if you visit grandma with
| your small kids on a regular basis, grandma lives in a
| small town, getting to which on public transit from your
| home requires 2 transfers, and is only reasonably
| possible twice a day at very particular times. In that
| scenario, which, by the way, is (in some form) extremely
| common for most people who aren't single professionals
| living in big city, public transit is just a non starter,
| even in Germany.
|
| Since the latter scenario is, as I point out, rather
| common, most people own a car anyway. At that point,
| you're already paying the total cost of ownership just to
| use it on routes where public transit is extremely
| inconvenient. This changes your calculation on routes
| where public transit actually is pretty convenient: sure,
| public transit on that route might win with total cost
| ownership of the car, but once you already have a car,
| fixed costs are already sunk, so public transit is now
| competing with marginal costs, and it might very well
| then lose.
|
| For this reason, even in countries with good public
| transit, it is largely a domain of students, young
| singles, and retirees, and working people with families
| overwhelmingly own and use cars.
| stjohnswarts wrote:
| Shouldn't core inflation include everythign that "regular
| people" need to keep food on the table and a roof over
| their head and a basic existence (health care)?
| JumpCrisscross wrote:
| > _Shouldn 't core inflation include everythign that
| "regular people" need to keep food on the table and a
| roof over their head and a basic existence_
|
| That's headline inflation. It's politically relevant. If
| you're running for Congress or the President of the
| United States, this is the one that gets you in and out
| of office.
|
| Core inflation is monetarily and thus more financially
| relevant. It singles out what central banks can
| strategically respond to. (You don't want to raise rates
| because an energy exporter invaded a food exporter; rates
| aren't the problem.)
| anm89 wrote:
| It's crazy how Russia invading Ukraine in March was really
| spiking food prices in January.
| garydevenay wrote:
| Energy and food based inflation was already a huge problem
| before Russia's invasion of Ukraine.
|
| There is no monetary phenomenon. It's clear as day on the
| Fed's balance sheet the reason for inflation. https://www.f
| ederalreserve.gov/monetarypolicy/bst_recenttren...
|
| If one can't understand why the value of their money goes
| down as the government buys trillions of dollars of their
| own debt with non-existent money, I'm not sure how to help.
| lalaland1125 wrote:
| Energy inflation only really spiked once the war started.
|
| Energy commodities are up 48% this year, but 37% of that
| increase was over the last month.
| fallingknife wrote:
| Oil (WTI) is up only ~10% since the war started
| lalaland1125 wrote:
| Oil products such as gasoline have risen more. See
| https://www.bls.gov/news.release/cpi.nr0.htm
| ChrisLomont wrote:
| >It's clear as day on the Fed's balance sheet the reason
| for inflation
|
| Yet there was not this inflation during the Fed balance
| sheet runup in 2008-2018......
|
| So maybe your simple claim is not what is the cause. More
| likely is that in 2008, the balance sheet was loans to
| banks (paid back), whereas in 2019+, the increase was
| from money being handed to people?
|
| In fact, your total assets graph is misleading. Look at
| the same graph, under the selected liabilities breakdown
| - the monetary base has been steady, with no inflation
| for most of it. The big recent increase is in purchase of
| Treasuries, which is the money the govt gave to the
| people to help them through the COVID caused downturn.
| This is a good use of money, and of course giving people
| money with no gain in production will lead to inflation,
| but it's not the Fed at fault - it's elected officials
| voting for free money.
| depingus wrote:
| > More likely is that in 2008, the balance sheet was
| loans to banks (paid back), whereas in 2019+, the
| increase was from money being handed to people?
|
| Unsurprisingly, the lion's share of that money handed out
| for covid relief wasn't given to people. It was
| corporations that, once again, walked away with most of
| it. Going back even further, the 2016 tax bill also
| provisioned way more money to corporations compared to
| the time-limited-bone they threw at people.
|
| While its fair to say handing out money can cause
| inflation, lets not kid ourselves about who is really
| getting that money.
|
| https://theintercept.com/2020/12/04/covid-irs-
| corporation-ta...
|
| https://www.washingtonpost.com/graphics/2020/business/cor
| ona...
|
| https://www.forbes.com/sites/christianweller/2019/05/30/t
| he-...
|
| https://www.nytimes.com/2018/01/16/us/politics/banks-are-
| big...
| ChrisLomont wrote:
| >the lion's share of that money handed out for covid
| relief wasn't given to people.
|
| Wrong [1]. 1.8T directly to people, 1.7T to businesses.
| I'd not call that a lion's share.
|
| >It was corporations that, once again, walked away with
| most of it.
|
| And a significant part of that was to pay, you guessed
| it, people :)
|
| Of the 1.7T to businesses, 835B went to paycheck
| protection program (i.e., people wages) , 85B to a delay
| (not handout) of employer payroll tax (so this will be
| paid back by the businesses), and a significant number of
| loans, not handouts, that have to be paid back.
|
| And keeping companies alive, i.e., jobs available, has
| vastly better long term economic value than simply giving
| it to people, since at some point those people will
| really like having a job for a continued income.
|
| Tell me again of the 1.8T given to people, how much was
| loans that have to be paid back? And what is that ratio
| for the business side?
|
| [1]
| https://www.nytimes.com/interactive/2022/03/11/us/how-
| covid-...
| caeril wrote:
| > Yet there was not this inflation during the Fed balance
| sheet runup in 2008-2018......
|
| Asset prices are prices, they're just not part of the
| CPI.
|
| The early part of the inflation fed almost entirely into
| financial assets. Take a look at the absolutely INSANE
| multiple expansion of the S&P 500 for this time period,
| as well as the INSANE monotonically decreasing yield
| curve in literally every kind of debt security.
| ChrisLomont wrote:
| >Take a look at the absolutely INSANE multiple expansion
| of the S&P 500 for this time period
|
| Fed added 3.5T in balance sheet over this time. S&P 500
| market cap went from $12T to $23T (and this is not
| counting all the other market caps from other stocks and
| exchanges not in S&P 500). It's not unreasonable that
| investment market caps have increased tens of trillions
| over this time.
|
| So it's pretty hard to claim the Fed injected this money
| into the stock market. It's much more likely that as the
| world is changing some companies are viewed as increasing
| in value due to the products and services being more
| valuable than before.
| Gareth321 wrote:
| > Yet there was not this inflation during the Fed balance
| sheet runup in 2008-2018......
|
| Could you think of something which happened in 2008 which
| might have impacted the velocity of money in the global
| economy, despite the aforementioned QE? QE works great
| following a recession. For quite a number of years later,
| in turns out. But not forever. At some point the economy
| recovers and continuing to pour gasoline on it stimulates
| it beyond the target inflation zone.
| JumpCrisscross wrote:
| > _Could you think of something which happened in 2008
| which might have impacted the velocity of money in the
| global economy_
|
| You and the comment you're responding to agree on the
| Fed's balance sheet being insufficient _per se_ to
| explain core or non-core PCE. It 's a complicated
| phenomenon.
| Gareth321 wrote:
| Thanks for clarifying. I guess I missed that.
| [deleted]
| whimsicalism wrote:
| Many people on HN seem really unfamiliar with the
| concept/importance of monetary velocity. Given that price
| level * output = Money * Velocity, you would think you
| might want to look at a chart of velocity before blaming
| the price level on the balance sheet.
| testesttest wrote:
| But, see, your analysis doesn't inspire confidence in the
| economy which is bad for the economy. We need a different
| explanation. Ya know like "transitory inflation". Dam,
| used that, I guess Ukraine.
| lamontcg wrote:
| Was I imagining things or were we just talking about
| supply chain problems a few months ago?
|
| Didn't we all go through that period early in the
| pandemic where spot oil prices briefly went negative?
|
| Weren't "bullwhip effect" articles regularly making the
| rounds on HN or did I dream that all?
| thrwyoilarticle wrote:
| "If you don't include war, other countries, or a shipping
| crisis, all inflation is due to the fed!"
| BolexNOLA wrote:
| I am going to need to borrow this as a retort because
| frankly it's a very fair response to the parroted line
| above, which I keep hearing variations of.
| jgod wrote:
| It's not a strawman, it's watered down by being averaged
| with things like software prices and flatscreen TVs going
| down.
| abnry wrote:
| Inflation was occuring before the Ukraine invasion.
| lalaland1125 wrote:
| Correct, but the Ukraine invasion caused a distinct
| spike. You can see this in how March is an outlier in the
| data (37% of the energy commodity inflation for the
| entire year in a single month)
| JumpCrisscross wrote:
| > _inflation was occuring before the Ukraine invasion_
|
| A hypothesis perfectly corroborated by core PCE, the
| metric OP criticised [1].
|
| [1] https://news.ycombinator.com/item?id=31003409
| dannyw wrote:
| Unless you somehow don't eat and don't use energy, you
| can't call your bank and say "because Russia, rebate my
| account".
| orra wrote:
| > Core inflation includes housing and healthcare.
|
| Interesting, not in Europe. The UK produces a separate CPIH
| index. CPIH is CPI, additionally factoring in Owner
| Occupiers' Housing Costs.
| danuker wrote:
| Neither in the US:
| https://blog.firstam.com/economics/housing-inflation-is-
| not-...
|
| > Instead, the BLS uses an owner's equivalent rent (OER).
| The BLS estimates the OER by asking homeowners how much
| they could charge to rent their home.
| coolso wrote:
| This desperate "it's Russia's fault!" angle being pushed by
| the establishment right now is not convincing anyone with
| more than two brain cells. We all saw and experienced the
| massive inflation and supply chain issues longggg before
| that war started and there's mountains of data that shows
| that to be the case.
| nebula8804 wrote:
| So what you are telling me is that if you own your home,
| drive an electric car, grow at least some of your own food
| and try not to get injured you can pretty much beat the
| system? Thats the dream!
| sam0x17 wrote:
| furthermore, if you're a house-owning boomer who bought their
| first house for $25k and it is now worth $1m+, inflation can
| be seen as quite good
| onlyrealcuzzo wrote:
| I'm not sure why this is downvoted. Maybe the boomer
| bashing?
|
| Anyone in leveraged debt is going to do well in inflation.
| sam0x17 wrote:
| These days the word "boomer" triggers anyone older than
| elder millennials, and somehow it's furthermore become a
| bit politicized. Most people also don't know that
| Generation X or the Silent Generation exist, and many
| don't know which one they are, other than
| "boomer=old/bad". It's become a bit of a slur, and that's
| not what I intended.
| [deleted]
| anm89 wrote:
| Anyone in leveraged debt with a negative real rate*
| Regardless of inflation, if you are taking out 30% pay
| day loans you aren't winning.
| anecd0te wrote:
| Inflation is typically reported year over year
| colinmhayes wrote:
| Exactly, the headline implies that prices rose 8.5% this
| month, not since last year.
| throwaway4good wrote:
| Core inflation is 6.5% yoy which is very high. The other
| figures are month to month and are noisy and have a seasonal
| component.
| mc32 wrote:
| The administration's own people are owning up to inflation
| although conveniently attributing all of it to Putin.
|
| It's an amazing turnaround from the unisonic voice of "it's
| transitory", 'printer go brrrrrrt' is a conspiracy, don't you
| worry...
| stjohnswarts wrote:
| Yeah I'll concede this. Job numbers are often similar. They
| jump a lot month to month. Unless there is some crazy spike
| that you just can't ignore, it's better to use a trendline.
| TradingPlaces wrote:
| Seasonally adjusted data are adjusted.
| gruez wrote:
| Yeah but characterizing a rise of 8.5% that happened over a
| year, as happening in one month is misleading.
| throwaway4good wrote:
| The core inflation tells you that this is more than a fluke
| in energy prices.
|
| I would say it is due to loose monetary and fiscal policies
| (duh).
|
| Maybe we are in for a 70es rerun; and the 70es inflation
| spiral didn't really end until Paul Volker, Thatcher, and
| Reagan changed the economic policies.
|
| Also stopping the inflation spiral helped bankrupt the
| Soviets who were a great benifitter of the rising commodity
| prices ... just a hint.
| lghh wrote:
| Wasn't Volker nominated by Carter? And based on the premise
| that Volker would be doing what Volker did? Does Reagan
| deserve the praise there? Only mentioning because the
| Volker nomination was such a good move that I want to make
| sure the right person gets credit.
| jjoonathan wrote:
| Yes. Carter got the blame for chemotherapy, Reagan got
| credit for the recovery.
|
| This time around, who wants to be Carter? Somehow I
| suspect we will be short of volunteers. Neoliberal
| propaganda shot itself in the foot. Oops.
| jimbokun wrote:
| I feel like Biden has been surprisingly willing to do
| "the right thing" in spite of political fallout. Like
| leaving Afghanistan, even though it led to the Taliban
| regaining control.
| ThunderSizzle wrote:
| Biden delaying and screwing up Trump's plan to pull out
| of Afghanistan that was already in progress and getting
| Americans killed, leaving millions/billions of dollars of
| equipment, and sacrificing people who helped our soldiers
| to the Taliban is "the right thing"?
| jimbokun wrote:
| Trump never pulled out of Afghanistan, just talked about
| doing it and "made plans" that he handed to his successor
| to execute.
|
| Just like Obama, really.
|
| Biden actually did it, and paid the political price.
| There was never going to be any way to withdraw without
| horrific consequences. Which is why neither Obama or
| Trump actually did it.
| throwaway4good wrote:
| Yeah.
|
| Volker was brought in by Carter.
|
| And Reagan got all the credit - supposedly he tricked the
| Russians into thinking the Star Wars program actually
| worked and that was why they went bankrupt.
|
| Things have obviously changed - but the basics are still
| there: inflation comes from monetary and fiscal expansion
| - once the spiral picks up - commodities lead the way -
| and that's the Russians.
| mgfist wrote:
| Supply shocks (from covid + ukraine war) are a much bigger
| reason.
| [deleted]
| iso1210 wrote:
| Yes majority of the inflation is caused by a lack of
| supply due to covid (lots of things shut down, from
| microchip manufacturers to international shipping to
| lumber mills to refineries and produciton hasn't ramped
| up), and of course crude oil prices increasing.
|
| If you don't think this has any affect on inflation Ive
| got a bridge to sell you.
| matwood wrote:
| I agree. What the fed missed here when they originally
| said transitory was just how long it would take the
| supply chain to recover. Places in China are still doing
| zero-covid style lockdowns causing further shocks to
| supply around the globe. Throw in a war that drove energy
| prices up, and you have quite a number of existential
| factors that could quickly go in the other direction.
| kdkfk wrote:
| It couldn't POSSIBLY have anything to do with the massive
| spending bills passed at the beginning of the current
| term, which doubled the money supply??
|
| Why is inflation so much higher [0] in the US than
| Europe?
|
| 0 https://mobile.twitter.com/jasonfurman/status/151388223
| 71497...
| lmeyerov wrote:
| You'd think that, but data-driven economists were finding
| low correlations for this kind of (rational) thing
| specifically for the modern US dollar, which is
| confusing. Super great PlanetMoney/freakonomics episode
| on inflation ~last year. If I remember right, this broken
| state goes back to at least the Obama years, maybe closer
| to Clinton.
|
| It's a weird state to be in. The rational thing becomes
| to continue (leverage) the weird situation -- the market
| expects continued regular high spend for whatever regular
| big thing of the month/year -- and the irresponsible
| thing becomes any deviations that risk rocking the boat
| (ex: risk EU style rallying on austerity becoming a self-
| fulling prophecy). A lot on inflation concern is
| triggering FUD loops (sporadic supply chain hits vs YoY
| spirals), so when we know the market treats USD
| differently to beginwith, accepting the FUD (by policies
| that assumes the USD is a weaker currency) is kind of the
| worst thing policy makers can do. Likewise, most non-US
| countries rely on USD stability, so probably same thing
| for their policy makers.
|
| I'd hate to be the one making these calls.
| lmeyerov wrote:
| Fun to see negative downvotes here. People dislike that
| the dollar breaks the rules :)
| JacobThreeThree wrote:
| >data-driven economists were finding low correlations for
| this kind of (rational) thing specifically for the US
| dollar
|
| Can you share these data-driven economist findings?
| lmeyerov wrote:
| Tried to find -- this was sometime 2020 / early 2021, and
| from a variety of sources (academic + gov), and pretty
| sure done by Freakonomics bc it was so weird. Interesting
| bc casts doubt on basically any expert wrt modern USD vs
| other currencies.
| jjoonathan wrote:
| It couldn't POSSIBLY have anything to do with the money
| the last guy printed, it's definitely all due to the
| money the current guy printed. Obviously.
| dllthomas wrote:
| But if inflation is so high because we made way too many
| dollars (compared to Europe not making way too many
| euros), why has the dollar been strengthening against the
| euro?
|
| Not saying you're clearly wrong, just that there are
| dynamics that I, at least, am not understanding.
| liuliu wrote:
| More than that, not only Euro. Currencies in emerging
| markets and places more disassociated with the U.S.
| hasn't seen their currencies strengthen in the past year
| or two against the Dollar too. FWIW, even Bitcoins hasn't
| strengthen against the dollar in the past year while we
| are having the inflation.
|
| Only commodities.
| didymospl wrote:
| >Why is inflation so much higher [0] in the US than
| Europe?
|
| It is not. It looks like the author of the tweet cherry-
| picked some inflation components but overall it looks
| equally bad.
|
| See https://ec.europa.eu/eurostat/documents/2995521/14442
| 438/2-0...
| colinmhayes wrote:
| The US has been printing money non stop since 08. Never
| caused a problem before
| bubbleRefuge wrote:
| The hypothesis that Volker killed inflation has been
| discredited. Inflation in the 80's, like today, was supply
| side from reliance on oil for energy. When natural gas
| replaced oil for energy production in the US, inflation
| came down.
| onlyrealcuzzo wrote:
| > The hypothesis that Volker killed inflation has been
| discredited.
|
| Highly subjective.
| bubbleRefuge wrote:
| All econ is fairly subjective. Hence the "dismal" science
| label.
|
| search for "Volker"
| http://bilbo.economicoutlook.net/blog/?p=7591
| bubbleRefuge wrote:
| It may have even caused more inflation as 20% on
| treasuries adds lots of interest income to the economy on
| the demand side.
| jbay808 wrote:
| Ah yes -- the Erdogan school of economics.
| nostrademons wrote:
| And folks like you are why we are going to get more
| inflation...
| memish wrote:
| Volcker raised rates to almost 20% to break inflation in
| the 70s. But that's when debt was low and we were able to
| service it. Now that debt is high, how much can the Fed
| actually increase rates? Are they out of options?
| [deleted]
| onlyrealcuzzo wrote:
| Who says they'll need to raise rates to 20% to stop
| inflation?
|
| I think everyone agrees they _can 't_ raise rates to 20%
| without causing catastrophic side effects.
|
| I think everyone also agrees they don't _need_ to raise
| rates that high.
| throwaway4good wrote:
| 5% would probably do.
| kzrdude wrote:
| Covid measures left a whole lot of people working from
| home, inefficiently, or inefficiently working on location
| (less customers, higher costs). The efficiency loss is also
| being paid for partially by rising prices, inflation. Same
| salary, less work output for it.
| nkohari wrote:
| If this were true, it would show up in drastically
| lowered revenue across many industries. That isn't the
| case.
|
| Here's a summary of revenue/share for the S&P 500 (from
| Standard & Poor's data):
| https://www.multpl.com/s-p-500-sales/table/by-year
| jimbob45 wrote:
| > Covid measures left a whole lot of people working from
| home, inefficiently.
|
| Can you explain what you mean by that? I think many of us
| would argue that we're more efficient now in WfH
| situations.
| kzrdude wrote:
| We'd need a wide survey. Whatever the HN crowd in
| aggregate thinks, it's not representative of the whole
| population who had to work at home, splitting their
| attention between homeschooling kids and other
| distractions and work.
| jimbob45 wrote:
| I've yet to meet anyone who wasn't more productive after
| switching to WfH, HN or otherwise. That seems to be the
| case for my colleagues as well. If you have some data or
| experiences that show otherwise, feel free to share them.
| kzrdude wrote:
| Lots of people want it to be true. I feel for those who
| can't admit how far they've fallen behind due to social
| disconnection or not being able to trade ideas with
| colleagues. I wish there were more solid studies done.
| Many use self-estimated productivity. Some seem to simply
| be pro-remote work, i.e have that as an agenda. That's
| fine as an interest of course but doesn't answer the
| question in terms of forcing everyone, for those it's not
| a good fit.
|
| My workplace is post-remote now. We're back to fulltime
| in the office. I'm super happy for all the random
| interaction, problem solving together and coffee breaks.
| The social interaction enables us to work better in the
| team.
|
| The best policy was not the topic of the comment but it's
| probably to let those who want and like remote work to do
| it.
| dleslie wrote:
| > I'm super happy for all the random interaction, problem
| solving together and coffee breaks. The social
| interaction enables us to work better in the team.
|
| Ah yes, the pervasive disruptive social din of an office.
| Unstructured, random and disruptive interactions. How
| anyone achieves optimal focus and gets into the zone when
| in an office is beyond me.
| lostcolony wrote:
| I mean, I'm probably less productive. But I'd still take
| it. I think my effective work hours have halved, but my
| effective productivity has dropped maybe 10-20%, as I've
| basically become far more aggressive about doing what
| matters and not the other bullshit that is maybe
| 'productive', but has no real value (i.e., write only
| documentation, synchronous communication sessions over
| things that don't really matter such as the exact wording
| of some bit of high level guidance, etc).
|
| So my -efficiency- is higher. Total work productivity,
| sure, taken a hit.
| tick_tock_tick wrote:
| I've yet to meet more than a handful of person who says
| they are more productive WFH that actually are. Even then
| when digging into it most of them will admit their
| productivity increase came as the expense of team
| velocity.
| KerrAvon wrote:
| As a middle-aged software engineer, I really don't get
| this. I am massively more productive WFH and have issue
| tracker stats to prove it.
|
| Team velocity? What do people who say this do all day?
| Are you in sales?
| nostrademons wrote:
| I like to think of this in terms of vectors.
|
| Think of your work output as a vector. It has a magnitude
| - how _much_ work you can get done in say a quarter. It
| also has a _direction_ - what is the project you 're
| working on, and does that line up in an economically
| productive way?
|
| The reason we have corporations and management is to get
| all those vectors to line up in a certain direction.
| They're like magnets, aligning the productivity vectors
| of each IC so they don't compete with each other and
| instead contribute to a common goal. Almost every IC is
| less productive in terms of magnitude when working in a
| big corporation, but because there are thousands of them,
| the overall product becomes very hard to compete with.
|
| WFH effectively reduces the magnetic force on each
| employee. Their productivity magnitude increases - they
| get more _individual_ work done per unit time. But their
| _alignment_ suffers. It 's harder to identify when two
| IC's work is not going to line up perfectly, and harder
| to catch problems and complications early, and harder to
| set a direction in the first place.
|
| And that's where WFH is going to suffer. As long as
| people can basically continue on the same direction they
| were going pre-pandemic, it's an improvement. But as soon
| as a direction shift becomes needed, corporations that
| have gone all-WFH are going to quickly find that the
| reason they're a _corporation_ has gone away. They won 't
| be able to adapt and chart a new course, and their
| employees will all quit and join new startups that are
| already pointed in the right direction.
| tick_tock_tick wrote:
| "Team velocity" is just a measure of the teams overall
| performance. I'm a senior software engineer on my team so
| a large part of my work is not coding but work that helps
| the team function: code reviews, mentoring juniors,
| design discussion, adhoc and planned pair programing,
| triaging issues that are escalated to engineering from
| the customer support team, etc. The closest I ever get to
| sales is maybe joining a call as a technical expert if
| they need more expertise (or assurances on a big contract
| deal) than the sale tech expert on our product can
| provide.
|
| Most of these things really are harder to do remote. I
| could honestly see how you'd be more productive and have
| stats to prove it if the vast majority of your
| responsibilities were just code.
| 31003149 wrote:
| 31003149 wrote:
| dleslie wrote:
| I'm more productive at home, and I'm a man with two kids
| under ten. My wife works odd hours and must commute, so
| I'm in charge of before and after school care.
|
| Kids playing happily with their toys or reading quietly
| are considerably less distracting and disruptive then any
| open concept office that I've suffered in the past.
| Unlike many adult coworkers I've had, my kids respect me
| enough to let me focus.
| smrtinsert wrote:
| Also much more productive here. After school activities a
| few times a week helps and mix of friends or alone time.
| Not losing 2 hours+ to commuting can do nothing but help
| productivity and family availability.
| 31003149 wrote:
| So the state takes care of your kids for most of your
| work day.
|
| Congratulations-- you've won the lottery by living in one
| of the few places in the US that has a functioning public
| school system (or else you're going the private route,
| which means you don't need t congrats to know you've won
| the lottery).
| dleslie wrote:
| > you've won the lottery by living in one of the few
| places in the US that has a functioning public school
| system
|
| Are you seriously claiming that's there exists
| significant portions of the USA where children don't have
| access to school? That's absurd.
|
| I'm Canadian, my kids go to public school. In fact, we're
| walking there right now; a privilege I wouldn't have if I
| had to be in a car, commuting to an office at this
| moment.
| butlerm wrote:
| Public school is available pretty much everywhere in the
| US, but it is not necessarily very high quality depending
| on demographics primarily, which is deeply unfortunate.
| Most "normal" families cannot afford to go anywhere else.
| 31003149 wrote:
| dragonwriter wrote:
| > Are you seriously claiming that's there exists
| significant portions of the USA where children don't have
| access to school?
|
| "functioning" appears to be a gateway for infinite
| malleability in meaning.
| djtango wrote:
| While there are many jobs that could be done more
| efficiently from home (massively biased towards knowledge
| work) there are plenty of jobs which are less effective
| from home.
|
| If you recall "ping-gate" entire underground lines were
| shutdown in the UK due to people working jobs that can't
| be done remotely.
|
| My passport took _forever_ to get renewed during the very
| first lockdown due to disruption to a fairly manual
| process that required handling of physical things (eg a
| passport)
| michaelt wrote:
| During the pandemic, my ballet instructor switched from
| teaching in-person classes to teaching online classes.
|
| Although they saved money on studio rental and travel,
| they ended up teaching far fewer students - despite
| starting out with an established group of regular
| students, and charging much less than an in-person class
| would cost.
| TheGigaChad wrote:
| aaomidi wrote:
| ???????
|
| Where are these statements coming from?
| tonyedgecombe wrote:
| Ideology.
| iambateman wrote:
| While it's confusing, it's the industry standard to express
| inflation percentages on an annual basis.
| tommiegannert wrote:
| Nah, this headline is just wrong.
|
| The standard way to formulate YoY changes is what GP said, or
| "Consumer prices rose 8.5% in the year ending in March".
|
| The MoM change for March is a hefty 1.2% in its own right.
| thehappypm wrote:
| Gas is dominating the March spike though; not saying it
| isn't accurate, but it's not a clear indicator that
| inflation is actually spiking right now.
| parkingrift wrote:
| This headline may be "wrong" in your eyes but this is the
| way that inflation is universally reported. Even finance
| centric news sites such as Bloomberg or WSJ report
| inflation in this way. It is universally understood to mean
| year ending.
| colinmhayes wrote:
| You're just not right. Saying prices rose 8.5% in March
| means prices rose 8.5% in March, not in the year ending
| in march. Reputable journalists say inflation rose to
| 8.5% in march, which isn't the same as saying prices rose
| 8.5% at all. I really don't think this is petty at all.
| Saying prices rose 8.5% in a month is incredibly
| misleading.
| parkingrift wrote:
| My comment isn't that the wording is right. It's that
| there is no ambiguity on what is actually being reported.
| This "issue" only exists in the mind of grammar warriors
| on message boards.
| 6gvONxR4sf7o wrote:
| "Inflation was X% in march" is what you're suggesting.
| But the title just says "Consumer prices rose X% in
| march."
| tedunangst wrote:
| The WSJ headline is "U.S. Inflation Accelerated to 8.5%
| in March". It doesn't say prices rose 8.5% in March
| alone.
| stickfigure wrote:
| Given the amount of confusion here, it's not _universal_.
| HN can do better than Bloomberg or WSJ. Clarity matters,
| mods should change the title.
| parkingrift wrote:
| The only thing I see here is people making petty
| semantics arguments. No one seems confused as to what
| we're actually discussing.
| ask_b123 wrote:
| I was confused because it really is a confusing wording.
| vernie wrote:
| Also bigger number means more clicks.
| mFixman wrote:
| That's how you know you are talking about a first-world
| country. My dear home country had an official (likely
| underreported) inflation rate of 5.5% in March alone.
| Mikeb85 wrote:
| > I think the article's own title is incorrect? >> Headline CPI
| in March rose by 8.5% _from a year ago_
|
| How do you figure? YoY is the best way to measure these things
| since there's seasonal changes that happen month to month.
| BaseballPhysics wrote:
| TBH, I'm pretty surprised that core inflation seems to have not
| grown as much as expected. That's actually very good news,
| given that core inflation is lifted by fuel prices (since
| increased fuel prices influence prices across the economy).
|
| This... seems like a good news story?
|
| Obviously the Russian invasion of Ukraine has royally messed up
| fuel and food prices, but that's a specific shock that's
| independent of larger macroeconomic issues.
| butlerm wrote:
| Some news outlets falsify their inflation reporting as a matter
| of course. Consumer prices obviously did not rise 8.5% in
| March, they rose 8.5% over the preceding twelve months ending
| in March.
|
| https://www.bls.gov/news.release/cpi.nr0.htm
| jmyeet wrote:
| Here are the weightings of CPI [1]. It's not quite that simple
| (eg there are seasonal adjustments) but it's a good rough
| estimate. You'll note that Shelter (Housing) is 32% and Energy is
| 7%. Two key events YoY:
|
| 1. We went from Covid discounts in housing to a corection and a
| surge in the other direction. Housing is certainly a problem but
| the impact on inflation is slightly exaggerated because of that
| swing; and
|
| 2. A war started in Ukraine and this allowed energy companies to
| arbitrarily raise prices for massive profits that have little to
| do with actual or potential supply issues.
|
| Housing takes a long time to turn around. I honestly think we
| need to start punitively taxing property held by corporations
| (including LLCs), foreign-owned property and illegal hotels (ie
| AirBnB) as these are restricting access to a necessity for no
| real benefit.
|
| As for energy, as much as many in the US in particular like to
| blame this on Biden. It's worldwide. The real problem though is
| profiteering by oil companies. It maddens me when I see
| governments suspending taxes to reduce the hit but somehow the
| energy companies can't take a hit? They're making absolute record
| profits. But no one even speaks about that.
|
| Where Biden is responsible is in the same way every US president
| is, regardless of party. And that is in promoting a reckless
| foreign policy and dangling NATO membership to Ukraine to keep it
| aligned with the West when it was (and is) never going to happen
| for exactly the reasons we're seeing now. Of course, Russia is to
| blame for a completely unjustifable and horrific invasion and
| everything that comes from that but both of these things can be
| true at the same time.
|
| Put it this way: you park your car in a crappy part of town and
| leave your Macbook on the hood and there's a good chance it'll be
| stolen. Sure the thief is responsible but you also could've taken
| more care. And no, that's not victim-blaming.
|
| [1]: https://www.pewresearch.org/fact-tank/2022/01/24/as-
| inflatio...
| Workaccount2 wrote:
| Taxing those land/dwelling holding corporations just creates a
| pass-through situation where the end-user ends up footing the
| cost of those taxes. It ultimately just raises prices even
| more.
|
| The best fix (and proper one) is for states/feds to step in,
| override zoning, and start mass construction of new multi-
| family housing.
| colinmhayes wrote:
| > Taxing those land/dwelling holding corporations just
| creates a pass-through situation
|
| Rental prices are almost completely demand based because
| supply is completely inelastic in the short run and only
| barely elastic in the medium/long run. Landlords are already
| charging as much as the market will bear, they can't just
| unilaterally raise prices, people will move and they won't
| fill their units.
| Workaccount2 wrote:
| >people will move
|
| Where will they move?
| [deleted]
| colinmhayes wrote:
| There are plenty of housing substitutes. A cheaper
| town/neighborhood, roommates, less bedrooms. As people
| leave more expensive areas those areas are forced to
| lower rent back to where it was.
| BitwiseFool wrote:
| >"Consumer prices rose 8.5% in March, _slightly hotter than
| expected_ and the highest since 1981 "
|
| The qualifier "slightly hotter than expected" reeks of media
| manipulation. 'Spin' at best, 'propaganda' at worst. It seems
| obvious to me that the reporters are trying to dampen or downplay
| this obviously negative news. Whereas this exact same news could
| be harped on and used like a weapon against the policy of the
| current administration. But don't worry, this was "expected" and
| only slightly worse than our central planners predicted. Keep
| calm and carry on.
| nonameiguess wrote:
| This is a weird comment. "Expected" doesn't mean it's good. It
| was expected because March already happened and forecasters had
| a pretty good idea of what the retrospective measure would be
| based on their own measurements.
| zzleeper wrote:
| Nonsense. 8.5% is literally slightly hotter than the expected
| 8.4%. From yesterday's Axios:
|
| > Details: Analysts surveyed by FactSet expect the release to
| show 8.4% inflation over the last year. That would be the
| highest inflation rate since December 1981. The rate was 7.9%
| for the year that ended in February.
|
| From this morning (6am) Morning Brew:
|
| > Good morning. Today's consumer price index reading is
| expected to show that March prices surged 8.4% over last year.
| You know who's not contributing to inflation? The Brew. Today,
| we're launching a revamped referral program with cheaper
| "prices" on swag items...that were already free to begin with.
|
| So the NEWS of the release is that it was 8.5% instead of 8.4%.
| That's why they pointed it out. Everything else was already
| priced in by markets.
| contingencies wrote:
| In Februrary UK prices were up 6.2% YoY which is a 30 year high.
| https://www.bbc.com/news/business-60833361
| TSiege wrote:
| This is a serious issue mostly fueled by rising energy prices. I
| wish our politicians could think of better solutions than what's
| going to be proposed like expanding ethanol use in gasoline, when
| it will actually make matters worse. See tweet
| https://mobile.twitter.com/SarahTaber_bww/status/15113297700...
|
| Any reason Biden can't use the war time production act to force
| American oil producers to up production (which is still short
| sighted) instead of making matters worse?
| barathr wrote:
| SPR is being tapped: https://www.cnbc.com/2022/03/31/oil-
| markets-us-strategic-pet...
| sparrish wrote:
| Biden can't use the war time production act... cause we're not
| at war.
| infamouscow wrote:
| But Trump can use it... cause we're not at war?
| TSiege wrote:
| Sorry it's called the "Defense Time Production Act" and he's
| already used it. https://www.lawfareblog.com/understanding-
| bidens-invocation-...
| typeofhuman wrote:
| The current administration does not want to relieve the
| pressure. They are against oil/lng. They openly oppose the
| industry and want everyone to be driving electric cars and have
| windmills powering everything.
| mjhay wrote:
| I wish that were true, but it is not. The Biden admin has
| expanded drilling and has been generally pro-oil, despite
| their green rhetoric.
| infamouscow wrote:
| How do you explain Biden signing an EO the first day in
| office to shutdown the Keystone pipeline.
| TSiege wrote:
| I wish that was the case but their entire approach to war in
| Ukraine triggering a European energy crisis is selling
| American LNG to them. And they've been begging American oil
| companies to pump more oil
| toomuchtodo wrote:
| Good? I mean, has nothing been learned from the oil crisis in
| the 70s? If you don't want your economy held hostage,
| electrify it and use clean energy domestically produced to
| power it. The US has had ~50 years to plan for this.
|
| Make carbon more expensive and rebate that to folks by income
| (carbon tax). Push people away from fossil fuels, and then
| you won't be held hostage by fossil producers in the future.
| Cheap oil isn't a right.
| typeofhuman wrote:
| Couldn't the people who own the windmills just as easily
| hold the country hostage as you put it? Who do you think is
| paying to build and operate these things?
| JaimeThompson wrote:
| That same reasoning applies to the current large oil
| companies who aren't really doing everything they can to
| increase production because doing so would bring them a
| lower rate of profit.
| [deleted]
| mjhay wrote:
| Investors? Coal plants could be hypothetically be shut
| down and hold the economy hostage too. Not sure your
| point.
| danans wrote:
| One of the great things about electricity is that its
| sources are highly substitutable - the end uses don't
| care whether their energy comes from wind, solar, hydro,
| nuclear, natural gas, etc.
|
| Also, the inherent intermittency of wind and solar makes
| it even harder for generators to hold the market hostage,
| as they don't control the timing when they generate
| power. To curtail energy supply would be to undermine the
| economics of the capital investments into these projects,
| as it would be missed revenue.
| JumpCrisscross wrote:
| > _Couldn 't the people who own the windmills just as
| easily hold the country hostage as you put it?_
|
| It's easier to enforce American political will on a wind
| farm in Texas than a pump in Saudi/Siberia.
| fullstop wrote:
| Presumably the windmills would be domestic and not
| foreign.
| typeofhuman wrote:
| Good point. I made a faulty assumption.
|
| A lot of windmill farms are popping up offshore, however.
| danans wrote:
| Offshore within the territorial waters of the US, so
| again they can't hold their customers hostage.
| fullstop wrote:
| Even those are not in international waters, so I don't
| see how this makes any difference.
| beembeem wrote:
| I would be curious if you could point to a foreign
| offshore wind farm connected to the US grid. I've never
| heard of this. Presumably they're all within US
| controlled territorial water.
| JacobThreeThree wrote:
| Interesting to see this playing out.
|
| https://foreignpolicy.com/2020/06/25/texas-chinese-wind-
| farm...
|
| https://www.politico.eu/article/chinese-wind-farm-
| investment...
| Someone1234 wrote:
| They literally could not, because they're within US legal
| jurisdiction (being physically in the US), emergency
| powers can be used when life or liberty at threatened to
| keep them operating while the disputes are resolved
| likely through the courts.
| [deleted]
| parf02 wrote:
| So what does the normal working class guy like me do to protect
| my savings? Currently investing in diversified ETFs doesn't seem
| to protect me.
| reducesuffering wrote:
| Global stock market is 18 P/E, so returning 5.5% + inflation
| medium & long term, assuming no growth. That's 14% nominal
| right now, more if there's any growth (which there usually is
| medium & long term).
| timcavel wrote:
| Tarucho wrote:
| Who benefits from this? Is wealth distribution changing?
| throwaway5752 wrote:
| Inflation in the west is Russia's goal. There is an economic war
| going on, for those that are not aware.
| [deleted]
| caycep wrote:
| Honestly, this was just my gut and I've felt prices were
| artificially low for the past decade or so - maybe because of
| globalization and offshore manufacturing, and things are really
| just catching up to what they're actually worth. You can elect a
| guy that will "decouple" from China and trash international trade
| deals...but don't expect low prices 4 years later...
| ericmay wrote:
| I agree. I think the prices we see now are probably more
| "correct", and things were just very cheap in the past. But I
| also think that there's some inflation going on from pent-up
| savings. Flights, credit card points, hotels, etc. coupled with
| corporations raising prices to offset losses in 2020-2021. I'm
| also curious about a race condition with wages and prices.
| Forget the tech wages because those are probably propping up
| equity markets and housing markets, but day-to-day stuff where
| someone was making $15/hour and now they're making $20/hour or
| more with that change happening over the course of a year and
| for millions, well, they can afford the higher prices... I'd
| love to read something more educated on that topic though. I
| have an intuition (race condition or at least partial race
| condition) but I haven't studied the specific economics of
| that. I always assumed you'd get inflation but not
| corresponding wage increases. I guess if the west is able to
| prop up currencies, it's fine? Kind of like living in Iceland
| except everywhere.
|
| For example, I live in Ohio. Can someone explain to me why I
| would expect a swordfish steak or tuna steak or salmon to be
| cheap whatsoever? And that's _still_ not pricing in offsets
| needed from c02 emissions. Chicken on the other hand? Yea that
| should be very cheap and very fresh.
|
| We need more local suppliers. Grow a victory garden. Last
| season we had so many onions. I wish I could have had a
| neighborhood farmer's market. But rules. Regulations. Etc.
| throwaway0a5e wrote:
| >For example, I live in Ohio. Can someone explain to me why I
| would expect a swordfish steak or tuna steak or salmon to be
| cheap whatsoever? And that's still not pricing in offsets
| needed from c02 emissions. Chicken on the other hand? Yea
| that should be very cheap and very fresh.
|
| Because global interconnected economy. The same business
| processes that figure out how to distribute all sorts of
| widgets to warehouses and supply house shelves and parts
| departments all over the country are being used to send a
| steady stream of approximately the amount of swordfish to
| Cleveland that people in Cleveland buy. It doesn't really
| cost any more to ship it to Cleveland than it does NYC. It's
| just a giant customization problem. Thanks to modern
| communications technology the dozen swordfish steaks that you
| and eleven other people will buy this week get to your
| supermarket.
| tmp_anon_22 wrote:
| In the US whenever I traveled during the past decade it felt
| like consumer goods were much more expensive, CAD, AUD, EUR,
| purchases all felt more expensive. I wonder if part of this is
| just the weakening of the dollar as the result of US economic
| policy over the last twenty years.
| jmoak3 wrote:
| I agree. To see the process of prices deflating happen on a
| small timeline, look to Japan. After Japan realized their cost
| of doing business was going to rise due to aging, their markets
| crashed in the 90s. In response they poured epic levels of
| investment into mobilizing offshore workers and completely
| recovered. The lesson the world took away was "money isn't
| real, maybe we should take on more debt".
|
| Ironically here in the US the party of "trash international
| trade to increase local workers' bargaining power" is also the
| party of "keep retirement age the same at all costs and
| maintain fixed income QOL".
|
| As we see globalization unwind from international policy and as
| working populations age (China peaked @ ~1 billion workers, and
| is declining), we are guaranteed to see prices rise as workers
| can demand much, much more (to the dismay of those on fixed
| income).
|
| I think it'll be interesting to see this unholy coupling tear
| apart.
| memish wrote:
| I agree with this premise, but we haven't on-shored production
| yet. It's still mostly offshore.
| jmoak3 wrote:
| You're right, but I think you've missed a detail.
|
| Our stuff was being made in China, until many of our supply
| chains were severed due to Covid, leading to Chinese
| defaults, shortages, and an increased cost of doing business.
| Now a certain amount of stuff simply isn't getting made at
| all.
|
| The question at play is will they recover to 2019 levels?
| Will China be able to deal with the defaults of businesses
| who provided key nodes in the supply chain while juggling
| their 0-covid strategy? What will happen to the cost of doing
| business when China loses 20% of its workers over the next
| decade or so due to aging?
|
| I've been a broken record about this but I highly recommend
| The Great Demographic Reversal. It provides a high level view
| of the forces at play in our world and is a real eye opener.
|
| caycep said prices were artificially low but that's not quite
| right - prices were as low as they deserved to be because
| China had workers and we were able to make deals to mobilize
| them. In the coming decades I'm not convinced we will have
| that luxury.
| euph0ria wrote:
| Edit: Read counter-arguments in comments to this below.
|
| And shadowstats.com puts it to 17.15%:
|
| March 2022 CPI-U annual inflation hit a 40-plus year high of
| 8.54% [up from 7.87% in February], the steepest inflation pace
| since December 1981; March 2022 ShadowStats "Corrected" Alternate
| CPI estimate hit 17.15%, up from 16.05% in February], the
| steepest inflation rate since June 1947 (in 75 years).
| arcticbull wrote:
| Shadowstats is completely worthless. They literally just added
| a fixed 5% to the actual CPI numbers over the entire period
| without any justification. If you took their average inflation
| rate to any commodity over the period they claim, the price
| would be about 10X higher than it is. It's a tinfoil hat
| conspiracy site.
| euph0ria wrote:
| How does Shadowstats calculate it differently:
| http://www.shadowstats.com/article/no-438-public-comment-on-...
|
| Counter-arguments: https://en.m.wikipedia.org/wiki/Shadowstats.
| com#:~:text=A%20....
| [deleted]
| gruez wrote:
| If you deflate nominal GDP with shadowstats numbers, you'll
| find that GDP has been continually dropping for the last few
| decades. That seems hard to believe.
| schemescape wrote:
| Just eyeballing the ShadowStats chart (because accessing the
| raw data requires a subscription), they're claiming that the
| inflation rate has been hovering around 8% since roughly the
| year 2000. That implies that the cost of living in the US has
| increased over 5x since 2000.
| jchonphoenix wrote:
| At least in the bay, it kind of has if you include housing...
| 2000 was a low point and we're at a high point now.
| annoyingnoob wrote:
| No matter which party you choose, or if you choose to be
| independent, we are very likely to end up with a Democrat or a
| Republican in the White House. History tells us that a lot of
| inflation under a Democrat president will help flip the next
| election to a Republican. If Democrats want the next term they
| will have to get inflation under control, otherwise the WH is
| going to flip. The way things are going Biden is going to look
| like Carter.
| 323 wrote:
| Quite a lot of people are starting to say that measuring
| inflation with a single number is like measuring the temperature
| of the whole US with a single number - "today the temperature in
| US is 81 F".
| Gareth321 wrote:
| Those people don't understand how the CPI is calculated. A
| basket of goods is used to project what an average person would
| spend on goods and services. Do people in New York spend more
| on the same basket? Of course! But the _percentage change_ is
| fairly uniform in a connected economy like the US. The
| measurement is intended to calculate the macro effect of
| inflation; not Bob's impact, who lives in Ohio, owns three
| cats, and exclusively eats tuna from a can.
|
| An analogy is the BMI. This is intended as a population metric,
| but is often used by the individual. It's _less_ useful for the
| individual, but still actually pretty useful. If your BMI is
| above 30, you're probably unhealthy. You _might_ be a pro
| wrestler with huge muscles, but you probably aren't.
| davidjgraph wrote:
| And that's wrong because the units are outdated?...
| wincy wrote:
| It's wrong because there's a freak snowstorm in Seattle and
| it's 39degF there right now and it's 81degF in Kansas City.
| So the average temp between those two place is 60degF which
| tells us nothing useful about either place.
| francisofascii wrote:
| Sure, but prices are up everywhere for most goods. Are
| prices actually down for anything significant right now? So
| using the weather analogy, it is hot everywhere in the US.
| sudosysgen wrote:
| If half of the US was under a freak snowstorm that would be
| pretty significant.
| kzrdude wrote:
| Over longer time the US average temp is useful, it tells us
| something about the climate, not the weather. Maybe that
| analogy kinda works for the economy.
| long_time_gone wrote:
| > Quite a lot of people are starting to say
|
| Who? What are their credentials? What improved measure have
| they created?
| Kon-Peki wrote:
| I'm wondering if these people are suggesting a completely
| different approach, or if they are just starting to realize
| that BLS publishes a huge number of inflation measures [1]:
|
| > Price indexes are available for the U.S., the four Census
| regions, nine Census divisions, two size of city classes,
| eight cross-classifications of regions and size-classes, and
| for 23 local areas. Indexes are available for major groups of
| consumer expenditures (food and beverages, housing, apparel,
| transportation, medical care, recreation, education and
| communications, and other goods and services), for items
| within each group, and for special categories, such as
| services.
|
| [1] https://www.bls.gov/cpi/overview.htm
| long_time_gone wrote:
| Maybe it's a by-product of the broader trend towards
| distrust of experts?
| z2 wrote:
| Which is potentially useful if the aggregate is weighted
| appropriately and whatever insights respect the implications of
| using an aggregate. It's even more useful with the additional
| information that temperatures in the US tend to be highly
| correlated between areas.
|
| Some useful insights if you have enough data points would be
| where in the year you are, which season it is, if it might be
| an El Nino or la Nina year, and over the long term if there are
| any secular trends like global warming...
| gsk22 wrote:
| It's nothing like that.
|
| People live in one place and only care about the weather at
| that place. Whereas consumers need products from all sectors of
| the economy, so an aggregate inflation indicator makes sense.
|
| Sure, it's not perfect, since every household spends their
| money differently, but everyone needs food, housing, energy,
| etc.
| helen___keller wrote:
| I think it's an apt metaphor. If you lived in a big city in
| the 2010s, you've probably read years worth of headlines
| about low inflation, all while experiencing a rapidly
| inflating cost of living.
|
| CPI is like climate news, not weather news, and should be
| understood as much.
| long_time_gone wrote:
| If GDP goes up 5%, but you only get a 3% raise does that
| make GDP a bad measure of the economy?
| vmception wrote:
| Assumes GDP is a good measure without this hypothetical
| long_time_gone wrote:
| I don't follow, can you please clarify?
|
| Edit: Reread and understand now...
|
| The point is that GDP is a measure of how much the
| economy in the US grows or contracts, just as CPI is a
| measure of how much prices in the US grow or contract.
| You shouldn't view GDP as a personal indicator of
| economic growth, just like CPI isn't an analysis of costs
| on your personal spending. Treating it as such feels like
| distorting the purpose of the measure to suit a
| narrative.
| vmception wrote:
| It has limitations in its ability to measure that, it can
| simultaneously be the _best_ measure that we have, in the
| absence of a better one, doesn 't mean its good or a
| helpful indication, and as we both agree it's not a good
| indication of any individual persons experience
| long_time_gone wrote:
| > It has limitations in its ability to measure that
|
| Nobody has denies this, so why is it a talking point?
|
| > as we both agree it's not a good indication of any
| individual persons experience
|
| Which is why I use it for what it is instead of
| complaining about it not being something else. Any one
| individual is influenced by their own bias and
| experience, which creates an entirely different problem.
| vmception wrote:
| > If GDP goes up 5%, but you only get a 3% raise does
| that make GDP a bad measure of the economy?
|
| let's stick with the basics. this was the whole
| conversation, a leading question that pretends to be a
| thought exercise that suggests in some other scenario
| that GDP is a good measure. no more, no less. I think
| we've gone over everything now.
| long_time_gone wrote:
| I didn't see where you developed the bulletproof case
| that GDP was a bad measure. If you've proven that at some
| point, I'm happy to adjust my understanding. In lieu of
| that, I'll go with the economic experts who regularly
| study, use, and rely on GDP for real world analysis.
|
| > you're the only one that had to read it twice, we
| talked about it now, good talk.
|
| The lack of punctuation and choice of verb tense made it
| difficult to understand, no need for the condescending
| tone.
| stusmall wrote:
| I like the analogy. Recent inflation hasn't hit my household
| as hard while its crippling for others. We work from home and
| rarely drive far when we do leave the house. We eat frugally
| and cook almost all our own meals. Finally we own our home
| and are locked in at our mortgage rate. Inflation has been
| hammering energy, food and housing costs. We've felt some of
| the food increases but the rest, not really.
|
| Meanwhile imagine a family that rents their home, commutes
| long distances to work and has growing kids. They are
| probably drowning. Comparing these cases feels a lot like
| averaging together the temperatures of Seattle and Houston.
| Iwan-Zotow wrote:
| Putin did it!
| memish wrote:
| Predictions on where it goes from here?
| NDizzle wrote:
| "One of these days ... One of these days ... Pow! right in the
| kisser!"
| jbay808 wrote:
| The biggest story here is in shelter prices.
|
| https://www.bls.gov/charts/consumer-price-index/consumer-pri...
|
| March saw a continuation of a year-long trend in which YoY
| shelter inflation _accelerated_ by almost exactly an additional
| 0.3% each month. March came in at 5%, 0.3% higher than February
| 's 4.7%, and so on.
|
| Shelter is the largest category in the CPI basket, and it is
| critical for a reason. It isn't coming from Ukraine. It mostly
| isn't coming from supply chain bottlenecks and shipping container
| shortages. It isn't discretionary. And most importantly, it's a
| deeply lagging indicator with a long way still to go to catch up
| to the current activity in the housing and rental markets.
|
| My expectation is to see this trend continue. Base year effects
| (in the second derivative) might slow it down a bit, but by June
| we could be looking at almost 6% inflation in shelter alone.
|
| And remember -- a linearly increasing growth rate is _faster_
| than exponential price growth.
|
| Interest rate hikes may help, but the dynamics are such that
| they'll need to make things worse before they make things better.
| matwood wrote:
| > It mostly isn't coming from supply chain bottlenecks and
| shipping container shortages.
|
| Inventory is still bumping along record lows. Housing starts
| were up in the new year, but it will take time for new units to
| come online after being side lined with labor and material
| shortages. ~5% mortgage rates are also likely to begin to slow
| things down.
| jbay808 wrote:
| > Inventory is still bumping along record lows.
|
| Absolutely, but that's part of the mechanism through which
| price rises happen, more than a causal explanation of it. It
| further suggests that shelter has a lot of momentum.
|
| > Housing starts were... side lined with labor and material
| shortages.
|
| That's a bigger part, but easily offset by historically low
| population growth in the US. Low pandemic interest rates were
| almost certainly a much bigger factor in driving the housing
| market than the cost of construction.
|
| > ~5% mortgage rates are also likely to begin to slow things
| down.
|
| Again, absolutely (although if inflation also levels out at
| 5%, that may be neutral). But, as I mentioned in my comment,
| there's a "right half-plane zero" in the transfer function
| between interest rates, housing prices, homeownership costs,
| and shelter. Rising mortgage rates may level off housing
| prices, but meanwhile drive _up_ the cost of homeownership.
| Even as the housing market plateaus, those rising
| homeownership costs can carry shelter higher, both in the
| form of real rents and "owner's-equivalent" rents. (In
| Canada the relationship is more direct, with mortgage
| interest costs directly included in the shelter basket, but
| the relationship exists indirectly in the US CPI metric too).
|
| That shelter CPI can trend higher as housing prices plateau
| is the price of reciprocity that we pay for shelter CPI
| appearing low after interest rate cuts, even as housing
| prices grew rapidly.
| sixo wrote:
| Not seeing how that graph suggests shelter is the biggest
| story. Shelter looks linear since Feb 2021, but only caught up
| to pre-pandemic levels around Nov/Dec 2021, and while linear
| since then falls FAR behind energy, food, basically everything
| else incl the aggregate. A few months of linear shelter prices
| doesn't register as a meaningfully different trend than the
| rest of the basket that's been booming this winter, just that
| shelter would be more time delayed and smoothed0out due to
| leases coming up.
| jbay808 wrote:
| The reason shelter is the biggest story is not because
| shelter inflation is leading the pack (of course it's not, so
| energy is grabbing all the attention!), but because shelter
| has _so much inertia_ behind it, and couples so much more
| closely to interest rates than to supply chains and wars.
| polygotdomain wrote:
| I agree that shelter(housing) prices increasing at 5% is not
| good, but when we're seeing inflation of 8.5% there's something
| else that's driving things up.
|
| When you look at just the energy component of the CPI you'll
| notice that it began to outpace inflation in March of 2021 at
| 13.2% and has fluctuated between 25% and 32% since them. The
| previous chart on that page that breaks down the most recent
| month's inflation between food, energy, and all other items you
| see that food is in-line with inflation, energy is crazy, and
| other items are at 6.5%.
|
| https://www.bls.gov/charts/consumer-price-index/consumer-pri...
|
| We have a lot of problems going on right now, but why the
| energy sector has been experiencing crazy inflation for the
| last year might be more of a factor that the other things
| grabbing the headlines right now.
| jbay808 wrote:
| Shelter isn't housing, it's rent. Housing is up much more --
| 21.7% YoY (as of January 2022, on top of 9% the previous year
| [1]) -- but that isn't directly captured in the CPI. Shelter
| CPI goes approximately as a massive low-pass filter on the
| product of (housing prices x mortgage rates), and so rising
| interest rates can carry shelter up higher, even after
| housing prices plateau.
|
| [1]: https://fred.stlouisfed.org/series/csushpinsa
| riversflow wrote:
| Nice observation and chart. Also really unsettling, do you
| think that housing prices running away like this might
| instigate some policy shifts?
|
| I can't decide if the U.S. is headed towards a feudalistic
| society or not. If shelter _cost inflation_ is accelerating it
| gives me hope, in a sort of grim accelerationist way, that
| housing will have to be addressed soon. I want to believe that
| we will see a housing campaign to "promote the American dream"
| or something, but everyone I talk to seems to think it's not
| gonna happen and democracy isn't alive enough to fix the
| corporate rent seeking.
| jbay808 wrote:
| > do you think that housing prices running away like this
| might instigate some policy shifts?
|
| Probably, yes. It was easy to see this coming, so I think
| policymakers should have shifted policy earlier, but it will
| be hard not to do so at this point, because now you don't
| need to look ahead anymore to see it.
|
| The last time shelter inflation rose in this fashion was
| around 2010 to 2013 -- but that was shelter bouncing back
| from -0.6% to 2.3% after the GFC, rather than running ahead
| of the inflation target. The time before that was 2005-2007,
| when shelter inflation ramped up to 4.3% before the GFC. And
| the time before that was the '80s Volcker shock.
|
| That's not just pattern-matching; that's a causal
| relationship. When interest rates gradually rise or fall,
| housing prices fall or rise in tandem such that shelter
| inflation -- rent and mortage payments -- is fairly constant
| at around 2%. But when interest rates step-change suddenly,
| shelter reacts violently. When that change is a rate cut,
| shelter initially falls (as mortgages get cheaper) and then
| climbs back (as housing prices adjust for the lower rates).
| When that is a rate hike, shelter initially spikes (as
| mortgages get expensive) and then falls (after the real
| estate market corrects).
|
| But real estate market corrections are more broadly
| devastating than stock market corrections (although they
| often go in pairs). Housing is a highly-leveraged asset, is
| most peoples' largest (or only) investment, is used as
| collateral for other loans, and so on.
|
| Shelter is a good approximator for overall long-term
| inflation expectations, labor prices, and wage inflation. So
| the Fed doesn't have much choice but to either address it or
| allow an inflationary wage-price spiral.
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