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> or your central bank is injecting money into the economy and your "savings" is being inflated away This classical macroeconomic principle does not work any m

by kds3 7y ago

> or your central bank is injecting money into the economy and your "savings" is being inflated away This classical macroeconomic principle does not work any more [0]. Today inflation is not directly related to central bank actions. [0] https://www.economist.com/special-report/2019/10/10/inflation-is-losing-its-meaning-as-an-economic-indicator https://www.economist.com/special-report/2019/10/10/inflatio...

colechristensen 7y ago
Meh, I think it has more to do with central bank actions being so far removed from buying eggs at the grocery store that the macroeconomic effects are just not very tightly coupled with specific actions. People aren't making different decisions w.r.t. the cost of capital and banks giving loans aren't giving riskier loans when interest rates are lower - the risk and the interest have little coupling at all. So central bank actions are only having effects inside the very navel-gazing financial industry that is moreso playing its own game than interacting with the outside world. That is, central bank actions' effects are being hidden by complexity that will take time to shake out. Interest rates and bailouts and the like are only affecting a certain tier of society and it will take a while for those waves to spread to the rest of us.
winfred 7y ago
If over time, you change the way you measure inflation[0], to manipulate government bond rates and Social Security payouts[1], then it's not surprising you end up with a world where inflation is not directly related to central bank actions.[2] [0]http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts [1]https://www.businessinsider.com/if-people-knew-the-actual-inflation-rate-it-would-crash-the-economy-2016-8 https://www.businessinsider.com/if-people-knew-the-actual-in... [2]https://www.investopedia.com/articles/07/consumerpriceindex.asp https://www.investopedia.com/articles/07/consumerpriceindex....

by kds3 7y ago

colechristensen 7y ago

Meh, I think it has more to do with central bank actions being so far removed from buying eggs at the grocery store that the macroeconomic effects are just not very tightly coupled with specific actions. People aren't making different decisions w.r.t. the cost of capital and banks giving loans aren't giving riskier loans when interest rates are lower - the risk and the interest have little coupling at all. So central bank actions are only having effects inside the very navel-gazing financial industry that is moreso playing its own game than interacting with the outside world. That is, central bank actions' effects are being hidden by complexity that will take time to shake out. Interest rates and bailouts and the like are only affecting a certain tier of society and it will take a while for those waves to spread to the rest of us.

winfred 7y ago

If over time, you change the way you measure inflation[0], to manipulate government bond rates and Social Security payouts[1], then it's not surprising you end up with a world where inflation is not directly related to central bank actions.[2] [0]http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts [1]https://www.businessinsider.com/if-people-knew-the-actual-inflation-rate-it-would-crash-the-economy-2016-8 https://www.businessinsider.com/if-people-knew-the-actual-in... [2]https://www.investopedia.com/articles/07/consumerpriceindex.asp https://www.investopedia.com/articles/07/consumerpriceindex....