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but we're not having deflation. With fewer and fewer people working, there's less and less supply with even larger demand, now that they're printing money like

but we're not having deflation. With fewer and fewer people working, there's less and less supply with even larger demand, now that they're printing money like never before. As a result, we're going to get really really serious inflation of over 2%, 3%, maybe even more than 3%. It doesn't sound like much because we've become innured to it. But, it's really bad. Just think, you earned 100K in 1 year and 1 year later it's only worth 97K. That's a tax of 3K just for holding on to your money, on top of all the taxes that already exist (Govt spending is 40% of GDP ~ and that's just nationwide.) After just 20 years of 3% inflation, your money is worth half of what it was when you earned it. What's the point of government if they can't even provide a stable currency? Is the expectation that everyone must now buy equities and real estate? Are we to go back to bartering?

Der_Einzige 7y ago
At the moment, foreign demand for the dollar is so high that we are experiencing deflation (liquidity is still too low which is entirely why the fed is moving towards negative interest rates), in spite of the money printer going "brrrrr"
- toomuchtodo 7y ago
  > the money printer going "brrrrr" For those who have yet to have the enjoyment of the experience: https://brrr.money/ https://brrr.money/
  - Rury 7y ago
    Can someone explain the 'going brrrrr' meme to me? I've seen it used in other contexts but can't quite fully grasp what is meant by it.
    - toomuchtodo 7y ago
      It's a tongue in cheek reference to the Federal Reserve "running the printing presses", generating as much fiat as necessary to support the US and global economy. With the US dollar not on the gold standard [1], or tied to something physical resource, the Federal Reserve can create money out of thin air without constraint. Ergo, the "money printer goes brrr". https://www.nytimes.com/2020/03/23/upshot/coronavirus-fed-extraordinary-response.html https://www.nytimes.com/2020/03/23/upshot/coronavirus-fed-ex... (The Fed’s Message: The Money-Printing Presses Are Fired Up and Ready to Go) [1] https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard
    - tacon 7y ago
      The sound of a lot of paper money being processed: https://www.youtube.com/watch?v=ehFImqzVWos https://www.youtube.com/watch?v=ehFImqzVWos
    - pjc50 7y ago
      https://knowyourmeme.com/memes/money-printer-go-brrr https://knowyourmeme.com/memes/money-printer-go-brrr
- jnordwick 7y ago
  This is actually more true than people realize. Gold is down to flat even after the the huge Fed announcements. The CRB index has been getting crushed in the last month. But this short-term liquidity demand is going to go away. The real inflation story is going to be when it does and the economy settles down. Then we will have all these programs that pumped huge amounts of money into the system, and unless they are sanitized watch out. I've seen people losing a lot of money on gold calls, but i think the proper time for that is going to be when this short-term credit demand has dried up and business starts returning to normal.
  - everybodyknows 7y ago
    The crucial question is when does business return to normal? Credible experts have put the time to a vaccine at 18-24 months. Until then, what sort of "normal" is plausible for say, an airline, or a dentist?
- eloff 7y ago
  This seems true, every currency pair against the US dollar that I checked is down substantially. Yen, Cad, Eur, Gbp, among others.
bwanab 7y ago
You may be right, but as Lord Keynes said, the market can stay irrational longer than you can stay solvent.
mdorazio 7y ago
1) Once again, inflation does not work that way. If it did, it would have been out of control in 2009. Instead, it was near zero. The same thing is happening right now. 2) The idea that 2-3% inflation is "really really serious" is completely absurd. I'm guessing you're young because historical US inflation prior to the ridiculous post-2009 financial situation had long periods of being well above 3% and the sky didn't fall. Inflation above what we've seen in the last decade is not necessarily a bad thing.
- hnarn 7y ago
  For context, the inflation goal set by the Swedish national bank is 2%. That's what they're aiming for, so clearly it's not "really really serious". CNBC also states that: >The Fed considers a 2% inflation rate to be a sign of sustainable growth and a level that keeps interest rates high enough to allow for mobility in the event of an economic downturn.
  - akuchling 7y ago
    1-3% is also the Bank of Canada's target range: https://www.bankofcanada.ca/rates/indicators/key-variables/key-inflation-indicators-and-the-target-range/ https://www.bankofcanada.ca/rates/indicators/key-variables/k...
- fauigerzigerk 7y ago
  I agree that 2-3% inflation is nothing to worry about. But what's happening now is not quite the same thing as in 2009. For the first time in a very long time we actually have a shortage of supply. We didn't have that in 2009. But I think/hope it will be short lived, and depending on how we act now it could easily turn into a shortage of demand once again.
  - jjeaff 7y ago
    Do we really have a shortage of supply? For what products? The only shortages I have seen are for toilet paper and a few random grocery store products that maniacs decide to stockpile next. (in my community, there is all the sudden a run on ice cream now that bread is back in stock).
jnwatson 7y ago
That printing money necessarily leads to inflation is not true in a situation like this. Inflation happens when there's more and more money being used to chase a finite amount of goods. In our current economic situation, there's a huge pile of money that's not chasing any goods at all. Like like after the 2008 crisis that didn't lead to inflation, this won't either, as long at they turn off the money printer when people start investing again.
- jjeaff 7y ago
  They aren't really printing money. They are buying up debt, both private and government that will eventually be sold back to the market or will mature this returning that money back, with appreciation, to the fed. Which will then make it disappear just as easily as they created it.
  - jnwatson 7y ago
    Sure. The Fed doesn't even own printing presses, the Department of Treasury does. However, in this context, "printing money" doesn't mean making physical pieces of paper. It means creating money out of thin air. It does that by buying debt, which, as you note, can be destroyed just as fast as it is created.
csomar 7y ago
> but we're not having deflation. We are going to have deflation. The stock market already "deflated". Just wait for the rest. Food prices are going to go through the roof (and maybe medical procedures) but everything else is going to get cheaper.
- jiaaro 7y ago
  Given that food and medicine make up a large portion of spending, I think we'll see something more like, "some prices go up and others go down." Another big chunk is housing, which as far as I know, shouldn't expect much difference in supply or demand in the short term, though demand may increase (at least as measured by square footage) if people are staying home for a long enough time. That may be countered by the reduction in demand for real estate by businesses, though zoning will probably limit the short term effects that has on housing.
- state_less 7y ago
  Stocks are deflated because they aren’t expected to earn because people aren’t out buying and companies aren’t earning. Same for oil. Same for airline tickets. It seems obvious that there is deflation. If you have a good paying job right now, you can buy a lot for less.
viklove 7y ago
There's less supply of what? We still have plenty of food, plenty of homes, plenty of water. Yeah, we have less Airbnbs getting booked, and Ubers being called, but does that really fucking matter? It only matters to the VCs who have invested in these companies. Americans don't need to buy their 6th iPhone to save this economy, we just need to focus on what's important. It's very telling of the state of current US politics that when a crisis emerges, everyone says we have to help rich corporations stay rich.
- samsonradu 7y ago
  There was this joke running on Twitter: If aliens invaded us today our first reaction would be to lower interest rates.
  - deleted 7y ago
    [deleted]
- a_tractor 7y ago
  Not totally disagreeing but I'm pretty sure the idea for most is that we want people to keep their jobs. Corporations staying rich means people staying employed. What does it say that you use Apple as a supporting example, one of the strongest corporations in the history of the world, rather than any or all of the millions of small businesses all over the country which are now hanging on by a thread.
chewz 7y ago
> get really really serious inflation of over 2%, 3%, maybe even more than 3% Really serious inflation is when prices in supermarket change twice a day like in Brasil in the old times. It is Weimar style hyperinflation where everyone want to get rid of paper money right away. Inflation of 2-3% is actually desirable - it is a sign of healthy, growing economy. Additionaly it is good for public finances as most expenditures is fixed and tax recipes are over the target. Yes it is a kind of tax on people but in healthy economy who cares? Most central banks and banks in general (also insurers) dread deflation not small inflation.
- voisin 7y ago
  > Inflation of 2-3% is actually desirable - it is a sign of healthy, growing economy. Why 2-3% and not 5-7% or -1-1%? Source for this assertion?
  - chewz 7y ago
    Inflation target for most CB..
deleted 7y ago
[deleted]

Der_Einzige 7y ago

At the moment, foreign demand for the dollar is so high that we are experiencing deflation (liquidity is still too low which is entirely why the fed is moving towards negative interest rates), in spite of the money printer going "brrrrr"

toomuchtodo 7y ago
> the money printer going "brrrrr" For those who have yet to have the enjoyment of the experience: https://brrr.money/ https://brrr.money/
- Rury 7y ago
  Can someone explain the 'going brrrrr' meme to me? I've seen it used in other contexts but can't quite fully grasp what is meant by it.
  - toomuchtodo 7y ago
    It's a tongue in cheek reference to the Federal Reserve "running the printing presses", generating as much fiat as necessary to support the US and global economy. With the US dollar not on the gold standard [1], or tied to something physical resource, the Federal Reserve can create money out of thin air without constraint. Ergo, the "money printer goes brrr". https://www.nytimes.com/2020/03/23/upshot/coronavirus-fed-extraordinary-response.html https://www.nytimes.com/2020/03/23/upshot/coronavirus-fed-ex... (The Fed’s Message: The Money-Printing Presses Are Fired Up and Ready to Go) [1] https://en.wikipedia.org/wiki/Gold_standard https://en.wikipedia.org/wiki/Gold_standard
  - tacon 7y ago
    The sound of a lot of paper money being processed: https://www.youtube.com/watch?v=ehFImqzVWos https://www.youtube.com/watch?v=ehFImqzVWos
  - pjc50 7y ago
    https://knowyourmeme.com/memes/money-printer-go-brrr https://knowyourmeme.com/memes/money-printer-go-brrr
jnordwick 7y ago
This is actually more true than people realize. Gold is down to flat even after the the huge Fed announcements. The CRB index has been getting crushed in the last month. But this short-term liquidity demand is going to go away. The real inflation story is going to be when it does and the economy settles down. Then we will have all these programs that pumped huge amounts of money into the system, and unless they are sanitized watch out. I've seen people losing a lot of money on gold calls, but i think the proper time for that is going to be when this short-term credit demand has dried up and business starts returning to normal.
- everybodyknows 7y ago
  The crucial question is when does business return to normal? Credible experts have put the time to a vaccine at 18-24 months. Until then, what sort of "normal" is plausible for say, an airline, or a dentist?
eloff 7y ago
This seems true, every currency pair against the US dollar that I checked is down substantially. Yen, Cad, Eur, Gbp, among others.

bwanab 7y ago

You may be right, but as Lord Keynes said, the market can stay irrational longer than you can stay solvent.

mdorazio 7y ago

1) Once again, inflation does not work that way. If it did, it would have been out of control in 2009. Instead, it was near zero. The same thing is happening right now. 2) The idea that 2-3% inflation is "really really serious" is completely absurd. I'm guessing you're young because historical US inflation prior to the ridiculous post-2009 financial situation had long periods of being well above 3% and the sky didn't fall. Inflation above what we've seen in the last decade is not necessarily a bad thing.

hnarn 7y ago
For context, the inflation goal set by the Swedish national bank is 2%. That's what they're aiming for, so clearly it's not "really really serious". CNBC also states that: >The Fed considers a 2% inflation rate to be a sign of sustainable growth and a level that keeps interest rates high enough to allow for mobility in the event of an economic downturn.
- akuchling 7y ago
  1-3% is also the Bank of Canada's target range: https://www.bankofcanada.ca/rates/indicators/key-variables/key-inflation-indicators-and-the-target-range/ https://www.bankofcanada.ca/rates/indicators/key-variables/k...
fauigerzigerk 7y ago
I agree that 2-3% inflation is nothing to worry about. But what's happening now is not quite the same thing as in 2009. For the first time in a very long time we actually have a shortage of supply. We didn't have that in 2009. But I think/hope it will be short lived, and depending on how we act now it could easily turn into a shortage of demand once again.
- jjeaff 7y ago
  Do we really have a shortage of supply? For what products? The only shortages I have seen are for toilet paper and a few random grocery store products that maniacs decide to stockpile next. (in my community, there is all the sudden a run on ice cream now that bread is back in stock).

jnwatson 7y ago

That printing money necessarily leads to inflation is not true in a situation like this. Inflation happens when there's more and more money being used to chase a finite amount of goods. In our current economic situation, there's a huge pile of money that's not chasing any goods at all. Like like after the 2008 crisis that didn't lead to inflation, this won't either, as long at they turn off the money printer when people start investing again.

jjeaff 7y ago
They aren't really printing money. They are buying up debt, both private and government that will eventually be sold back to the market or will mature this returning that money back, with appreciation, to the fed. Which will then make it disappear just as easily as they created it.
- jnwatson 7y ago
  Sure. The Fed doesn't even own printing presses, the Department of Treasury does. However, in this context, "printing money" doesn't mean making physical pieces of paper. It means creating money out of thin air. It does that by buying debt, which, as you note, can be destroyed just as fast as it is created.

csomar 7y ago

> but we're not having deflation. We are going to have deflation. The stock market already "deflated". Just wait for the rest. Food prices are going to go through the roof (and maybe medical procedures) but everything else is going to get cheaper.

jiaaro 7y ago
Given that food and medicine make up a large portion of spending, I think we'll see something more like, "some prices go up and others go down." Another big chunk is housing, which as far as I know, shouldn't expect much difference in supply or demand in the short term, though demand may increase (at least as measured by square footage) if people are staying home for a long enough time. That may be countered by the reduction in demand for real estate by businesses, though zoning will probably limit the short term effects that has on housing.
state_less 7y ago
Stocks are deflated because they aren’t expected to earn because people aren’t out buying and companies aren’t earning. Same for oil. Same for airline tickets. It seems obvious that there is deflation. If you have a good paying job right now, you can buy a lot for less.

viklove 7y ago

There's less supply of what? We still have plenty of food, plenty of homes, plenty of water. Yeah, we have less Airbnbs getting booked, and Ubers being called, but does that really fucking matter? It only matters to the VCs who have invested in these companies. Americans don't need to buy their 6th iPhone to save this economy, we just need to focus on what's important. It's very telling of the state of current US politics that when a crisis emerges, everyone says we have to help rich corporations stay rich.

samsonradu 7y ago
There was this joke running on Twitter: If aliens invaded us today our first reaction would be to lower interest rates.
- deleted 7y ago
  [deleted]
a_tractor 7y ago
Not totally disagreeing but I'm pretty sure the idea for most is that we want people to keep their jobs. Corporations staying rich means people staying employed. What does it say that you use Apple as a supporting example, one of the strongest corporations in the history of the world, rather than any or all of the millions of small businesses all over the country which are now hanging on by a thread.

chewz 7y ago

> get really really serious inflation of over 2%, 3%, maybe even more than 3% Really serious inflation is when prices in supermarket change twice a day like in Brasil in the old times. It is Weimar style hyperinflation where everyone want to get rid of paper money right away. Inflation of 2-3% is actually desirable - it is a sign of healthy, growing economy. Additionaly it is good for public finances as most expenditures is fixed and tax recipes are over the target. Yes it is a kind of tax on people but in healthy economy who cares? Most central banks and banks in general (also insurers) dread deflation not small inflation.

voisin 7y ago
> Inflation of 2-3% is actually desirable - it is a sign of healthy, growing economy. Why 2-3% and not 5-7% or -1-1%? Source for this assertion?
- chewz 7y ago
  Inflation target for most CB..

deleted 7y ago

[deleted]