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People in the market aren't expecting inflation: https://www.clevelandfed.org/our-research/indicators-and-data/inflation-expectations.aspx https://www.clevelan

People in the market aren't expecting inflation: https://www.clevelandfed.org/our-research/indicators-and-data/inflation-expectations.aspx https://www.clevelandfed.org/our-research/indicators-and-dat... So I don't know why people on HN so often are.

rodiger 7y ago
Probably because of a misunderstanding of QE. At first glance it seems obvious that it would cause excess inflation (more money==less value) but that's not generally the case (at least not to the extent that one would assume).
philwelch 7y ago
There are a lot of goldbugs/bitbugs/Austrians here for some reason.
TheOtherHobbes 7y ago
Inexplicably, I'm not entirely reassured. Official economic dogma is that inflation is caused by pay rises. This has always been self-serving nonsense, but it's particularly unhelpful now because it disguises the real causes of commodity inflation - which is a combination of supply/demand shocks that spike the prices of essential commodities, combined with loss of trust in national currencies, often made worse by foreign debt obligations. (Asset price inflation is a different thing, and is caused by too much cheap money pumping up the cost of rent-seeking assets - which happened after 2008. If you're on the wrong end of the rent-seeking process it's still price inflation, but it's usually considered a good thing rather than a bad thing in official figures.) It should be obvious that there's a danger of at least some of the above. Down-to-the-bone commodities like food and medical supplies will become more expensive, and there may be some spill-over into industrial commodities. Luxury and "entertainment" commodities - which have driven the Chinese economy - are going to take a severe hit, because part of their customer base is going to be wiped out financially. Rent-seeking assets are probably going to have a bad time too. As is bricks and mortar retail. I'd expect a wave of bankruptcies and default among landlords at all level. Even those who own property free and clear may struggle. tl;dr: A rebalancing away from luxury/investment/speculation towards basic essentials, which will spike in price, with a lot of collateral damage at all levels.
powerslacker 7y ago
One of these days the chickens are gonna come home to roost.

rodiger 7y ago

Probably because of a misunderstanding of QE. At first glance it seems obvious that it would cause excess inflation (more money==less value) but that's not generally the case (at least not to the extent that one would assume).

philwelch 7y ago

There are a lot of goldbugs/bitbugs/Austrians here for some reason.

TheOtherHobbes 7y ago

Inexplicably, I'm not entirely reassured. Official economic dogma is that inflation is caused by pay rises. This has always been self-serving nonsense, but it's particularly unhelpful now because it disguises the real causes of commodity inflation - which is a combination of supply/demand shocks that spike the prices of essential commodities, combined with loss of trust in national currencies, often made worse by foreign debt obligations. (Asset price inflation is a different thing, and is caused by too much cheap money pumping up the cost of rent-seeking assets - which happened after 2008. If you're on the wrong end of the rent-seeking process it's still price inflation, but it's usually considered a good thing rather than a bad thing in official figures.) It should be obvious that there's a danger of at least some of the above. Down-to-the-bone commodities like food and medical supplies will become more expensive, and there may be some spill-over into industrial commodities. Luxury and "entertainment" commodities - which have driven the Chinese economy - are going to take a severe hit, because part of their customer base is going to be wiped out financially. Rent-seeking assets are probably going to have a bad time too. As is bricks and mortar retail. I'd expect a wave of bankruptcies and default among landlords at all level. Even those who own property free and clear may struggle. tl;dr: A rebalancing away from luxury/investment/speculation towards basic essentials, which will spike in price, with a lot of collateral damage at all levels.

powerslacker 7y ago

One of these days the chickens are gonna come home to roost.