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The statement about the lack of inflation from QE and other stimulus programs from 2008 is pretty questionable. There's been little inflation as measured using

• grey-area 6y ago
  We're about to find out what global QE to infinity does. I'd expect more events like the recent boom in stock prices in spite of massive global unemployment and the wave of unrest nicknamed the Arab spring which came after 2008 and had origins in economic disruption. Revolutions often come after the unbearable has passed. Even if we quickly overcome the virus the global economic impact of the lockdown and QE will be severe and long lasting. It's quite possible that due to QE/stimulus none of that will show up in stock prices and they will shoot up, boosting inequality again.
  • api 6y ago
    Based on past experience post-dot-com-bust-bailout and post-2008-bailout: Prepare for the $1.5M starter home financed by an 0.08% interest 90 year no money down mortgage, $800k student loans at 0% interest, and business lines of credit at 2% to any business that has shown any revenue at all in the last month and that can produce one mammal capable of fogging glass. Any mammal with provable respiration will be able to get a car loan and a credit card. Go long on real estate, stocks, bonds, Bitcoin, Litecoin, Dogecoin, all the shitcoins that don't even work, gold, oil, cow farts, and pogo stick futures. Expect more monstrously overfunded "unicorn" startups that lose massive amounts of money and produce very little. These are basically Ponzi schemes targeting the very rich and venture funds. Wages however will continue to stagnate. Everything always goes up but wages. As a result of wage stagnation in 2024 or 2028 another even more asinine Populist than Trump will be elected; whether they are "right-wing" or "left-wing" will depend on which side is able to produce a louder demagogue and better memes. Meanwhile the rich will build orbital bases and prepare to leave the planet.
    • skat20phys 6y ago
      At one time there was intrinsic cost to the lender in the form of risk. It seems not so anymore, or at least less than it should.
  • WalterBright 6y ago
    > none of that will show up in stock prices and they will shoot up, boosting inequality again. If you really believe that, you should be buying stocks now.
  • vsareto 6y ago
    Instead of "DJIA isn't a good representation of companies", it'll probably be "the whole stock market isn't a good representation of companies".
  • billylindeman 6y ago
    Agreed. The most sobering chart i've seen regarding what the fed is doing is the Caracas stock index: https://www.bloomberg.com/quote/IBVC:IND https://www.bloomberg.com/quote/IBVC:IND Stocks going up doesn't indicate that the economy is fine.
• chrisco255 6y ago
  QE never really worked, bailed out a bunch of corrupt and broken companies that should have gone bankrupt, and kicked the can down the road. They were supposed to unwind QE1 but they never did. And $4T in toxic QE1 assets sat on the Fed's balance sheet going into this mess. The Fed is propping up the bond market and toying with the idea of buying equities. We just had 17 million people file for unemployment in 3 weeks and the Dow went up a few hundred points. Our markets have been completely decoupled from economic reality because the Fed is faking demand and not letting the markets crash like they should. Our fiscal deficit is already $3 trillion this year and it's only April. This is a recipe for disaster. How much of corporate America will the Fed own when this all comes crashing down? Will we have a nationalized economy by default?
  • jariel 6y ago
    QE1 worked well and the banks are not corrupt. It's in the later years, while stocks and the economy were on a tear, that the Fed at. al. refused to raise interest rates ... this perpetuated the housing bubble among other things, which is the #1 source of inequality (hint, it's not between the billionaires and the rest of us, it's between the propertied and the unpropertied).
    • chrisco255 6y ago
      QE1 did not work at all. And the Fed's 0 percent interest rates have distorted capital markets causing corporate debt to skyrocket. That alone is propping up zombie companies and this overleverage is what will make the coming recession / depression even worse than 2008. Note: the Fed is violating the Federal Reserve Act by using BlackRock as a proxy for bond purchases. So please do not tell me they are not corrupt. They're beyond corrupt.
      • yamoriyamori 6y ago
        This. The 'race to the bottom', committed globally by central banks, to get to 0% interest rates, and keep them there for the sake of keeping the markets 'up', exacerbated by top level politicians' desires/directives. If there's no cost to borrow, why not keep borrowing? And keep borrowing? And lending? Until things really unwind in a recession/depression that will de-lever everything/everyone. The moral hazard? I try to maintain my own family finances, keep a budget, save for expensive things. And in the span of 3 weeks the US has spent $7,000 of every individual's future ($2T / 340M people).
• option 6y ago
  yes, basic consumer goods didn’t see much inflation. But what about housing, education, even stuff like cars and travel. Of course, other factors are at play too, but abundant “cheap” money certainly increase prices of those
  • api 6y ago
    The fact that the most common inflation numbers (AFAIK) don't include real estate makes them worthless.
    • Gibbon1 6y ago
      Or that the rise in stock prices unsupported by fundamentals isn't considered inflation either.
    • throwawayjava 6y ago
      Shelter (rent and "owners' equivalent of rent") are included in the CPI.
      • lotsofpulp 6y ago
        The increasing volatility of future economic prosperity in most places, as well as concentration of burgeoning businesses into a few select cities is not factored into the CPI, and is probably not able to be factored. The difference in probabilities of future life outcomes for living in certain prosperous neighborhoods and cities and the compound effect of children growing up in those is very material nowadays. This especially effects how much more housing and land costs in certain cities, and how much people are willing to gamble on it by leveraging more to "buy in" to those probabilities of future success.
      • ls612 6y ago
        Not only are they included they account for almost a third of CPI. Thing is it is measuring nationwide housing costs which may not be moving in sync with Bay Area rents
  • duxup 6y ago
• deleted 6y ago
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• quotemstr 6y ago
  Another way of looking at it: consumer goods (as measured by CPI) have radically dropped in price relative to non-CPI goods over the past few years (perhaps driven by automation and optimization of global supply chains) while, at the same time, the general price level has risen as we've exploded the money supply.
• mythrwy 6y ago
  If we look at inflation for consumer goods (not oil, healthcare, housing etc.) there may be another, non-fiscal policy aspect coming into play shortly. Formerly Chinese (and sometimes subsidized I suspect) dirt cheap items might become a lot more expensive. Non stick frying pans and pool swim noodles type things. I can't believe that returns exactly to how it has been.
• AngrySkillzz 6y ago
  Every HN thread on economics has a bunch of comments like these that are earnestly misinformed about economics. When commenting on something outside of your wheelhouse, please recall Socrates from the Apology: "I observed that even the good artisans fell into the same error as the poets; because they were good workmen they thought that they also knew all sorts of high matters, and this defect in them overshadowed their wisdom." I'll point out just two deficiencies in these threads and leave the rest to you. If P/E ratios in the US are "too high," then people would invest their money elsewhere for better return, right? Maybe international stocks or bonds or whatever. And why don't they, if they have every incentive to seek a better return? Because there are no better returns, even in countries with higher interest rates. So how could P/E ratios be too high? The more likely explanation is that this is the "new normal" - savings outpaces investment opportunities for many reasons (aging populations, growth in countries with stronger saving cultures, etc.), which pushes up the premium on assets. Second, on the subject of interest rates and QE, a little international perspective would make you reconsider the effect on the overall economy. All other developed economies have lower interest rates, more QE, and slower growth than the US. Look at Europe, look at Japan. The issues of "why are asset prices rising" and "why is inflation low" are much larger than just US policy. We are talking global trade and demographic factors that influence these things. The current stance of fiscal and monetary policy is the symptom, not the cause. And in fact the US has been significantly more successful than our counterparts on that topic, as a fast and strong response in 2008 pre-empted the kind of drawn out economic malaise seen in Europe, where the ECB waited years before easing policy to the degree that we had. Now Europe has lower rates, more QE, lower inflation, a worse labor market, and less growth than the US. And that's before factoring in the coronavirus crisis. Policy may have increased inequality in some ways, but if you're going to make that claim you have to also answer the corresponding counter-factual: potentially the poor would have been even worse off (relative to the rich) if there were no policy interventions and the labor market collapsed. There have been some papers on the topic, and it is not at all obvious that inequality is worse now than it would have been if there was less policy intervention.
  • jariel 6y ago
    "a bunch of comments like these that are earnestly misinformed about economics. " " savings outpaces investment opportunities for many reasons (aging populations, growth in countries with stronger saving cultures, etc.), which pushes up the premium on assets." The savings rate is not correlated with stock prices. [1] "All other developed economies have lower interest rates, more QE, and slower growth than the US. " No, they have similar rates per capita. US grows because it brings in more bodies [2]. Moving warm bodies from A->B implying a loss somewhere and again somewhere else isn't exactly growth. (I mean - yes, they probably can be more productive in America). But this is not an economic marvel. The OPs statements concerning inflation of financial assets is very, very reasonable economics. [1] https://www.statista.com/statistics/246234/personal-savings-rate-in-the-united-states/ https://www.statista.com/statistics/246234/personal-savings-... [2] All other developed economies have lower interest rates, more QE, and slower growth than the US.
• diob 6y ago
  You've put into words what I was thinking about the other day. I always hear folks say "Weird there was no inflation after the 2008 stimulus" or even experts try to claim that there is none. But it's not about inflation of everyday consumer goods, it's about the massive inflation in things that consumers don't purchase regularly (things like houses). And at this point, I think we've done a lot to essentially price regular consumers out of that market. Think about that. We've priced regular folk out of things that build wealth. It's going to lead to something terrible down the road. Even more terrible than what we're already living in.
• SergeAx 6y ago
  I am living outside US and have a hypothesis that there's also significant inflation in higher education sector. Can you confirm or disprove that?