6 ms·

> hardly any ill effect. Surely you're being sarcastic? There's this minor issue of inflation which results in constantly paying more $ for the same goods.

0xffff2 6y ago
We've been printing money hand over fist since 2008. Inflation has been been normal. Classical economics no longer correctly models reality.
- noworriesnate 6y ago
  No it's still accurate. The idea of classical economics here is that when the money supply in circulation increases and the total goods for sale stay the same, prices increase as well. What we're seeing is that because the USD is the world's exchange currency, it is a good way for foreigners to store wealth. So all these dollars end up locked away overseas which means that the money supply in circulation doesn't expand. Of course, the US can only play this game so long before we devalue our currency enough that it's worth it for the world to switch to another currency. And when that happens, the USD will no longer be a good store of value, which means all those dollars will come flooding back. And we'll experience decades of inflation in a very short period of time, with disastrous consequences.
  - Apocryphon 6y ago
    Are there even viable alternatives right now? The Euro? RMB? Bitcoin? Because if there aren’t any, then the whole world is forced to play along.
- bdamm 6y ago
  Or maybe it is still there, growing like a cancer while we plow on with the blinders. 12 years is not really a long time in terms of monetary policy.
  - kyuudou 6y ago
    Depends on who you ask. I track things like food staples the value of which to humanity stays about the same e.g. eggs, milk, bread... Shadowstats[1] is an alternative view of CPI etc. 1: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
- DINKDINK 6y ago
  >Inflation has been been normal Inflation's been normal? Maybe we don't share the same reality. Let's continue with the USA, which previous commenters have be referencing. The median price of a US home has gone up 45% [1] since 2008 when The Fed started "printing money hand over fist". Did the quality of all homes suddenly go up by 45% in lockstep? I would doubt that. It could be that all people started to be more productive simultaneously, and despite an aversion to paying a premium on housing, the price increase is merely a symptom of a supply-restricted market -- and yet Median incomes (household, individual) only increased (26%[2],28%[3]). The US is experiencing at least 13% and practically 45% asset-price inflation over the period you referenced. I would hardly say that's "normal". It's the sign of a dying currency -- one that cannot maintain its long term purchasing power. [4] >Classical economics no longer correctly models reality. Economics is not physics -- it's an intangible process of action, human action. One cannot make an economic model of the utility I get from the sloth of laying in a field on a warm day, even if it means I'll be less robust against a winter storm. "Ce qu'on voit et ce qu'on ne voit pas" and TNSTAAFL still hold despite what the central planners decree. [1] https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/ [2] https://dqydj.com/household-income-by-year/ https://dqydj.com/household-income-by-year/ [3] https://dqydj.com/individual-income-by-year/ https://dqydj.com/individual-income-by-year/ [4] Living in a home is a consumptive act: Using land, material, past labor for one's enjoyment. It is not "investing". One may try to reduce the costs of that consumption by buying the house etc.
  - kyuudou 6y ago
    I very much agree with DINKDINK's comments.
  - pnutjam 6y ago
    Hmmm. I wonder if tax policy has anything to do with this, or the way wealthy people can shelter money in a residence. I wonder if lack of savings interest is a big driver... In short, your analysis is grade school level.
    - DINKDINK 6y ago
      >your analysis is grade school level Correct me if I'm wrong, but I didn't analyze anything. My goal was to assert: Inflation is present in the US economy, Home prices as an example; and to provide some relative bounds on what that rate might be. >I wonder if tax policy has anything to do with this What's you thesis of the tax policy changes that occurred in the past 12 years that caused asset-price inflation? >way wealthy people can shelter money in a residence How are "wealthy people" "sheltering money" in the bottom 50% of all home prices -- those homes who prices would need to change to change the median price? >lack of savings interest is a big driver The opportunity of high, investment returns doesn't reduce the prices of the goods we need to buy to exist. If I was to actually provide some analysis for the price increases, I'd posit: Downward, interest-rate manipulation by central banks has caused systemic-wide credit expansion. The new money that results from this policy affects economic of all goods but most severely inelastic goods -- such as houses and in markets that receive artificial economic intervention from central planners (in the US, the housing market is a prime example).
- kyuudou 6y ago
  Inflation is not "normal" to me. It is theft by dilution to encourage "velocity". As long as it's a reality I have to constantly search for ways not to grow my wealth but to even simply maintain what I've worked for. It encourages unrealistic economic growth which is not environmentally sustainable in the long term. And IMO it's immoral.

0xffff2 6y ago

We've been printing money hand over fist since 2008. Inflation has been been normal. Classical economics no longer correctly models reality.

noworriesnate 6y ago
No it's still accurate. The idea of classical economics here is that when the money supply in circulation increases and the total goods for sale stay the same, prices increase as well. What we're seeing is that because the USD is the world's exchange currency, it is a good way for foreigners to store wealth. So all these dollars end up locked away overseas which means that the money supply in circulation doesn't expand. Of course, the US can only play this game so long before we devalue our currency enough that it's worth it for the world to switch to another currency. And when that happens, the USD will no longer be a good store of value, which means all those dollars will come flooding back. And we'll experience decades of inflation in a very short period of time, with disastrous consequences.
- Apocryphon 6y ago
  Are there even viable alternatives right now? The Euro? RMB? Bitcoin? Because if there aren’t any, then the whole world is forced to play along.
bdamm 6y ago
Or maybe it is still there, growing like a cancer while we plow on with the blinders. 12 years is not really a long time in terms of monetary policy.
- kyuudou 6y ago
  Depends on who you ask. I track things like food staples the value of which to humanity stays about the same e.g. eggs, milk, bread... Shadowstats[1] is an alternative view of CPI etc. 1: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
DINKDINK 6y ago
>Inflation has been been normal Inflation's been normal? Maybe we don't share the same reality. Let's continue with the USA, which previous commenters have be referencing. The median price of a US home has gone up 45% [1] since 2008 when The Fed started "printing money hand over fist". Did the quality of all homes suddenly go up by 45% in lockstep? I would doubt that. It could be that all people started to be more productive simultaneously, and despite an aversion to paying a premium on housing, the price increase is merely a symptom of a supply-restricted market -- and yet Median incomes (household, individual) only increased (26%[2],28%[3]). The US is experiencing at least 13% and practically 45% asset-price inflation over the period you referenced. I would hardly say that's "normal". It's the sign of a dying currency -- one that cannot maintain its long term purchasing power. [4] >Classical economics no longer correctly models reality. Economics is not physics -- it's an intangible process of action, human action. One cannot make an economic model of the utility I get from the sloth of laying in a field on a warm day, even if it means I'll be less robust against a winter storm. "Ce qu'on voit et ce qu'on ne voit pas" and TNSTAAFL still hold despite what the central planners decree. [1] https://dqydj.com/historical-home-prices/ https://dqydj.com/historical-home-prices/ [2] https://dqydj.com/household-income-by-year/ https://dqydj.com/household-income-by-year/ [3] https://dqydj.com/individual-income-by-year/ https://dqydj.com/individual-income-by-year/ [4] Living in a home is a consumptive act: Using land, material, past labor for one's enjoyment. It is not "investing". One may try to reduce the costs of that consumption by buying the house etc.
- kyuudou 6y ago
  I very much agree with DINKDINK's comments.
- pnutjam 6y ago
  Hmmm. I wonder if tax policy has anything to do with this, or the way wealthy people can shelter money in a residence. I wonder if lack of savings interest is a big driver... In short, your analysis is grade school level.
  - DINKDINK 6y ago
    >your analysis is grade school level Correct me if I'm wrong, but I didn't analyze anything. My goal was to assert: Inflation is present in the US economy, Home prices as an example; and to provide some relative bounds on what that rate might be. >I wonder if tax policy has anything to do with this What's you thesis of the tax policy changes that occurred in the past 12 years that caused asset-price inflation? >way wealthy people can shelter money in a residence How are "wealthy people" "sheltering money" in the bottom 50% of all home prices -- those homes who prices would need to change to change the median price? >lack of savings interest is a big driver The opportunity of high, investment returns doesn't reduce the prices of the goods we need to buy to exist. If I was to actually provide some analysis for the price increases, I'd posit: Downward, interest-rate manipulation by central banks has caused systemic-wide credit expansion. The new money that results from this policy affects economic of all goods but most severely inelastic goods -- such as houses and in markets that receive artificial economic intervention from central planners (in the US, the housing market is a prime example).
kyuudou 6y ago
Inflation is not "normal" to me. It is theft by dilution to encourage "velocity". As long as it's a reality I have to constantly search for ways not to grow my wealth but to even simply maintain what I've worked for. It encourages unrealistic economic growth which is not environmentally sustainable in the long term. And IMO it's immoral.