5 ms·
1. is not settled yet. we are yet to see how all this spending is going to be paid for.
by sunshinerag 6y ago
1. is not settled yet. we are yet to see how all this spending is going to be paid for.
- lotsofpulp 6y agoI assume like it always has been, with a reduction in value of the currency relative to assets.
- Traster 6y agoIsn’t that... inflation
- tehlike 6y agoSadly, not directly. Assets inflation != Inflation
- sunshinerag 6y ago>> Assets inflation != Inflation why?
- MacsHeadroom 6y agoBecause the Fed measures inflation by CPI. The price of gas and groceries. Nothing makes for a more unstable economy than a working class who can't afford food and mobility.
- sunshinerag 6y agoAh, so the Fed does not measure house price rises, mortgage payment increases as inflation. if a person becomes homeless as they can't afford shelter there is still no inflation as per CPI.
- lotsofpulp 6y agoOwners equivalent rent is included in CPI: https://www.bls.gov/opub/hom/cpi/ https://www.bls.gov/opub/hom/cpi/ I can’t speak as to how accurate it is compared to real life. What I know is CPI figures don’t and can’t incorporate volatility. For example, I assume healthcare expenses will skyrocket, and government assistance such as Social Security will be reduced. Therefore, I act as if life will be more and more expensive.
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- CyberDildonics 6y agoYes, I think that was their point.
- pjc50 6y agoNegative interest rates?
- paulryanrogers 6y agoLooks like essentials like food and shelter are rapidly outpacing the lower class' ability to pay for them. So my guess is food stamps and housing stipends will grow as wealth concentrates into the hands of those who own/produce them.
- gruez 6y agoIsn't it just shelter, healthcare, and education? Or has food prices increased as well?
- paulryanrogers 6y agoAt least where I am in the Midwestern US food prices of staples and produce are almost 200% where they were in late 2019
- gruez 6y agoAcross all food items, or specific ones? According to the BLS CPI report for the Chicago area[1], food prices has only increased 5% in the past year. If you drill down to the specific food categories on page 5, none of the food categories are anywhere close to 200% figure you claimed. [1] https://www.bls.gov/regions/midwest/news-release/2020/pdf/consumerpriceindex_chicago_20201210.pdf https://www.bls.gov/regions/midwest/news-release/2020/pdf/co...
- hiram112 6y agoJust my anecdote - I usually shop at Kroger owned stores (various brand names depending on your region of the US). Their "normal" prices are about the same as any other non-discount grocer like Safeway, but they're very aggressive with large discounts for store "members" who use their tracking card. For example, when I shop, I'm not that particular to specific brands, so if I'm buying soup or cereal, I will always choose the one that is on sale that week, usually around half price (e.g B1G1). I end up paying about 60% of what a normal customer pays who is loyal to specific brands no matter if they're on sale or not. What I've noticed is that the normal prices haven't really gone up all that much, but the discounts are very small and there are far fewer of the really good ones (e.g. $3 per lb. of chicken, the $0.99 carton of eggs, half price cheese, B1G1 soups, etc). Thus, I'd say my grocery bill has gone up about 50% or more in just the last year, whereas it had really held stead for the last decade. This is, of course, on top of home prices in my area nearly doubling in 10 years when considering increased taxes, HOAs, repair costs, etc.
- jcfrei 6y agoThe Austrian answer to such a crisis has been tried early in the 20th century after the Great Depression. Spending was reduced but the government was still running a balanced budget. "Outright leave-it-alone liquidationism was a common position, and was universally held by Austrian School economists." [1] Mainstream consensus is that if the Fed had expanded their balance sheet immediately and government had reduced taxes and increased spending the crisis would have been much less severe - but this only started when WWII broke out and the war had to be financed. [1]: https://en.wikipedia.org/wiki/Great_Depression#cite_ref-Randall_E._Parker_2003,_p._9_47-0 https://en.wikipedia.org/wiki/Great_Depression#cite_ref-Rand...
- seibelj 6y agoThe depression and the “Austrian” response implemented are vastly oversimplifying it. For starters the widespread tariffs and outright ban and seizure of gold should tell you this is not what an Austrian would do.
- jcfrei 6y agoYou pointing out two policy measures which are not according to the Austrian school doesn't invalidate the argument that the response was Austrian rather than Keynesian. The seizure of Gold was to prevent a further contraction in credit because the dollar was still on a gold standard. I'm not defending gold confiscations (nor am I in favor of a gold standard) but without this measure the crisis would likely have been even worse. The tariffs were politically motivated (to strengthen American manufacturers - neither Keynesian nor Austrian) and intended to stoke inflation.
- sunshinerag 6y agoNot sure where Austrian is implied? Are you saying there is nothing to be paid by current and future generations for this.? The system will take care of itself somehow?
- jcfrei 6y agoDepends, if the central bank can keep to inflate its balance sheet and absorb most of the additional debt of corporations and the public without creating inflation then nobody will actually have to pay. If there is inflation then that means the purchasing power of savers (ppl with bonds as their main asset) will be reduced (ie. savers will pay).