9 ms·

83% of Americans Are Belt Tightening Due to Inflation Pressures

53 points by whack 5y ago

trey-jones 5y ago
Wow. Who could have foreseen this? I suppose that's different from "Who could have stopped this?" Our economic problems are not easy ones to solve, but when trillions of dollars of are created out of thin air and distributed to the populace, you had to know this was coming.
- deleted 5y ago
  [deleted]
- halsom 5y ago
  Most of those trillions were delivered to the ruling/corporate class who has used it to secure assets instead of create value. That is the source of this inflation. For example: https://www.msn.com/en-us/news/us/koch-e2-80-99s-foundation-funded-eviction-push-while-investing-in-real-estate-companies/ar-AAKf7e3 https://www.msn.com/en-us/news/us/koch-e2-80-99s-foundation-...
  - blacksqr 5y ago
    If so, the solution to the problem presented in the article is simple: tax the rich.
    - abfan1127 5y ago
      tax the rich? by whom? the same people have gave the rich the money? a bit incestuous, no? This is my point. stop giving these people the power to take from one group and give to another. It only works out for those connected. And guess what? in the history of the world, the poor have never been connected. Lower taxes (lower spending) and the poor get to keep their money and do as they wish with it.
    - thrwawy12345 5y ago
      Even more simple: “fix” the problem by not creating it in the first place.
    - markkanof 5y ago
      Or even just stop giving the rich money that is taken from regular people. The money may not be directly taken from us, but printing money causes inflation, which is not really different from taking money in the form of taxes. At the end of the day all of us regular people still have less purchasing power.
      - lainga 5y ago
        Well printing it and putting it into circulation causes inflation. If you give Bill Gates $1Tn and he hides it under his mattress, that does not cause inflation.
        toomuchtodo 5y ago
        If Bill takes it and buys more farmland, that does cause trickle down inflation (depending on lease rates charges for farming).
        lainga 5y ago
        yes, but that's putting it into circulation, isn't it?
        otnihoithiu 5y ago
        He didn't hide it under his mattress, he purchased enormous amounts of farmland to rent seek off of your need to eat. https://www.businessinsider.com/bill-gates-land-portfolio-biggest-private-farmland-owner-in-america-2021-1 https://www.businessinsider.com/bill-gates-land-portfolio-bi...
    - gher-shyu3i 5y ago
      The problem is more fundamental. The financial system is based on the immoral and parasitic practice of usury. The fiat money we use today is controlled by the whim of the government, which borrows money from the Fed with usury. It has to print money to pay it back because due to usury, it keeps increasing.
  - lainga 5y ago
    How does buying up assets lead to price increases in "groceries (96%), gas (93%), dining out (57%), and clothing (42%)"? Are the Koch Brothers hitting up Costco every day?
    - imtringued 5y ago
      It doesn't drive inflation, it merely drives inequality and in specific circumstances it can cause needless unemployment or bullshit jobs.
    - halsom 5y ago
      Gas is up because of the recent pipeline shutdown. Grocery prices have been rising since the start of the pandemic. Far more people are now accustomed to cooking at home. Anecdotally, I am one of them. I buy at least twice as many groceries as I did pre-pandemic and that is not going to change. Also the pandemic is still in full force internationally, especially in places where the US sources major food imports. Clothing is up because commerce with the Chinese textile industry was shut down during the pandemic. It will take at least another year before clothing prices are restored. Notice that the massive spikes in real estate prices are not even mentioned in the article. This is a propaganda piece. It cherrypicks items that poor people depend on in order to promote backlash against redistribution.
      - lainga 5y ago
        So the trillions being delivered to the rich is the source of inflation (per your comment above) because of... other nefarious things the rich people did, and also other events that they didn't do? Did they need those trillions to be incompetent, maybe? Or to reduce support for redistribution (per your comment pre-edit)?
    - makomk 5y ago
      Obviously it doesn't. In fact, one common long-running justification for why we should helicopter-drop money to ordinary people rather than businesses and banks is precisely that ordinary people will spend it on goods and services whereas the wealthy will not - and it seems like we're seeing the consequences of actually doing this right now. The trouble is that there's a strong strain of left-wing populism in the US based around a view of the economy that is simple, gives someone convenient to blame (the evil wealthy corporate class sitting on all the wealth like dragons on hoards), and bears almost no resemblance to the way the world really works. Which is why you still get people pushing for wealth redistribution as a solution to this inflation, even though the very argument that was being used to call for it before means that it will make the inflation problem worse.
- blacksqr 5y ago
  The article reports that 72% of respondents said their income has not increased. So whatever trillions of dollars were created don't seem to have made it to the populace. Either the respondents are not a representative sample of consumers, in which case the article's conclusions are of little value; or something other than increased consumer spending, like supply chain issues, is causing the inflation.
  - chitowneats 5y ago
    Your second sentence does not follow from your first. Trillions of dollars in stimulus have allowed millions of Americans to retain the bulk of their income while not working to produce anything.
    - blacksqr 5y ago
      If the stimulus money only allowed people to maintain their income level rather than increase it, then the inflation pressure can't be coming from increased consumer spending. GDP only dropped 2.3% last year [0], so there's approximately the same amount of stuff to buy. The linked article reads to me like an incoherent attempt to scare people into thinking the stimulus was a bad idea. [0] https://www.bea.gov/news/2021/gross-domestic-product-4th-quarter-and-year-2020-advance-estimate https://www.bea.gov/news/2021/gross-domestic-product-4th-qua...
  - lumost 5y ago
    It's surprisingly plausible that wages would not rise and inflation would speed up. This can occur because companies lay off employees due to rising costs and lack of demand (while raising their own prices) or because the money is going to some alternate consumption. Food prices could increase today simply because one or more of the beneficiaries of those trillions of dollars has allocated it to land acquisition. Retiring of productive capacity for other "economic" purposes will increase inflation.
    - blacksqr 5y ago
      > It's surprisingly plausible that wages would not rise and inflation would speed up. I agree entirely. But the linked article explicitly blames increased deficit government spending. The article reads like a stealth attack on stimulus, with the implicit point that inflation should be controlled by ending it, rather than looking more deeply at causes like the ones you suggest -- which might lead to solutions that a Forbes contributor might not like, like taxing the rich.
- omegaworks 5y ago
  This was due to the pandemic disrupting the global supply chain, not because of the inadequate yet desperately needed stimulus, unemployment supplement and child UBI.
- purple_ferret 5y ago
  The idea that more cash has driven up the price of basic goods this quickly is almost certainly frivolous. The pressure simply isn't there, especially with wages still so low. That's not to say prices haven't been suppressed over the years in various ways that combat normal inflation (6oz denim Jeans that are now 10% Spandex I'm looking at you) and there's a ton of money in the system that have mostly went into assets.
  - jrs235 5y ago
    It's not just more cash (increase "demand"), it's also reduced supplies due to many businesses shuttering or reducing output during covid.
    - blacksqr 5y ago
      GDP only dropped 2.3% last year [0], so there's approximately the same amount of stuff to buy. [0] https://www.bea.gov/news/2021/gross-domestic-product-4th-quarter-and-year-2020-advance-estimate https://www.bea.gov/news/2021/gross-domestic-product-4th-qua...
      - trey-jones 5y ago
        My rationale is simply that more dollars to go around means that one dollar is worth less. Simple logic, rather than fancy economics, I guess.
        blacksqr 5y ago
        You explicitly blamed distribution of trillions to the populace, which I think is the conclusion the article's author wanted people to come to. Your response illustrates the likelihood that the article is a stealth attack on government stimulus to the non-rich, to deflect the possibility of more straightforward solutions, like curtailing stimulus to the rich.
        machinebun 5y ago
        > My rationale is simply that more dollars to go around means that one dollar is worth less. Simple logic, rather than fancy economics, I guess. You're looking at the total supply (which is true in the long term, since those dollars have to be spent eventually). However, inflation in the short term has much more to do with velocity and actual spending - if all of that money just sits in bank accounts, there will be no inflation. So looking at the money supply in isolation will tell you nothing about the actual inflation. It's about what's happening to that money.
- throwaway_kufu 5y ago
  Trillions were not distributed to the populace, trillions were distributed to businesses and the Fed to leverage even further to prop up the stock market. The “populace” got billions. The printing isn’t really the problem either, it’s a symptom of policies from both parties for 50-60 years resulting in a nation that functions purely on debt from individual households, small businesses, publicly traded businesses, to the government itself. Before the pandemic the majority of households couldn’t cover a $400 emergency. But the truth is businesses and governments were in the same position, and even in “the greatest economy the world has ever seen” the majority of them live the equivalent of paycheck to paycheck just servicing their debts.
  - imtringued 5y ago
    A lot of large businesses had large cash reserves. It's the small ones that needed the support.
newaccount2021 5y ago
Inflation is here, it will get worse, the Fed will surprise you by over-reacting with an unscheduled rate hike. For some weird reason, HN threads on this topic are immediately flooded by comments trying to debunk inflation...I suppose even HN isn't shill-proof.
- zardo 5y ago
  I don't think anyone is going to argue that "supply-chain issues" don't cause price inflation. If less stuff is available the price of stuff goes up.
  - newaccount2021 5y ago
    If you really think this is merely a supply-chain issue, you haven't been watching the continuous stream of Fed easing that has been happening since the GFC, and arguably almost since the end of the .com burst. The Fed is buying $120 bln in debt per month, every month. Is this because lumber isn't in stock at Home Depot? The Fed now purchases 40% of the debt produced in the economy...maybe it really is because of the pool chlorine supply issues. I see your response as just another variant of the HN denial on this topic...you're literally suggesting our only problem is not being able to keep up with the awesome.
    - imtringued 5y ago
      It took a pandemic to reach 4% inflation. If you are the president of the central bank and your mandate is 2% it is a fantastic show of incompetence. > If you really think this is merely a supply-chain issue, you haven't been watching the continuous stream of Fed easing that has been happening since the GFC, and arguably almost since the end of the .com burst. The Fed mostly did two things, set low interest rates (not low enough since the market clearing rate is negative) and give banks more reserves so that they can lend more. When the Fed creates new money it does so via debt, all that new money has to be returned one day so as soon as you raise interest rates we'll automatically get deflation as people pay their debts back. A lot of the QE money is "hot air" because you have to borrow money to tap into it and large businesses and mortgages get much better terms than consumers and startups. The pandemic is special because the new money actually reached everyone. One big problem that the Fed faces is that the easy money is being taken by unproductive companies and the ease of access to loans makes it easier for these unproductive companies to survive leaving less room for the productive ones that may not need as much funding. Zombie companies are fine in the short term because they employ people and you get the helicopter money effect. Once you have full employment you get rising wages and inflation, which means it is time to kill off zombies by raising interest rates. However, if it takes 10 years of low interest and inflation to get back to full employment those zombies will have time to gain market share and when it's time for them to go, they may take a big chunk of the market with them. The benefit of helicopter money is that people spend the money on things they personally need. No need for a government to decide what to spend the money on. No need for companies to do market research on what consumers want.
blacksqr 5y ago
> Shopkick, which produced the report, is a shopping rewards company. The company provides tracking to monitor consumer engagement along the path to purchase. The company has a pay for performance model.
anotha1 5y ago
I'll take "inflation" if it means trillion dollar spending packages are more likely to reach human citizens instead of corporations.
- swiley 5y ago
  This. We were already experiencing inflation (cost of living went up because housing went up because we bailed out a bunch of banks that should have failed.) This time it's just more obvious because the price of things people buy directly went up immediately.
  - Black101 5y ago
    I will never buy a home again if costs don't drop dramatically... because unlike what most people think, a house is generally not an investment, unless you rent it
- fridif 5y ago
  Still waiting on mine!
  - whymauri 5y ago
    Literally never got a stimulus. Students, especially poor students on scholarships, are so thoroughly fucked by the US tax system. It's gotten to the point that schools like Princeton and Stanford encourage low-income full-ride students to avoid declaring their tax liability at all, arguing that they're better off dealing with that monster when they actually have income (in software, finance, etc where the tax liability is negligible in comparison to a full-ride to an elite college).
    - rejectedandsad 5y ago
      Wow I feel so sorry for those elites, what more can we do to avoid such a tragedy for them?
      - 5y ago
ping_pong 5y ago
Economists like Bernanke have talked about dropping money from helicopters in the sky, in order to prevent deflation. What the government has done in the last year with its $10+ trillion in stimulus, is the exact definition of dropping money from helicopters and yet no one is pointing this out. Which means we must have narrowly averted a truly horrific situation as a country. The fact that everyone keeps talking about more stimulus means that the government knows more than we do, and the risk of deflation still remains high.
- jdhn 5y ago
  I could go for some deflation in the housing market right about now.
  - dominotw 5y ago
    same here. Interest rates are going up so there is some hope.
  - ping_pong 5y ago
    The Fed will do WHATEVER it takes to prevent house price deflation. They've already shown this during the Financial Crisis. Too much of the economy and financial system is based on house prices, there's no way that they can ever afford to see house prices decline in our lifetime.
    - lotsofpulp 5y ago
      They will do whatever it takes to prevent asset price deflation in general. The last thing politicians want is people watching their 401k values go down, and they certainly want them to go up. As far as I’m concerned, VTI is a better inflation protected security than TIPS for any 3+ year investment horizon.
    - jdhn 5y ago
      At this point I'll take stagnating housing prices.
  - 5y ago
giantg2 5y ago
So more people are adopting smart shopping practices by avoiding name brands, and plan to tighten up their budgets. Basically things I already do.
endisneigh 5y ago
Is there a good nontechnical analysis of what would’ve happened if the government did not give out any stimulus?
- dnautics 5y ago
  is there a good technical analysis? It's not like we can A/B test universes.
- imtringued 5y ago
  You would get the Eurozone.
anotherman554 5y ago
"6% indicated they experience price increases on everyday goods and services. Notably, they pointed to on groceries (96%), gas (93%), dining out (57%), and clothing (42%)" This is a poorly conducted survey if it's trying to show inflation is a problem. This response would be accurate even if inflation was just 2%. The concern isn't inflation but the amount of inflation.
- mywittyname 5y ago
  Nominal inflation is fairly well hidden from people. The prices of most goods remain relatively static, or at least stay within a narrow band over an annual cycle. Producers have contracts for fixed prices on inputs and often outputs, so their prices are often fixed for a term. Frosted Flakes may remain $3.99 a box for five years, while a price increase to $4.49 is introduced gradually through sales and promotions. So if people are experiencing inflation in the short term, that's notable. Now, it's important to differentiate between inflation due to supply constraints vs. inflation due to long-term cost increases on inputs. For example, lumber is hella expensive right now, but it's probably not going to remain at the levels it is at in the long term. Whereas the cost increases of corn might be permanent.
  - sjg007 5y ago
    67% of field corn is used for ethanol or animal feed. But regardless, only 10% of the price change in wholesale corn is passed on to consumers: https://www.ers.usda.gov/amber-waves/2008/february/corn-prices-near-record-high-but-what-about-food-costs/ https://www.ers.usda.gov/amber-waves/2008/february/corn-pric... And the government heavily subsidizes crops.
    - mywittyname 5y ago
      The issue is not really how much of the price increase are passed along to consumers, rather, are these prices increases permanent?
      - sjg007 5y ago
wolverine876 5y ago
The headline confuses me: If that large proportion were 'tightening their belts', economic activity would decline and there would be no inflation. An inflation headline would be, '83% of Americans are buying new cars/computers/homes/washer-dryers' or '83% of Americans have borrowed more than last year'. Inflation is an excess of economic activity - too much money for the available truly valuable investments. It's people buying cryptographic strings, hoping they will go up in value, and the values nominally going up because so many are buying it. I doubt 83% of Americans know what inflation is, much less know about the current debates around it or understand its effects. I question whether 83% could be reacting to reports of inflation. Inflation has been turned into a bad word, but the post-Great Recession era of near-nil inflation is the anomaly. Generally, through most of my life of reading economists, a low level of inflation (e.g, 2-3%) is considered the healthiest state. I think part of it is politicization: Whenever someone talks about government spending or stimulus, particularly around the Great Recession in 2008 and the Coronavirus pandemic, people who advocate for small government use inflation risk as an argument against it. My feeling is that has created two conditions: 1) the stopped clock is eventually right, and 2) they've built up inflation as so much of a demon that people are afraid of it. The direct effects of inflation are to help people with lots of fixed debt and inflationary income, because your debt of 100,000 is still 100,000 while your income inflates from e.g., 50,000 to 52,000. And it similarly hurts people with lots of fixed income or assets. The indirect effects are complicated, but again, a low level of inflation - higher than recent experience - has long been considered optimal.
- dragonwriter 5y ago
  > The headline confuses me: If that large proportion were 'tightening their belts', economic activity would decline and there would be no inflation. 83% at the bottom could tighten their belts, and the 17% at the top who control far more wealth could loosen theirs and economic activitt would increase. > and there would be no inflation. Even if we assume the first incorrect statement were true, this would still be wrong: there wouldn’t be demand-pull inflation, but there still could be supply-push inflation. > Inflation is an excess of economic activity - too much money for the available truly valuable investments. No, inflation is an increase in consumer price levels, and has nothing directly to do with investments, though there are indirect effects in both direction.
tmaly 5y ago
I always find it funny that the FED does not consider food and energy in the numbers. To the average American, if you food prices increase 50%, it is a big deal.
- Black101 5y ago
  > I always find it funny that the FED does not consider food and energy in the numbers. it's not funny... they fudge the numbers to make politicians look good
- mywittyname 5y ago
  It's not all the funny when you consider that prices fluctuate so wildly that including them would make the numbers meaningless. Even though they are excluded, they are still a component of other inflation factors. Food & energy costs contribute to the cost of materials & labor. So they are included by proxy in the long term. And if you are really interested, the Fed does calculate personal consumption expenditures (PCE). See below. https://www.bea.gov/data/personal-consumption-expenditures-price-index https://www.bea.gov/data/personal-consumption-expenditures-p... https://fred.stlouisfed.org/series/PCE https://fred.stlouisfed.org/series/PCE As you can see, long term, the trend matches that of inflation. Short term, it is all over the place.

53 points by whack 5y ago

Wow. Who could have foreseen this? I suppose that's different from "Who could have stopped this?" Our economic problems are not easy ones to solve, but when trillions of dollars of are created out of thin air and distributed to the populace, you had to know this was coming.

deleted 5y ago
[deleted]
halsom 5y ago
Most of those trillions were delivered to the ruling/corporate class who has used it to secure assets instead of create value. That is the source of this inflation. For example: https://www.msn.com/en-us/news/us/koch-e2-80-99s-foundation-funded-eviction-push-while-investing-in-real-estate-companies/ar-AAKf7e3 https://www.msn.com/en-us/news/us/koch-e2-80-99s-foundation-...
- blacksqr 5y ago
  If so, the solution to the problem presented in the article is simple: tax the rich.
  - abfan1127 5y ago
    tax the rich? by whom? the same people have gave the rich the money? a bit incestuous, no? This is my point. stop giving these people the power to take from one group and give to another. It only works out for those connected. And guess what? in the history of the world, the poor have never been connected. Lower taxes (lower spending) and the poor get to keep their money and do as they wish with it.
  - thrwawy12345 5y ago
    Even more simple: “fix” the problem by not creating it in the first place.
  - markkanof 5y ago
    Or even just stop giving the rich money that is taken from regular people. The money may not be directly taken from us, but printing money causes inflation, which is not really different from taking money in the form of taxes. At the end of the day all of us regular people still have less purchasing power.
    - lainga 5y ago
      Well printing it and putting it into circulation causes inflation. If you give Bill Gates $1Tn and he hides it under his mattress, that does not cause inflation.
      - toomuchtodo 5y ago
        If Bill takes it and buys more farmland, that does cause trickle down inflation (depending on lease rates charges for farming).
        lainga 5y ago
        yes, but that's putting it into circulation, isn't it?
      - otnihoithiu 5y ago
        He didn't hide it under his mattress, he purchased enormous amounts of farmland to rent seek off of your need to eat. https://www.businessinsider.com/bill-gates-land-portfolio-biggest-private-farmland-owner-in-america-2021-1 https://www.businessinsider.com/bill-gates-land-portfolio-bi...
  - gher-shyu3i 5y ago
    The problem is more fundamental. The financial system is based on the immoral and parasitic practice of usury. The fiat money we use today is controlled by the whim of the government, which borrows money from the Fed with usury. It has to print money to pay it back because due to usury, it keeps increasing.
- lainga 5y ago
  How does buying up assets lead to price increases in "groceries (96%), gas (93%), dining out (57%), and clothing (42%)"? Are the Koch Brothers hitting up Costco every day?
  - imtringued 5y ago
    It doesn't drive inflation, it merely drives inequality and in specific circumstances it can cause needless unemployment or bullshit jobs.
  - halsom 5y ago
    Gas is up because of the recent pipeline shutdown. Grocery prices have been rising since the start of the pandemic. Far more people are now accustomed to cooking at home. Anecdotally, I am one of them. I buy at least twice as many groceries as I did pre-pandemic and that is not going to change. Also the pandemic is still in full force internationally, especially in places where the US sources major food imports. Clothing is up because commerce with the Chinese textile industry was shut down during the pandemic. It will take at least another year before clothing prices are restored. Notice that the massive spikes in real estate prices are not even mentioned in the article. This is a propaganda piece. It cherrypicks items that poor people depend on in order to promote backlash against redistribution.
    - lainga 5y ago
      So the trillions being delivered to the rich is the source of inflation (per your comment above) because of... other nefarious things the rich people did, and also other events that they didn't do? Did they need those trillions to be incompetent, maybe? Or to reduce support for redistribution (per your comment pre-edit)?
  - makomk 5y ago
    Obviously it doesn't. In fact, one common long-running justification for why we should helicopter-drop money to ordinary people rather than businesses and banks is precisely that ordinary people will spend it on goods and services whereas the wealthy will not - and it seems like we're seeing the consequences of actually doing this right now. The trouble is that there's a strong strain of left-wing populism in the US based around a view of the economy that is simple, gives someone convenient to blame (the evil wealthy corporate class sitting on all the wealth like dragons on hoards), and bears almost no resemblance to the way the world really works. Which is why you still get people pushing for wealth redistribution as a solution to this inflation, even though the very argument that was being used to call for it before means that it will make the inflation problem worse.
blacksqr 5y ago
The article reports that 72% of respondents said their income has not increased. So whatever trillions of dollars were created don't seem to have made it to the populace. Either the respondents are not a representative sample of consumers, in which case the article's conclusions are of little value; or something other than increased consumer spending, like supply chain issues, is causing the inflation.
- chitowneats 5y ago
  Your second sentence does not follow from your first. Trillions of dollars in stimulus have allowed millions of Americans to retain the bulk of their income while not working to produce anything.
  - blacksqr 5y ago
    If the stimulus money only allowed people to maintain their income level rather than increase it, then the inflation pressure can't be coming from increased consumer spending. GDP only dropped 2.3% last year [0], so there's approximately the same amount of stuff to buy. The linked article reads to me like an incoherent attempt to scare people into thinking the stimulus was a bad idea. [0] https://www.bea.gov/news/2021/gross-domestic-product-4th-quarter-and-year-2020-advance-estimate https://www.bea.gov/news/2021/gross-domestic-product-4th-qua...
- lumost 5y ago
  It's surprisingly plausible that wages would not rise and inflation would speed up. This can occur because companies lay off employees due to rising costs and lack of demand (while raising their own prices) or because the money is going to some alternate consumption. Food prices could increase today simply because one or more of the beneficiaries of those trillions of dollars has allocated it to land acquisition. Retiring of productive capacity for other "economic" purposes will increase inflation.
  - blacksqr 5y ago
    > It's surprisingly plausible that wages would not rise and inflation would speed up. I agree entirely. But the linked article explicitly blames increased deficit government spending. The article reads like a stealth attack on stimulus, with the implicit point that inflation should be controlled by ending it, rather than looking more deeply at causes like the ones you suggest -- which might lead to solutions that a Forbes contributor might not like, like taxing the rich.
omegaworks 5y ago
This was due to the pandemic disrupting the global supply chain, not because of the inadequate yet desperately needed stimulus, unemployment supplement and child UBI.
purple_ferret 5y ago
The idea that more cash has driven up the price of basic goods this quickly is almost certainly frivolous. The pressure simply isn't there, especially with wages still so low. That's not to say prices haven't been suppressed over the years in various ways that combat normal inflation (6oz denim Jeans that are now 10% Spandex I'm looking at you) and there's a ton of money in the system that have mostly went into assets.
- jrs235 5y ago
  It's not just more cash (increase "demand"), it's also reduced supplies due to many businesses shuttering or reducing output during covid.
  - blacksqr 5y ago
    GDP only dropped 2.3% last year [0], so there's approximately the same amount of stuff to buy. [0] https://www.bea.gov/news/2021/gross-domestic-product-4th-quarter-and-year-2020-advance-estimate https://www.bea.gov/news/2021/gross-domestic-product-4th-qua...
    - trey-jones 5y ago
      My rationale is simply that more dollars to go around means that one dollar is worth less. Simple logic, rather than fancy economics, I guess.
      - blacksqr 5y ago
        You explicitly blamed distribution of trillions to the populace, which I think is the conclusion the article's author wanted people to come to. Your response illustrates the likelihood that the article is a stealth attack on government stimulus to the non-rich, to deflect the possibility of more straightforward solutions, like curtailing stimulus to the rich.
      - machinebun 5y ago
        > My rationale is simply that more dollars to go around means that one dollar is worth less. Simple logic, rather than fancy economics, I guess. You're looking at the total supply (which is true in the long term, since those dollars have to be spent eventually). However, inflation in the short term has much more to do with velocity and actual spending - if all of that money just sits in bank accounts, there will be no inflation. So looking at the money supply in isolation will tell you nothing about the actual inflation. It's about what's happening to that money.
throwaway_kufu 5y ago
Trillions were not distributed to the populace, trillions were distributed to businesses and the Fed to leverage even further to prop up the stock market. The “populace” got billions. The printing isn’t really the problem either, it’s a symptom of policies from both parties for 50-60 years resulting in a nation that functions purely on debt from individual households, small businesses, publicly traded businesses, to the government itself. Before the pandemic the majority of households couldn’t cover a $400 emergency. But the truth is businesses and governments were in the same position, and even in “the greatest economy the world has ever seen” the majority of them live the equivalent of paycheck to paycheck just servicing their debts.
- imtringued 5y ago
  A lot of large businesses had large cash reserves. It's the small ones that needed the support.

newaccount2021 5y ago

Inflation is here, it will get worse, the Fed will surprise you by over-reacting with an unscheduled rate hike. For some weird reason, HN threads on this topic are immediately flooded by comments trying to debunk inflation...I suppose even HN isn't shill-proof.

zardo 5y ago
I don't think anyone is going to argue that "supply-chain issues" don't cause price inflation. If less stuff is available the price of stuff goes up.
- newaccount2021 5y ago
  If you really think this is merely a supply-chain issue, you haven't been watching the continuous stream of Fed easing that has been happening since the GFC, and arguably almost since the end of the .com burst. The Fed is buying $120 bln in debt per month, every month. Is this because lumber isn't in stock at Home Depot? The Fed now purchases 40% of the debt produced in the economy...maybe it really is because of the pool chlorine supply issues. I see your response as just another variant of the HN denial on this topic...you're literally suggesting our only problem is not being able to keep up with the awesome.
  - imtringued 5y ago
    It took a pandemic to reach 4% inflation. If you are the president of the central bank and your mandate is 2% it is a fantastic show of incompetence. > If you really think this is merely a supply-chain issue, you haven't been watching the continuous stream of Fed easing that has been happening since the GFC, and arguably almost since the end of the .com burst. The Fed mostly did two things, set low interest rates (not low enough since the market clearing rate is negative) and give banks more reserves so that they can lend more. When the Fed creates new money it does so via debt, all that new money has to be returned one day so as soon as you raise interest rates we'll automatically get deflation as people pay their debts back. A lot of the QE money is "hot air" because you have to borrow money to tap into it and large businesses and mortgages get much better terms than consumers and startups. The pandemic is special because the new money actually reached everyone. One big problem that the Fed faces is that the easy money is being taken by unproductive companies and the ease of access to loans makes it easier for these unproductive companies to survive leaving less room for the productive ones that may not need as much funding. Zombie companies are fine in the short term because they employ people and you get the helicopter money effect. Once you have full employment you get rising wages and inflation, which means it is time to kill off zombies by raising interest rates. However, if it takes 10 years of low interest and inflation to get back to full employment those zombies will have time to gain market share and when it's time for them to go, they may take a big chunk of the market with them. The benefit of helicopter money is that people spend the money on things they personally need. No need for a government to decide what to spend the money on. No need for companies to do market research on what consumers want.

blacksqr 5y ago

> Shopkick, which produced the report, is a shopping rewards company. The company provides tracking to monitor consumer engagement along the path to purchase. The company has a pay for performance model.

anotha1 5y ago

I'll take "inflation" if it means trillion dollar spending packages are more likely to reach human citizens instead of corporations.

swiley 5y ago
This. We were already experiencing inflation (cost of living went up because housing went up because we bailed out a bunch of banks that should have failed.) This time it's just more obvious because the price of things people buy directly went up immediately.
- Black101 5y ago
  I will never buy a home again if costs don't drop dramatically... because unlike what most people think, a house is generally not an investment, unless you rent it
fridif 5y ago
Still waiting on mine!
- whymauri 5y ago
  Literally never got a stimulus. Students, especially poor students on scholarships, are so thoroughly fucked by the US tax system. It's gotten to the point that schools like Princeton and Stanford encourage low-income full-ride students to avoid declaring their tax liability at all, arguing that they're better off dealing with that monster when they actually have income (in software, finance, etc where the tax liability is negligible in comparison to a full-ride to an elite college).
  - rejectedandsad 5y ago
    Wow I feel so sorry for those elites, what more can we do to avoid such a tragedy for them?
    - 5y ago

ping_pong 5y ago

Economists like Bernanke have talked about dropping money from helicopters in the sky, in order to prevent deflation. What the government has done in the last year with its $10+ trillion in stimulus, is the exact definition of dropping money from helicopters and yet no one is pointing this out. Which means we must have narrowly averted a truly horrific situation as a country. The fact that everyone keeps talking about more stimulus means that the government knows more than we do, and the risk of deflation still remains high.

jdhn 5y ago
I could go for some deflation in the housing market right about now.
- dominotw 5y ago
  same here. Interest rates are going up so there is some hope.
- ping_pong 5y ago
  The Fed will do WHATEVER it takes to prevent house price deflation. They've already shown this during the Financial Crisis. Too much of the economy and financial system is based on house prices, there's no way that they can ever afford to see house prices decline in our lifetime.
  - lotsofpulp 5y ago
    They will do whatever it takes to prevent asset price deflation in general. The last thing politicians want is people watching their 401k values go down, and they certainly want them to go up. As far as I’m concerned, VTI is a better inflation protected security than TIPS for any 3+ year investment horizon.
  - jdhn 5y ago
    At this point I'll take stagnating housing prices.
- 5y ago

giantg2 5y ago

So more people are adopting smart shopping practices by avoiding name brands, and plan to tighten up their budgets. Basically things I already do.

endisneigh 5y ago

Is there a good nontechnical analysis of what would’ve happened if the government did not give out any stimulus?

dnautics 5y ago
is there a good technical analysis? It's not like we can A/B test universes.
imtringued 5y ago
You would get the Eurozone.

anotherman554 5y ago

"6% indicated they experience price increases on everyday goods and services. Notably, they pointed to on groceries (96%), gas (93%), dining out (57%), and clothing (42%)" This is a poorly conducted survey if it's trying to show inflation is a problem. This response would be accurate even if inflation was just 2%. The concern isn't inflation but the amount of inflation.

mywittyname 5y ago
Nominal inflation is fairly well hidden from people. The prices of most goods remain relatively static, or at least stay within a narrow band over an annual cycle. Producers have contracts for fixed prices on inputs and often outputs, so their prices are often fixed for a term. Frosted Flakes may remain $3.99 a box for five years, while a price increase to $4.49 is introduced gradually through sales and promotions. So if people are experiencing inflation in the short term, that's notable. Now, it's important to differentiate between inflation due to supply constraints vs. inflation due to long-term cost increases on inputs. For example, lumber is hella expensive right now, but it's probably not going to remain at the levels it is at in the long term. Whereas the cost increases of corn might be permanent.
- sjg007 5y ago
  67% of field corn is used for ethanol or animal feed. But regardless, only 10% of the price change in wholesale corn is passed on to consumers: https://www.ers.usda.gov/amber-waves/2008/february/corn-prices-near-record-high-but-what-about-food-costs/ https://www.ers.usda.gov/amber-waves/2008/february/corn-pric... And the government heavily subsidizes crops.
  - mywittyname 5y ago
    The issue is not really how much of the price increase are passed along to consumers, rather, are these prices increases permanent?
    - sjg007 5y ago

wolverine876 5y ago

The headline confuses me: If that large proportion were 'tightening their belts', economic activity would decline and there would be no inflation. An inflation headline would be, '83% of Americans are buying new cars/computers/homes/washer-dryers' or '83% of Americans have borrowed more than last year'. Inflation is an excess of economic activity - too much money for the available truly valuable investments. It's people buying cryptographic strings, hoping they will go up in value, and the values nominally going up because so many are buying it. I doubt 83% of Americans know what inflation is, much less know about the current debates around it or understand its effects. I question whether 83% could be reacting to reports of inflation. Inflation has been turned into a bad word, but the post-Great Recession era of near-nil inflation is the anomaly. Generally, through most of my life of reading economists, a low level of inflation (e.g, 2-3%) is considered the healthiest state. I think part of it is politicization: Whenever someone talks about government spending or stimulus, particularly around the Great Recession in 2008 and the Coronavirus pandemic, people who advocate for small government use inflation risk as an argument against it. My feeling is that has created two conditions: 1) the stopped clock is eventually right, and 2) they've built up inflation as so much of a demon that people are afraid of it. The direct effects of inflation are to help people with lots of fixed debt and inflationary income, because your debt of 100,000 is still 100,000 while your income inflates from e.g., 50,000 to 52,000. And it similarly hurts people with lots of fixed income or assets. The indirect effects are complicated, but again, a low level of inflation - higher than recent experience - has long been considered optimal.

dragonwriter 5y ago
> The headline confuses me: If that large proportion were 'tightening their belts', economic activity would decline and there would be no inflation. 83% at the bottom could tighten their belts, and the 17% at the top who control far more wealth could loosen theirs and economic activitt would increase. > and there would be no inflation. Even if we assume the first incorrect statement were true, this would still be wrong: there wouldn’t be demand-pull inflation, but there still could be supply-push inflation. > Inflation is an excess of economic activity - too much money for the available truly valuable investments. No, inflation is an increase in consumer price levels, and has nothing directly to do with investments, though there are indirect effects in both direction.

tmaly 5y ago

I always find it funny that the FED does not consider food and energy in the numbers. To the average American, if you food prices increase 50%, it is a big deal.

Black101 5y ago
> I always find it funny that the FED does not consider food and energy in the numbers. it's not funny... they fudge the numbers to make politicians look good
mywittyname 5y ago
It's not all the funny when you consider that prices fluctuate so wildly that including them would make the numbers meaningless. Even though they are excluded, they are still a component of other inflation factors. Food & energy costs contribute to the cost of materials & labor. So they are included by proxy in the long term. And if you are really interested, the Fed does calculate personal consumption expenditures (PCE). See below. https://www.bea.gov/data/personal-consumption-expenditures-price-index https://www.bea.gov/data/personal-consumption-expenditures-p... https://fred.stlouisfed.org/series/PCE https://fred.stlouisfed.org/series/PCE As you can see, long term, the trend matches that of inflation. Short term, it is all over the place.