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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 th

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.
- imtringued 5y ago
  Take Germany as an example of stagflation. Last year we had to fell a lot of trees because bark beetles. Everyone was dumping their bad lumber. A CDU politician introduced a 85% quota so that the markets can recover but now the situation has reversed and some forest owners are not allowed to harvest their lumber despite high prices. For small businesses losing those last 15% may make it unprofitable to harvest at all. Making it illegal to run businesses serving hot markets is a recipe for cost increases without corresponding wage increases. However, in the US the investment rate is going up and businesses are expanding production. The biggest factor right now is the semiconductor shortage and there it is just a matter of time before things return to normal.
  - lumost 5y ago
    Anecdotally, I've become skeptical of US business investment and production metrics. Companies can ramp up investment into assets or expand production of assets without producing consumer/b2b goods. We capture increased production and investment in speculative assets as economic growth when it may not yield any new production.
tobyjsullivan 5y ago
> something other than increased consumer spending, like supply chain issues, is causing the inflation My (naive) understanding is these are tightly linked. The process is something like: => Consumers have more cash to spend on goods. => Consumers buy more goods => More demand is created for commodities to build those goods => Demand for commodities exceeds demand => Commodity prices inflate => Manufactured good prices inflate
- blacksqr 5y ago
  Yes but the article explicitly states that the vast majority of consumers don't have more cash to spend. So the cause of the inflation must be something else.
  - new_realist 5y ago
    Yes, it is caused by something else: the 28% of consumers who do have more cash to spend.
    - blacksqr 5y ago
      Then the solution is simple: tax the rich.
    - sjg007 5y ago
      That's not enough to move the needle. I think we are seeing "inflation" due to short term supply chain stop and restart. As incomes are still fixed and there are cheaper substitutes for almost everything you want to eat people will modify and reduce.
    - machinebun 5y ago
      Them having the cash doesn't necessarily mean they spent it; plus, they could have spent it on deleveraging their debts (and not on consumption). I tend to agree that all the inflation we are seeing right now is supply chain related (with the one exception of graphics cards - the liquidity injected into the system probably made price of crypto go up which accelerated the demand for GPUs, so the GPU issue is both a supply problem & demand problem)
ffggvv 5y ago
actually median savings are at all time highs for the average person. thanks to stimulus payments and enhanced unemployment and also shutdowns preventing people from spending money even if they wanted.

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.
imtringued 5y ago
Take Germany as an example of stagflation. Last year we had to fell a lot of trees because bark beetles. Everyone was dumping their bad lumber. A CDU politician introduced a 85% quota so that the markets can recover but now the situation has reversed and some forest owners are not allowed to harvest their lumber despite high prices. For small businesses losing those last 15% may make it unprofitable to harvest at all. Making it illegal to run businesses serving hot markets is a recipe for cost increases without corresponding wage increases. However, in the US the investment rate is going up and businesses are expanding production. The biggest factor right now is the semiconductor shortage and there it is just a matter of time before things return to normal.
- lumost 5y ago
  Anecdotally, I've become skeptical of US business investment and production metrics. Companies can ramp up investment into assets or expand production of assets without producing consumer/b2b goods. We capture increased production and investment in speculative assets as economic growth when it may not yield any new production.

tobyjsullivan 5y ago

> something other than increased consumer spending, like supply chain issues, is causing the inflation My (naive) understanding is these are tightly linked. The process is something like: => Consumers have more cash to spend on goods. => Consumers buy more goods => More demand is created for commodities to build those goods => Demand for commodities exceeds demand => Commodity prices inflate => Manufactured good prices inflate

blacksqr 5y ago
Yes but the article explicitly states that the vast majority of consumers don't have more cash to spend. So the cause of the inflation must be something else.
- new_realist 5y ago
  Yes, it is caused by something else: the 28% of consumers who do have more cash to spend.
  - blacksqr 5y ago
    Then the solution is simple: tax the rich.
  - sjg007 5y ago
    That's not enough to move the needle. I think we are seeing "inflation" due to short term supply chain stop and restart. As incomes are still fixed and there are cheaper substitutes for almost everything you want to eat people will modify and reduce.
  - machinebun 5y ago
    Them having the cash doesn't necessarily mean they spent it; plus, they could have spent it on deleveraging their debts (and not on consumption). I tend to agree that all the inflation we are seeing right now is supply chain related (with the one exception of graphics cards - the liquidity injected into the system probably made price of crypto go up which accelerated the demand for GPUs, so the GPU issue is both a supply problem & demand problem)

ffggvv 5y ago

actually median savings are at all time highs for the average person. thanks to stimulus payments and enhanced unemployment and also shutdowns preventing people from spending money even if they wanted.