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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 wage

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.
otnihoithiu 5y ago
Prices aren't up because people are bidding more for finished goods. Prices are up because commodity costs are up, so the inputs to production cost more. Those costs are passed onto end consumers, to the extent they can afford them, or they are passed on in the reduction in the availability of goods.

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.

otnihoithiu 5y ago

Prices aren't up because people are bidding more for finished goods. Prices are up because commodity costs are up, so the inputs to production cost more. Those costs are passed onto end consumers, to the extent they can afford them, or they are passed on in the reduction in the availability of goods.