4 ms·

They’re not. Most of these price increases (e.g. semiconductors, lumber, consumer perishables) are supply-chain related. It’s reasonable to expect them to subs

They’re not. Most of these price increases (e.g. semiconductors, lumber, consumer perishables) are supply-chain related. It’s reasonable to expect them to subside as the most acute phase of the pandemic recedes. Only one I’m not sure about is the price of a meal at a restaurant …

whb07 5y ago
They are… you cannot roll back wage inflation. “Oh hey Jim, I know we hired you at $25/hr.. well now that things are normalizing, well have to pay you the real rate of $12/hr” Even the PepsiCo CEO was commenting on passing higher prices and the consumer accepting them just fine.
- talentedcoin 5y ago
  Idk. I somewhat agree; but I’m not sure what to think of that because it’s a fiscal and not a monetary intervention. Minimum wages going up (whether explicitly or because unemployment benefits are competing with them) will definitely bump up demand and will also bump up costs for some industries, particularly restaurants and hospitality. Insofar as demand responds positively a little inflation is imo not a terrible price to pay. This article, however, is bringing up a boogeyman that inflation will somehow slip from the Fed’s grasp, which I very much doubt.
  - whb07 5y ago
    So idk how deep you want to go into “basic” common sense economics and not this trashy thing they call it now, but the divide between fiscal/monetary is by name only. Let me explain: There used to be the real divide between both, but now every action by the fiscal side is effectively done by the monetary side. Congress writes some laws, the treasury calls up the FED the night before the day of selling new bonds and just like magic, the bonds get sold at a superb price. The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates, would lead to default as just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost… So what’s the FED to do? Why are living expenses going up faster than real wages? Why do you think theres a godly group of supremely moral and righteous humans sitting at the FED?
    - dragonwriter 5y ago
      > The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates 400 basis basis points, back to the level of late 2005-early 2007, is a “tiny” increase in rates? That's an enormous increase... > just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost… If you look at history of Treasury interest rates and Fed Funds rates, the relationship you imply where even that giant increase to the Fed Funds target would do that... doesn't exist.
      - whb07 5y ago
        Going from 0-1% to 4-5% is massive I agree on that. But in the absolute, it’s still tiny and even a negative real interest rate. The other stuff about the fed activities not influencing treasury rates is about as true as inflation being 2% avg for the last couple years.
        dragonwriter 5y ago
        > But in the absolute, it’s still tiny No, it's not; its from the global minimum to, while not the historic global maximum, a level clear on the other side of average. > The other stuff about the fed activities not influencing treasury rates No one said that. The relation historically is not such that going to a 4-5% fed funds target would double or triple debt service costs.
      - talentedcoin 5y ago
        For what it’s worth, the unusually large increase in inflation as measured by CPI seems to be at least partially due to base effects: https://www.dallasfed.org/research/economics/2021/0513 https://www.dallasfed.org/research/economics/2021/0513 Long story short, we are comparing year-on-year when last year was itself almost as unusual as can be.
        imtringued 5y ago
- BizarroLand 5y ago
  I mean, they charge nearly $3 for a 20oz soda. I know some of that is convenience store surcharge but their prices have gone up at least 10% in the last year.
ganeshkrishnan 5y ago
Absolutely correct. Printing excess money does not cause inflation. Disrupting supply chain does. Especially with USD which has virtually unlimited appetite. If anything good comes out of this covid, it will be remote work and universal basic income (since we already tested that printing more money causes no major issues)
bcrl 5y ago
There's about to be a boom in overconstruction of semiconductor fabs with all the government incentives to build new fabs in the US and Europe. It will be a sad day if we go back to the days of tariffs raise on DRAM that were a regular part of the semiconductor industry 30 years ago.

whb07 5y ago

They are… you cannot roll back wage inflation. “Oh hey Jim, I know we hired you at $25/hr.. well now that things are normalizing, well have to pay you the real rate of $12/hr” Even the PepsiCo CEO was commenting on passing higher prices and the consumer accepting them just fine.

talentedcoin 5y ago
Idk. I somewhat agree; but I’m not sure what to think of that because it’s a fiscal and not a monetary intervention. Minimum wages going up (whether explicitly or because unemployment benefits are competing with them) will definitely bump up demand and will also bump up costs for some industries, particularly restaurants and hospitality. Insofar as demand responds positively a little inflation is imo not a terrible price to pay. This article, however, is bringing up a boogeyman that inflation will somehow slip from the Fed’s grasp, which I very much doubt.
- whb07 5y ago
  So idk how deep you want to go into “basic” common sense economics and not this trashy thing they call it now, but the divide between fiscal/monetary is by name only. Let me explain: There used to be the real divide between both, but now every action by the fiscal side is effectively done by the monetary side. Congress writes some laws, the treasury calls up the FED the night before the day of selling new bonds and just like magic, the bonds get sold at a superb price. The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates, would lead to default as just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost… So what’s the FED to do? Why are living expenses going up faster than real wages? Why do you think theres a godly group of supremely moral and righteous humans sitting at the FED?
  - dragonwriter 5y ago
    > The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates 400 basis basis points, back to the level of late 2005-early 2007, is a “tiny” increase in rates? That's an enormous increase... > just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost… If you look at history of Treasury interest rates and Fed Funds rates, the relationship you imply where even that giant increase to the Fed Funds target would do that... doesn't exist.
    - whb07 5y ago
      Going from 0-1% to 4-5% is massive I agree on that. But in the absolute, it’s still tiny and even a negative real interest rate. The other stuff about the fed activities not influencing treasury rates is about as true as inflation being 2% avg for the last couple years.
      - dragonwriter 5y ago
        > But in the absolute, it’s still tiny No, it's not; its from the global minimum to, while not the historic global maximum, a level clear on the other side of average. > The other stuff about the fed activities not influencing treasury rates No one said that. The relation historically is not such that going to a 4-5% fed funds target would double or triple debt service costs.
    - talentedcoin 5y ago
      For what it’s worth, the unusually large increase in inflation as measured by CPI seems to be at least partially due to base effects: https://www.dallasfed.org/research/economics/2021/0513 https://www.dallasfed.org/research/economics/2021/0513 Long story short, we are comparing year-on-year when last year was itself almost as unusual as can be.
      - imtringued 5y ago
BizarroLand 5y ago
I mean, they charge nearly $3 for a 20oz soda. I know some of that is convenience store surcharge but their prices have gone up at least 10% in the last year.

ganeshkrishnan 5y ago

Absolutely correct. Printing excess money does not cause inflation. Disrupting supply chain does. Especially with USD which has virtually unlimited appetite. If anything good comes out of this covid, it will be remote work and universal basic income (since we already tested that printing more money causes no major issues)

bcrl 5y ago

There's about to be a boom in overconstruction of semiconductor fabs with all the government incentives to build new fabs in the US and Europe. It will be a sad day if we go back to the days of tariffs raise on DRAM that were a regular part of the semiconductor industry 30 years ago.