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We would not be "in the Cater [sic] Years" regardless. The lowest inflation reported in the late 70's was about 5%, with a peak at 15%. Last year's post-covid

We would not be "in the Cater [sic] Years" regardless. The lowest inflation reported in the late 70's was about 5%, with a peak at 15%. Last year's post-covid number was 5.4%. Your point seems mostly like demagoguery. I think the more interesting question is... is 5% actually bad? There's a real argument to be had here that rapid inflation reflects genuine improvements like rising wage levels and that it's worth paying for. Remember that the "biggest losers" in inflationary economies are people who hold assets, not investors (whose returns accomadate faster than things like loan terms) or wage workers (who don't have significant assets to depreciate and whose wages track inflation well).

rsync 5y ago
"Remember that the "biggest losers" in inflationary economies are people who hold assets, not investors ..." The biggest losers among sophisticated, moneyed actors are indeed people who hold assets. But the biggest losers overall are those with fixed incomes dealing with rapidly rising prices.
- newacct583 5y ago
  > But the biggest losers overall are those with fixed incomes dealing with rapidly rising prices. And therein lies one of the big pseudo-centrist points here. A mild reduction[1] in fixed-rate entitlement programs is coming down the pipe at some point regardless. This essentially gets the hard part of that political calculus out of the way "for free" (or at least in a cheaper way, since you can blame covid). [1] Contra the nutjobs who predict the Death of Social Security or whatnot.
  - dragonwriter 5y ago
    > This essentially gets the hard part of that political calculus out of the way "for free" No, if anything it hastens having to deal with the hard part, since SS benefits are wage indexed during employment and CPI-indexed in retirement, not fixed. Inflation drives up the nominal $ cost for current retirees, and, ceteris paribus, hastens trust fund depletion.
- rdtwo 5y ago
  Only if you own paper debt assets like bonds. If you own dividend paying stock or property you are going to be fine. If you buy stock in a company with a heavy debt load that is slowly digging it’s way it (not sure they exist) you might come out a big winner
  - ethbr0 5y ago
    > company with a heavy debt load that is slowly digging [its] way [out?] Telecom? Utilities? Mining?
  - bityard 5y ago
    Key word there, might. Even people who's actual job it is to pick winners and losers do worse in aggregate than an index fund.
    - vineyardmike 5y ago
      > do worse in aggregate than an index fund. This is widely stated, but only barely accurate sentiment. First, index funds do good at 1 thing - which is provide "market returns". Market returns is basically defined by an index, so naturally the definition is circular. The parent mentioned dividends, which are not the normal target for investors (but useful for retirees and others who want an "income" from investment). Dividend stocks may do worse at beating market returns, but better at income generation.
- dragonwriter 5y ago
  > But the biggest losers overall are those with fixed incomes dealing with rapidly rising prices. So, non-SS pensioners? Not: Social Security recipients (it has an inflation-indexed COLA). Not: public benefit recipients (this inflation is in part a product of temporary increases to aid at the lower end of the economic spectrum). Not: low-end labor, where prices are being bid up. (And also, often a beneficiary of the previous point.)
  - mc32 5y ago
    The government basket used to calculate inflation isn’t the same basket of goods pensioners buy from. If inflation were “good” then the US along with many countries the word over would cause it to happen —it’s easy to do.
    - dragonwriter 5y ago
      > if inflation were “good” then the US along with many countries the word over would cause it to happen Literally every single one of them that controls its own monetary policy (including the US) actively and deliberately does, so there's that.
      - mc32 5y ago
        My implication was extraordinary inflation isn’t good. The fed, since Bush/Clinton/Greenspan targeted 2-3.5% as desirable “good”. What I mean is if what we have now (which is about double the norm) were good, we would have done it a long time ago and so would have others.
  - AnimalMuppet 5y ago
    Even those with COLAs. See, prices go up, and then, later, the COLA adjustment kicks in. It still hurts those who get COLA adjustments, just not as bad as it hurts those who don't.
mc32 5y ago
I don't think the financial system of the 70s is the same financial system of the 2000s. We were were also pouring a lot of resources into countering the 'second world' including the Vietnam war, missile defence, etc. add to that the 'oil shock.' As far as I can recall, the current system is 'calibrated' for 2-3% annual growth. 5-8% is entering the banana republic inflation zone. You, know, where they'd have to 'devaluate' their currencies to make up the difference?
- jonathankoren 5y ago
  > As far as I can recall, the current system is 'calibrated' for 2-3% annual growth. 5-8% is entering the banana republic inflation zone. This is simply untrue. Like not even close the definition of hyperinflation used by economists. Hyperinflation is a monthly inflation rate of 50%, or 12974.63% annually. This is scare tactics.
  - deleted 5y ago
    [deleted]
  - mc32 5y ago
    Hyperinflation is Zimbabwe or Brazil during some periods. That's not what I'm comparing it to. High inflation is what we had during the Carter years. People who lived though it say it was awful. Five per-cent may be on the cusp, but 8% is getting up there where it eats up a wage earner's buying power.
    - jonathankoren 5y ago
      If you’re not comparing the United States in 2021 to countries where the entire economy has collapsed due to inflation, then why are you using terms like “banana republic”? You could have used the 1970s if you meant the the 1970s, which as someone that barely remembers it, was not a “banana republic”.
- Spooky23 5y ago
  Huh? We just ended a 20-year war and are stuck in a military investment cycle to replace the worn out and obsolete equipment.
Spooky23 5y ago
Exactly. As a well to do tech person, the impact of 10% inflation is nil when my retirement funds returned 25%. Now if I was some über rich dude with millions of capital tied up high friction investments, forced to choose between paying capital gains taxes or losing to inflation, i may feel differently. Frankly, we need to put shitty businesses that exist by virtue of low interest rates out of business. It should not be feasible to buy thousands of single family homes as investment property, for example.
- mc32 5y ago
  It's the poor who this hits most. Most tech workers can 'absorb' this. We may get raises, bonuses, etc., to make up the diff. But your average Joe and Jill in the world working restaurants or deliveries, they can't just shrug it off.
  - newacct583 5y ago
    That's almost exactly backwards, where are you getting this? The big inflation driver right now is (1) the increase in liquid cash in the economy due to covid relief programs and (2) the higher wage levels needed to get people to work during a pandemic. The "poor" are, in fact, doing significantly better (economically, anyway) now than they were in 2019. I'll have to go look it up, but there was a great blog post a few months back looking at poverty statistics over the pandemic. The relief bills helped a ton.
    - dnautics 5y ago
      > The relief bills helped a ton. Those are transitory, and even if they become permanent, never forget, inflation is a compounding process, so to keep up there must be the political will to re-up them. Moreover, the irony is that the way to fund the relief bills is to create more inflation. You are advocating putting all of society on an accelerating treadmill that pushes people backwards towards poverty.
      - newacct583 5y ago
medvezhenok 5y ago
Note that how we calculate inflation has actually changed since the Carter Years - most importantly the substitution of housing in the inflation basket with OER (owner-equivalent rent). If we had the previous inflation measure (same as 1970s), CPI would be closer to double digits now (because of housing appreciation over the last year). https://www.wsj.com/articles/inflation-numbers-1970s-cpi-housing-prices-11626298531 https://www.wsj.com/articles/inflation-numbers-1970s-cpi-hou...
- newacct583 5y ago
  True enough, though if the modern real estate market had existed in the 70's then "inflation" would have been something closer to 30-40%. Like it or not "home values" decoupled from "housing costs" over the past two decades. The reason for that metric change was to preserve equivalency, you don't get to argue backwards because of it.

rsync 5y ago

"Remember that the "biggest losers" in inflationary economies are people who hold assets, not investors ..." The biggest losers among sophisticated, moneyed actors are indeed people who hold assets. But the biggest losers overall are those with fixed incomes dealing with rapidly rising prices.

newacct583 5y ago
> But the biggest losers overall are those with fixed incomes dealing with rapidly rising prices. And therein lies one of the big pseudo-centrist points here. A mild reduction[1] in fixed-rate entitlement programs is coming down the pipe at some point regardless. This essentially gets the hard part of that political calculus out of the way "for free" (or at least in a cheaper way, since you can blame covid). [1] Contra the nutjobs who predict the Death of Social Security or whatnot.
- dragonwriter 5y ago
  > This essentially gets the hard part of that political calculus out of the way "for free" No, if anything it hastens having to deal with the hard part, since SS benefits are wage indexed during employment and CPI-indexed in retirement, not fixed. Inflation drives up the nominal $ cost for current retirees, and, ceteris paribus, hastens trust fund depletion.
rdtwo 5y ago
Only if you own paper debt assets like bonds. If you own dividend paying stock or property you are going to be fine. If you buy stock in a company with a heavy debt load that is slowly digging it’s way it (not sure they exist) you might come out a big winner
- ethbr0 5y ago
  > company with a heavy debt load that is slowly digging [its] way [out?] Telecom? Utilities? Mining?
- bityard 5y ago
  Key word there, might. Even people who's actual job it is to pick winners and losers do worse in aggregate than an index fund.
  - vineyardmike 5y ago
    > do worse in aggregate than an index fund. This is widely stated, but only barely accurate sentiment. First, index funds do good at 1 thing - which is provide "market returns". Market returns is basically defined by an index, so naturally the definition is circular. The parent mentioned dividends, which are not the normal target for investors (but useful for retirees and others who want an "income" from investment). Dividend stocks may do worse at beating market returns, but better at income generation.
dragonwriter 5y ago
> But the biggest losers overall are those with fixed incomes dealing with rapidly rising prices. So, non-SS pensioners? Not: Social Security recipients (it has an inflation-indexed COLA). Not: public benefit recipients (this inflation is in part a product of temporary increases to aid at the lower end of the economic spectrum). Not: low-end labor, where prices are being bid up. (And also, often a beneficiary of the previous point.)
- mc32 5y ago
  The government basket used to calculate inflation isn’t the same basket of goods pensioners buy from. If inflation were “good” then the US along with many countries the word over would cause it to happen —it’s easy to do.
  - dragonwriter 5y ago
    > if inflation were “good” then the US along with many countries the word over would cause it to happen Literally every single one of them that controls its own monetary policy (including the US) actively and deliberately does, so there's that.
    - mc32 5y ago
      My implication was extraordinary inflation isn’t good. The fed, since Bush/Clinton/Greenspan targeted 2-3.5% as desirable “good”. What I mean is if what we have now (which is about double the norm) were good, we would have done it a long time ago and so would have others.
- AnimalMuppet 5y ago
  Even those with COLAs. See, prices go up, and then, later, the COLA adjustment kicks in. It still hurts those who get COLA adjustments, just not as bad as it hurts those who don't.

mc32 5y ago

I don't think the financial system of the 70s is the same financial system of the 2000s. We were were also pouring a lot of resources into countering the 'second world' including the Vietnam war, missile defence, etc. add to that the 'oil shock.' As far as I can recall, the current system is 'calibrated' for 2-3% annual growth. 5-8% is entering the banana republic inflation zone. You, know, where they'd have to 'devaluate' their currencies to make up the difference?

jonathankoren 5y ago
> As far as I can recall, the current system is 'calibrated' for 2-3% annual growth. 5-8% is entering the banana republic inflation zone. This is simply untrue. Like not even close the definition of hyperinflation used by economists. Hyperinflation is a monthly inflation rate of 50%, or 12974.63% annually. This is scare tactics.
- deleted 5y ago
  [deleted]
- mc32 5y ago
  Hyperinflation is Zimbabwe or Brazil during some periods. That's not what I'm comparing it to. High inflation is what we had during the Carter years. People who lived though it say it was awful. Five per-cent may be on the cusp, but 8% is getting up there where it eats up a wage earner's buying power.
  - jonathankoren 5y ago
    If you’re not comparing the United States in 2021 to countries where the entire economy has collapsed due to inflation, then why are you using terms like “banana republic”? You could have used the 1970s if you meant the the 1970s, which as someone that barely remembers it, was not a “banana republic”.
Spooky23 5y ago
Huh? We just ended a 20-year war and are stuck in a military investment cycle to replace the worn out and obsolete equipment.

Spooky23 5y ago

Exactly. As a well to do tech person, the impact of 10% inflation is nil when my retirement funds returned 25%. Now if I was some über rich dude with millions of capital tied up high friction investments, forced to choose between paying capital gains taxes or losing to inflation, i may feel differently. Frankly, we need to put shitty businesses that exist by virtue of low interest rates out of business. It should not be feasible to buy thousands of single family homes as investment property, for example.

mc32 5y ago
It's the poor who this hits most. Most tech workers can 'absorb' this. We may get raises, bonuses, etc., to make up the diff. But your average Joe and Jill in the world working restaurants or deliveries, they can't just shrug it off.
- newacct583 5y ago
  That's almost exactly backwards, where are you getting this? The big inflation driver right now is (1) the increase in liquid cash in the economy due to covid relief programs and (2) the higher wage levels needed to get people to work during a pandemic. The "poor" are, in fact, doing significantly better (economically, anyway) now than they were in 2019. I'll have to go look it up, but there was a great blog post a few months back looking at poverty statistics over the pandemic. The relief bills helped a ton.
  - dnautics 5y ago
    > The relief bills helped a ton. Those are transitory, and even if they become permanent, never forget, inflation is a compounding process, so to keep up there must be the political will to re-up them. Moreover, the irony is that the way to fund the relief bills is to create more inflation. You are advocating putting all of society on an accelerating treadmill that pushes people backwards towards poverty.
    - newacct583 5y ago

medvezhenok 5y ago

Note that how we calculate inflation has actually changed since the Carter Years - most importantly the substitution of housing in the inflation basket with OER (owner-equivalent rent). If we had the previous inflation measure (same as 1970s), CPI would be closer to double digits now (because of housing appreciation over the last year). https://www.wsj.com/articles/inflation-numbers-1970s-cpi-housing-prices-11626298531 https://www.wsj.com/articles/inflation-numbers-1970s-cpi-hou...

newacct583 5y ago
True enough, though if the modern real estate market had existed in the 70's then "inflation" would have been something closer to 30-40%. Like it or not "home values" decoupled from "housing costs" over the past two decades. The reason for that metric change was to preserve equivalency, you don't get to argue backwards because of it.