5 ms·

All you have to do is look at the Fed balance sheet to get an inkling of what's going on. They are monetizing the debt. Inflation is a very simple concept to

by starkd 5y ago

All you have to do is look at the Fed balance sheet to get an inkling of what's going on. They are monetizing the debt. Inflation is a very simple concept to understand. It's too many dollars facing too few goods. I understand no one wants a panic, but you also don't want to bury your head in the sand.

boringg 5y ago
I think my original point is that this isn't something to panic over much like the public narrative is trying to make hay of. I am also not saying bury your head in the sand. Watch and see and don't get caught up in the hype.
wbsss4412 5y ago
6% inflation is nothing to panic over. People equate the fed not hitting their 2% target with hyperinflation and it’s absolutely maddening to see the level of discourse drop to astounding lows when this happens.
- starkd 5y ago
  It doesn't have to reach hyperinflation to have a seriously disabling influence. People look ahead for potential impediments to being able to get the goods they need. Hopefully, it won't amount to inflation, but historically, hyperinflation always tends to come out of nowhere. It's very hard to control once it gets going.
  - option_greek 5y ago
    Not even as difficult as that. As the prices rise with a regular periodicity, people stock up more goods with expectation that in future their money will buy them less. Which causes more price increases and corresponding increase in stocking. Obviously 6% won't do that but at higher levels its the complex dynamics driving inflation than good old supply demand balance. And don't think that exports will solve hyper inflation because at that point other countries will also expect devaluation in currency which becomes a self fulfilling prophecy. Again not applicable to dollar and USA for the moment but at higher inflation levels anything is possible.
    - logfromblammo 5y ago
      Somebody has to stock up. Just-in-time delivery didn't, and that's why we're in this supply chain situation. In the future, not only is it possible your money will buy you less, it is also possible that no amount of money, no matter how large, can obtain what you need. For instance, anything with a silicon chip in it. For some goods, every known upstream retailer is out of stock, with no idea when it will be replenished, and the resellers are doing business at way above MSRP.
    - wbsss4412 5y ago
      What you’re describing around consumer expectations is that the absolute price level continues to rise at a higher as consumer expectations change. It doesn’t follow however that the rate itself increases due to this dynamic. Consumer expectations tend to anchor inflation at a particular level. This is just a fundamental misunderstanding of what causes hyperinflation.
  - wbsss4412 5y ago
    Hyperinflation just shouldn’t be entering into this discussion. It’s not happening, it’s not close to happening. Now, im not trying to downplay the fact that elevated inflation can cause issues, but it so so challenging to keep that nuance when every discussion devolves into “we are on the precipice of +1,000% inflation” when the inflation rate went from 1 to 6.
    - ashtonkem 5y ago
      As I keep saying, threats of hyper inflation are fundamentally a political argument, and not a terribly convincing one at that. Hyperinflation can and does happen, but the doomsayers of such things are well into "boy who cries wolf territory" and can be ignored.
- IAmWorried 5y ago
  6% is only looking at the CPI. Factor in equity prices, housing prices, tuition prices, and suddenly there is a lot more reason to panic.
  - wbsss4412 5y ago
    Housing, tuition and equity prices have been skyrocketing for the last decade and no one panicked. Has tuition even notably increased in the last 12 months?
    - IAmWorried 5y ago
      I don't exactly think people were very happy about it either. I mean look, I'm 24 years old and I don't own any of these assets. At the rate things are going now, I probably never will own these assets. The best thing that could happen for me is major deflation. But it is too politically unpopular, I bet it will be years before we get a fed chairman who has the spine to raise rates. So I'm reduced to angrily complaining online and shaking my fist at the sky while our rulers at the fed prop up boomers and leave my generation out to dry.
      - wbsss4412 5y ago
        The fed _was_ raising rates pre pandemic, it got detailed by Covid. I would confidently bet money that they raise rates in 2022. At the end of the day, the fed has to take its queues from the fiscal policy that’s in place. This time around is very very different from 08.

by starkd 5y ago

boringg 5y ago

I think my original point is that this isn't something to panic over much like the public narrative is trying to make hay of. I am also not saying bury your head in the sand. Watch and see and don't get caught up in the hype.

wbsss4412 5y ago

6% inflation is nothing to panic over. People equate the fed not hitting their 2% target with hyperinflation and it’s absolutely maddening to see the level of discourse drop to astounding lows when this happens.

starkd 5y ago
It doesn't have to reach hyperinflation to have a seriously disabling influence. People look ahead for potential impediments to being able to get the goods they need. Hopefully, it won't amount to inflation, but historically, hyperinflation always tends to come out of nowhere. It's very hard to control once it gets going.
- option_greek 5y ago
  Not even as difficult as that. As the prices rise with a regular periodicity, people stock up more goods with expectation that in future their money will buy them less. Which causes more price increases and corresponding increase in stocking. Obviously 6% won't do that but at higher levels its the complex dynamics driving inflation than good old supply demand balance. And don't think that exports will solve hyper inflation because at that point other countries will also expect devaluation in currency which becomes a self fulfilling prophecy. Again not applicable to dollar and USA for the moment but at higher inflation levels anything is possible.
  - logfromblammo 5y ago
    Somebody has to stock up. Just-in-time delivery didn't, and that's why we're in this supply chain situation. In the future, not only is it possible your money will buy you less, it is also possible that no amount of money, no matter how large, can obtain what you need. For instance, anything with a silicon chip in it. For some goods, every known upstream retailer is out of stock, with no idea when it will be replenished, and the resellers are doing business at way above MSRP.
  - wbsss4412 5y ago
    What you’re describing around consumer expectations is that the absolute price level continues to rise at a higher as consumer expectations change. It doesn’t follow however that the rate itself increases due to this dynamic. Consumer expectations tend to anchor inflation at a particular level. This is just a fundamental misunderstanding of what causes hyperinflation.
- wbsss4412 5y ago
  Hyperinflation just shouldn’t be entering into this discussion. It’s not happening, it’s not close to happening. Now, im not trying to downplay the fact that elevated inflation can cause issues, but it so so challenging to keep that nuance when every discussion devolves into “we are on the precipice of +1,000% inflation” when the inflation rate went from 1 to 6.
  - ashtonkem 5y ago
    As I keep saying, threats of hyper inflation are fundamentally a political argument, and not a terribly convincing one at that. Hyperinflation can and does happen, but the doomsayers of such things are well into "boy who cries wolf territory" and can be ignored.
IAmWorried 5y ago
6% is only looking at the CPI. Factor in equity prices, housing prices, tuition prices, and suddenly there is a lot more reason to panic.
- wbsss4412 5y ago
  Housing, tuition and equity prices have been skyrocketing for the last decade and no one panicked. Has tuition even notably increased in the last 12 months?
  - IAmWorried 5y ago
    I don't exactly think people were very happy about it either. I mean look, I'm 24 years old and I don't own any of these assets. At the rate things are going now, I probably never will own these assets. The best thing that could happen for me is major deflation. But it is too politically unpopular, I bet it will be years before we get a fed chairman who has the spine to raise rates. So I'm reduced to angrily complaining online and shaking my fist at the sky while our rulers at the fed prop up boomers and leave my generation out to dry.
    - wbsss4412 5y ago
      The fed _was_ raising rates pre pandemic, it got detailed by Covid. I would confidently bet money that they raise rates in 2022. At the end of the day, the fed has to take its queues from the fiscal policy that’s in place. This time around is very very different from 08.