5 ms·

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

by 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.

by starkd 5y ago

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.