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Calling it blame implies that inflation is bad. Inflation is not intrinsically bad. It's bad to the extent it creates friction in the economy. Currently, the

by xapata 5y ago

Calling it blame implies that inflation is bad. Inflation is not intrinsically bad. It's bad to the extent it creates friction in the economy. Currently, the US economy is growing very well. One might anticipate that inflation will eventually drag down economic growth, but that's far from certain. Japan proved that low inflation doesn't cause high growth, and many recent periods in the US had both low inflation and low growth. In contrast, the inflation today appears to be caused by supply trouble. Alleviating supply pressure is great motivation for innovation and efficiency improvements. Much better economic activity than simply cutting costs and trying to capture market share in a low growth market.

simonh 5y ago
I'd expect supply trouble to affect more than just the USA, but the US is experiencing more inflation than other countries also hit by supply constraints.
- xapata 5y ago
  > the US is experiencing more inflation than other countries also hit by supply constraints. How much more? I've read the opposite. There's probably some imprecision in "the same rate" so I'm willing to believe both are true.
ThunderSizzle 5y ago
Inflation is a tax on the middle class for the sin of trying to save money instead of being an indebted consumer. I would disagree that inflation isn't intrinsically bad. At least the type of inflation modern monetary theory has provided in the past several decades.
- mindslight 5y ago
  > At least the type of inflation modern monetary theory has provided in the past several decades I wouldn't characterize the past several decades as modern monetary theory. Rather they were traditional post Bretton Woods monetary policy of monetary creation primarily through the financial industry. I believe that MMT will actually help control overall inflation - the government printing money and injecting it places besides the financial industry will create quicker consumer price inflation, which will stop the Fed from continuing to create asset inflation by lowering rates.
- thehappypm 5y ago
  It’s kind of a tax on the middle class, but the middle class also has mortgages (it’s kind of the defining quality of being middle class, without one you’re way more likely to be lower class) and with high inflation + mortgage, your debts are shrinking faster than your assets.
  - landemva 5y ago
    And when you go to sell your house after the price triples, you get taxed on alleged gains. But the gains basically kept up with the ramp in energy prices and other necessary commodities. So you kept pace with the baseline while you get taxed as if you are 3x richer.
- xapata 5y ago
  Since wages are a component of inflation, it doesn't change middle class purchasing power. It only affects the middle class to the extent they are creditors, and then only if inflation is a surprise. Peer-to-peer lending isn't a big market, yet.
- ChrisLomont 5y ago
  Most middle class has loans, which inflation helps, and don't hold savings in cash, but in assets like houses and 401k, both of which inflation helps. Who holds lifetime savings in cash? That would be a terrible idea. Employers generally are forced to increase wages, although lagged, else people start to leave. Inflation isn't a tax on the middle class. It transfers effective wealth from lenders to borrowers.
  - landemva 5y ago
    'Who holds lifetime savings in cash? That would be a terrible idea' Everyone is forced to speculate because the fiat currency is no longer a reasonable store of value. The poorest, who have no investments, typically do the worst through inflationary years.
    - ChrisLomont 5y ago
      The poorest tend to have loans, car, mortgage, etc. and no significant cash, so inflation helps them by lowering their effective debt. Fiat has never been a good store of wealth, ever, in any country, in any time. Nothing there has changed, despite your beliefs. And pretty much no one with much long term savings keeps it all in cash, there's too many better places to save.
- cudgy 5y ago
  Inflation should raise interest rates which would then help savers and discourage borrowing due to higher interest costs. Furthermore, it would pressure housing and asset prices lower making them more affordable while also pressuring wages higher. Seems better than the current climate.
  - landemva 5y ago
    No quite. Until the 'rona hit, the Fed was raising rates and stock market asset prices were also rising.
    - cudgy 5y ago
      Fed raising interest rates before corona was short-lived and symbolic at best. The stock market will not react until investors are convinced that the Fed has changed it’s multi-decade stance of extraordinarily low interest rates. This shift in market sentiment may not occur immediately after the Fed shifts, particularly since many of the younger investors know nothing else but low interest rates and expect them to continue indefinitely.
landemva 5y ago
Inflation, or decline in purchasing power of the currency, is bad for savers and those who rely on fixed incomes. It is also bad for deeply indebted governments when they try to roll over their debt instead of actually paying it down.

by xapata 5y ago

simonh 5y ago

I'd expect supply trouble to affect more than just the USA, but the US is experiencing more inflation than other countries also hit by supply constraints.

xapata 5y ago
> the US is experiencing more inflation than other countries also hit by supply constraints. How much more? I've read the opposite. There's probably some imprecision in "the same rate" so I'm willing to believe both are true.

ThunderSizzle 5y ago

Inflation is a tax on the middle class for the sin of trying to save money instead of being an indebted consumer. I would disagree that inflation isn't intrinsically bad. At least the type of inflation modern monetary theory has provided in the past several decades.

mindslight 5y ago
> At least the type of inflation modern monetary theory has provided in the past several decades I wouldn't characterize the past several decades as modern monetary theory. Rather they were traditional post Bretton Woods monetary policy of monetary creation primarily through the financial industry. I believe that MMT will actually help control overall inflation - the government printing money and injecting it places besides the financial industry will create quicker consumer price inflation, which will stop the Fed from continuing to create asset inflation by lowering rates.
thehappypm 5y ago
It’s kind of a tax on the middle class, but the middle class also has mortgages (it’s kind of the defining quality of being middle class, without one you’re way more likely to be lower class) and with high inflation + mortgage, your debts are shrinking faster than your assets.
- landemva 5y ago
  And when you go to sell your house after the price triples, you get taxed on alleged gains. But the gains basically kept up with the ramp in energy prices and other necessary commodities. So you kept pace with the baseline while you get taxed as if you are 3x richer.
xapata 5y ago
Since wages are a component of inflation, it doesn't change middle class purchasing power. It only affects the middle class to the extent they are creditors, and then only if inflation is a surprise. Peer-to-peer lending isn't a big market, yet.
ChrisLomont 5y ago
Most middle class has loans, which inflation helps, and don't hold savings in cash, but in assets like houses and 401k, both of which inflation helps. Who holds lifetime savings in cash? That would be a terrible idea. Employers generally are forced to increase wages, although lagged, else people start to leave. Inflation isn't a tax on the middle class. It transfers effective wealth from lenders to borrowers.
- landemva 5y ago
  'Who holds lifetime savings in cash? That would be a terrible idea' Everyone is forced to speculate because the fiat currency is no longer a reasonable store of value. The poorest, who have no investments, typically do the worst through inflationary years.
  - ChrisLomont 5y ago
    The poorest tend to have loans, car, mortgage, etc. and no significant cash, so inflation helps them by lowering their effective debt. Fiat has never been a good store of wealth, ever, in any country, in any time. Nothing there has changed, despite your beliefs. And pretty much no one with much long term savings keeps it all in cash, there's too many better places to save.
cudgy 5y ago
Inflation should raise interest rates which would then help savers and discourage borrowing due to higher interest costs. Furthermore, it would pressure housing and asset prices lower making them more affordable while also pressuring wages higher. Seems better than the current climate.
- landemva 5y ago
  No quite. Until the 'rona hit, the Fed was raising rates and stock market asset prices were also rising.
  - cudgy 5y ago
    Fed raising interest rates before corona was short-lived and symbolic at best. The stock market will not react until investors are convinced that the Fed has changed it’s multi-decade stance of extraordinarily low interest rates. This shift in market sentiment may not occur immediately after the Fed shifts, particularly since many of the younger investors know nothing else but low interest rates and expect them to continue indefinitely.

landemva 5y ago

Inflation, or decline in purchasing power of the currency, is bad for savers and those who rely on fixed incomes. It is also bad for deeply indebted governments when they try to roll over their debt instead of actually paying it down.