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> They by mandate should have drastically increased interest rates. I disagree, we are having inflation because of supply bottlenecks, not because of demand. R

> They by mandate should have drastically increased interest rates. I disagree, we are having inflation because of supply bottlenecks, not because of demand. Raising interest rates would only make it harder for companies to get finances to ensure supply chains meet demand. That's if you even believe raising interest rates stops inflation. The correlation between interest rates and inflation over the last 40 years is pretty nil.

throw_nbvc1234 5y ago
> I disagree, we are having inflation because of supply bottlenecks, not because of demand. I've seen this multiple times but what's the underlying evidence for either side. If demand goes up and the supply can't increase to follow, it'll look like a supply issue but ultimately caused by demand. What's ultimately the difference? Is the idea that if the supply chain is scaled for X then moving from X-2 -> X is easier then X -> X+2?
- andrekandre 5y ago
  > it'll look like a supply issue but ultimately caused by demand true, but is demand actually higher than pre-pandemic or is it just returning to previous levels (where broken/damaged supply chain issues are now showing up)?
  - throw_nbvc1234 5y ago
    exactly, what data would someone look at to decide which came first; the supply crunch or the demand increase. and does the distinction even matter?
- smashem 5y ago
  It's systems + networks analysis. Factories, ports, and transportation were limited or shuttered completely. Warehousing and storefronts saw the same. Impairing these network nodes, all at relatively the same time and in great numbers, had gigantic consequences. And if the supply network is severely damaged, it ultimately means supply will go down.
Red_Leaves_Flyy 5y ago
Supply bottlenecks is certainly one way to describe a horrific pandemic response, widespread corporate mismanagement, and the fed printer propping up zombie corps.
sleepingadmin 5y ago
>I disagree, we are having inflation because of supply bottlenecks, not because of demand. Raising interest rates would only make it harder for companies to get finances to ensure supply chains meet demand. Certainly an interesting take. Not unlike this read from somewhat recent. So you're in good company with your position. https://research.stlouisfed.org/publications/economic-synopses/2021/12/16/supply-chain-bottlenecks-and-inflation-the-role-of-semiconductors https://research.stlouisfed.org/publications/economic-synops... Mind you, basically everyone and their mother has announced new semiconductor fabs. Intel in Ohio recently for example. I am curious if these are confounding factors. Maybe they will all play against each other. In terms of the 40% inflation locked in. This has nothing to do with supply chain at all. This is private debt to GDP being 235% in the USA. This is the central bank balance sheet being 8 trillion $ in the negative. This is the money supply being 7 trillion in the negative. Pretty standard Quantity Theory of Money Supply chain isn't a factor yet, this is ~40% inflation locked in. Now if you consider supply chain struggles. It only exacerbates and makes the situation worse. >That's if you even believe raising interest rates stops inflation. The correlation between interest rates and inflation over the last 40 years is pretty nil. The correlation has been weaker because they are using these other options to affect macroeconomics. The central banks are beyond bankrupt, but there is no bankruptcy system for them. So instead of fixing the debt situation, you run inflation high and technically you reduce your debt at the expense of those who are holding currency. Primarily retirees are those who are harmed.

throw_nbvc1234 5y ago

> I disagree, we are having inflation because of supply bottlenecks, not because of demand. I've seen this multiple times but what's the underlying evidence for either side. If demand goes up and the supply can't increase to follow, it'll look like a supply issue but ultimately caused by demand. What's ultimately the difference? Is the idea that if the supply chain is scaled for X then moving from X-2 -> X is easier then X -> X+2?

andrekandre 5y ago
> it'll look like a supply issue but ultimately caused by demand true, but is demand actually higher than pre-pandemic or is it just returning to previous levels (where broken/damaged supply chain issues are now showing up)?
- throw_nbvc1234 5y ago
  exactly, what data would someone look at to decide which came first; the supply crunch or the demand increase. and does the distinction even matter?
smashem 5y ago
It's systems + networks analysis. Factories, ports, and transportation were limited or shuttered completely. Warehousing and storefronts saw the same. Impairing these network nodes, all at relatively the same time and in great numbers, had gigantic consequences. And if the supply network is severely damaged, it ultimately means supply will go down.

Red_Leaves_Flyy 5y ago

Supply bottlenecks is certainly one way to describe a horrific pandemic response, widespread corporate mismanagement, and the fed printer propping up zombie corps.

sleepingadmin 5y ago

>I disagree, we are having inflation because of supply bottlenecks, not because of demand. Raising interest rates would only make it harder for companies to get finances to ensure supply chains meet demand. Certainly an interesting take. Not unlike this read from somewhat recent. So you're in good company with your position. https://research.stlouisfed.org/publications/economic-synopses/2021/12/16/supply-chain-bottlenecks-and-inflation-the-role-of-semiconductors https://research.stlouisfed.org/publications/economic-synops... Mind you, basically everyone and their mother has announced new semiconductor fabs. Intel in Ohio recently for example. I am curious if these are confounding factors. Maybe they will all play against each other. In terms of the 40% inflation locked in. This has nothing to do with supply chain at all. This is private debt to GDP being 235% in the USA. This is the central bank balance sheet being 8 trillion $ in the negative. This is the money supply being 7 trillion in the negative. Pretty standard Quantity Theory of Money Supply chain isn't a factor yet, this is ~40% inflation locked in. Now if you consider supply chain struggles. It only exacerbates and makes the situation worse. >That's if you even believe raising interest rates stops inflation. The correlation between interest rates and inflation over the last 40 years is pretty nil. The correlation has been weaker because they are using these other options to affect macroeconomics. The central banks are beyond bankrupt, but there is no bankruptcy system for them. So instead of fixing the debt situation, you run inflation high and technically you reduce your debt at the expense of those who are holding currency. Primarily retirees are those who are harmed.