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> If you destroy your productive capacity but money supply remains the same (which is honestly a bit odd, since real prices are always relative), then you get
by wbsss4412 5y ago
> If you destroy your productive capacity but money supply remains the same (which is honestly a bit odd, since real prices are always relative), then you get substitution effects that don't affect the general price level, only the price levels in particular segments of the economy.
Because the destruction of capacity somehow didn’t affect the substitutes? That’s magical thinking.
There’s a shortage of new cars => used car prices skyrocket (alone this accounts for roughly ~1.5 points of the cpi increase). And no, it’s not simply because demand is higher for cars, new car sales are still below pre pandemic levels.
> Inflation is really always and everywhere a monetary phenomenon.
It can be one, and that is certainly a contributing factor here, but if you can see the obvious supply chain/shift in demand due to covid effects, then you’re just blinded by dogma.
- baryphonic 5y ago> > Inflation is really always and everywhere a monetary phenomenon. > It can be one, and that is certainly a contributing factor here, but if you can see the obvious supply chain/shift in demand due to covid effects, then you’re just blinded by dogma. I didn't realize Jerome Powell commented on Hacker News! If you can't see how the change in the money supply over the past two years[0] may be the dominant and, dare I say, only explanation for the inflation we are experiencing, then—well—maybe I'm not the dogmatic one. [0]https://fred.stlouisfed.org/graph/fredgraph.png?g=LYjq https://fred.stlouisfed.org/graph/fredgraph.png?g=LYjq
- wbsss4412 5y agoYes yes, look at big number. Ignore any possible alternate explanation because reasons.