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High prices will outlast the war
- AutumnCurtain 5y agohttps://archive.ph/haLFu https://archive.ph/haLFu
- HNHatesUsers 5y ago
- HNHatesUsers 5y ago
- BLKNSLVR 5y agoReplace 'war' with 'pandemic', and that would also be true. That we have both in combination, means effects of one can be blamed on the other for a while yet to come. The water level never fully recedes despite, or as a result of, society's short memory. Edited to add: Are we likely to see an acceleration of the electrification of transport? Buy Tesla shares? Renewable energy projects double-digit percentage uptick?
- arcticbull 5y agoWhile true, it's not really a problem per se. On average, wages keep pace with inflation and so if prices go up in a persistent way, so too will wages, and the effect will cancel out in time. You are right that some prices are sticky - but so are wages - and so there's a built-in mechanism to address this over time. [0] > Edited to add: Are we likely to see an acceleration of the electrification of transport? Buy Tesla shares? Renewable energy projects double-digit percentage uptick? Investing isn't really that simple. While TSLA has notionally gone down in price per share (from $1200 to $780), the bubble has gotten bigger. It's market cap is higher than every other automaker put together, plus a bunch of utility companies, plus a few battery companies. This is about the most crowded trade on the planet. Even after Elon dumped on everyone at the peak and is under SEC investigation for doing so. [1] Generally, you won't do much better than just investing in the S&P 500. In fact 92% of actively-managed funds underperform the S&P 500 over a 15 year period. [2] You think you can do better? [0] https://corporatefinanceinstitute.com/resources/knowledge/economics/sticky-wage-theory/ https://corporatefinanceinstitute.com/resources/knowledge/ec... [1] https://www.wsj.com/articles/sec-probes-trading-by-elon-musk-and-brother-in-wake-of-tesla-ceos-sales-11645730528 https://www.wsj.com/articles/sec-probes-trading-by-elon-musk... [2] https://www.cnbc.com/2019/03/15/active-fund-managers-trail-the-sp-500-for-the-ninth-year-in-a-row-in-triumph-for-indexing.html https://www.cnbc.com/2019/03/15/active-fund-managers-trail-t...
- seibelj 5y agoAn incredibly good investment for anyone that can afford it in the USA is a house. The government subsidizes your mortgage by fixing the rate. As inflation increases rents, you pay the same amount. It’s an amazing handout for even the slightly wealthy.
- arcticbull 5y agoIt actually depends on a ton of factors. [1] How long you plan to stay there, opportunity cost of capital, annual salary, deductions, inflation, taxes, closing costs, HOAs, maintenance, etc. It can be! But it isn't always. [1] https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
- seibelj 5y agoAt some point you need to make a decision in life. I myself am self-made wealthy and I didn’t do that by putting all my money in index funds and renting. Have conviction - put down roots - commit.
- arcticbull 5y agoIt's interesting that you say that, I've also done quite well for myself, and I was in a position to risk more because I hadn't committed all my free capital to a down payment on a mortgage. In fact, at that time, I wouldn't have been able to afford a place I actually wanted to live in anyways. Putting down roots doesn't mean owning a property you don't want to, and being unable to then expose yourself to more interesting risks due to being house-poor. This is of course equally anecdotal, which is why I think folks would do well to review the NYT calculator to evaluate the specifics of their situation :) Risk is good! I'm a big fan of risk. However, a house won't go up more than a few points a year. That's never going to be life changing money. The opportunity cost of the down payment making you unable to early exercise some startup equity could on the other hand leave you pretty full of regret.
- rm_-rf_slash 5y agoElectrification is still difficult to predict. Communities fight tooth and nail to prevent solar farms, wind farms, and most crucially, transmission lines. Could’ve had a line from Montreal through Maine but voters from the state killed it. Now our best hope is along the Hudson. It’s not a technology problem, it’s a governance problem.
- donw 5y agoTurns out that tripling the money supply... increased prices. If only there had been some sort of model or discipline that could have predicted this beforehand.
- e4e78a06 5y agoUnfortunately the party in charge right now is trumpeting the idea that inflation must be because companies are price gouging customers rather than trying to slow down domestic spending. The other party doesn't like to balance budgets either and if the Fed even touches interest rates the market (and everyone's 401k) tanks.
- deleted 5y ago[deleted]
- PaulDavisThe1st 5y ago> Unfortunately the party in charge right now is trumpeting the idea that inflation must be because companies are price gouging customers rather than trying to slow down domestic spending. What is the scope of the evidence that proves that this claim (which, btw, is really not being trumpeted by anyone "in charge") is false?
- legalcorrection 5y agoThe law of supply and demand is what sets prices across an entire economy, not some grand conspiracy by every company to overcharge consumers. Greedy companies might collude in an industry here and there, but that doesn’t cause across the board inflation. And this grand conspiracy argument is the position, at least in part, being pushed by the Democratic Party in the US. It’s actually similar to what flailing governments in third world inflationary economies say too. It’s always the evil capitalists raising prices for no reason but to line their pockets. Ignorant drivel meant to appease ignorant people and deflect blame.
- giantrobot 5y ago
- donsupreme 5y agoSerious question: is Powell just bad at his job or what? Doesn't everyone and their mom's knew high inflation was coming when they shut down the economy, send people checks to flip crypto and GME by running the money printer nonstop?
- jimbob45 5y ago
- willcipriano 5y agoInflation was long before Putin.
- BLKNSLVR 5y agoIf they manage to get it back under control now, then we'll know if they could have gotten it under control post-pandemic. If not, we're all fucked anyway and not many people may care to research the answer to the question. This is why the timing of the invasion is, for want of a better word, "perfect" if you're someone who wants to watch the world burn (assuming that "the world" was primarily the Western World with its heaviest dependence upon "stuff"). As the pandemic appears to be easing, the interest rate hike (first step as a reaction to the inflation problem) a month away. The timing of the invasion was both exquisite and horrendous.
- legalcorrection 5y agoAlso worth noting that no one expected the US to impose sanctions of this severity. Even a month ago, President Biden himself would not have thought we would react this way. But Twitter hysteria struck again and imposing harsher and harsher sanctions—and in the private sector, voluntarily withdrawing from the Russian economy even when sanctions did not require it—became a way to demonstrate your holiness. Rational calculation and self-preservation, out the window. We live in a Twitter world order now. You can tell this was unplanned because back in January, with the invasion looming, US officials said (even if they did not completely mean it) that sanctions would be narrowly targeted to hurt the Russian elite but not the common people. Now, the explicit goal of the sanctions is to cripple the Russian economy and cause mass suffering sufficient to collapse support for the Russian government. If this was the plan all along, we would have said so. Deterrence only works if the other guy sees it coming.
- jimbob45 5y ago>It is a crucial source of wheat Wheat? I’m to believe we can’t grow our own wheat?
- barry-cotter 5y agoIf supply falls prices rise. This is true even if a country is completely self-sufficient. World oil prices determine the price of oil in Norway just as world prices for lamb and mutton determine the price of those meats in New Zealand.
- bryanrasmussen 5y agohttps://www.card.iastate.edu/iowa_ag_review/summer_08/article1.aspx https://www.card.iastate.edu/iowa_ag_review/summer_08/articl... because biofuel production increases, due to governmental incentives in part, food grain production goes down. on edit: I believe this article will probably also make some connections https://news.ycombinator.com/item?id=30681639 https://news.ycombinator.com/item?id=30681639 although have not gone into yet, David Frum arguing to decrease ethanol subsidies as they help Putin.
- randomdata 5y ago1. With some climate consideration, to get the yields you typically want to seed it in the fall, so unless you have a time machine it's a little late to be thinking about growing wheat now for a lot of regions. 2. Protein content is quite sensitive to the climate the wheat is grown in, so assuming you want breads and pastas rather than pastries there are even more challenges in front of you. 3. An acre planted in wheat is an acre not planted in something else, so even if you overcome all of other issues you're just pushing the problem onto another crop.
- deleted 5y ago[deleted]
- rdevsrex 5y agoYeah, let's hope we can produce our own fertilizer, otherwise high prices won't be the only concern.
- bricemo 5y ago“Prices could reach $240/barrel” Eyeballing the historical relationship between Brent crude and gas pump prices, that would mean $9.00/gallon: https://www.macrotrends.net/2501/crude-oil-vs-gasoline-prices-chart https://www.macrotrends.net/2501/crude-oil-vs-gasoline-price...
- 88840-8855 5y agothat's 2.16 eur per liter. is 2.30 per liter here in Europe now. don't worry, I'm sure you can pay it. we can pay it, too.
- pageandrew 5y agoAmericans are more reliant on driving than Europeans.
- Gigachad 5y agoThey might be forced to restructure if this goes for long enough.
- lancebeet 5y agoThere's a significant difference. American society is largely built around the use of cars. Large parts of the US are unlivable without a car. In Europe, this is much less common.
- meheleventyone 5y agoAmericans also drive much less fuel efficient cars in general?
- radicalbyte 5y agoThe UK is exactly the same for people not living in the big cities. Same thing for France. Same thing for the North/East of The Netherlands (where I live). The difference is that we also tend to drive more efficient vehicles.
- oxff 5y agoThe west has this weird idea that destroying its living standards is the way to support Ukraine and combat Russia. My guess: won't happen. Russia won't change its course, but I will be paying 5e per liter of gas in september, all in name of some "democracy, freedom" in Ukraine. Supremely delusional state of affairs.
- epistasis 5y agoThis isn't just about Russia and Ukraine, it's also about China and Taiwan and Russia and what Russian imperialists call the "little russias." Greater instability has far greater risks to your pocket book than some short term concern of tiny rises in fossil fuel costs.
- thriftwy 5y ago"Little russia" is not a condescending term, it's more like "asia minor", or "new york city" vs. "greater new york area".
- agapon 5y agoAccording to whom? I am a Ukrainian in Ukraine. Not Little Russian in Little Russia.
- epistasis 5y agoI've only encountered it through two lenses: 1) non-Russian people taking offense to their land being called a "little Russia", and 2) imperialists in Russia using it to encourage invading other countries. It might be used by some who don't consider it condescending, but many of those on the receiving end do consider it an insult. So, issuing a blanket "not condescending" can not be considered correct
- runeks 5y agoNo, the idea is that destroying the living standards of Russians will achieve peace — which is also highly questionable.
- mise_en_place 5y agoI think what will really blow the top off of the CPI and inflation numbers are if the dollar loses reserve currency status. Right now inflation is relatively contained because everyone piles into USD as a safe haven asset, which allows the US to purchase a lot of imports since the dollar is strengthening when that happens.
- echelon 5y ago> I think what will really blow the top off of the CPI and inflation numbers are if the dollar loses reserve currency status. How likely is that to happen this decade?
- nostromo 5y agoThe risk seems overblown. Mostly because nobody trusts China either, which has as many economic and political problems as does the US, if not more. Russia just doesn’t have enough power to move global markets. Its economy is smaller than Texas’, and is rapidly shrinking.
- akmarinov 5y agoRussia doesn’t have enough power to move global markets, yet here we are with all time high gas prices and inflation.
- jjeaff 5y agoWe actually don't have all time high gas prices, at least not yet. They were higher pre-2008 crash when adjusted for inflation. Which is the only price that matters. After all, we also have all time high average income right now as well.
- poilcn 5y agoCalifornia is supposed to be fifth economy in the world. You can use software produced in California under sanctions by ignoring intellectual rights. This wouldn't work with physical goods. You can't replace oil from one source with oil from another. Deficit of some resource chokes production of things that depend on this resource. And it's a chain reaction.
- StanislavPetrov 5y agoHigh prices were here before the war in Ukraine (one of numerous global wars underway, despite what you'd believe if your only source of information was legacy media) which started only a few weeks ago. Our incompetent response will certainly make things worse, but soaring inflation was already here to stay regardless of the situation in Ukraine.
- blitzar 5y agoCPI inflation for the 12 months to feb was 7.9% - Ukraine invasion happened in March... Did people not notice the price of everything going up?
- k__ 5y agoI just read that the prices aren't high all over the world. Which implies someone is just using the war to profit.
- nradov 5y agoPrices are high all over the world except for countries where governments subsidize the price of fuel, or impose price controls. Those are populist measures which can't usually be sustained. Either the cheap fuel gets smuggled out leading to shortages, or the government runs out of foreign currency reserves.
- tamaharbor 5y agoIn the US, the Fed would normally combat inflation by increasing interest rates. Why have they not done that to any extent this time?
- blitzar 5y agoThe Federal Reserve is widely expected to start raising interest rates this week to help tame inflation. And expected to do so 4 more times this year.
- tamaharbor 5y agoBetter late than never, I guess.
- blitzar 5y agoThe fed is reactive not proactive - the thing that the "everyone knew there would be inflation" crowd dont mention; everyone knew there would be runaway inflation every year since 2008 and now they are a f'ing Nostradamus for getting it right on the 14th go.