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White House warns of 'extraordinarily elevated' March inflation

76 points by memish 5y ago

coolso 5y ago
Can someone fact check the “Putin price hike” angle or are all the debunkers on vacay this administration? I do recall months and months of extremely high inflation and gas prices $1.50/gal more than they were two years ago, prior to any “Russian interference” in our economy via the war in Ukraine. Is the media really going to let Biden get away with this? Because I don’t think anyone in the real world is really buying it.
- thomascgalvin 5y ago
  Putin is partially responsible, but it seems like we're in a perfect storm of price increases. The entire supply chain was disrupted by COVID, and we still haven't fixed all of it. That is almost certainly a bigger factor than the invasion of Ukraine.
  - mistrial9 5y ago
    can we just get rid of the obvious "scapegoating" and look at the real, actual causes?
  - cudgy 5y ago
    What about the Biden administration itself being responsible for cornering Putin with talk of Ukraine joining NATO, which Putin stated many times was a red line. Furthermore, US had agreed to not push NATO farther east, but its actions were in complete opposition to that agreement. Biden administration has cornered themselves as well into an unnecessary conflict with little chance of an exit ramp. Dangerous stuff.
    - supertrope 5y ago
      Comrade when you egregiously break your promises you cannot expect others to keep acting the same way toward you. https://www.journalofdemocracy.org/what-putin-fears-most/ https://www.journalofdemocracy.org/what-putin-fears-most/
      - cudgy 5y ago
        “The more serious cause of tensions has been a series of democratic breakthroughs and popular protests for freedom throughout the 2000s, what many refer to as the “Color Revolutions.” Putin believes that Russian national interests have been threatened by what he portrays as U.S.-supported coups. After each of them—Serbia in 2000, Georgia in 2003, Ukraine in 2004, the Arab Spring in 2011, Russia in 2011–12, and Ukraine in 2013–14—Putin has pivoted to more hostile policies toward the United States, and then invoked the NATO threat as justification for doing so.” “These episodes of substantive Russia-NATO cooperation undermine the argument that NATO expansion has always and continuously been the driver of Russia’s confrontation with the West over the last thirty years.” The article you linked is all over the place with its reasoning. How does it reconcile the two above points? There is a great deal of hand waving with a sole focus on democratic models of government…sounds straight out of the CIA playbook that attempted to justify the US tangled up in so many conflicts for the sake of democracy. Also, who said NATO expansion has always been the driver of confrontation? And finally, Ukraine is and has been a far cry from an independent democracy. It is a fractious country that has clear divisions of tribal and ethnic conflict. Their elections and politics have been heavily influenced by Russia and the United States. Biden has been at the center of heavy US influence in a huge country that has been the source of many wars against Russia for centuries. Ignoring the perspective of Russia and only focusing on democracy is critically short-sighted.
- jawilson2 5y ago
  How is President Biden affecting inflation and gas prices in, e.g., Europe? Crude futures were in line with pre-pandemic prices in early 2022, then they spiked in March. Along with Ags and Nat Gas futures.
  - RspecMAuthortah 5y ago
    President Biden may not, but Fed certainly is. Remember with the eurodollar system, Fed's role at this point is pretty much a liquidity provider for anyone and everyone which they did with unconditional access to swap lines etc. since April 2020 injecting trillions of dollars of liquidity into the system. The inflation we are seeing right now is largely a by-product of that. Fed with its utterly irresponsible course of acts over the past two years is directly responsible for this crisis. Their choice at this point is doomed to crash the US economy with recession if they want to do anything measurable to fight inflation. Which if they end up doing, will largely invalidate their mandate of full employment and thus the validity of their existence. With regards to President Biden, he will have to be held responsible for applying all out sanctions which have not been able to achieve their objectives. If the goal of the sanctions was to stop the war, that has not happened in last 45 days. We don't know how difficult life has been for the average Joe in Russia from those sanction bites due to the censorship in media in both west and Russia. It certainly has however affected the life of the average Joe here and not for good. But, we are told this is at the expense of our moral victory.
    - somewhereoutth 5y ago
      Not to stop the war, but to degrade Russia's ability to prosecute it and any future aggression. We should be doing everything that stays short of the nuclear trigger to destroy Putin's war machine.
      - brimble 5y ago
        That right there. Sanctions like this are meant to make prosecuting a war more expensive, so make ending the war more appealing, but also to make it harder to recover from e.g. battlefield losses of equipment, and to otherwise make further military buildup slower and more difficult, if the war keeps going for any length of time. In a case like this, they're not just "to stop the war", at least not immediately, even if that would be considered a great outcome. They haven't necessarily failed if they don't bring a swift end to the war, even if that'd be considered ideal.
- memish 5y ago
  Fact check: Mostly false. Inflation and overall cost of living (housing anyone?) has been increasing significantly for over a year prior to the invasion.
  - abvdasker 5y ago
    In retrospect it looks like wishful thinking, but for a while I held out hope that the transition to white collar remote work during COVID would be permanent so all that empty office space could be converted into residential. Might have gone a long way towards addressing inflation and the housing crisis, but I guess we'll never know what could have been.
    - thaumasiotes 5y ago
      > so all that empty office space could be converted into residential What would be the point? The residential demand is only there because that's where the offices are.
      - cudgy 5y ago
        Cities are more than just offices and work centers.
        thaumasiotes 5y ago
        Yes, they're also a bunch of support services for the offices and work centers. But the support has no reason to exist without the offices. The offices are the cause, and everything else is the effect.
        cudgy 5y ago
        The chicken or the egg? Without people nearby, you’ll have no offices/jobs. Without jobs, you’ll have no people is your argument. I prefer the former cause and effect as more plausible mainly due to simple financial returns. Who is going justify from a financial returns perspective building an office where there are few people? Nowadays offices are even less impactful with technology and a worldwide, scattered workforce facilitating working in homes and/or smaller satellite offices. Large, central office hubs are in big trouble.
- AnimalMuppet 5y ago
  Well, where I am gas is $1/gal higher than it was in March. That's down to Putin/Ukraine/sanctions and all that. That's going to show up in as a big inflation bump. Now, inflation was up before that, definitely, in a way that it hadn't been since 2008. But it got a bit spur from Putin's non-war war.
  - naoqj 5y ago
    It’s down to sanctions only.
- outside1234 5y ago
  It sort of a perfect storm from where I sit: * Trump tax cuts contribute to deficit and demand * COVID stimulus contribute to deficit and demand * COVID causes supply shortages, with same demand, so therefore higher prices (see markups on cars). * Putin has to go and make it worse with an invasion, pushing up energy costs, which are part of the cost of everything.
- vmception 5y ago
  They're all levers, interconnected. Pull one lever and many others are slightly tugged as well. "Putin Price hike" is just alliteration, its not scapegoating everything on Putin, its reducing the expected constriction of energy on the market to the geopolitical catalyst in response to Putin's actions. This constriction is not nearly as heavy as it could be, with mostly just a few large US/EU private sector companies choosing not to trade Russian oil and gas right now. The oil and gas is not sanctioned right now. Even this explanation is the beginning of a dissertation that will be irrelevant in a few weeks, so it might make more sense why a reductive 3 word phrase is chosen. Of course they're going to get away with this. It is politically unfavorable to say "our actions rose gas prices". If the media is operating in your favor just go for it. If you wanted an indication that some actual humans understood the doublespeak, well now you know that I do, and largely don't care. I follow the macroeconomic environment pretty closely, politicians are a lever too. Where I'm currently at is that Biden/the US taking action to try to flood the market with their oil reserves and bring down prices is going to be mostly show, as the oil reserves will just need to be topped up again and very quickly. So this means supply and demand for oil has not changed at all, not even in the near term. The market via oil prices is still digesting what the price should be in light of Russian's actions and has not finished even doing that, with an initial overreaction (margin call) and just settling in the $93/barrel range for now. I don't think US oil reserves, for example, is having any effect on that. Just a small tangent to show how I think, in light of political speak which I consider benign and not relevant enough to be as passionate about as you are.
- exabrial 5y ago
  > or are all the debunkers on vacay this administration On vacation unfortunately. Even HNrs appear married to their political parties.
- azth 5y ago
  They're using him to scapegoat their incompetencies. Everyone with an ounce of critical thinking was able to see that money printing will cause this. "Transitory inflation" yeah right.
- zthrowaway 5y ago
  Mostly false. These trillion dollar spending bills have caused this.
- skippyboxedhero 5y ago
  The US isn't really exposed to Russian gas prices. Nat gas prices are pretty low in the US, although converging with global prices as the US exports grow, because of fracking. Food prices are up, but not to a huge extent. The noticeable thing in the US, relative to the rest of the world, is the level of fiscal and monetary stimulus. This wasn't only Biden, it was thrown into the economy at a time of significant supply shortages and when people were suddenly accumulating large cash balances. It is a crazy situation. Obviously, prices will rise and soak up all that excess demand but: inflation near 10%, interest rates 1%...wow, it is impossible to look at that and conclude anything other than politics has totally debauched monetary policy. It is also entertaining to go back and read the views of some people (the usual candidates) who were loudly insisting that inflation wasn't going to rise, then that is would be temporary, then that is was due to Putin...this should impress upon the public that economists don't know better, they have no credibility (extraordinary given that the economic logic has dictated policy for close to three decades, they were regarded as omnipotent by politicians).
- UncleOxidant 5y ago
  Inflation was baked in even prior to the pandemic. Biden bears little blame here. The previous president was starting trade wars that were already starting to blow up supply chains even before covid. The Fed with it's years of loose money policy, the previous president (who, in addition to trade wars, also blew up the deficit at a time when it should have been reduced) and of course covid deserve most of the blame. There's not a whole lot Biden can do to stop this inflation, it's up to the Fed but I doubt they'll take decisive enough action. These puny 1/4% rate increases aren't going to do anything anywhere near fast enough. We need to take the medicine that Dr. Volcker would prescribe were he here.
Qw3r7 5y ago
"Calling it the "Putin price hike," Psaki said she expected to see "a large difference" between headline inflation and "core" CPI, which excludes volatile food and energy prices. Economists say the annual inflation rate could be close to 8.5 percent, the highest seen since late 1981. According to the median forecast of analysts, monthly CPI growth will accelerate to 1.2 percent compared to February when the gain was 0.8 percent rate, while core CPI will remain unchanged at 0.5 percent.,, So its energy and food then I guess based off of this statement alone.
- idiotsecant 5y ago
  >which excludes volatile food and energy prices. Oh good, so just the things I buy, then.
- thomascgalvin 5y ago
  Well good thing I don't need energy or food. Wait...
- dragonwriter 5y ago
  The core CPI is broken out because energy and food have high short term volatility, so core usually better represents longer-term factors, but as long as the war & sanctions continue and (especially for food) for some time after food and energy are going to be problematic, so the core breakout is probably at a low point in relevance.
nitinagg 5y ago
Populism (from both sides) is going to destroy this economy
- rayiner 5y ago
  How exactly is “populism” to blame?
  - imapeopleperson 5y ago
    Populism blinds the public from understanding the true root cause of our problems and therefore destines our solutions to fail. In this case, the populism is Biden’s admin labeling inflation as the ‘Putin Price Hike’. This completely ignores the possibility that the American Rescue Plan Act of 2021, $2 Trillion in stimulus that’s largely already spent, could’ve contributed to inflation also. This leaves us vulnerable to repeat our mistakes when making future policy decisions - like whether to waive all student debt.
    - jjtheblunt 5y ago
      I wonder if anyone hears Psaki or others say "Putin Price Hike" without thinking "a bunch of lying politicians" since Putin's craziness came long after the printing of money.
      - encryptluks2 5y ago
        All they care about is radicalizing their voter base.
      - LightG 5y ago
        Obviously it's both, and then some ...
    - LightG 5y ago
      The problem is an electorate often only willing/able to absorb three-word-slogans.
    - 5y ago
deleted 5y ago
[deleted]
tomjen3 5y ago
Funny: you always hear about large price hikes due to this or that. You rarely hear that because of this or that event prices have gone down.
- jihadjihad 5y ago
  My guess is this is more a consequences of many prices in the economy exhibiting "rocket and feather" [0] behavior: quick to rise, slow to fall. 0: https://en.wikipedia.org/wiki/Asymmetric_price_transmission https://en.wikipedia.org/wiki/Asymmetric_price_transmission
- Barrin92 5y ago
  because that's boring to report on. Effectively anything that has been digitized has practically collapsed in price. Newspaper, books, movies, music, and so on. Ask your dad what he paid for records compared to your Spotify subscription.
  - troon-lover 5y ago
    You dont own anything on Spotify, and the songs can be removed at any time. You can also be removed at any time. Ownership and records are still just as expensive today. Renting is just a new option
    - harambae 5y ago
      Not really the point of this post I'm aware, but "Downtify" https://github.com/Igglybuff/awesome-piracy#spotify https://github.com/Igglybuff/awesome-piracy#spotify
- skeeter2020 5y ago
  See: the price of gas at the pump. The one exception that lead to a mild reduction was shutting down the entire world, everything else is explained by this perfect linkage between crude increasing a few penny on the barrel leading to an increase at the station.
ren_engineer 5y ago
you know it's bad if they are already trying to get out in front of the numbers with propagandized slogans to shift blame the real irony is people saying this is evidence we need to shift to "green energy", when almost all the key components for that come from China rather than Russia. Even if we make the shift, the end result will be the same in 20 years where China has huge leverage due to countries being reliant on them for energy
- naravara 5y ago
  With renewables it's more fixed capital instead of a direct supply of literal energy in the form of fuel. That's less of an immediate dependency than it is with oil. Capital does depreciate over time, but ebbs and flows of international prices offer more room for short-term elasticity in demand (people can delay upgrading or replacing equipment). It's also got lower barriers to entry so dependency can be a policy choice (reversible in the medium term) rather than a simple fact of geology the way fossil fuel dependency is.
- inetknght 5y ago
  Fortunately, depending on your perspective, 20 years is plenty of time to not only switch to renewable energy but also to bring back the manufacturing jobs that make the components for renewable energy. But good luck (literally) selling that to American companies who have to pay those factory salaries.
- sbierwagen 5y ago
  Solar panels aren't burned for power. If the US manages to transition to 100% solar, but then China cuts off exports, then we're still at 100% solar. It will just be more expensive to add more capacity or replace damaged panels. Annoying, but not oil-embargo level bad.
  - 20after4 5y ago
    Solar panels have a very limited life span. Damage isn't the only concern by far. Their output drops proportional to their age.
nimbius 5y ago
sadly my original nihilist prediction of 10%+ inflation by Q4 is starting to seem more meritous every month. the efforts to incept quantitative tightening as of April are...bad comedy. The federal reserves one quarter of one pecent increase of the prime interest rate is a performance art. it has absolutely no ability to control inflation in any context. The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. the honeymoon from last december of downplaying the issue as 'transient' inflation is over. Unchecked inflation and sky high gas prices have the very real potential to defenestrate whole sectors of the US economy predicated on summer travel and spending. other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. this isnt solely foreign policy to blame. its a QE addiction stretching all the way back to 2008 the fed has tried and failed to treat.
- AnthonyMouse 5y ago
  > other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. Neither of those fix it. Most people don't make minimum wage; the 25th percentile wage is already $15/hour and all of those people are paying higher prices. Which increase even more if you raise the minimum wage and require that cost increase to be priced into goods and services. Works projects reduce unemployment. Unemployment is already very low. That's not the problem so that's not the solution. > The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. The real solution is a little weird. There are two real problems. a) People can't afford consumer goods (short term). b) Asset bubble inflated by low interest rates (long term). It's actually the second one that contributes to the first. High housing prices etc. relative to wages increase real cost of living. But what do you want to do, pop the bubble by raising rates? What we need is for nominal asset prices to stay where they are but for interest rates to go up. So how do you keep the bubble from popping while raising interest rates? Put money into it from somewhere else. Send people checks. That will cause inflation to counteract the effect of higher interest rates on nominal asset prices, but this time the beneficiaries of the policy are the people who get the checks (i.e. everybody) instead of the holders of speculative assets. So nominal asset prices stay the same and nominal non-asset prices (consumer goods and wages) go up. But people have the checks to cover that in the short term and long term we finally get out of low interest rates and high housing costs relative to wages.
belval 5y ago
So what's the solution to shield my money from this insane level of inflation? Is there something I can do?
- redmen 5y ago
  Diversify slowly for the next time around. Or go all in on Alibaba
- KarlKemp 5y ago
  Spend it to make your life more energy efficient.
- daxelrod 5y ago
  Series I savings bonds are designed to track inflation. https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm https://www.treasurydirect.gov/indiv/research/indepth/ibonds... . I only recently became aware of them and I am not qualified to give financial advice, so I have no idea if they actually accomplish this well.
  - UncleOxidant 5y ago
    They're doing pretty well at this point as they're paying 7.12%. Likely at the rate reset in May they'll pay that much or more for the next 6 months. Only downside is you can only put in $10k/year. If you have a spouse then you can put in $20K/year. Another nice thing about them is that the interest is state-tax free so if you live in a state with income tax it's an added bonus.
    - twblalock 5y ago
      The other big downside is you can't get the money out for one year. After that, they are basically liquid.
      - UncleOxidant 5y ago
        Not a huge downside, really. CDs are similar.
rednerrus 5y ago
Won't the bullwhip effect create some deflationary pressure? I'm already starting to see weird ads for sales from companies that NEVER have sales.
somewhereoutth 5y ago
Interest rates need to return to 5% (perhaps more temporarily). Of course this will trigger an asset price collapse. Fiscal policy should then be used to ensure that it is the rich who carry the burden, to result in a society with a fairer distribution of wealth.
- exabrial 5y ago
  > a fairer distribution of wealth This is such a stupid assertion that keeps getting repeated. The sum of free choices is a fair distribution. People aren't getting robbed at gunpoint; they're _giving_ their wealth to the rich. Bezos is a zillionaire because people literally gave him all his money_.
  - sschueller 5y ago
    Sorry but that is inaccurate. The deck is stacked in favor of Bezos and others. Your choice to not buy from Amazon is rapidly decreasing when alternatives just can't complete in an unfair market. People are giving their money to Amazon or Walmart because they have no alternatives left or can't afford what alternatives still exist.
    - exabrial 5y ago
      The deck is stacked for every American or western country. If you're posting on HN, you likely live an extraordinarily privileged life compared to the vast majority of earth's population. Instead of complaining about Bezos, how about you ask yourself what you're doing to help those in need?
  - dotopotoro 5y ago
    Definition of “fair” is similar to definition of “random”. Both terms are very ambiguous, unless qualification is provided. Random variables can have many distributions e.g. Poisson, Gaussian, uniform. I don’t know names of categories of “fairness”, but clearly you and GP have different meanings for the same word. On one end of the spectrum seems to be: “fair == same end result” -> effort and luck should not matter, not in the slightest. On the other end of the same spectrum: “fair = same system/rules” -> you could have racketeered more people to get more money and bought a bigger gun to stay alive. Both definitions of “fair” are equally valid, the choice of the definition is subjective.
azth 5y ago
Can assets and stocks go back up please?
- rhexs 5y ago
  You’re in for a bumpy ride. Normally the advice is to buy bonds if you’re risk averse, but the government got those into a nice bubble as well with QE.
  - dopamean 5y ago
    Averse*
- Ekaros 5y ago
  Have they been down recently? I mean reasonably down...
andrewla 5y ago
Unpopular opinion -- in the US, inflation is necessary. My feeling is that we have been in an immensely inflationary regimen in many ways for a long time. We see that in the money supply, and we see it in the credit market and the capital markets in general -- too much cheap capital. This manifests in many unhealthy ways. The core problem is that we have been playing games to hide inflation. Outsourcing has allowed us to hide the general inflation of almost all sectors with deflation in electronics and consumer goods. Lax antitrust and "consumer rights" has pushed heavy discounting and loss-leading into the forefront, which means that plentiful capital can cause prices to appear low by shifting them to other sectors. If we enact important policy changes to antitrust, trade, labor, and climate, there will be inevitable increases in prices, because there's a reason that we're buying all of our consumer goods from China. Hedge funds and private equity and investment banks have huge amounts of capital from loose monetary policy, and they use that to create situations that drive down prices and drive up equity prices, which they unload on huge index funds with consumer funds driven by vast government incentives, and once they manipulate the price up high enough the mark-to-market of their holdings unlocks the ability to access even more capital for this cycle. Teams of economists work constantly to ensure that our macroeconomic metrics balance out so that we get increasingly useless measures of "productivity" or "GDP" or frankly even "inflation". All we are seeing now is that we are running out of ways to hide inflation.
- shostack 5y ago
  Is there a visualization of this anywhere? Do you see this as how the money people have invested in index funds (bogleheads and whatnot) gets "harvested?"
- nukemaster 5y ago
  Asset price inflation is more or less eating the children. None of the younger people can afford to live on their own which means keeping the same production requires civilization destroying high rates of immigration (and even that isn't really working.) It doesn't really matter now, it's way way too late to fix but these two things will more or less end the US, it's how most of the large Western empires ended.
zthrowaway 5y ago
I’m shocked there’s no blame being put on the trillion dollar spending bills that have been passed the last two years. But of course that would make politicians responsible. Our government spending is out of control and mostly to blame for all of this. Putin is not the root cause, and if you believe that then you are a victim of propaganda.
- exabrial 5y ago
  Thank you. This is the only correct answer in this entire thread. If you spend $100T, only have $1T, and print the rest using make believe dollar bills, what do you expect to happen? There's literally not enough capital in America to pay for what the congress is signing checks for.
- t0bia_s 5y ago
  Narration to justify crisis. Yes, that is what I can see in Europe too. Prices of energy was rising around 3 months before invasion, overall prices are rising since 2021. And now we should believe that it is because of Putin. And if you are not agree, then you are supporting invasion and consuming Russian propaganda. This is ridiculous.
- croutonwagon 5y ago
  I think most individuals keyed in and paying attention have been aware and saying this since the original stimulus under Trump. And at the time it was "yes inflation will be an outcome, but it may be better than burning it down in the short term". Most anyone I spoke with that had even a basic "macroeconomics 101" level of understanding or took any time to manage their own investment portfolio said this. But then it came time to put the meat in the with potatoes. And there was little, if any, oversight in the distribution. A LOT of money was handed out to both individuals and companies that frankly didnt need it. And then the Biden admin added more and more. Most that i recall seemed shakey at the prospect initially but understanding of the urgency of action. And outright offended at the implementation/outcome, and then viewed it as ludicrous with the follow ups. These are largely the results coming home to roost. But agian, those were not the majority or even a vocal minority that i saw. You know how many on certain sites will be outright certain xyz is how the masses view something (ie: an election) and then when the actual results come in everyone is shocked and just states that the differing viewpoint is stupid and gross. Well it seems those individuals got their way this time, and even now possibly haven't realized how shortsighted their viewpoints were and still arent connecting the dots.
mimikatz 5y ago
I wonder if those Modern Monetary Theory people will start pushing to increase taxes to combat inflation.
- sundaeofshock 5y ago
  I’m one of those people and I would be happy to see the Trump tax cuts rolled back. Further, I’m a huge fan of a windfall profits tax.
- legitster 5y ago
  Modern Monetary Theory is effectively dead. The problem is that millionaires and billionaires consume the same amount of toilet paper as us. Taking away money from them doesn't actually change the upwards price pressure on a roll. You actually have to tax away money from consumers for it to have any work combating inflation - I would like to see who can possibly sell raising taxes across the board as a way of fighting inflation.
- dragonwriter 5y ago
  > I wonder if those Modern Monetary Theory people will start pushing to increase taxes to combat inflation. Probably, but (1) MMT support among people with any political relevance is already in the faction known for supporting higher taxes, and (2) no one listens to the people who support MMT, anyway.
oh_sigh 5y ago
I'm just impressed they're blaming it on Putin and not the previous administration.
- mythrwy 5y ago
  Well, to be fair they blamed the previous administration on Putin as well.
  - oh_sigh 5y ago
    That's one of the democrat's talking points that didn't really hold up well. If Putin really had kompromat on Trump, why wouldn't Putin take Ukraine during Trump's presidency?
    - beeboop 5y ago
      Trump kept in place the Magnitsky Act, which targeted high-ranking Russians with sanctions. His administration also put new sanctions on five Russians and Chechens over human rights abuses, and it approved lethal arms sales to Ukraine. Trump also signed a bill in August 2017 that targeted Russia’s energy and defense sectors with sanctions, and put into place sanctions that affected the Nord Stream 2 pipeline. Yet somehow people accuse Trump of being Putin's puppet. Doesn't add up to me.
      - TMWNN 5y ago
        >Trump kept in place the Magnitsky Act, which targeted high-ranking Russians with sanctions. His administration also put new sanctions on five Russians and Chechens over human rights abuses, and it approved lethal arms sales to Ukraine. Trump also signed a bill in August 2017 that targeted Russia’s energy and defense sectors with sanctions, and put into place sanctions that affected the Nord Stream 2 pipeline. Don't forget incessantly pleading with European NATO members (in the unique Trump manner of "pleading") to raise their defense spending to the sky-high level of ... 2% of GDP that all NATO powers have been supposed to be spending all along. I got a good laugh from a video I saw from a European aviation YouTube content creator, discussing countries falling over themselves boosting their spending after the current war started, in which he went out of his way to chastise viewers who had the foolish notion that Trump might have been in any way right. Also, keeping up and accelerating the training/arming of Ukraine that began under Obama after Russia took Crimea/eastern Ukraine in 2014. There's been tons of media coverage of how Ukraine totally remade its tactics and training on Western models post-2014, and how much of a difference that has made in the current war, but curiously little analysis of the common-sense observation that having all of this happen post-January 2021 is impossible. >Yet somehow people accuse Trump of being Putin's puppet. Doesn't add up to me. One might even conclude that the allegations of Putin's insidious influence on US politics/media are correct ... but that the message said influence backs has always been misdescribed. Might.
twblalock 5y ago
This should be the nail in the coffin for UBI. The consumer demand created by the last round of stimulus is nothing compared to what UBI would create, and that stimulus is clearly a contributor to the inflation we have been seeing since last year. Larry Summers was right about the stimulus and the Fed, and quite a lot of the economists who missed this are guilty of wishful thinking. They let their political preferences blind them to the consequences of the stimulus package. Larry Summers is right about UBI too.
- aaomidi 5y ago
  Are you aware of the huge wealth transfer that happened due to the PPP loans that a lot of them have been forgiven? The best thing is, the database is public. I know so many people who got dozens to hundreds of thousands of dollars and got it forgiven by the govt. The stimulus is a distraction. We had the largest wealth transfer from the working class to the rich during the pandemic and they've got us squabbling about the small stimulus checks.
  - boppo1 5y ago
    Link to the database? Is there an api or documentation?
    - aaomidi 5y ago
      https://projects.propublica.org/coronavirus/bailouts/ https://projects.propublica.org/coronavirus/bailouts/
  - harambae 5y ago
    Yeah, I checked on that website and my (somewhat shady) friend somehow got $42k PPP money, his wife got $41k and his mom got $40k. None of them have businesses or employee paychecks of any kind to protect. I do wonder how common this is and if any of them will actually have to pay this back ever. (I also feel like a little bit of a sucker working for a living...)
    - 5y ago
legitster 5y ago
The war excuse is bizarre and inaccurate. "Inflation is always and everywhere a monetary phenomenon" M2 has been increasing at an unprecedented rate: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL If you don't solve this you don't solve inflation.
- IAmEveryone 5y ago
  The jump in 2020 is explained by a footnote saying that the definition was broadened in May of that year. Other than that, the rate is unprecedented in absolute terms only in the way that any chart of exponentional growth will always be.
- Brycee 5y ago
  in the late 70s the politicians also blamed OPEC for inflation. which was also bullshit.
- nathanaldensr 5y ago
  Absolutely no one believes this has anything much to do with Putin, Russia, or Ukraine. Congress' spending is out of control. The Fed's 20-year low interest rate policy is finally coming home to roost.
sudden_dystopia 5y ago
It has already been “extraordinarily elevated” because the money supply has been “extraordinarily elevated. This is accelerating inflation. That’s going to be a problem. They can call it the Putin price hike all they like but the invasion only made the situation worse. This is 100% poor monetary policy and a Fed that is painted into a corner. Buckle up.
memish 5y ago
Volcker raised rates to almost 20% to break inflation in the 70s. But that's when debt was low and we were able to service it. Now that debt is high, how much can the Fed actually increase rates? Are they out of options?
thrill 5y ago
Congress should be directing monthly increases to SS to match inflation numbers. Instead they'll wait and see which party can promise they'll do just that better than the other party if they get the votes.
- deleted 5y ago
  [deleted]
- dragonwriter 5y ago
  > Congress should be directing monthly increases to SS to match inflation numbers Post-retirement SS benefits are tied to inflation, but in occur annually. (Retirement baseline is adjusted pre-retirement by a wage index, rather than inflation.)
  - thrill 5y ago
    Yeah, I could have been clearer. It should be done monthly since it affects people immediately.
- zthrowaway 5y ago
  And where's the money going to come from for that? We are in this mess because we are printing money out of thin air, artificially increasing the money supply without the output to match. What you propose continues to amplify the root cause.
xtracto 5y ago
This smells a lot of 1980s global recession: https://en.wikipedia.org/wiki/Early_1980s_recession https://en.wikipedia.org/wiki/Early_1980s_recession Energy crisis due to international conflicts Inflation getting higher than 7% Increased interest rates I wonder how far will this get in the coming years
mark_l_watson 5y ago
If I understand this correctly, inflation hurts working people and a recession hurts Wall Street. If this is correct, I expect to see huge efforts made avoiding a recession and caring much less about inflation.

76 points by memish 5y ago

Can someone fact check the “Putin price hike” angle or are all the debunkers on vacay this administration? I do recall months and months of extremely high inflation and gas prices $1.50/gal more than they were two years ago, prior to any “Russian interference” in our economy via the war in Ukraine. Is the media really going to let Biden get away with this? Because I don’t think anyone in the real world is really buying it.

thomascgalvin 5y ago
Putin is partially responsible, but it seems like we're in a perfect storm of price increases. The entire supply chain was disrupted by COVID, and we still haven't fixed all of it. That is almost certainly a bigger factor than the invasion of Ukraine.
- mistrial9 5y ago
  can we just get rid of the obvious "scapegoating" and look at the real, actual causes?
- cudgy 5y ago
  What about the Biden administration itself being responsible for cornering Putin with talk of Ukraine joining NATO, which Putin stated many times was a red line. Furthermore, US had agreed to not push NATO farther east, but its actions were in complete opposition to that agreement. Biden administration has cornered themselves as well into an unnecessary conflict with little chance of an exit ramp. Dangerous stuff.
  - supertrope 5y ago
    Comrade when you egregiously break your promises you cannot expect others to keep acting the same way toward you. https://www.journalofdemocracy.org/what-putin-fears-most/ https://www.journalofdemocracy.org/what-putin-fears-most/
    - cudgy 5y ago
      “The more serious cause of tensions has been a series of democratic breakthroughs and popular protests for freedom throughout the 2000s, what many refer to as the “Color Revolutions.” Putin believes that Russian national interests have been threatened by what he portrays as U.S.-supported coups. After each of them—Serbia in 2000, Georgia in 2003, Ukraine in 2004, the Arab Spring in 2011, Russia in 2011–12, and Ukraine in 2013–14—Putin has pivoted to more hostile policies toward the United States, and then invoked the NATO threat as justification for doing so.” “These episodes of substantive Russia-NATO cooperation undermine the argument that NATO expansion has always and continuously been the driver of Russia’s confrontation with the West over the last thirty years.” The article you linked is all over the place with its reasoning. How does it reconcile the two above points? There is a great deal of hand waving with a sole focus on democratic models of government…sounds straight out of the CIA playbook that attempted to justify the US tangled up in so many conflicts for the sake of democracy. Also, who said NATO expansion has always been the driver of confrontation? And finally, Ukraine is and has been a far cry from an independent democracy. It is a fractious country that has clear divisions of tribal and ethnic conflict. Their elections and politics have been heavily influenced by Russia and the United States. Biden has been at the center of heavy US influence in a huge country that has been the source of many wars against Russia for centuries. Ignoring the perspective of Russia and only focusing on democracy is critically short-sighted.
jawilson2 5y ago
How is President Biden affecting inflation and gas prices in, e.g., Europe? Crude futures were in line with pre-pandemic prices in early 2022, then they spiked in March. Along with Ags and Nat Gas futures.
- RspecMAuthortah 5y ago
  President Biden may not, but Fed certainly is. Remember with the eurodollar system, Fed's role at this point is pretty much a liquidity provider for anyone and everyone which they did with unconditional access to swap lines etc. since April 2020 injecting trillions of dollars of liquidity into the system. The inflation we are seeing right now is largely a by-product of that. Fed with its utterly irresponsible course of acts over the past two years is directly responsible for this crisis. Their choice at this point is doomed to crash the US economy with recession if they want to do anything measurable to fight inflation. Which if they end up doing, will largely invalidate their mandate of full employment and thus the validity of their existence. With regards to President Biden, he will have to be held responsible for applying all out sanctions which have not been able to achieve their objectives. If the goal of the sanctions was to stop the war, that has not happened in last 45 days. We don't know how difficult life has been for the average Joe in Russia from those sanction bites due to the censorship in media in both west and Russia. It certainly has however affected the life of the average Joe here and not for good. But, we are told this is at the expense of our moral victory.
  - somewhereoutth 5y ago
    Not to stop the war, but to degrade Russia's ability to prosecute it and any future aggression. We should be doing everything that stays short of the nuclear trigger to destroy Putin's war machine.
    - brimble 5y ago
      That right there. Sanctions like this are meant to make prosecuting a war more expensive, so make ending the war more appealing, but also to make it harder to recover from e.g. battlefield losses of equipment, and to otherwise make further military buildup slower and more difficult, if the war keeps going for any length of time. In a case like this, they're not just "to stop the war", at least not immediately, even if that would be considered a great outcome. They haven't necessarily failed if they don't bring a swift end to the war, even if that'd be considered ideal.
memish 5y ago
Fact check: Mostly false. Inflation and overall cost of living (housing anyone?) has been increasing significantly for over a year prior to the invasion.
- abvdasker 5y ago
  In retrospect it looks like wishful thinking, but for a while I held out hope that the transition to white collar remote work during COVID would be permanent so all that empty office space could be converted into residential. Might have gone a long way towards addressing inflation and the housing crisis, but I guess we'll never know what could have been.
  - thaumasiotes 5y ago
    > so all that empty office space could be converted into residential What would be the point? The residential demand is only there because that's where the offices are.
    - cudgy 5y ago
      Cities are more than just offices and work centers.
      - thaumasiotes 5y ago
        Yes, they're also a bunch of support services for the offices and work centers. But the support has no reason to exist without the offices. The offices are the cause, and everything else is the effect.
        cudgy 5y ago
        The chicken or the egg? Without people nearby, you’ll have no offices/jobs. Without jobs, you’ll have no people is your argument. I prefer the former cause and effect as more plausible mainly due to simple financial returns. Who is going justify from a financial returns perspective building an office where there are few people? Nowadays offices are even less impactful with technology and a worldwide, scattered workforce facilitating working in homes and/or smaller satellite offices. Large, central office hubs are in big trouble.
AnimalMuppet 5y ago
Well, where I am gas is $1/gal higher than it was in March. That's down to Putin/Ukraine/sanctions and all that. That's going to show up in as a big inflation bump. Now, inflation was up before that, definitely, in a way that it hadn't been since 2008. But it got a bit spur from Putin's non-war war.
- naoqj 5y ago
  It’s down to sanctions only.
outside1234 5y ago
It sort of a perfect storm from where I sit: * Trump tax cuts contribute to deficit and demand * COVID stimulus contribute to deficit and demand * COVID causes supply shortages, with same demand, so therefore higher prices (see markups on cars). * Putin has to go and make it worse with an invasion, pushing up energy costs, which are part of the cost of everything.
vmception 5y ago
They're all levers, interconnected. Pull one lever and many others are slightly tugged as well. "Putin Price hike" is just alliteration, its not scapegoating everything on Putin, its reducing the expected constriction of energy on the market to the geopolitical catalyst in response to Putin's actions. This constriction is not nearly as heavy as it could be, with mostly just a few large US/EU private sector companies choosing not to trade Russian oil and gas right now. The oil and gas is not sanctioned right now. Even this explanation is the beginning of a dissertation that will be irrelevant in a few weeks, so it might make more sense why a reductive 3 word phrase is chosen. Of course they're going to get away with this. It is politically unfavorable to say "our actions rose gas prices". If the media is operating in your favor just go for it. If you wanted an indication that some actual humans understood the doublespeak, well now you know that I do, and largely don't care. I follow the macroeconomic environment pretty closely, politicians are a lever too. Where I'm currently at is that Biden/the US taking action to try to flood the market with their oil reserves and bring down prices is going to be mostly show, as the oil reserves will just need to be topped up again and very quickly. So this means supply and demand for oil has not changed at all, not even in the near term. The market via oil prices is still digesting what the price should be in light of Russian's actions and has not finished even doing that, with an initial overreaction (margin call) and just settling in the $93/barrel range for now. I don't think US oil reserves, for example, is having any effect on that. Just a small tangent to show how I think, in light of political speak which I consider benign and not relevant enough to be as passionate about as you are.
exabrial 5y ago
> or are all the debunkers on vacay this administration On vacation unfortunately. Even HNrs appear married to their political parties.
azth 5y ago
They're using him to scapegoat their incompetencies. Everyone with an ounce of critical thinking was able to see that money printing will cause this. "Transitory inflation" yeah right.
zthrowaway 5y ago
Mostly false. These trillion dollar spending bills have caused this.
skippyboxedhero 5y ago
The US isn't really exposed to Russian gas prices. Nat gas prices are pretty low in the US, although converging with global prices as the US exports grow, because of fracking. Food prices are up, but not to a huge extent. The noticeable thing in the US, relative to the rest of the world, is the level of fiscal and monetary stimulus. This wasn't only Biden, it was thrown into the economy at a time of significant supply shortages and when people were suddenly accumulating large cash balances. It is a crazy situation. Obviously, prices will rise and soak up all that excess demand but: inflation near 10%, interest rates 1%...wow, it is impossible to look at that and conclude anything other than politics has totally debauched monetary policy. It is also entertaining to go back and read the views of some people (the usual candidates) who were loudly insisting that inflation wasn't going to rise, then that is would be temporary, then that is was due to Putin...this should impress upon the public that economists don't know better, they have no credibility (extraordinary given that the economic logic has dictated policy for close to three decades, they were regarded as omnipotent by politicians).
UncleOxidant 5y ago
Inflation was baked in even prior to the pandemic. Biden bears little blame here. The previous president was starting trade wars that were already starting to blow up supply chains even before covid. The Fed with it's years of loose money policy, the previous president (who, in addition to trade wars, also blew up the deficit at a time when it should have been reduced) and of course covid deserve most of the blame. There's not a whole lot Biden can do to stop this inflation, it's up to the Fed but I doubt they'll take decisive enough action. These puny 1/4% rate increases aren't going to do anything anywhere near fast enough. We need to take the medicine that Dr. Volcker would prescribe were he here.

Qw3r7 5y ago

"Calling it the "Putin price hike," Psaki said she expected to see "a large difference" between headline inflation and "core" CPI, which excludes volatile food and energy prices. Economists say the annual inflation rate could be close to 8.5 percent, the highest seen since late 1981. According to the median forecast of analysts, monthly CPI growth will accelerate to 1.2 percent compared to February when the gain was 0.8 percent rate, while core CPI will remain unchanged at 0.5 percent.,, So its energy and food then I guess based off of this statement alone.

idiotsecant 5y ago
>which excludes volatile food and energy prices. Oh good, so just the things I buy, then.
thomascgalvin 5y ago
Well good thing I don't need energy or food. Wait...
dragonwriter 5y ago
The core CPI is broken out because energy and food have high short term volatility, so core usually better represents longer-term factors, but as long as the war & sanctions continue and (especially for food) for some time after food and energy are going to be problematic, so the core breakout is probably at a low point in relevance.

nitinagg 5y ago

Populism (from both sides) is going to destroy this economy

rayiner 5y ago
How exactly is “populism” to blame?
- imapeopleperson 5y ago
  Populism blinds the public from understanding the true root cause of our problems and therefore destines our solutions to fail. In this case, the populism is Biden’s admin labeling inflation as the ‘Putin Price Hike’. This completely ignores the possibility that the American Rescue Plan Act of 2021, $2 Trillion in stimulus that’s largely already spent, could’ve contributed to inflation also. This leaves us vulnerable to repeat our mistakes when making future policy decisions - like whether to waive all student debt.
  - jjtheblunt 5y ago
    I wonder if anyone hears Psaki or others say "Putin Price Hike" without thinking "a bunch of lying politicians" since Putin's craziness came long after the printing of money.
    - encryptluks2 5y ago
      All they care about is radicalizing their voter base.
    - LightG 5y ago
      Obviously it's both, and then some ...
  - LightG 5y ago
    The problem is an electorate often only willing/able to absorb three-word-slogans.
  - 5y ago

deleted 5y ago

[deleted]

tomjen3 5y ago

Funny: you always hear about large price hikes due to this or that. You rarely hear that because of this or that event prices have gone down.

jihadjihad 5y ago
My guess is this is more a consequences of many prices in the economy exhibiting "rocket and feather" [0] behavior: quick to rise, slow to fall. 0: https://en.wikipedia.org/wiki/Asymmetric_price_transmission https://en.wikipedia.org/wiki/Asymmetric_price_transmission
Barrin92 5y ago
because that's boring to report on. Effectively anything that has been digitized has practically collapsed in price. Newspaper, books, movies, music, and so on. Ask your dad what he paid for records compared to your Spotify subscription.
- troon-lover 5y ago
  You dont own anything on Spotify, and the songs can be removed at any time. You can also be removed at any time. Ownership and records are still just as expensive today. Renting is just a new option
  - harambae 5y ago
    Not really the point of this post I'm aware, but "Downtify" https://github.com/Igglybuff/awesome-piracy#spotify https://github.com/Igglybuff/awesome-piracy#spotify
skeeter2020 5y ago
See: the price of gas at the pump. The one exception that lead to a mild reduction was shutting down the entire world, everything else is explained by this perfect linkage between crude increasing a few penny on the barrel leading to an increase at the station.

ren_engineer 5y ago

you know it's bad if they are already trying to get out in front of the numbers with propagandized slogans to shift blame the real irony is people saying this is evidence we need to shift to "green energy", when almost all the key components for that come from China rather than Russia. Even if we make the shift, the end result will be the same in 20 years where China has huge leverage due to countries being reliant on them for energy

naravara 5y ago
With renewables it's more fixed capital instead of a direct supply of literal energy in the form of fuel. That's less of an immediate dependency than it is with oil. Capital does depreciate over time, but ebbs and flows of international prices offer more room for short-term elasticity in demand (people can delay upgrading or replacing equipment). It's also got lower barriers to entry so dependency can be a policy choice (reversible in the medium term) rather than a simple fact of geology the way fossil fuel dependency is.
inetknght 5y ago
Fortunately, depending on your perspective, 20 years is plenty of time to not only switch to renewable energy but also to bring back the manufacturing jobs that make the components for renewable energy. But good luck (literally) selling that to American companies who have to pay those factory salaries.
sbierwagen 5y ago
Solar panels aren't burned for power. If the US manages to transition to 100% solar, but then China cuts off exports, then we're still at 100% solar. It will just be more expensive to add more capacity or replace damaged panels. Annoying, but not oil-embargo level bad.
- 20after4 5y ago
  Solar panels have a very limited life span. Damage isn't the only concern by far. Their output drops proportional to their age.

nimbius 5y ago

sadly my original nihilist prediction of 10%+ inflation by Q4 is starting to seem more meritous every month. the efforts to incept quantitative tightening as of April are...bad comedy. The federal reserves one quarter of one pecent increase of the prime interest rate is a performance art. it has absolutely no ability to control inflation in any context. The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. the honeymoon from last december of downplaying the issue as 'transient' inflation is over. Unchecked inflation and sky high gas prices have the very real potential to defenestrate whole sectors of the US economy predicated on summer travel and spending. other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. this isnt solely foreign policy to blame. its a QE addiction stretching all the way back to 2008 the fed has tried and failed to treat.

AnthonyMouse 5y ago
> other options include increasing minimum wage, which is a third-rail for neoliberal capitalism it seems, or works projects, which were torpedoed some time ago by apparently just a single senator. Neither of those fix it. Most people don't make minimum wage; the 25th percentile wage is already $15/hour and all of those people are paying higher prices. Which increase even more if you raise the minimum wage and require that cost increase to be priced into goods and services. Works projects reduce unemployment. Unemployment is already very low. That's not the problem so that's not the solution. > The real solution, 3-5% interest, is suicide as it would blow up the already shaky corporate credit bubble which is over-leveraged in empty office buildings post-covid. The real solution is a little weird. There are two real problems. a) People can't afford consumer goods (short term). b) Asset bubble inflated by low interest rates (long term). It's actually the second one that contributes to the first. High housing prices etc. relative to wages increase real cost of living. But what do you want to do, pop the bubble by raising rates? What we need is for nominal asset prices to stay where they are but for interest rates to go up. So how do you keep the bubble from popping while raising interest rates? Put money into it from somewhere else. Send people checks. That will cause inflation to counteract the effect of higher interest rates on nominal asset prices, but this time the beneficiaries of the policy are the people who get the checks (i.e. everybody) instead of the holders of speculative assets. So nominal asset prices stay the same and nominal non-asset prices (consumer goods and wages) go up. But people have the checks to cover that in the short term and long term we finally get out of low interest rates and high housing costs relative to wages.

belval 5y ago

So what's the solution to shield my money from this insane level of inflation? Is there something I can do?

redmen 5y ago
Diversify slowly for the next time around. Or go all in on Alibaba
KarlKemp 5y ago
Spend it to make your life more energy efficient.
daxelrod 5y ago
Series I savings bonds are designed to track inflation. https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm https://www.treasurydirect.gov/indiv/research/indepth/ibonds... . I only recently became aware of them and I am not qualified to give financial advice, so I have no idea if they actually accomplish this well.
- UncleOxidant 5y ago
  They're doing pretty well at this point as they're paying 7.12%. Likely at the rate reset in May they'll pay that much or more for the next 6 months. Only downside is you can only put in $10k/year. If you have a spouse then you can put in $20K/year. Another nice thing about them is that the interest is state-tax free so if you live in a state with income tax it's an added bonus.
  - twblalock 5y ago
    The other big downside is you can't get the money out for one year. After that, they are basically liquid.
    - UncleOxidant 5y ago
      Not a huge downside, really. CDs are similar.

rednerrus 5y ago

Won't the bullwhip effect create some deflationary pressure? I'm already starting to see weird ads for sales from companies that NEVER have sales.

somewhereoutth 5y ago

Interest rates need to return to 5% (perhaps more temporarily). Of course this will trigger an asset price collapse. Fiscal policy should then be used to ensure that it is the rich who carry the burden, to result in a society with a fairer distribution of wealth.

exabrial 5y ago
> a fairer distribution of wealth This is such a stupid assertion that keeps getting repeated. The sum of free choices is a fair distribution. People aren't getting robbed at gunpoint; they're _giving_ their wealth to the rich. Bezos is a zillionaire because people literally gave him all his money_.
- sschueller 5y ago
  Sorry but that is inaccurate. The deck is stacked in favor of Bezos and others. Your choice to not buy from Amazon is rapidly decreasing when alternatives just can't complete in an unfair market. People are giving their money to Amazon or Walmart because they have no alternatives left or can't afford what alternatives still exist.
  - exabrial 5y ago
    The deck is stacked for every American or western country. If you're posting on HN, you likely live an extraordinarily privileged life compared to the vast majority of earth's population. Instead of complaining about Bezos, how about you ask yourself what you're doing to help those in need?
- dotopotoro 5y ago
  Definition of “fair” is similar to definition of “random”. Both terms are very ambiguous, unless qualification is provided. Random variables can have many distributions e.g. Poisson, Gaussian, uniform. I don’t know names of categories of “fairness”, but clearly you and GP have different meanings for the same word. On one end of the spectrum seems to be: “fair == same end result” -> effort and luck should not matter, not in the slightest. On the other end of the same spectrum: “fair = same system/rules” -> you could have racketeered more people to get more money and bought a bigger gun to stay alive. Both definitions of “fair” are equally valid, the choice of the definition is subjective.

azth 5y ago

Can assets and stocks go back up please?

rhexs 5y ago
You’re in for a bumpy ride. Normally the advice is to buy bonds if you’re risk averse, but the government got those into a nice bubble as well with QE.
- dopamean 5y ago
  Averse*
Ekaros 5y ago
Have they been down recently? I mean reasonably down...

andrewla 5y ago

Unpopular opinion -- in the US, inflation is necessary. My feeling is that we have been in an immensely inflationary regimen in many ways for a long time. We see that in the money supply, and we see it in the credit market and the capital markets in general -- too much cheap capital. This manifests in many unhealthy ways. The core problem is that we have been playing games to hide inflation. Outsourcing has allowed us to hide the general inflation of almost all sectors with deflation in electronics and consumer goods. Lax antitrust and "consumer rights" has pushed heavy discounting and loss-leading into the forefront, which means that plentiful capital can cause prices to appear low by shifting them to other sectors. If we enact important policy changes to antitrust, trade, labor, and climate, there will be inevitable increases in prices, because there's a reason that we're buying all of our consumer goods from China. Hedge funds and private equity and investment banks have huge amounts of capital from loose monetary policy, and they use that to create situations that drive down prices and drive up equity prices, which they unload on huge index funds with consumer funds driven by vast government incentives, and once they manipulate the price up high enough the mark-to-market of their holdings unlocks the ability to access even more capital for this cycle. Teams of economists work constantly to ensure that our macroeconomic metrics balance out so that we get increasingly useless measures of "productivity" or "GDP" or frankly even "inflation". All we are seeing now is that we are running out of ways to hide inflation.

shostack 5y ago
Is there a visualization of this anywhere? Do you see this as how the money people have invested in index funds (bogleheads and whatnot) gets "harvested?"
nukemaster 5y ago
Asset price inflation is more or less eating the children. None of the younger people can afford to live on their own which means keeping the same production requires civilization destroying high rates of immigration (and even that isn't really working.) It doesn't really matter now, it's way way too late to fix but these two things will more or less end the US, it's how most of the large Western empires ended.

zthrowaway 5y ago

I’m shocked there’s no blame being put on the trillion dollar spending bills that have been passed the last two years. But of course that would make politicians responsible. Our government spending is out of control and mostly to blame for all of this. Putin is not the root cause, and if you believe that then you are a victim of propaganda.

exabrial 5y ago
Thank you. This is the only correct answer in this entire thread. If you spend $100T, only have $1T, and print the rest using make believe dollar bills, what do you expect to happen? There's literally not enough capital in America to pay for what the congress is signing checks for.
t0bia_s 5y ago
Narration to justify crisis. Yes, that is what I can see in Europe too. Prices of energy was rising around 3 months before invasion, overall prices are rising since 2021. And now we should believe that it is because of Putin. And if you are not agree, then you are supporting invasion and consuming Russian propaganda. This is ridiculous.
croutonwagon 5y ago
I think most individuals keyed in and paying attention have been aware and saying this since the original stimulus under Trump. And at the time it was "yes inflation will be an outcome, but it may be better than burning it down in the short term". Most anyone I spoke with that had even a basic "macroeconomics 101" level of understanding or took any time to manage their own investment portfolio said this. But then it came time to put the meat in the with potatoes. And there was little, if any, oversight in the distribution. A LOT of money was handed out to both individuals and companies that frankly didnt need it. And then the Biden admin added more and more. Most that i recall seemed shakey at the prospect initially but understanding of the urgency of action. And outright offended at the implementation/outcome, and then viewed it as ludicrous with the follow ups. These are largely the results coming home to roost. But agian, those were not the majority or even a vocal minority that i saw. You know how many on certain sites will be outright certain xyz is how the masses view something (ie: an election) and then when the actual results come in everyone is shocked and just states that the differing viewpoint is stupid and gross. Well it seems those individuals got their way this time, and even now possibly haven't realized how shortsighted their viewpoints were and still arent connecting the dots.

mimikatz 5y ago

I wonder if those Modern Monetary Theory people will start pushing to increase taxes to combat inflation.

sundaeofshock 5y ago
I’m one of those people and I would be happy to see the Trump tax cuts rolled back. Further, I’m a huge fan of a windfall profits tax.
legitster 5y ago
Modern Monetary Theory is effectively dead. The problem is that millionaires and billionaires consume the same amount of toilet paper as us. Taking away money from them doesn't actually change the upwards price pressure on a roll. You actually have to tax away money from consumers for it to have any work combating inflation - I would like to see who can possibly sell raising taxes across the board as a way of fighting inflation.
dragonwriter 5y ago
> I wonder if those Modern Monetary Theory people will start pushing to increase taxes to combat inflation. Probably, but (1) MMT support among people with any political relevance is already in the faction known for supporting higher taxes, and (2) no one listens to the people who support MMT, anyway.

oh_sigh 5y ago

I'm just impressed they're blaming it on Putin and not the previous administration.

mythrwy 5y ago
Well, to be fair they blamed the previous administration on Putin as well.
- oh_sigh 5y ago
  That's one of the democrat's talking points that didn't really hold up well. If Putin really had kompromat on Trump, why wouldn't Putin take Ukraine during Trump's presidency?
  - beeboop 5y ago
    Trump kept in place the Magnitsky Act, which targeted high-ranking Russians with sanctions. His administration also put new sanctions on five Russians and Chechens over human rights abuses, and it approved lethal arms sales to Ukraine. Trump also signed a bill in August 2017 that targeted Russia’s energy and defense sectors with sanctions, and put into place sanctions that affected the Nord Stream 2 pipeline. Yet somehow people accuse Trump of being Putin's puppet. Doesn't add up to me.
    - TMWNN 5y ago
      >Trump kept in place the Magnitsky Act, which targeted high-ranking Russians with sanctions. His administration also put new sanctions on five Russians and Chechens over human rights abuses, and it approved lethal arms sales to Ukraine. Trump also signed a bill in August 2017 that targeted Russia’s energy and defense sectors with sanctions, and put into place sanctions that affected the Nord Stream 2 pipeline. Don't forget incessantly pleading with European NATO members (in the unique Trump manner of "pleading") to raise their defense spending to the sky-high level of ... 2% of GDP that all NATO powers have been supposed to be spending all along. I got a good laugh from a video I saw from a European aviation YouTube content creator, discussing countries falling over themselves boosting their spending after the current war started, in which he went out of his way to chastise viewers who had the foolish notion that Trump might have been in any way right. Also, keeping up and accelerating the training/arming of Ukraine that began under Obama after Russia took Crimea/eastern Ukraine in 2014. There's been tons of media coverage of how Ukraine totally remade its tactics and training on Western models post-2014, and how much of a difference that has made in the current war, but curiously little analysis of the common-sense observation that having all of this happen post-January 2021 is impossible. >Yet somehow people accuse Trump of being Putin's puppet. Doesn't add up to me. One might even conclude that the allegations of Putin's insidious influence on US politics/media are correct ... but that the message said influence backs has always been misdescribed. Might.

twblalock 5y ago

This should be the nail in the coffin for UBI. The consumer demand created by the last round of stimulus is nothing compared to what UBI would create, and that stimulus is clearly a contributor to the inflation we have been seeing since last year. Larry Summers was right about the stimulus and the Fed, and quite a lot of the economists who missed this are guilty of wishful thinking. They let their political preferences blind them to the consequences of the stimulus package. Larry Summers is right about UBI too.

aaomidi 5y ago
Are you aware of the huge wealth transfer that happened due to the PPP loans that a lot of them have been forgiven? The best thing is, the database is public. I know so many people who got dozens to hundreds of thousands of dollars and got it forgiven by the govt. The stimulus is a distraction. We had the largest wealth transfer from the working class to the rich during the pandemic and they've got us squabbling about the small stimulus checks.
- boppo1 5y ago
  Link to the database? Is there an api or documentation?
  - aaomidi 5y ago
    https://projects.propublica.org/coronavirus/bailouts/ https://projects.propublica.org/coronavirus/bailouts/
- harambae 5y ago
  Yeah, I checked on that website and my (somewhat shady) friend somehow got $42k PPP money, his wife got $41k and his mom got $40k. None of them have businesses or employee paychecks of any kind to protect. I do wonder how common this is and if any of them will actually have to pay this back ever. (I also feel like a little bit of a sucker working for a living...)
  - 5y ago

legitster 5y ago

The war excuse is bizarre and inaccurate. "Inflation is always and everywhere a monetary phenomenon" M2 has been increasing at an unprecedented rate: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL If you don't solve this you don't solve inflation.

IAmEveryone 5y ago
The jump in 2020 is explained by a footnote saying that the definition was broadened in May of that year. Other than that, the rate is unprecedented in absolute terms only in the way that any chart of exponentional growth will always be.
Brycee 5y ago
in the late 70s the politicians also blamed OPEC for inflation. which was also bullshit.
nathanaldensr 5y ago
Absolutely no one believes this has anything much to do with Putin, Russia, or Ukraine. Congress' spending is out of control. The Fed's 20-year low interest rate policy is finally coming home to roost.

sudden_dystopia 5y ago

It has already been “extraordinarily elevated” because the money supply has been “extraordinarily elevated. This is accelerating inflation. That’s going to be a problem. They can call it the Putin price hike all they like but the invasion only made the situation worse. This is 100% poor monetary policy and a Fed that is painted into a corner. Buckle up.

memish 5y ago

Volcker raised rates to almost 20% to break inflation in the 70s. But that's when debt was low and we were able to service it. Now that debt is high, how much can the Fed actually increase rates? Are they out of options?

thrill 5y ago

Congress should be directing monthly increases to SS to match inflation numbers. Instead they'll wait and see which party can promise they'll do just that better than the other party if they get the votes.

deleted 5y ago
[deleted]
dragonwriter 5y ago
> Congress should be directing monthly increases to SS to match inflation numbers Post-retirement SS benefits are tied to inflation, but in occur annually. (Retirement baseline is adjusted pre-retirement by a wage index, rather than inflation.)
- thrill 5y ago
  Yeah, I could have been clearer. It should be done monthly since it affects people immediately.
zthrowaway 5y ago
And where's the money going to come from for that? We are in this mess because we are printing money out of thin air, artificially increasing the money supply without the output to match. What you propose continues to amplify the root cause.

xtracto 5y ago

This smells a lot of 1980s global recession: https://en.wikipedia.org/wiki/Early_1980s_recession https://en.wikipedia.org/wiki/Early_1980s_recession Energy crisis due to international conflicts Inflation getting higher than 7% Increased interest rates I wonder how far will this get in the coming years

mark_l_watson 5y ago

If I understand this correctly, inflation hurts working people and a recession hurts Wall Street. If this is correct, I expect to see huge efforts made avoiding a recession and caring much less about inflation.