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Honestly, this was just my gut and I've felt prices were artificially low for the past decade or so - maybe because of globalization and offshore manufacturing,

by caycep 5y ago

Honestly, this was just my gut and I've felt prices were artificially low for the past decade or so - maybe because of globalization and offshore manufacturing, and things are really just catching up to what they're actually worth. You can elect a guy that will "decouple" from China and trash international trade deals...but don't expect low prices 4 years later...

tmp_anon_22 5y ago
In the US whenever I traveled during the past decade it felt like consumer goods were much more expensive, CAD, AUD, EUR, purchases all felt more expensive. I wonder if part of this is just the weakening of the dollar as the result of US economic policy over the last twenty years.
ericmay 5y ago
I agree. I think the prices we see now are probably more "correct", and things were just very cheap in the past. But I also think that there's some inflation going on from pent-up savings. Flights, credit card points, hotels, etc. coupled with corporations raising prices to offset losses in 2020-2021. I'm also curious about a race condition with wages and prices. Forget the tech wages because those are probably propping up equity markets and housing markets, but day-to-day stuff where someone was making $15/hour and now they're making $20/hour or more with that change happening over the course of a year and for millions, well, they can afford the higher prices... I'd love to read something more educated on that topic though. I have an intuition (race condition or at least partial race condition) but I haven't studied the specific economics of that. I always assumed you'd get inflation but not corresponding wage increases. I guess if the west is able to prop up currencies, it's fine? Kind of like living in Iceland except everywhere. For example, I live in Ohio. Can someone explain to me why I would expect a swordfish steak or tuna steak or salmon to be cheap whatsoever? And that's still not pricing in offsets needed from c02 emissions. Chicken on the other hand? Yea that should be very cheap and very fresh. We need more local suppliers. Grow a victory garden. Last season we had so many onions. I wish I could have had a neighborhood farmer's market. But rules. Regulations. Etc.
- throwaway0a5e 5y ago
  >For example, I live in Ohio. Can someone explain to me why I would expect a swordfish steak or tuna steak or salmon to be cheap whatsoever? And that's still not pricing in offsets needed from c02 emissions. Chicken on the other hand? Yea that should be very cheap and very fresh. Because global interconnected economy. The same business processes that figure out how to distribute all sorts of widgets to warehouses and supply house shelves and parts departments all over the country are being used to send a steady stream of approximately the amount of swordfish to Cleveland that people in Cleveland buy. It doesn't really cost any more to ship it to Cleveland than it does NYC. It's just a giant customization problem. Thanks to modern communications technology the dozen swordfish steaks that you and eleven other people will buy this week get to your supermarket.
jmoak3 5y ago
I agree. To see the process of prices deflating happen on a small timeline, look to Japan. After Japan realized their cost of doing business was going to rise due to aging, their markets crashed in the 90s. In response they poured epic levels of investment into mobilizing offshore workers and completely recovered. The lesson the world took away was "money isn't real, maybe we should take on more debt". Ironically here in the US the party of "trash international trade to increase local workers' bargaining power" is also the party of "keep retirement age the same at all costs and maintain fixed income QOL". As we see globalization unwind from international policy and as working populations age (China peaked @ ~1 billion workers, and is declining), we are guaranteed to see prices rise as workers can demand much, much more (to the dismay of those on fixed income). I think it'll be interesting to see this unholy coupling tear apart.
memish 5y ago
I agree with this premise, but we haven't on-shored production yet. It's still mostly offshore.
- jmoak3 5y ago
  You're right, but I think you've missed a detail. Our stuff was being made in China, until many of our supply chains were severed due to Covid, leading to Chinese defaults, shortages, and an increased cost of doing business. Now a certain amount of stuff simply isn't getting made at all. The question at play is will they recover to 2019 levels? Will China be able to deal with the defaults of businesses who provided key nodes in the supply chain while juggling their 0-covid strategy? What will happen to the cost of doing business when China loses 20% of its workers over the next decade or so due to aging? I've been a broken record about this but I highly recommend The Great Demographic Reversal. It provides a high level view of the forces at play in our world and is a real eye opener. caycep said prices were artificially low but that's not quite right - prices were as low as they deserved to be because China had workers and we were able to make deals to mobilize them. In the coming decades I'm not convinced we will have that luxury.

by caycep 5y ago

tmp_anon_22 5y ago

In the US whenever I traveled during the past decade it felt like consumer goods were much more expensive, CAD, AUD, EUR, purchases all felt more expensive. I wonder if part of this is just the weakening of the dollar as the result of US economic policy over the last twenty years.

ericmay 5y ago

I agree. I think the prices we see now are probably more "correct", and things were just very cheap in the past. But I also think that there's some inflation going on from pent-up savings. Flights, credit card points, hotels, etc. coupled with corporations raising prices to offset losses in 2020-2021. I'm also curious about a race condition with wages and prices. Forget the tech wages because those are probably propping up equity markets and housing markets, but day-to-day stuff where someone was making $15/hour and now they're making $20/hour or more with that change happening over the course of a year and for millions, well, they can afford the higher prices... I'd love to read something more educated on that topic though. I have an intuition (race condition or at least partial race condition) but I haven't studied the specific economics of that. I always assumed you'd get inflation but not corresponding wage increases. I guess if the west is able to prop up currencies, it's fine? Kind of like living in Iceland except everywhere. For example, I live in Ohio. Can someone explain to me why I would expect a swordfish steak or tuna steak or salmon to be cheap whatsoever? And that's still not pricing in offsets needed from c02 emissions. Chicken on the other hand? Yea that should be very cheap and very fresh. We need more local suppliers. Grow a victory garden. Last season we had so many onions. I wish I could have had a neighborhood farmer's market. But rules. Regulations. Etc.

throwaway0a5e 5y ago
>For example, I live in Ohio. Can someone explain to me why I would expect a swordfish steak or tuna steak or salmon to be cheap whatsoever? And that's still not pricing in offsets needed from c02 emissions. Chicken on the other hand? Yea that should be very cheap and very fresh. Because global interconnected economy. The same business processes that figure out how to distribute all sorts of widgets to warehouses and supply house shelves and parts departments all over the country are being used to send a steady stream of approximately the amount of swordfish to Cleveland that people in Cleveland buy. It doesn't really cost any more to ship it to Cleveland than it does NYC. It's just a giant customization problem. Thanks to modern communications technology the dozen swordfish steaks that you and eleven other people will buy this week get to your supermarket.

jmoak3 5y ago

I agree. To see the process of prices deflating happen on a small timeline, look to Japan. After Japan realized their cost of doing business was going to rise due to aging, their markets crashed in the 90s. In response they poured epic levels of investment into mobilizing offshore workers and completely recovered. The lesson the world took away was "money isn't real, maybe we should take on more debt". Ironically here in the US the party of "trash international trade to increase local workers' bargaining power" is also the party of "keep retirement age the same at all costs and maintain fixed income QOL". As we see globalization unwind from international policy and as working populations age (China peaked @ ~1 billion workers, and is declining), we are guaranteed to see prices rise as workers can demand much, much more (to the dismay of those on fixed income). I think it'll be interesting to see this unholy coupling tear apart.

memish 5y ago

I agree with this premise, but we haven't on-shored production yet. It's still mostly offshore.

jmoak3 5y ago
You're right, but I think you've missed a detail. Our stuff was being made in China, until many of our supply chains were severed due to Covid, leading to Chinese defaults, shortages, and an increased cost of doing business. Now a certain amount of stuff simply isn't getting made at all. The question at play is will they recover to 2019 levels? Will China be able to deal with the defaults of businesses who provided key nodes in the supply chain while juggling their 0-covid strategy? What will happen to the cost of doing business when China loses 20% of its workers over the next decade or so due to aging? I've been a broken record about this but I highly recommend The Great Demographic Reversal. It provides a high level view of the forces at play in our world and is a real eye opener. caycep said prices were artificially low but that's not quite right - prices were as low as they deserved to be because China had workers and we were able to make deals to mobilize them. In the coming decades I'm not convinced we will have that luxury.