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Define inflation. Assets have been artificially inflated for a very long time due to QE and low interest rates and the Fed's balance sheet. If that were singl

Define inflation. Assets have been artificially inflated for a very long time due to QE and low interest rates and the Fed's balance sheet. If that were single handedly the reason for corn and lumber to get more expensive (general inflation) - we should've seen that a long time ago. There's a lot going on - and it's hard to blame everything on the Fed. Rising inequality? Sure. General inflation? Not convinced.

vkou 4y ago
My guess is rising wages. When wages go up, it can either go at the expense of profits, or at the expense of prices (Or, most usually, both). The labour shortage in the pandemic created upward wage pressure, which added to existing pressure[1] caused by rising housing/healthcare costs. Notice how interest rates went up, as unemployment hit an all-time low? Capitalists hate low unemployment, as it causes wages to go up. Raising interest rates cools off the market, reduces the number of speculative investments, and increases unemployment. There's a reason that the government always wants a few million people to always be jobless. It puts the brakes on wage growth. [1] This is most notable in resort towns. As housing prices went up, nobody who works a service job can afford to live in them anymore - so all the workers pack up, and move to the city. As a result, businesses either have to raise wages, or shut down, or significantly reduce their hours. For some reason, tech folks vacationing in their lakeside dachas aren't keen on putting in a few hours at the local grocery.
- gopher_space 4y ago
  > As a result, businesses either have to raise wages, or shut down, or significantly reduce their hours. If these were your only choices you were on the edge of profitability right before a global pandemic hit. Plenty of reasons for that. Commercial Rent Control is "progressive" and the people who own property like this can afford to let it sit vacant indefinitely and will literally abandon this amount of profit because they feel like it.
  - vkou 4y ago
    This started before the pandemic hit, the pandemic just accelerated the growth of housing prices in those towns, as remote-workers started moving to them.
    - gopher_space 4y ago
      Nobody needs to be speculating on the lumber market.
gopher_space 4y ago
How long ago would you have wanted to see lumber go up for that to be an indicator?

vkou 4y ago

My guess is rising wages. When wages go up, it can either go at the expense of profits, or at the expense of prices (Or, most usually, both). The labour shortage in the pandemic created upward wage pressure, which added to existing pressure[1] caused by rising housing/healthcare costs. Notice how interest rates went up, as unemployment hit an all-time low? Capitalists hate low unemployment, as it causes wages to go up. Raising interest rates cools off the market, reduces the number of speculative investments, and increases unemployment. There's a reason that the government always wants a few million people to always be jobless. It puts the brakes on wage growth. [1] This is most notable in resort towns. As housing prices went up, nobody who works a service job can afford to live in them anymore - so all the workers pack up, and move to the city. As a result, businesses either have to raise wages, or shut down, or significantly reduce their hours. For some reason, tech folks vacationing in their lakeside dachas aren't keen on putting in a few hours at the local grocery.

gopher_space 4y ago
> As a result, businesses either have to raise wages, or shut down, or significantly reduce their hours. If these were your only choices you were on the edge of profitability right before a global pandemic hit. Plenty of reasons for that. Commercial Rent Control is "progressive" and the people who own property like this can afford to let it sit vacant indefinitely and will literally abandon this amount of profit because they feel like it.
- vkou 4y ago
  This started before the pandemic hit, the pandemic just accelerated the growth of housing prices in those towns, as remote-workers started moving to them.
  - gopher_space 4y ago
    Nobody needs to be speculating on the lumber market.

gopher_space 4y ago

How long ago would you have wanted to see lumber go up for that to be an indicator?