4 ms·

Well, yeah, there's an intentional effort right now to crush demand because folks realized supply chains don't normalize in two financial quarters (see: "transi

Well, yeah, there's an intentional effort right now to crush demand because folks realized supply chains don't normalize in two financial quarters (see: "transitory"). All of COVID seems like a case of impatience. The fact that the pandemic would last years was kind of obvious by late spring 2020 -- when in the history of humanity have humans ever experienced a pandemic that didn't last for years/decades? (I'm not here to debate masks or whatever public health measures; that's entirely tangential to the point that pandemics don't just go away after a few months.) Pandemics do end. Just not in a few financial quarters. The same thing is happening with "Transitory Inflation" now. The supply shock IS transitory and things WILL normalize, but only in the same sense that pandemics do eventually end. Shit takes years, not quarters. I think by 2024-2025 we'll be in this weird state where supply is back to normal but where there have been years of policy aimed at crushing demand.

mupuff1234 4y ago
What is being done to crush demand?
- khuey 4y ago
  raising interest rates to tamp down on employment and wage growth
- vkou 4y ago
  Tightening monetary policy in order to increase unemployment.
mchusma 4y ago
The length of the pandemic seems largely due to your definition of the pandemic. From a practical perspective, once people can vaccinate to prevent death AND get a cure, many people's definition of "pandemic" is that it is over. I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
- InefficientRed 4y ago
  > From a practical perspective, once people can vaccinate to prevent death AND get a cure, many people's definition of "pandemic" is that it is over. Vaccines weren't available until summer 2021, which was unexpectedly early, and still aren't widely available in some parts of the world. No reasonable "definition" puts the end of a pandemic at summer 2020, but "short and temporary" was certainly the messaging in March 2020. What I'm saying is that in March 2020 (or perhaps April) it was was obvious that the world would not be out of the pandemic for years in the best case scenario, but many people believed things would be back to normal in weeks or perhaps months. Which... just doesn't have any historical precedent and was clearly wishful thinking. I remember expressing this on the phone to family and friends -- that covid would last years -- and no one believed me. > I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate? Central banks change interest rates in order to shift aggregate demand curves. "Curbing inflation" sounds less negative than "destroying demand", but the central tenant of central bank interest rate policy is that the two are causally related to one another.
- dwater 4y ago
  I'm still seeing businesses close because their staff are out sick and I have more personal contacts who've taken sick leave in the past month than any time I can remember in the past 2 years. In my mind that's still in a pandemic.
gz5 4y ago
Agree on the macro. Why the need to crush demand now, and what steps by what actors are you identifying as designed to crush demand?
- InefficientRed 4y ago
  Nearly every central bank.
- abvdasker 4y ago
  Powell has said explicitly that one of the Fed's short term goals is to bring down wages.
  - yellowapple 4y ago
    "What's this? The American working class is struggling because wages haven't kept pace with cost of living in 50 years? Surely suppressing wages even more will fix that!"
    - abvdasker 4y ago
      Personally, I think this slow moving inflation disaster is the result of the US government's inability to raise taxes. They have to reduce the money supply somehow to fight inflation and they're doing it with one hand (fiscal policy) tied behind their back. I suspect the reason is because tax increases are politically toxic while monetary policy changes made by the Fed are seen as apolitical. To be even more cynical about it, one could argue that the wealthy people and corporations who control politicians have an obvious interest in preventing tax increases even when it would benefit the economy as a whole in the long term.
      - xxxtentachyon 4y ago
        Tax policy also acts much more slowly for individuals. Beyond that, I don’t think this is US-specific issue. Are there any countries at the moment trying to address near-term inflation via fiscal policy?
minsc_and_boo 4y ago
So does that mean we are in line with a recession in 2023, regardless of efforts in play now?
tgsovlerkhgsel 4y ago
Both https://en.wikipedia.org/wiki/2002%E2%80%932004_SARS_outbreak https://en.wikipedia.org/wiki/2002%E2%80%932004_SARS_outbrea... and https://en.wikipedia.org/wiki/2009_swine_flu_pandemic https://en.wikipedia.org/wiki/2009_swine_flu_pandemic were mostly over relatively quickly.

mupuff1234 4y ago

What is being done to crush demand?

khuey 4y ago
raising interest rates to tamp down on employment and wage growth
vkou 4y ago
Tightening monetary policy in order to increase unemployment.

mchusma 4y ago

The length of the pandemic seems largely due to your definition of the pandemic. From a practical perspective, once people can vaccinate to prevent death AND get a cure, many people's definition of "pandemic" is that it is over. I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?

InefficientRed 4y ago
> From a practical perspective, once people can vaccinate to prevent death AND get a cure, many people's definition of "pandemic" is that it is over. Vaccines weren't available until summer 2021, which was unexpectedly early, and still aren't widely available in some parts of the world. No reasonable "definition" puts the end of a pandemic at summer 2020, but "short and temporary" was certainly the messaging in March 2020. What I'm saying is that in March 2020 (or perhaps April) it was was obvious that the world would not be out of the pandemic for years in the best case scenario, but many people believed things would be back to normal in weeks or perhaps months. Which... just doesn't have any historical precedent and was clearly wishful thinking. I remember expressing this on the phone to family and friends -- that covid would last years -- and no one believed me. > I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate? Central banks change interest rates in order to shift aggregate demand curves. "Curbing inflation" sounds less negative than "destroying demand", but the central tenant of central bank interest rate policy is that the two are causally related to one another.
dwater 4y ago
I'm still seeing businesses close because their staff are out sick and I have more personal contacts who've taken sick leave in the past month than any time I can remember in the past 2 years. In my mind that's still in a pandemic.

gz5 4y ago

Agree on the macro. Why the need to crush demand now, and what steps by what actors are you identifying as designed to crush demand?

InefficientRed 4y ago
Nearly every central bank.
abvdasker 4y ago
Powell has said explicitly that one of the Fed's short term goals is to bring down wages.
- yellowapple 4y ago
  "What's this? The American working class is struggling because wages haven't kept pace with cost of living in 50 years? Surely suppressing wages even more will fix that!"
  - abvdasker 4y ago
    Personally, I think this slow moving inflation disaster is the result of the US government's inability to raise taxes. They have to reduce the money supply somehow to fight inflation and they're doing it with one hand (fiscal policy) tied behind their back. I suspect the reason is because tax increases are politically toxic while monetary policy changes made by the Fed are seen as apolitical. To be even more cynical about it, one could argue that the wealthy people and corporations who control politicians have an obvious interest in preventing tax increases even when it would benefit the economy as a whole in the long term.
    - xxxtentachyon 4y ago
      Tax policy also acts much more slowly for individuals. Beyond that, I don’t think this is US-specific issue. Are there any countries at the moment trying to address near-term inflation via fiscal policy?

minsc_and_boo 4y ago

So does that mean we are in line with a recession in 2023, regardless of efforts in play now?

tgsovlerkhgsel 4y ago

Both https://en.wikipedia.org/wiki/2002%E2%80%932004_SARS_outbreak https://en.wikipedia.org/wiki/2002%E2%80%932004_SARS_outbrea... and https://en.wikipedia.org/wiki/2009_swine_flu_pandemic https://en.wikipedia.org/wiki/2009_swine_flu_pandemic were mostly over relatively quickly.