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> It used to be that inflation fueled spending because people figured they should buy it now because it will cost more later. They’d figure there is no point in

> It used to be that inflation fueled spending because people figured they should buy it now because it will cost more later. They’d figure there is no point in saving because the value of money will get eroded. I highly doubt this was ever the case, rather than what some orthodox econ types told themselves without evidence.

gedy 4y ago
People totally do that with housing price inflation
- Ericson2314 4y ago
  Fair, but buying a long lived asset to both save money and get a larger capital gain is different than rushing to buy depreciating goods because one is worried their prices will go up further. More broadly, if there was price stability for single family homes, buyers would be outraged!
  - thehappypm 4y ago
    As a homeowner I’d be fine with price stability. I don’t see why the price should go up (and that just increases my tax burden). I certainly don’t want to be in the hole if I sell though.
    - Johnny555 4y ago
      I agree, I bought my house as a home, I really don't need or want it to go up in value. I think many people would be better of if we had policies discouraging residential housing as an investment. My home's value has gone up over 30% since I bought it around 18 months ago (and 50% since 3 years ago) - I couldn't afford to buy my own home if I were house shopping today.
    - Ericson2314 4y ago
      Oh don't get me wrong, I would love a world with housing price stability. Renting with a land value is good.
  - dragonwriter 4y ago
    > More broadly, if there was price stability for single family homes, buyers would be outraged! If there was price stability for homes, people buying them for living in rather than as investments would be happy, since affordability would increase with real (or even nominal, depending on the sense of “stability”) wages.
    - Ericson2314 4y ago
      In fact, there would hardly be any reason to by them. Just rent!
      - dragonwriter 4y ago
        If you can find a long-term, fixed-price lease, sure. There are reasons to buy besides price appreciation.
        Ericson2314 4y ago
        Microecnomically, sure. Macroecnomically, if housing prices were stable, I am pretty sure the other reasons would evaporate.
DickingAround 4y ago
We did that in Q4 2021/Q1 2022 amongst my friend group. Literally hundreds of thousands of dollars in spending among us in land, tools, etc. Stock market looked high, don't want to stay in the dollar. It's not a complex economic environment out there. You can look at a very small set of numbers and get the picture; buffet-index (total market value to GDP) and GDP growth in dollar terms says the market is high. CPI, M1 money supply, and debt-to-GPD says the dollar will reduce in value. So where else you going to park your money? If there's machines you can use, that was a good time. Most people don't need machines so it's all about houses and land and anything not showing as much peak. Not academic; critical to maintaining the value a person has put into savings from all that labor.
- Ericson2314 4y ago
  > Stock market looked high, don't want to stay in the dollar. If you are looking to cache out of the stock market, that's quite different: you were worried about both inflation and the stock market falling after a bubble. Most people have negligable liquid savings. Even if they wanted to, they lack the means to do what you did. Your behavior is anomalous and not representative of a broader macroeconomic trend.
  - SantalBlush 4y ago
    There is some evidence that spending habits during high inflation do vary across incomes and between durables and nondurables. Believe it or not, people actually study this sort of thing. As your post highlights, it gets more complicated the more factors one considers, like disposable income, stock ownership, etc. What you're describing here is rudimentary, not some groundbreaking, econ-slaying assertion.
    - Ericson2314 4y ago
      https://www.federalreserve.gov/econres/feds/why-do-we-think-that-inflation-expectations-matter-for-Inflation-and-should-we.htm https://www.federalreserve.gov/econres/feds/why-do-we-think-... I would say it is pretty damning.

gedy 4y ago

People totally do that with housing price inflation

Ericson2314 4y ago
Fair, but buying a long lived asset to both save money and get a larger capital gain is different than rushing to buy depreciating goods because one is worried their prices will go up further. More broadly, if there was price stability for single family homes, buyers would be outraged!
- thehappypm 4y ago
  As a homeowner I’d be fine with price stability. I don’t see why the price should go up (and that just increases my tax burden). I certainly don’t want to be in the hole if I sell though.
  - Johnny555 4y ago
    I agree, I bought my house as a home, I really don't need or want it to go up in value. I think many people would be better of if we had policies discouraging residential housing as an investment. My home's value has gone up over 30% since I bought it around 18 months ago (and 50% since 3 years ago) - I couldn't afford to buy my own home if I were house shopping today.
  - Ericson2314 4y ago
    Oh don't get me wrong, I would love a world with housing price stability. Renting with a land value is good.
- dragonwriter 4y ago
  > More broadly, if there was price stability for single family homes, buyers would be outraged! If there was price stability for homes, people buying them for living in rather than as investments would be happy, since affordability would increase with real (or even nominal, depending on the sense of “stability”) wages.
  - Ericson2314 4y ago
    In fact, there would hardly be any reason to by them. Just rent!
    - dragonwriter 4y ago
      If you can find a long-term, fixed-price lease, sure. There are reasons to buy besides price appreciation.
      - Ericson2314 4y ago
        Microecnomically, sure. Macroecnomically, if housing prices were stable, I am pretty sure the other reasons would evaporate.

DickingAround 4y ago

We did that in Q4 2021/Q1 2022 amongst my friend group. Literally hundreds of thousands of dollars in spending among us in land, tools, etc. Stock market looked high, don't want to stay in the dollar. It's not a complex economic environment out there. You can look at a very small set of numbers and get the picture; buffet-index (total market value to GDP) and GDP growth in dollar terms says the market is high. CPI, M1 money supply, and debt-to-GPD says the dollar will reduce in value. So where else you going to park your money? If there's machines you can use, that was a good time. Most people don't need machines so it's all about houses and land and anything not showing as much peak. Not academic; critical to maintaining the value a person has put into savings from all that labor.

Ericson2314 4y ago
> Stock market looked high, don't want to stay in the dollar. If you are looking to cache out of the stock market, that's quite different: you were worried about both inflation and the stock market falling after a bubble. Most people have negligable liquid savings. Even if they wanted to, they lack the means to do what you did. Your behavior is anomalous and not representative of a broader macroeconomic trend.
- SantalBlush 4y ago
  There is some evidence that spending habits during high inflation do vary across incomes and between durables and nondurables. Believe it or not, people actually study this sort of thing. As your post highlights, it gets more complicated the more factors one considers, like disposable income, stock ownership, etc. What you're describing here is rudimentary, not some groundbreaking, econ-slaying assertion.
  - Ericson2314 4y ago
    https://www.federalreserve.gov/econres/feds/why-do-we-think-that-inflation-expectations-matter-for-Inflation-and-should-we.htm https://www.federalreserve.gov/econres/feds/why-do-we-think-... I would say it is pretty damning.