4 ms·

What could cause spiraling inflation? Human behavior? Looks like high energy costs are here to stay (due to years of ESG signalling leading to underinvestment i

• baggy_trough 4y ago
  Negative real interest rates are inflationary.
• almost_usual 4y ago
  Creating 40% of broad money in 2.5 years.
  • xyzzyz 4y ago
    This on its own should only create a single inflationary shock, not a spiral.
    • deleted 4y ago
      [deleted]
    • UncleEntity 4y ago
      It takes a while for all that new money to move through the economy. Plus the Fed has been paying banks interest on their excess reserves in order to prevent that sort of thing. Hell, AFAICT I’m still living off the money I got from unemployment insurance two years ago and have just been banking the cash for the job I’ve had for the last year (and a day, yesterday was my anniversary apparently).
• puranjay 4y ago
  Service and shelter inflation tend to be sticky. You don’t renegotiate your lease or your salary every month. Inflation is now moving increasingly towards these two categories, which indicates that it could be around much longer even if supply chain issues get resolved.
• el_nahual 4y ago
  Wages aren't that sticky, and in many cases (big unions, big employers) contractually give out inflation-indexed raises. So if a transient spike lasts long enough to be considered "inflation", then it gets baked into wage increases, which leads to higher prices, which leads to higher inflation, which leads to wage increases... Unfortunately, the govt thinks of monetary policy as their only tool to fight inflation, when in fact they have a much stronger, better one: public policy. The govt should be passing emergency legislation to vastly increase supply of the three main contributors to family spending: housing, healthcare, transportation, and education. Make it MUCH easier to build housing. Vastly incentivize cheap car replacements (ebikes, etc). Loosen drug import laws from Europe & CA like, yesterday.
• lamontcg 4y ago
  The sticky thing is the wage market with boomers retiring, reduced immigration, COVID and long COVID removing workers from the job market, and the pandemic in general pissing people off so they start to demand more at their work, rising unionization, etc. High energy costs are also not here to stay. There's very clearly the post-pandemic supply shock which has spilled over into high energy costs due to a bullwhip effect. And there's the war in Ukraine, which will not last forever. There's also a buildup in inventories now (the bullwhip is coming back around) and there's no huge demand for container ships from China right now. High energy costs didn't stick in 2007, they didn't stick in 2014 and they won't stick this time. Commodities/Energy inflation is cyclical.
  • amaranth 4y ago
    The argument for high oil and gas costs sticking around this time is that the producers have realized they'll be effectively wiped out in 20-30 years, assuming we get anywhere close to meeting climate goals. There will always be a need for oil and gas but if it's not being used for most heating, transportation, or electricity generation that demand will be a pittance of what they get today. This realization has led them to essentially halt new production and lean hard in to scarcity to get all they can out of a dying market, even if doing so makes that market die faster.
    • lamontcg 4y ago
      That is what some people thought the last two times oil prices spiked.