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Ask HN: What Would Solve Inflation?

3 points by tmaly 4y ago

I am curious to know in your mind, what would solve inflation? Would it be something like unlimited free energy or something else?

uberman 4y ago
The super-natural ability to predict all future demand and perfectly manage production to match it.
sharemywin 4y ago
Causes of price increases: 1. Energy costs 2. Labor Costs 3. Artificial supply limiting(Intellectual property, property rights, licensing, taxes etc.) 4. Natural Resources costs - Recovery (Either Mining or recycling) Increases in demand: 1. Wages 2. Government(Federal, State Local) 3. Charity 4. Exports The current process is to cut interest rates which forces cuts and commissions in financial institutions and changes entrepreneurial and investor behavior from investment to wealth preservation. which leads to cutbacks in spending, wage reduction, and layoffs which leads to less demand in common goods once it reaches the middle class and poor which spend most of their money on those types of items. which also leads to cuts in production as is the case in the current oil production
bitxbitxbitcoin 4y ago
Unlimited free energy could do the trick for a lot of things.
night-rider 4y ago
Diverse income streams. Don’t rely on cash cows and singular income streams. Stop complaining and go out and make more money. Not what people want to hear but it will work.
janandonly 4y ago
Inflation is different "things" to different people, see for a good explainer Lyn Alden [1]. Inflation used to be defined as an increase in the money supply: this can be easily explained when you realize that for the longest time in human history, "making money" had a real cost [2]. After all, the material that a coin was made of was gold, silver or copper (for small amounts), that first had to be mined. If there had been no recent wars and therefor the supply of slaves was low, then new coinage was hard to make because labor for the mines was hard to come by. Food prices would rise in times of drought, but would come back down afterwards [3]. So for a very long time, prices were more-or-less constant [4]. The 'simple' solution to go back to a "pre-inflation" world is to take the privilege of money-making out of the hands of governments [5] and leave it up to a natural restricted good that is in high demand and (constant) low supply, like, gold. There is, of course, no direct way today to do this, but as of now, nobody is stopping you from buying hard assets like gold or bitcoin, and using them to pay with. [1] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/ [2] https://www.britishmuseum.org/explore/themes/money/the_origins_of_coinage.aspx https://www.britishmuseum.org/explore/themes/money/the_origi... [3] This effect is gone in today's "inflation". [4] https://www.nber.org/system/files/chapters/c6739/c6739.pdf https://www.nber.org/system/files/chapters/c6739/c6739.pdf [5] https://mises.org/library/hayeks-plan-private-money https://mises.org/library/hayeks-plan-private-money
WheelsAtLarge 4y ago
It comes down to reducing the money supply. Increasing interest rates will eventually reduce inflation but it's going to hurt the economy. Another way to reduce the money supply is to increase taxes but that's mostly impossible to accomplish so we'll see interest rates rise until we see inflation slow.
- raxxorraxor 4y ago
  You cannot really stop if you need to refinance insane amounts of debt. Nearly all developed countries have this problem. The EU sees inflation due to energy but it is also self-accelerated by monetary policies. The ECB tries to be independent from politics but that is not really the case. At least not since a few years and it probably wasn't even independent.
Blackstrat 4y ago
Friedman explained inflation decades ago. It’s a monetary phenomenon. Years of easy money, coupled with extreme government spending, supply chain disruptions, and the entire overreaction to the COVID virus has left the US teetering on the brink of financial collapse. It’s not a surprise nor was it accidental.

3 points by tmaly 4y ago

I am curious to know in your mind, what would solve inflation? Would it be something like unlimited free energy or something else?

uberman 4y ago

The super-natural ability to predict all future demand and perfectly manage production to match it.

sharemywin 4y ago

Causes of price increases: 1. Energy costs 2. Labor Costs 3. Artificial supply limiting(Intellectual property, property rights, licensing, taxes etc.) 4. Natural Resources costs - Recovery (Either Mining or recycling) Increases in demand: 1. Wages 2. Government(Federal, State Local) 3. Charity 4. Exports The current process is to cut interest rates which forces cuts and commissions in financial institutions and changes entrepreneurial and investor behavior from investment to wealth preservation. which leads to cutbacks in spending, wage reduction, and layoffs which leads to less demand in common goods once it reaches the middle class and poor which spend most of their money on those types of items. which also leads to cuts in production as is the case in the current oil production

bitxbitxbitcoin 4y ago

Unlimited free energy could do the trick for a lot of things.

night-rider 4y ago

Diverse income streams. Don’t rely on cash cows and singular income streams. Stop complaining and go out and make more money. Not what people want to hear but it will work.

janandonly 4y ago

Inflation is different "things" to different people, see for a good explainer Lyn Alden [1]. Inflation used to be defined as an increase in the money supply: this can be easily explained when you realize that for the longest time in human history, "making money" had a real cost [2]. After all, the material that a coin was made of was gold, silver or copper (for small amounts), that first had to be mined. If there had been no recent wars and therefor the supply of slaves was low, then new coinage was hard to make because labor for the mines was hard to come by. Food prices would rise in times of drought, but would come back down afterwards [3]. So for a very long time, prices were more-or-less constant [4]. The 'simple' solution to go back to a "pre-inflation" world is to take the privilege of money-making out of the hands of governments [5] and leave it up to a natural restricted good that is in high demand and (constant) low supply, like, gold. There is, of course, no direct way today to do this, but as of now, nobody is stopping you from buying hard assets like gold or bitcoin, and using them to pay with. [1] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/ [2] https://www.britishmuseum.org/explore/themes/money/the_origins_of_coinage.aspx https://www.britishmuseum.org/explore/themes/money/the_origi... [3] This effect is gone in today's "inflation". [4] https://www.nber.org/system/files/chapters/c6739/c6739.pdf https://www.nber.org/system/files/chapters/c6739/c6739.pdf [5] https://mises.org/library/hayeks-plan-private-money https://mises.org/library/hayeks-plan-private-money

WheelsAtLarge 4y ago

It comes down to reducing the money supply. Increasing interest rates will eventually reduce inflation but it's going to hurt the economy. Another way to reduce the money supply is to increase taxes but that's mostly impossible to accomplish so we'll see interest rates rise until we see inflation slow.

raxxorraxor 4y ago
You cannot really stop if you need to refinance insane amounts of debt. Nearly all developed countries have this problem. The EU sees inflation due to energy but it is also self-accelerated by monetary policies. The ECB tries to be independent from politics but that is not really the case. At least not since a few years and it probably wasn't even independent.

Blackstrat 4y ago

Friedman explained inflation decades ago. It’s a monetary phenomenon. Years of easy money, coupled with extreme government spending, supply chain disruptions, and the entire overreaction to the COVID virus has left the US teetering on the brink of financial collapse. It’s not a surprise nor was it accidental.