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> First, point 2 isn't valid, inflation was happening long before the war. It's the reason that it's at the rate that it is rather than the rate that it was b

> First, point 2 isn't valid, inflation was happening long before the war. It's the reason that it's at the rate that it is rather than the rate that it was before the war, which is covered by the other two points. I could be wrong but is China not getting discounted Russian, Iranian and Venezuelan energy right now or do they participate fully in the sanctions? That's a question. Japan is an odd duck of an economy, I wouldn't use it in such an argument. Switzerland refutes your/their point as a counterexample since they mirrored EU/US policy. I don't know anything about Taiwan's economy. The further up the supply chain and those that can't sustain themselves are going to be the biggest hit though.

Mikeb85 4y ago
> but is China not getting discounted Russian, Iranian and Venezuelan energy right now or do they participate fully in the sanctions? That's a question. They are but they also had much tighter monetary policy throughout the whole pandemic. Higher interest rates, money supply increase has been constant over the last decade. Switzerland's money supply increased at a near constant rate the last few decades, there wasn't a massive change during COVID. No they didn't mirror US or EU policy, dunno why you think that. And they've had zero or negative interest rates for the better part of a decade, no change during COVID. Japan same deal. Check these same indicators for the higher inflation countries and there's clear policy differences... Late edit - also oil prices are high but not at all-time highs. Last time oil prices were this high the inflation rate wasn't this high. There's other obvious differences.
- imtringued 4y ago
  One thing that is actually obvious in hindsight is that austerity and balanced budgets result in both lower inflation and lower interest rates, that even applies if the interest rate is already at or below zero percent. The inability to conduct austerity and a balanced budget is tied to the inability to cut interest below zero. We can't have the "nice" things because our money system doesn't support it, we are running an outdated version. So instead we expand the money supply in the hope that inflation results in real negative interest rates. In my opinion raising interest rates isn't the best answer. If inflation has to be unrolled then according to MMT the government should run a budget surplus and as unintuitive that may sound, it actually requires an interest rate cut while simultaneously reducing the quantity of central bank reserves available to commercial banks i.e. quantitative tightening. It is almost as if Friedman was right with his monetarism, but he never even once considered that negative interest rates are necessary to maintain a constant velocity of money. Always remember that quantitative easing is an attempt to emulate negative interest rates with inflation. If you can cut the interest rate you don't need QE.
- guerrilla 4y ago
  I think we're at an impasse. There's nothing more to argue without actually quantifying it which is going to be extremely difficult at this point. This [1] cites some beginnings on that front but we'll see what comes of it. The experiment is being done with or without that information though; the central bankers are acting on your story, not mine, so the blood will tell. My bet is that it can't possibly be enough (because the problem is material) and the consequences of the failure to recognize that are going to be very serious. > Right now, the Fed has no control over the main drivers of rising prices but the Fed can slow demand by getting a lot of people fired and making families poorer. This is the tip of the iceberg, I say. The global effects will be catastrophic. Edit: Yep, it's already hitting [2]. And there's your reason for lower inflation in Asia, subsidies and other state spending, so basically the opposite of what you were saying. 1. https://stephaniekelton.substack.com/p/inflation https://stephaniekelton.substack.com/p/inflation 2. https://www.bloomberg.com/news/newsletters/2022-06-27/asia-s-inflation-buffers-weaken https://www.bloomberg.com/news/newsletters/2022-06-27/asia-s...

Mikeb85 4y ago

> but is China not getting discounted Russian, Iranian and Venezuelan energy right now or do they participate fully in the sanctions? That's a question. They are but they also had much tighter monetary policy throughout the whole pandemic. Higher interest rates, money supply increase has been constant over the last decade. Switzerland's money supply increased at a near constant rate the last few decades, there wasn't a massive change during COVID. No they didn't mirror US or EU policy, dunno why you think that. And they've had zero or negative interest rates for the better part of a decade, no change during COVID. Japan same deal. Check these same indicators for the higher inflation countries and there's clear policy differences... Late edit - also oil prices are high but not at all-time highs. Last time oil prices were this high the inflation rate wasn't this high. There's other obvious differences.

imtringued 4y ago
One thing that is actually obvious in hindsight is that austerity and balanced budgets result in both lower inflation and lower interest rates, that even applies if the interest rate is already at or below zero percent. The inability to conduct austerity and a balanced budget is tied to the inability to cut interest below zero. We can't have the "nice" things because our money system doesn't support it, we are running an outdated version. So instead we expand the money supply in the hope that inflation results in real negative interest rates. In my opinion raising interest rates isn't the best answer. If inflation has to be unrolled then according to MMT the government should run a budget surplus and as unintuitive that may sound, it actually requires an interest rate cut while simultaneously reducing the quantity of central bank reserves available to commercial banks i.e. quantitative tightening. It is almost as if Friedman was right with his monetarism, but he never even once considered that negative interest rates are necessary to maintain a constant velocity of money. Always remember that quantitative easing is an attempt to emulate negative interest rates with inflation. If you can cut the interest rate you don't need QE.
guerrilla 4y ago
I think we're at an impasse. There's nothing more to argue without actually quantifying it which is going to be extremely difficult at this point. This [1] cites some beginnings on that front but we'll see what comes of it. The experiment is being done with or without that information though; the central bankers are acting on your story, not mine, so the blood will tell. My bet is that it can't possibly be enough (because the problem is material) and the consequences of the failure to recognize that are going to be very serious. > Right now, the Fed has no control over the main drivers of rising prices but the Fed can slow demand by getting a lot of people fired and making families poorer. This is the tip of the iceberg, I say. The global effects will be catastrophic. Edit: Yep, it's already hitting [2]. And there's your reason for lower inflation in Asia, subsidies and other state spending, so basically the opposite of what you were saying. 1. https://stephaniekelton.substack.com/p/inflation https://stephaniekelton.substack.com/p/inflation 2. https://www.bloomberg.com/news/newsletters/2022-06-27/asia-s-inflation-buffers-weaken https://www.bloomberg.com/news/newsletters/2022-06-27/asia-s...