4 ms·

Supply issues can be alleviated with less demand, which is precisely what the fed attempts by raising interest rates. So your logic about not printing dollars n

Supply issues can be alleviated with less demand, which is precisely what the fed attempts by raising interest rates. So your logic about not printing dollars not having an effect isn’t spot on imo. You also ignore the fact that USD is the reserve currency making it difficult to compare to other countries.

whatever1 4y ago
Inflation metrics don’t care about demand levels. It’s just a basket of goods. The question of how many people can afford this basket is a different question.
- JumpCrisscross 4y ago
  > question of how many people can afford this basket is a different question And that question’s name is demand.
  - whatever1 4y ago
    Let’s assume that we over reaching 10% of the global oil market, meaning that due to high demand we extended the supply by adding 10% expensive sources of oil. To get the prices back to the original we need to bring down by 10% the *global* demand. That means that the US needs to cut 50% their oil consumption (demand) if they are to act alone. These are not realistic things.
    - nightski 4y ago
      By increasing rates on USD you can affect demand globally. We are not in isolation as you seem to be so convinced. Also I have no idea why you'd compare global supply to domestic demand. Again, reserve currency and petrodollar status.
      - eru 4y ago
        > By increasing rates on USD you can affect demand globally. That's like saying that by pointing my fan to blow onto the road, I can move the cars. In theory and all else being equal, yes. In practice, cars have drivers that steer to stay on the road. Similarly, other countries around the globe have their own central banks that regulate their local money supply to achieve their own goals.
oneoff786 4y ago
The demand curve hasn’t changed
- deleted 4y ago
  [deleted]
- nightski 4y ago
  That's kind of the point. We haven't seen demand drop yet which is further driving inflation.
  - oneoff786 4y ago
    That’s good though. We generally want demand to stay strong. Inflation sucks but if it’s just prices going up because supply went down, well that’s just the breaks.
    - brutuscat 4y ago
      Demand should fall. Because of the [1]bullwhip effect. - Someone wants a car and ask the car dealer - car dealer orders 3 just in case because shortage - distributor orders 6 for the same reason - factory makes 12 because parts are short in stock Result: cars in demand 1, cars in stock 12. No more just in time production and huge demand imbalance. [1]https://web.archive.org/web/20220627205956/https://www.washingtonpost.com/business/michael-burrys-bullwhip-tweet-deserves-serious-attention/2022/06/27/0acb7812-f651-11ec-81db-ac07a394a86b_story.html?utm_source=twitter&utm_medium=social&utm_campaign=wp_business https://web.archive.org/web/20220627205956/https://www.washi...
      - wbsss4412 4y ago
        In your example, demand doesn’t decrease, it stays stable while supply increases. If anything you don’t want demand destruction if we are anticipating such a drastic increase in supply.
        4y ago

whatever1 4y ago

Inflation metrics don’t care about demand levels. It’s just a basket of goods. The question of how many people can afford this basket is a different question.

JumpCrisscross 4y ago
> question of how many people can afford this basket is a different question And that question’s name is demand.
- whatever1 4y ago
  Let’s assume that we over reaching 10% of the global oil market, meaning that due to high demand we extended the supply by adding 10% expensive sources of oil. To get the prices back to the original we need to bring down by 10% the *global* demand. That means that the US needs to cut 50% their oil consumption (demand) if they are to act alone. These are not realistic things.
  - nightski 4y ago
    By increasing rates on USD you can affect demand globally. We are not in isolation as you seem to be so convinced. Also I have no idea why you'd compare global supply to domestic demand. Again, reserve currency and petrodollar status.
    - eru 4y ago
      > By increasing rates on USD you can affect demand globally. That's like saying that by pointing my fan to blow onto the road, I can move the cars. In theory and all else being equal, yes. In practice, cars have drivers that steer to stay on the road. Similarly, other countries around the globe have their own central banks that regulate their local money supply to achieve their own goals.

oneoff786 4y ago

The demand curve hasn’t changed

deleted 4y ago
[deleted]
nightski 4y ago
That's kind of the point. We haven't seen demand drop yet which is further driving inflation.
- oneoff786 4y ago
  That’s good though. We generally want demand to stay strong. Inflation sucks but if it’s just prices going up because supply went down, well that’s just the breaks.
  - brutuscat 4y ago
    Demand should fall. Because of the [1]bullwhip effect. - Someone wants a car and ask the car dealer - car dealer orders 3 just in case because shortage - distributor orders 6 for the same reason - factory makes 12 because parts are short in stock Result: cars in demand 1, cars in stock 12. No more just in time production and huge demand imbalance. [1]https://web.archive.org/web/20220627205956/https://www.washingtonpost.com/business/michael-burrys-bullwhip-tweet-deserves-serious-attention/2022/06/27/0acb7812-f651-11ec-81db-ac07a394a86b_story.html?utm_source=twitter&utm_medium=social&utm_campaign=wp_business https://web.archive.org/web/20220627205956/https://www.washi...
    - wbsss4412 4y ago
      In your example, demand doesn’t decrease, it stays stable while supply increases. If anything you don’t want demand destruction if we are anticipating such a drastic increase in supply.
      - 4y ago