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> Something nasty is brewing in the economy. It will be obvious when it hits but until then it will be confusing as hell. It's only confusing because of FUD fr

• sokoloff 4y ago
  > vast majority of emergency debt created to combat economic shocks from COVID was embezzled by corporations and fraudsters I would at least expect that to be less inflationary than that same amount of money ending up in consumers’ hands and being rapidly spent without an offsetting increase in production. When the government opens up the feeding trough, it should expect pigs to show up. I agree that it probably can’t be blocked up front, but fraud needs to be prosecuted aggressively after the fact.
  • jjoonathan 4y ago
    They printed 10x as much money into asset markets, but I am sure they will blame stimulus checks.
    • xyzzyz 4y ago
      You’re missing the parent’s point: in a counterfactual scenario, if as much money was handed directly in stimulus checks as was used to pump assets, the actual inflation would be even worse, because velocity of stimulus money is much higher than velocity of asset.
      • jjoonathan 4y ago
        No, I did not miss the point that asset markets have lower velocity. Quite the opposite: I found it obvious and repulsively self-serving to invoke this as an excuse for rich people to print and pocket ten times as much money.
        • sokoloff 4y ago
          I don't see anywhere that I said that it was a good excuse to do that, merely that (in a thread specifically about inflation) I commented on the relative impact on inflation of high-velocity money vs low-velocity money.
          • jjoonathan 4y ago
            You repeated a talking point that has been widely invoked to rationalize printing lots of low-velocity money.
      • titzer 4y ago
        And yet people have argued for decades that stimulus money going to corporations is multiplied many times over because those corporations supposedly create jobs which supposedly creates even more economic activity. Why is it not the case that stimulus money to corporations creates multiplicative inflationary effects in the same way?
        • sokoloff 4y ago
          Companies grow by producing supply of products/services for sale. They also turn around and employ staff. The first sentence represents the creation of supply; the second the creation of demand [via the payments of wages]. That's much more balanced than if you just give money to consumers, increasing demand without a corresponding increase in supply.
          • jjoonathan 4y ago
            You conveniently left out the part where they are entitled to pocket it if they can, sending it straight into rich peoples' brokerage accounts, where it was intended to go all along. Yes, the brokerage accounts of rich people have less velocity than the bank accounts of poor people. This makes it more scandalous, not less. People who didn't need the money took ten times as much, because they could, and now they are pointing accusing fingers at the little people. Again.
  • titzer 4y ago
    The irony of this statement is that it's so often the case that people argue for lower taxes with "I know how to spend my money better than the government!" Then when it comes to stimulus money, it's the complete opposite: "Don't give it to consumers, that'll cause inflation! Give it to corporations, they know how to spend it! They'll make jobs or something!"
• rayiner 4y ago
  My gut feeling is that you’re correct and this is money printing coming home to roost. But lots of folks say that isn’t what it is. And I’m not an economist. What sources have you found helpful to explain what’s going on?
  • turns0ut 4y ago
    Given the Fed doesn’t even know what’s going on your gut is probably just as good a source: https://www.foxnews.com/media/fed-chairman-powell-admitting-understand-inflation https://www.foxnews.com/media/fed-chairman-powell-admitting-... There is this from Dalio who suggests money printer go brrr policies sank the Dutch and Brits: https://youtu.be/xguam0TKMw8 https://youtu.be/xguam0TKMw8 While all the fancy math is great for drawing geometric shapes, human intuition and basic arithmetic run the economy; human intuition for quantity has been evolving for millions of years whereas our fancy languages are only 5,000 years old (so says historians). We annotate our arithmetic operators differently for calculus and the rest of higher level math, but at the end of the day with only 13% of the adult public possessing an “advanced degree” most people make pretty basic arithmetical decisions. Smart people used their education to get ahead but the rest of the world has caught up and caught on as <50% believe in higher powers now; elites are just people, not specials to be kowtowed by. So what’s happened is again elites tried to form concrete agency habits into the masses (like religion did) but the masses agency does not concretely conform to rigid mathematical objects and the elites are now out of touch; either by stubbornness or age, they can’t handle they’re the ones losing ground all this time. So they tinker with official math to keep us in line: https://www.nytimes.com/1997/02/27/business/job-insecurity-of-workers-is-a-big-factor-in-fed-policy.html https://www.nytimes.com/1997/02/27/business/job-insecurity-o... So in the end economic policy was always politically motivated power consolidation for the elites, and the public, probably thanks to the meta awareness of our communities the internet provides, has caught onto the big picture game. Like Assange said; only the highly numerate will be able to see. I like to think it’s because such minds are not as swayed by cable group think. So here we are saving like the Fed said and emotionally normalizing to a recession coming because that’s what we talk about, and so we’ll create a self fulfilling prophecy of it because like the number say, only 13% have an advanced degree; the masses will go along with Jerome Powell and the cable news channels telling them; stop spending, save, because a recession is coming. And stopping that simple arithmetic spending at scale will trigger a recession. Subs will get cut to services. Services die off. What’s left is the new “real economy”, and off we go again. Conveniently not giving a toss about general public who got hurt while the elites look smart for getting us to believe they saw the future, and ignore that listening to them really just modified our economics behavior to make it all true.
• oneoff786 4y ago
  I think the dollar is just fine. The problem is that there’s a war in Europe that’s making food and energy more expensive. And also China is just off on its own facing a real estate collapse + the fallout of idiotic lockdowns. Things will cost more. That’s hardly surprising. Energy is really important.
  • xyzzyz 4y ago
    My memory reaches further than February 2022, and I clearly remember the prices were going up already before then.
    • oneoff786 4y ago
      If your memory doesn’t include the global pandemic that shut down global supply chains then I wouldn’t be calling attention to it. Of course prices went up.
      • GenerocUsername 4y ago
        Problem with citing the pandemic is the dissonance that red folk were very against shutting things down for just this reason. Meanwhile resurgence of COVID proved the shutdowns did little on a 5 year timescale
        • oneoff786 4y ago
          That doesn’t sound like a problem
        • pas 4y ago
          Folks gained some immunity (and experience in dealing with COVID) since the first few waves. Plus at best there was a big slowdown, but there was no serious shutdown, many people still worked and got COVID, eg. people who would have otherwise worked at the port. (Though even a serious lockdown doesn't help much. (We saw this in China.)) And mask wearing was so far from ideal that it was not able to seriously decrease the transmission of the disease. Aaand of course the boosters could have been much much better (containing new variants): https://www.slowboring.com/p/were-getting-an-omicron-optimized https://www.slowboring.com/p/were-getting-an-omicron-optimiz... What's true is the shut/lock/slow part made no sense after we got the vaccines, and it's also quite obvious that there was just not enough stockpile of basically anything to do a ~1 month lockdown to stop the spread of the disease. (And the moment the first international plane landed it would have started again.)
• eru 4y ago
  > [...] we've entered a world-wide inflationary death spiral driven [...] Not all countries are experiencing high inflation at the moment.
  • titzer 4y ago
    https://www.ft.com/content/088d3368-bb8b-4ff3-9df7-a7680d4d81b2 https://www.ft.com/content/088d3368-bb8b-4ff3-9df7-a7680d4d8... Vast majority.
    • eru 4y ago
      Yes, many countries. But not all. Which suggests that persistently high inflation is caused by the same thing it's always caused: (local) money printing. Not some abstract worries about excessive (?) debt or 'fraudsters' etc or so.
      • Aunche 4y ago
        Japan has always been the leader in money printing, yet they're also experiencing the least inflation.
        • ethbr0 4y ago
          Japan is an economic outlier in a lot of ways (i.e. savings and birth/immigration rates). And I think it's a great example that most of the actual drivers of economic outcomes are unmeasurable. What we actually measure and react to are themselves second order effects of those primary drivers. Which is why we can compare two situations with similar (second order) metrics (but different primary drivers) and be puzzled by different macro outcomes.
          • BlueTemplar 4y ago
            I think instead is that the mistake was to measure them in terms of money, which is a token, a signal, and hence not "real" (not to mention subject to feedback loops when trying to focus economic policy on that signal !)
• xienze 4y ago
  As much as I know that governments and central banks are to blame for inflation in a general sense, it can’t be understated that A LOT of this inflation is due to starting and stopping factories, ports, etc. in response to Covid over the past two years. There’s a long chain to finished products and when one link in the chain has an issue, everything else downstream suffers and price increases compound. In short, a lot of what’s happening comes back to the debate we had during the early part of the pandemic... one side said shutting down the world would have major consequences down the line and we’re seeing that now.
  • buscoquadnary 4y ago
    This bothered me during those discussions everyone who pointed out the potential impacts to the economy were shouted down for "caring more about money and people" and "putting the rich ahead of grandma" like the economy was some nebulous abstract betting ring that only effected the powerful and wealthy. No one seemed to understand that those kinds of things were going to have much more drastic effects for everyday people as well. This same thing goes for the stock market, sure I don't have a ton of money it it, but I do keep putting money in my 401k and so do a lot of other people that are depending on it for their retirement, when the stock market takes hits it effects me just as much as the "elite".
    • ethbr0 4y ago
      IMHO, the earliest shutdowns were defensible on the basis of ignorance: we knew so little about the communicability and lethality of SARS-CoV-2. It would have been irresponsible to risk chicken with something that might have had MERS lethality. Eventually we put tighter bounds on those quantities, and could make more informed decisions. But yes, all stages of the pandemic were unfortunately people talking past each other, without being actually curious about the pros/cons of various approaches. But it's been awhile since the political class has had to deal with an actual existential science problem... so that muscle wasn't very strong.
• bryanlarsen 4y ago
  We've had massive deficits for decades. It requires pretty strong evidence to claim that the problem is something that is common to the past few decades rather than the things that are unique to the last couple of years.
• DoingIsLearning 4y ago
  I've asked here in another thread but didn't get an answer. What can the average _not_a_billionaire_ investor do to weather this out (not knowing exactly what _this_ is)? In my example I have most of my money on Index funds (with a 60/20/20 split between US markets, China markets, and sector specific ETFs) plus an emergency fund that lasts me about 12 months and I (unfortunately now) earn in Euros.
  • gniv 4y ago
    There is no good answer. I think Lyn Alden said the same in a tweet recently. You will most likely lose no matter what short term. My conclusion is that long term it's probably good to be in stocks. The problem is that stocks might go down a lot before recovering, years from now. And of course you cannot time it.
  • rrrrrrrrrrrryan 4y ago
    If you expect inflation and continual shortages, the best bet is probably to invest in commodities. They're already pulling back this year though: https://finance.yahoo.com/quote/DJP https://finance.yahoo.com/quote/DJP
  • cko 4y ago
    If you believe in factor investing, value stocks have historically performed ok in inflationary times. I've been using AVLV and AVUV, but they've been down since I bought them in May.
  • surfaceofthesun 4y ago
    My best guess: * You can invest in covered call funds[1] (like QYLD) and equity-linked notes (like JEPI) as a hedge. This will lose out to index funds in the long-term, but should be better during volatile periods. * The US has I-bonds[2]. An equivalent may exist in your country. * Having an emergency fund is good. * Diversified investments is good. [1] - https://www.blackrock.com/us/individual/literature/investor-education/equity-covered-call-cefs.pdf https://www.blackrock.com/us/individual/literature/investor-... [2] - https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
• ethbr0 4y ago
  > Record profits across the board for corporations, highest CEO pay ratios ever recorded, massive housing bubble; the monied class is making off with their spoils and cashing the stock market in > Meanwhile they are sticking it to consumers That's a lot to parse, but I'll give it a try. "Record profits across the board for corporations" - Record profits is exactly what you would expect with lingering low interest rates + lowered rates from COVID response + unleashed demand post-COVID. This was by design, because profitable companies don't fire everyone and create a recesssion from unemployment. Or tank the stock market and thus housing market and thus create a recession. And you're a quarter out of date. Profits and margins have been compressing in Q1 2022 and look to continue. "Highest CEO pay ratios ever recorded" - Exactly what you'd expect with a roaring stock market, given equity-biased compensation. That will correct, as it always does. And furthermore, talent compensation is already increasing and on every HR department's priority list. [0] "Massive housing bubble" - Low interest rates + stimulus + lack of supply + sudden demand spike = price spike. Fed rate hikes will cool this off fairly quickly. "The monied class..." - You mean, everyone? "... making off with their spoils and cashing the stock market in..." - Reallocating and diversifying assets? "Meanwhile they are sticking it to the consumers with inflation..." - Who is "they"? Some generalized bourgeoisie who control the means of production and arbitrarily set prices? See earlier point (and google for statistics) and margin compression for what's actually happening: companies are passing along less than all of their own cost increases. [0] https://www.pwc.com/us/en/library/pulse-survey/executive-views-2022.html https://www.pwc.com/us/en/library/pulse-survey/executive-vie... (I hate big-4 management consulting pablum, but it's a quick distillation)
  • Folcon 4y ago
    I'm following along with your breakdown, but I'm not clear what point you're trying to make here? > "The monied class..." - You mean, everyone? Are you asserting that you believe the parent is using "The monied class..." to mean everyone? Which doesn't seem to be the case. Or are you asserting everyone belongs in "The monied class", if so, that seems so overly broad as to be a bit ridiculous?
    • ethbr0 4y ago
• lamontcg 4y ago
  The real problem is the labor market. With boomers retiring and deaths and disability due to covid taking workers out of the pool, along with suppression of immigration, there's a large overhang of jobs compared to workers. This is giving average workers negotiating power which is creating wage growth. That is what the Fed and the business pages are really most concerned about and the sternest warnings from the Fed are about the labor market. Not the headline CPI numbers. The fact that the "man on the street" now believes that inflation is purely a monetary phenomenon, though, means that every time wage inflation rears its head that people will clamor for the Fed to punish the economy. The Fed is going to have to crash the economy to create a recession and thereby cause deflation. There will almost certainly be detonations elsewhere in the economy (commercial and residential real estate most likely) that will further cause deflation. High CPI will be transitory because this Fed doesn't care about tanking the economy. Billionaires also don't care about tanking the economy, the past 20 years have taught them they always wind up even more on top than before. What will be interesting though is to see what happens when they've had enough of pain and start to support the economy again, then inflation will probably come roaring back, since its causes are now the structural conditions of the wage market. Then there will be renewed calls to tank the economy again and people will object to the Fed doing anything to try to support the economy with exactly the same rhetoric here. In the near term future (~10 years) any time the inflation numbers tick up the stock market may crash on its own now. I suspect we're now in for a decade or more of stagnation, although alternating periods of inflation and recession should average out. I might be wrong though if the billionaires decide it is too painful and want the Fed to turn the money spigot back on. But as a lot of this comment section shows, the managerial class has now been taught to really deeply hate the Fed doing that, and believes it to be the root cause of all that is ill.
  • namelessoracle 4y ago
    I suspect the massive money printing going on for years has had no impact because most of that money never actually landed in the hands of actual people and just existed to be sucked up by wall street and elites. And they dont spend in a way to impact prices. But enter covid money printing actually reaching normal people (even if alot of it got soaked up too), plus the elites using the money to buy things normal people want instead of rich people nonsense (buying housing as "safe" investment during covid), plus all the money that was going towards servicing student loans getting spend in the economy, plus normal people using their power to get more wages due to worker shortages and here we are.