6 ms·

Inflation at 9.1% in June

53 points by nimbius 4y ago

mercy_dude 4y ago
Why is Jerome Powel and all the Fed members who said inflation is transitory last year still running the show? Oh let me guess these unelected bureaucrats and economist experts run the show without any consequences. And for that matter, if honest journalism’s existed Janet Yalen who echoed the same thing would be having a rough time now. But none of these people have any accountability. And here we are.
- mikkergp 4y ago
  If only the fed could be run by people with the benefit of hindsight.
- dixie_land 4y ago
  It doesn’t even take a Monday morning quarterback to know pumping 4 trillions at the beginning of Covid is going to have consequences.
- jc_811 4y ago
  Would you rather have elected officials running the backbone of the entire economy? Officials who have to campaign and constantly worry about the next election cycle? Officials who will care much more about the short-term at the expense of the long-term since that is what keeps them elected? Neither system is ideal, but there are certainly reasons for the system being set up the way it is. Since you decided to bring up the issue, what would your proposed solution be? How should the FED system be set up in regard to officials, appointments, elections, etc. Genuinely curious as to what your thoughts are since I haven't been able to dream up an ideal scenario in my own mind.
  - mercy_dude 4y ago
    Because that’s how democracy is supposed to work. Ultimately democracy is not about bringing the most competent people around. It’s so peoples voice matters so when push comes to shove, we don’t become like Sri Lanka. Also I am not convinced Fed is apolitical. The proposed solution would be to go back to gold standard and Fed not have the power to seize it like Roosevelt did. So we need no fake money and fake policies around it.
    - rat87 4y ago
      I'm pretty sure the gold standard is seen as a joke but the vast majority of economists. During the great depression countries who went off gold standard first recovered more quickly. Roosevelt did the right thing
      - mercy_dude 4y ago
        The same economists who also thought inflation is transitory.
      - Grim-444 4y ago
        I'm always confused at how there's such a seemingly large mismatch between on one hand people trivially dismissing the gold standard as a joke and on the other the fact that the gold standard seemingly worked well enough for this country for hundreds of years. It was the system that powered the country over the majority of its history, for the vast majority of its expansion and rise to power. But it's so obviously a joke of a system?
        deleted 4y ago
        [deleted]
        generj 4y ago
        It didn’t work well at all. We had frequent economic panics all through the 1800s and early 1900s. When the US rose to power (1930s to 1940s) gold was mostly not used in practice due to international traffic being mostly blocked (due to nationalist impulses during the Depression) or under heavy credit (during WW2). There’s a decent argument to be made gold caused the Great Depression or at least exacerbated it. The “gold standard” system that started under Breton Woods (1944-1971) was basically a polite fiction, and when someone called the fiction it died. A gold standard would be totally unworkable for today’s trade. It barely served the fledgling globalism of the 1920s.
        7speter 4y ago
        >worked well enough for this country for hundreds of years. If I remember my numbers from an economics course right, from 1776-1912, there were major runs on banks in the US an average of every 12 years. While the US didn't leave the gold standard until 1933, the fed, after it learned not to drastically raise interest rates quickly in 1929, has kept things pretty stable for almost a century.
  - kansface 4y ago
    I’d prefer to have technocrats with accountability like generals in the military. Having said that, WW2 was the last time that we fired brass for incompetence.
    - csense 4y ago
      > WW2 was the last time that we fired brass for incompetence I don't think this is true. Two examples that immediately spring to mind because they've been in the news: - In 2014, Michael Flynn was fired from the DIA: https://en.wikipedia.org/wiki/Michael_Flynn#Defense_Intelligence_Agency https://en.wikipedia.org/wiki/Michael_Flynn#Defense_Intellig... - In 2017, the Navy removed a rear admiral and a captain when a destroyer collided with a civilian tanker: https://en.wikipedia.org/wiki/USS_John_S._McCain_and_Alnic_MC_collision#Investigation_of_incident https://en.wikipedia.org/wiki/USS_John_S._McCain_and_Alnic_M...
      - remarkEon 4y ago
        We spent 20 years toiling in wars in Iraq and Afghanistan. Multiple operational and strategic failures throughout, up to and including the “withdrawal” from Kabul. No one was fired for this incompetence, but McChrystal was fired for bad mouthing the president to a journalist.
- pylua 4y ago
  Not only is there no individual accountability, but there is also no entity cleansing function. If a company ran the way the government runs the economy it may not exist. Poor government policies are replaced by more radical policies designed to keep the ship from going under.
- spywaregorilla 4y ago
  Was there a war in ukraine last year and a large energy crisis threatening europe?
  - Proven 4y ago
- Georgelemental 4y ago
  Tbf Jerome Powell et all had 0 control over the trillions in stimulus spending. How much can you fault them for trying to appease the lunatics in Congress?
  - 7speter 4y ago
    >Tbf Jerome Powell et all had 0 control over the trillions in stimulus spending. Right, the fed injected trillions into the economy via monetary policy. Sources to start: https://www.reuters.com/article/us-health-coronavirus-federalreserve-mar-idUSKCN24E13G https://www.reuters.com/article/us-health-coronavirus-federa... https://markets.businessinsider.com/news/stocks/fed-repo-trillions-added-to-fight-coronavirus-economic-risk-recession-2020-3-1028991278 https://markets.businessinsider.com/news/stocks/fed-repo-tri... https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723 https://www.investopedia.com/government-stimulus-efforts-to-... I don't have a final number but please stop spreading disinformation, whether in bad faith or not.
    - imtringued 4y ago
      Ok now what? Are you going to reduce the money supply? I don't think so. Nobody wants to reduce the money supply because that would be theft or expropriation or whatever convenient excuse. So instead there is inflation/expansion of the money supply.
    - deleted 4y ago
      [deleted]
- danielmarkbruce 4y ago
  What if they are right? If it's 12-18 months of 8-9% inflation, it's probably fair to call it transitory. We just had 12 months of inflation during a wicked supply chain storm after a pandemic, and a war which has further squeezed energy prices. Here is a chart from bls: https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri... Notice when it last went above 5%? When oil hit 140+ back in 2008. Energy prices ripple through a lot of categories. If energy tanks, and it always has, we might fly back to 0% inflation in a hurry. Powell might not have a crystal ball, but he's no dummy.
MichaelMoser123 4y ago
Wikipedia says, that Russia's war against Ukraine is driving inflation. Now it seems that the bloody war is going to continue for quite a while. https://en.wikipedia.org/wiki/2021%E2%80%932022_inflation_surge https://en.wikipedia.org/wiki/2021%E2%80%932022_inflation_su... "Mark Zandi, chief economist of Moody's Analytics, analyzed consumer price index components following the May 2022 report that showed an 8.6% inflation rate. He found that the 2022 Russian invasion of Ukraine was the principal cause of higher inflation, comprising 3.5% of the 8.6%. He said oil and commodities prices jumped in anticipation of and response to the invasion, leading to higher gasoline price"
RichardHeart 4y ago
This is good for Fedcoin.
- madengr 4y ago
  Why has crypto crashed when it was supposed to be inflation proof?
  - lkbm 4y ago
    The stock market also crashed. Shouldn't it also run counter to inflation? Inflation is not the only force at work in our economy.
    - danielmarkbruce 4y ago
      Why should it?
battery_glasses 4y ago
demand > supply == inflation The fed can only reduce demand. Raising interest rates won't lower inflation if there are still massive disruptions to the supply chain. This is especially true for food and gas where people don't have much choice beside buy it or starve.
- rndmind 4y ago
  In the case of the recent wildly sharp increase in consumer prices is caused by lower supply of goods... not by increase of money supply. If the demand stays the same, the supply goes down... then the price will go up. It's pretty common sense if you think about supply and demand, but I am perplexed at the amount of people that don't practice any critical thought, let alone skepticism.
  - MuffinFlavored 4y ago
    > caused by lower supply of goods can you give an example of what specific types of goods?
    - battery_glasses 4y ago
      Semiconductors, shipping containers, tampons are some high profile cases. Examples are plentiful
      - yobbo 4y ago
        It's the price of milk, bread, and meat that is causing CPI to rise. Not PS5s.
- MuffinFlavored 4y ago
  what confuses me is... take median household that makes about $67k/yr in America median implies that's about 50% of the working population and below household wise, right? if they are having to pay more for energy/rent/food, they're "struggling" more compared to when CPI was lower, right? so... where is all of this excess demand coming from? exclusively from households that make more than $67k/yr? i wonder where the threshold is. obviously high networth individuals aren't affected super adversely by high gas prices. i just don't know what has the higher impact on "demand" (demand for what honestly, i have no clue): millions of lower networth households or more concentrated higher networth households
axg11 4y ago
CPI crossed the 2% threshold in March 2021, meaning we've only just barely had 1 year of >2% CPI. If inflation were to nosedive over the next 6-9 months, it would be pretty easy to argue that the inflation was transitory. I'm not taking sides in the "inflation is transitory" debate, merely saying that it is too early to tell.
- milkytron 4y ago
  Maybe it is too early to tell, but the Fed had argued this as a means to keep rates low. Hindsight is 2020, but it seems like the Fed has put themselves in a reactive situation and are now playing catch-up.
- danielmarkbruce 4y ago
  Plus, look at the correlation between energy prices and CPI (not just the energy category) and you see energy ripple through everything... It can go down fast, pulling CPI with it.
bakuninsbart 4y ago
Would be super curious to learn how cost of living is affecting other countries. I do understand that hn demographics skew higher income, but I feel like here in Germany almost no one is fully insulated. For me, my expenses after rent and health insurance jumped almost 75%. I don't own a car and generally don't spend much outside of good food and drinks. Things like beef mince is 3 times the price it was a year ago. Cheese and similar products rose by something like 50% at least. Now there's talks about heating bills (often times around 5% of income) rising 7-fold... I'm still quite safe myself, but increasingly feel like this is going to destroy a lot of lives around here, and have major consequences for everyone.
- gnulinux 4y ago
  This is exactly my experience. My expenses rose >75% even though I'm living a lot more frugally compared to 2021. I live in Boston and everything is just SO F'ING EXPENSIVE! I make ~$130k, I used to save ~$2000 every month before ~March 2022 and I'm now living close to paycheck to paycheck. I understand that there are things I can do better, but life is truly more expensive now.
  - JZL003 4y ago
    I live in a similar place and I'm with you. I knew it was inflation but I almost started to believe I just started eating out more or something. But it's a very noticeable jump
- mk89 4y ago
  I agree with you. These 7-8-9-10% increases are actually much more than that, in my opinion. I understand they need to make an average, but well, it looks like we need maybe other indicators as well? I think just alone the groceries have increased about 20-25% but I might be wrong, though.
  - r_hoods_ghost 4y ago
    Assuming you're a USAian you can drill down into the CPI data here (click the bars on the chart) https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri...
selimthegrim 4y ago
See also here: https://news.ycombinator.com/item?id=32081779 https://news.ycombinator.com/item?id=32081779

53 points by nimbius 4y ago

Why is Jerome Powel and all the Fed members who said inflation is transitory last year still running the show? Oh let me guess these unelected bureaucrats and economist experts run the show without any consequences. And for that matter, if honest journalism’s existed Janet Yalen who echoed the same thing would be having a rough time now. But none of these people have any accountability. And here we are.

mikkergp 4y ago
If only the fed could be run by people with the benefit of hindsight.
dixie_land 4y ago
It doesn’t even take a Monday morning quarterback to know pumping 4 trillions at the beginning of Covid is going to have consequences.
jc_811 4y ago
Would you rather have elected officials running the backbone of the entire economy? Officials who have to campaign and constantly worry about the next election cycle? Officials who will care much more about the short-term at the expense of the long-term since that is what keeps them elected? Neither system is ideal, but there are certainly reasons for the system being set up the way it is. Since you decided to bring up the issue, what would your proposed solution be? How should the FED system be set up in regard to officials, appointments, elections, etc. Genuinely curious as to what your thoughts are since I haven't been able to dream up an ideal scenario in my own mind.
- mercy_dude 4y ago
  Because that’s how democracy is supposed to work. Ultimately democracy is not about bringing the most competent people around. It’s so peoples voice matters so when push comes to shove, we don’t become like Sri Lanka. Also I am not convinced Fed is apolitical. The proposed solution would be to go back to gold standard and Fed not have the power to seize it like Roosevelt did. So we need no fake money and fake policies around it.
  - rat87 4y ago
    I'm pretty sure the gold standard is seen as a joke but the vast majority of economists. During the great depression countries who went off gold standard first recovered more quickly. Roosevelt did the right thing
    - mercy_dude 4y ago
      The same economists who also thought inflation is transitory.
    - Grim-444 4y ago
      I'm always confused at how there's such a seemingly large mismatch between on one hand people trivially dismissing the gold standard as a joke and on the other the fact that the gold standard seemingly worked well enough for this country for hundreds of years. It was the system that powered the country over the majority of its history, for the vast majority of its expansion and rise to power. But it's so obviously a joke of a system?
      - deleted 4y ago
        [deleted]
      - generj 4y ago
        It didn’t work well at all. We had frequent economic panics all through the 1800s and early 1900s. When the US rose to power (1930s to 1940s) gold was mostly not used in practice due to international traffic being mostly blocked (due to nationalist impulses during the Depression) or under heavy credit (during WW2). There’s a decent argument to be made gold caused the Great Depression or at least exacerbated it. The “gold standard” system that started under Breton Woods (1944-1971) was basically a polite fiction, and when someone called the fiction it died. A gold standard would be totally unworkable for today’s trade. It barely served the fledgling globalism of the 1920s.
      - 7speter 4y ago
        >worked well enough for this country for hundreds of years. If I remember my numbers from an economics course right, from 1776-1912, there were major runs on banks in the US an average of every 12 years. While the US didn't leave the gold standard until 1933, the fed, after it learned not to drastically raise interest rates quickly in 1929, has kept things pretty stable for almost a century.
- kansface 4y ago
  I’d prefer to have technocrats with accountability like generals in the military. Having said that, WW2 was the last time that we fired brass for incompetence.
  - csense 4y ago
    > WW2 was the last time that we fired brass for incompetence I don't think this is true. Two examples that immediately spring to mind because they've been in the news: - In 2014, Michael Flynn was fired from the DIA: https://en.wikipedia.org/wiki/Michael_Flynn#Defense_Intelligence_Agency https://en.wikipedia.org/wiki/Michael_Flynn#Defense_Intellig... - In 2017, the Navy removed a rear admiral and a captain when a destroyer collided with a civilian tanker: https://en.wikipedia.org/wiki/USS_John_S._McCain_and_Alnic_MC_collision#Investigation_of_incident https://en.wikipedia.org/wiki/USS_John_S._McCain_and_Alnic_M...
    - remarkEon 4y ago
      We spent 20 years toiling in wars in Iraq and Afghanistan. Multiple operational and strategic failures throughout, up to and including the “withdrawal” from Kabul. No one was fired for this incompetence, but McChrystal was fired for bad mouthing the president to a journalist.
pylua 4y ago
Not only is there no individual accountability, but there is also no entity cleansing function. If a company ran the way the government runs the economy it may not exist. Poor government policies are replaced by more radical policies designed to keep the ship from going under.
spywaregorilla 4y ago
Was there a war in ukraine last year and a large energy crisis threatening europe?
- Proven 4y ago
Georgelemental 4y ago
Tbf Jerome Powell et all had 0 control over the trillions in stimulus spending. How much can you fault them for trying to appease the lunatics in Congress?
- 7speter 4y ago
  >Tbf Jerome Powell et all had 0 control over the trillions in stimulus spending. Right, the fed injected trillions into the economy via monetary policy. Sources to start: https://www.reuters.com/article/us-health-coronavirus-federalreserve-mar-idUSKCN24E13G https://www.reuters.com/article/us-health-coronavirus-federa... https://markets.businessinsider.com/news/stocks/fed-repo-trillions-added-to-fight-coronavirus-economic-risk-recession-2020-3-1028991278 https://markets.businessinsider.com/news/stocks/fed-repo-tri... https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723 https://www.investopedia.com/government-stimulus-efforts-to-... I don't have a final number but please stop spreading disinformation, whether in bad faith or not.
  - imtringued 4y ago
    Ok now what? Are you going to reduce the money supply? I don't think so. Nobody wants to reduce the money supply because that would be theft or expropriation or whatever convenient excuse. So instead there is inflation/expansion of the money supply.
  - deleted 4y ago
    [deleted]
danielmarkbruce 4y ago
What if they are right? If it's 12-18 months of 8-9% inflation, it's probably fair to call it transitory. We just had 12 months of inflation during a wicked supply chain storm after a pandemic, and a war which has further squeezed energy prices. Here is a chart from bls: https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri... Notice when it last went above 5%? When oil hit 140+ back in 2008. Energy prices ripple through a lot of categories. If energy tanks, and it always has, we might fly back to 0% inflation in a hurry. Powell might not have a crystal ball, but he's no dummy.

MichaelMoser123 4y ago

Wikipedia says, that Russia's war against Ukraine is driving inflation. Now it seems that the bloody war is going to continue for quite a while. https://en.wikipedia.org/wiki/2021%E2%80%932022_inflation_surge https://en.wikipedia.org/wiki/2021%E2%80%932022_inflation_su... "Mark Zandi, chief economist of Moody's Analytics, analyzed consumer price index components following the May 2022 report that showed an 8.6% inflation rate. He found that the 2022 Russian invasion of Ukraine was the principal cause of higher inflation, comprising 3.5% of the 8.6%. He said oil and commodities prices jumped in anticipation of and response to the invasion, leading to higher gasoline price"

RichardHeart 4y ago

This is good for Fedcoin.

madengr 4y ago
Why has crypto crashed when it was supposed to be inflation proof?
- lkbm 4y ago
  The stock market also crashed. Shouldn't it also run counter to inflation? Inflation is not the only force at work in our economy.
  - danielmarkbruce 4y ago
    Why should it?

battery_glasses 4y ago

demand > supply == inflation The fed can only reduce demand. Raising interest rates won't lower inflation if there are still massive disruptions to the supply chain. This is especially true for food and gas where people don't have much choice beside buy it or starve.

rndmind 4y ago
In the case of the recent wildly sharp increase in consumer prices is caused by lower supply of goods... not by increase of money supply. If the demand stays the same, the supply goes down... then the price will go up. It's pretty common sense if you think about supply and demand, but I am perplexed at the amount of people that don't practice any critical thought, let alone skepticism.
- MuffinFlavored 4y ago
  > caused by lower supply of goods can you give an example of what specific types of goods?
  - battery_glasses 4y ago
    Semiconductors, shipping containers, tampons are some high profile cases. Examples are plentiful
    - yobbo 4y ago
      It's the price of milk, bread, and meat that is causing CPI to rise. Not PS5s.
MuffinFlavored 4y ago
what confuses me is... take median household that makes about $67k/yr in America median implies that's about 50% of the working population and below household wise, right? if they are having to pay more for energy/rent/food, they're "struggling" more compared to when CPI was lower, right? so... where is all of this excess demand coming from? exclusively from households that make more than $67k/yr? i wonder where the threshold is. obviously high networth individuals aren't affected super adversely by high gas prices. i just don't know what has the higher impact on "demand" (demand for what honestly, i have no clue): millions of lower networth households or more concentrated higher networth households

axg11 4y ago

CPI crossed the 2% threshold in March 2021, meaning we've only just barely had 1 year of >2% CPI. If inflation were to nosedive over the next 6-9 months, it would be pretty easy to argue that the inflation was transitory. I'm not taking sides in the "inflation is transitory" debate, merely saying that it is too early to tell.

milkytron 4y ago
Maybe it is too early to tell, but the Fed had argued this as a means to keep rates low. Hindsight is 2020, but it seems like the Fed has put themselves in a reactive situation and are now playing catch-up.
danielmarkbruce 4y ago
Plus, look at the correlation between energy prices and CPI (not just the energy category) and you see energy ripple through everything... It can go down fast, pulling CPI with it.

bakuninsbart 4y ago

Would be super curious to learn how cost of living is affecting other countries. I do understand that hn demographics skew higher income, but I feel like here in Germany almost no one is fully insulated. For me, my expenses after rent and health insurance jumped almost 75%. I don't own a car and generally don't spend much outside of good food and drinks. Things like beef mince is 3 times the price it was a year ago. Cheese and similar products rose by something like 50% at least. Now there's talks about heating bills (often times around 5% of income) rising 7-fold... I'm still quite safe myself, but increasingly feel like this is going to destroy a lot of lives around here, and have major consequences for everyone.

gnulinux 4y ago
This is exactly my experience. My expenses rose >75% even though I'm living a lot more frugally compared to 2021. I live in Boston and everything is just SO F'ING EXPENSIVE! I make ~$130k, I used to save ~$2000 every month before ~March 2022 and I'm now living close to paycheck to paycheck. I understand that there are things I can do better, but life is truly more expensive now.
- JZL003 4y ago
  I live in a similar place and I'm with you. I knew it was inflation but I almost started to believe I just started eating out more or something. But it's a very noticeable jump
mk89 4y ago
I agree with you. These 7-8-9-10% increases are actually much more than that, in my opinion. I understand they need to make an average, but well, it looks like we need maybe other indicators as well? I think just alone the groceries have increased about 20-25% but I might be wrong, though.
- r_hoods_ghost 4y ago
  Assuming you're a USAian you can drill down into the CPI data here (click the bars on the chart) https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category.htm https://www.bls.gov/charts/consumer-price-index/consumer-pri...

selimthegrim 4y ago

See also here: https://news.ycombinator.com/item?id=32081779 https://news.ycombinator.com/item?id=32081779