4 ms·

Given the combined supply shocks associated with the pandemic and Ukraine, I'm a bit curious why things haven't been much worse. For better or for worse, human

Given the combined supply shocks associated with the pandemic and Ukraine, I'm a bit curious why things haven't been much worse. For better or for worse, human labor and fossil fuels are the two most indefensible ingredients of our current global economic system, and the supply of both has been badly disrupted. Obviously a lot has changed since the 70s, but why exactly aren't we having 70s stagflation or worse in the US? Do domestic oil and gas play a role?

deleted 4y ago
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nine_zeros 4y ago
We aren't having massive inflation yet because we have labor from China and other countries producing goods for us. When one producer goes down, another ramps up. If America were producing its own things alone, the supply shock would have pushed inflation much much higher.
- josephcsible 4y ago
  > We aren't having massive inflation yet because [...] 9.1% isn't massive?
- civilized 4y ago
  I thought China's production has suffered even more than ours due to the COVID restrictions.
  - nine_zeros 4y ago
    And when China went down, Vietnam, Indonesia and India ramped up. We are extremely privileged to be able to acquire resources even if one producer goes down.
lettergram 4y ago
- josephcsible 4y ago
  > You mean lockdowns, not the pandemic. I agree with this part of your post. > And you mean western sanctions, not Ukraine. But not this part. Ukraine used to export a bunch of stuff that Russia has now destroyed.
  - lettergram 4y ago
    Energy is the most valuable resource in the world. Russia produces a large-ish percentage of the worlds oil and gas: https://en.m.wikipedia.org/wiki/List_of_countries_by_oil_exports https://en.m.wikipedia.org/wiki/List_of_countries_by_oil_exp... Ukraine doesn’t even list on it. They produce grain the news says… about 1/3 as much wheat as Russia. https://www.worldatlas.com/articles/top-wheat-producing-countries.html https://www.worldatlas.com/articles/top-wheat-producing-coun... I can go on, but to put it simply Russian (and Belarus) GDP is much higher than Ukraine GDP. It’s safe to assume they produce more and strict sanctions on them will have a greater impact. Ukraine is still producing, so some of their goods are still able to come to market. That said, yes some was destroyed / impacted I’m sure — but again, far less than sanctions or the lockdowns.
    - klipt 4y ago
      What would be the long term cost of letting Russia invade neighboring countries without sanctions? How do we know they'd stop at Ukraine?
      - civilized 4y ago
        The last time the world let a revanchist dictator take whatever European territory he wanted, things got much, much, much worse.
      - thatguy0900 4y ago
        Anyone who wants to can join nato? What is the long term cost of Russia owning Ukraine? Is there any? Russia interferes with our politics but whether they invade other countries most Americans couldn't place on a map doesn't have much to do with that.
refurb 4y ago
What makes you think things won’t get worse? We’re barely a year into high inflation. Optimistically I’d guess we’re looking at 3-5 years to get inflation under control and that might include a recession (thats already started).
- civilized 4y ago
  I have no idea how much worse it will get. Your guess seems as good as any.
  - refurb 4y ago
    Of course. But the easiest way to guess at the future is to look at similar problems of the past. Bank of Canada already said inflation won’t be under control for 2 more years.
- parkingrift 4y ago
  A recession has already started? Someone should tell the labor market. There is still substantial monthly job growth. 250,000 in June. Doesn’t sound like a recession to me. What it does sound like is younger people hoping for a recession because they think it will collapse housing prices. They’re wrong, but what’s new.
  - refurb 4y ago
    https://www.bea.gov/data/gdp/gross-domestic-product https://www.bea.gov/data/gdp/gross-domestic-product 2 quarters of negative GDP growth is a recession. We’ve had 1 quarter so far and lay offs are increasing. I hope not, but with increasing rates we stand a good chance.
    - parkingrift 4y ago
      That’s your definition, not “the definition.” The highest authority on this matter is the NBER. Their definition is pasted, below. I don’t see a significant decline and so far it has not impacted employment. We’re still adding a quarter million net jobs each month. “A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
lamontcg 4y ago
> but why exactly aren't we having 70s stagflation or worse in the US? we had strong unions back then which would demand double-digit COLA raises in salary producing a wage-price spiral. given how people could actually afford homes back then, though, i don't think this was a particularly bad thing. what we have now contains all the inflation in the system to the upper class and asset bubbles. we need either to have the cost of housing deflate or the wages paid to inflate. it will be less painful to inflate wages. this isn't what we're going to do though.
deleted 4y ago
[deleted]

deleted 4y ago

[deleted]

nine_zeros 4y ago

We aren't having massive inflation yet because we have labor from China and other countries producing goods for us. When one producer goes down, another ramps up. If America were producing its own things alone, the supply shock would have pushed inflation much much higher.

josephcsible 4y ago
> We aren't having massive inflation yet because [...] 9.1% isn't massive?
civilized 4y ago
I thought China's production has suffered even more than ours due to the COVID restrictions.
- nine_zeros 4y ago
  And when China went down, Vietnam, Indonesia and India ramped up. We are extremely privileged to be able to acquire resources even if one producer goes down.

lettergram 4y ago

josephcsible 4y ago
> You mean lockdowns, not the pandemic. I agree with this part of your post. > And you mean western sanctions, not Ukraine. But not this part. Ukraine used to export a bunch of stuff that Russia has now destroyed.
- lettergram 4y ago
  Energy is the most valuable resource in the world. Russia produces a large-ish percentage of the worlds oil and gas: https://en.m.wikipedia.org/wiki/List_of_countries_by_oil_exports https://en.m.wikipedia.org/wiki/List_of_countries_by_oil_exp... Ukraine doesn’t even list on it. They produce grain the news says… about 1/3 as much wheat as Russia. https://www.worldatlas.com/articles/top-wheat-producing-countries.html https://www.worldatlas.com/articles/top-wheat-producing-coun... I can go on, but to put it simply Russian (and Belarus) GDP is much higher than Ukraine GDP. It’s safe to assume they produce more and strict sanctions on them will have a greater impact. Ukraine is still producing, so some of their goods are still able to come to market. That said, yes some was destroyed / impacted I’m sure — but again, far less than sanctions or the lockdowns.
  - klipt 4y ago
    What would be the long term cost of letting Russia invade neighboring countries without sanctions? How do we know they'd stop at Ukraine?
    - civilized 4y ago
      The last time the world let a revanchist dictator take whatever European territory he wanted, things got much, much, much worse.
    - thatguy0900 4y ago
      Anyone who wants to can join nato? What is the long term cost of Russia owning Ukraine? Is there any? Russia interferes with our politics but whether they invade other countries most Americans couldn't place on a map doesn't have much to do with that.

refurb 4y ago

What makes you think things won’t get worse? We’re barely a year into high inflation. Optimistically I’d guess we’re looking at 3-5 years to get inflation under control and that might include a recession (thats already started).

civilized 4y ago
I have no idea how much worse it will get. Your guess seems as good as any.
- refurb 4y ago
  Of course. But the easiest way to guess at the future is to look at similar problems of the past. Bank of Canada already said inflation won’t be under control for 2 more years.
parkingrift 4y ago
A recession has already started? Someone should tell the labor market. There is still substantial monthly job growth. 250,000 in June. Doesn’t sound like a recession to me. What it does sound like is younger people hoping for a recession because they think it will collapse housing prices. They’re wrong, but what’s new.
- refurb 4y ago
  https://www.bea.gov/data/gdp/gross-domestic-product https://www.bea.gov/data/gdp/gross-domestic-product 2 quarters of negative GDP growth is a recession. We’ve had 1 quarter so far and lay offs are increasing. I hope not, but with increasing rates we stand a good chance.
  - parkingrift 4y ago
    That’s your definition, not “the definition.” The highest authority on this matter is the NBER. Their definition is pasted, below. I don’t see a significant decline and so far it has not impacted employment. We’re still adding a quarter million net jobs each month. “A significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

lamontcg 4y ago

> but why exactly aren't we having 70s stagflation or worse in the US? we had strong unions back then which would demand double-digit COLA raises in salary producing a wage-price spiral. given how people could actually afford homes back then, though, i don't think this was a particularly bad thing. what we have now contains all the inflation in the system to the upper class and asset bubbles. we need either to have the cost of housing deflate or the wages paid to inflate. it will be less painful to inflate wages. this isn't what we're going to do though.

deleted 4y ago

[deleted]