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In a way it is good thing. Inflation will be truly out of control is wages start to adjust to this inflationary environment. Then we will back to the 70s. The o

by cm2187 4y ago

In a way it is good thing. Inflation will be truly out of control is wages start to adjust to this inflationary environment. Then we will back to the 70s. The only way we tamed inflation then is with double digit interest rates that would wreck havoc in our highly leveraged economy.

josephcsible 4y ago
In what world is any of this good? What was wrong with the economy the way it was in 2019?
- lotsofpulp 4y ago
  Nothing, if you were in the top 2 to 3 income/wealth deciles and projected to keep moving up the percentiles. If you were below that, land prices in many popular and economically booming area were increasing out of your reach.
- cm2187 4y ago
  What's wrong with it is that it is gone. If you want to go back to it you want to avoid runaway inflation. Wages catching up with inflation means inflation becomes self-fulfilling.
- ska 4y ago
  The piper always has to be paid somehow, the question is how and if you can spread it out so the impact isn’t brutal.
cabraca 4y ago
yeah, wage adjustment will bring inflation out of control. Not the tax breaks for companies, not the 2 trillion dollar stock market bailout in 2020. It's the people getting a 2 dollar wage increase thats driving the inflation. /s
- cm2187 4y ago
  There is no question the 4 trillon (not 2) money printing has been the main driver of inflation. The question is not so much whether inflation has been created, it has, and has been in the CPI index for a year now. The question now is whether we are starting the cycle of price increase => wage increase => price increase, i.e. whether we will get inflation also next year and the year after, etc. Breaking that cycle is ugly business.
  - rightbyte 4y ago
    Too much money printed at the top. What should wage workers do except demand more at the bottom? If we don't demand higher wages the the printed dollars just end up among the really rich.
    - Karrot_Kream 4y ago
      Wage workers can and should demand more. When we're at the point where rising wages lead to a spiral of inflation, there's lots of other problems in the economy, so there's no point in wage workers not demanding more.
- Karrot_Kream 4y ago
  Of course it's not wage increases that's causing inflation. But once we're at a point where even wage increases lead to inflation, then we're in a really bad place. Hopefully we can cool off before getting there. Plus the government can't really affect wages. I'm surprised nobody has suggested increasing tax rates as a way to cool the economy off, but that's political, so probably much more difficult.
  - rightbyte 4y ago
    > But once we're at a point where even wage increases lead to inflation, then we're in a really bad place. Why is that bad? Given the asset inflation it is only anticipated wages catch up or assets crash.
- sershe 4y ago
  That is what you would expect for CPI inflation. Bailout for companies and the rich would not increase consumption of e.g. food or gas much; newly-printed money going to consumers via whatever means would, though. Bailouts for the "rich" would just increase prices of assets, so the only CPI impact you'd expect would be in housing, maybe. It's not like printing money and "helping people" has not been done a bunch in the past - it always works out the same way, to a different extent depending on other circumstances. To some extent, e.g. minimum wage laws could be beneficial... inflation+redistribution where the gains in wages for the poorest outstrip the resulting inflation that only affects those whose earnings didn't increase because they were already well above the new threshold, I guess? According to this article, we appear to be well beyond that point.

by cm2187 4y ago

josephcsible 4y ago

In what world is any of this good? What was wrong with the economy the way it was in 2019?

lotsofpulp 4y ago
Nothing, if you were in the top 2 to 3 income/wealth deciles and projected to keep moving up the percentiles. If you were below that, land prices in many popular and economically booming area were increasing out of your reach.
cm2187 4y ago
What's wrong with it is that it is gone. If you want to go back to it you want to avoid runaway inflation. Wages catching up with inflation means inflation becomes self-fulfilling.
ska 4y ago
The piper always has to be paid somehow, the question is how and if you can spread it out so the impact isn’t brutal.

cabraca 4y ago

yeah, wage adjustment will bring inflation out of control. Not the tax breaks for companies, not the 2 trillion dollar stock market bailout in 2020. It's the people getting a 2 dollar wage increase thats driving the inflation. /s

cm2187 4y ago
There is no question the 4 trillon (not 2) money printing has been the main driver of inflation. The question is not so much whether inflation has been created, it has, and has been in the CPI index for a year now. The question now is whether we are starting the cycle of price increase => wage increase => price increase, i.e. whether we will get inflation also next year and the year after, etc. Breaking that cycle is ugly business.
- rightbyte 4y ago
  Too much money printed at the top. What should wage workers do except demand more at the bottom? If we don't demand higher wages the the printed dollars just end up among the really rich.
  - Karrot_Kream 4y ago
    Wage workers can and should demand more. When we're at the point where rising wages lead to a spiral of inflation, there's lots of other problems in the economy, so there's no point in wage workers not demanding more.
Karrot_Kream 4y ago
Of course it's not wage increases that's causing inflation. But once we're at a point where even wage increases lead to inflation, then we're in a really bad place. Hopefully we can cool off before getting there. Plus the government can't really affect wages. I'm surprised nobody has suggested increasing tax rates as a way to cool the economy off, but that's political, so probably much more difficult.
- rightbyte 4y ago
  > But once we're at a point where even wage increases lead to inflation, then we're in a really bad place. Why is that bad? Given the asset inflation it is only anticipated wages catch up or assets crash.
sershe 4y ago
That is what you would expect for CPI inflation. Bailout for companies and the rich would not increase consumption of e.g. food or gas much; newly-printed money going to consumers via whatever means would, though. Bailouts for the "rich" would just increase prices of assets, so the only CPI impact you'd expect would be in housing, maybe. It's not like printing money and "helping people" has not been done a bunch in the past - it always works out the same way, to a different extent depending on other circumstances. To some extent, e.g. minimum wage laws could be beneficial... inflation+redistribution where the gains in wages for the poorest outstrip the resulting inflation that only affects those whose earnings didn't increase because they were already well above the new threshold, I guess? According to this article, we appear to be well beyond that point.