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Yeah, and it's crazy because there isn't much evidence of demand induced inflation in any of the advanced economies... Here in Australia we have massive inflati

Yeah, and it's crazy because there isn't much evidence of demand induced inflation in any of the advanced economies... Here in Australia we have massive inflation in the cost of energy (for obvious reasons given world events), but at the same time, the mining, oil & gas companies all have spiraling profits too, making massive windfall profits on the increases (they still manage to structure their businesses to pay almost no tax though...) Meanwhile, real wages, which have been fairly stagnant compared to profits over the last decades, are now down.

300bps 4y ago
it's crazy because there isn't much evidence of demand induced inflation There are two fundamental components to inflation. Supply and demand. The mere fact that we have inflation means that either supply is too low or demand is too high. Your statement seems to be saying, "there is evidence that 100% of the inflation we are experiencing is from supply side". That obviously isn't true. Meanwhile, real wages, which have been fairly stagnant compared to profits over the last decades, are now down. In the U.S., this is meaningless because at the low-salary end we had direct stimulus and tax rebates. In the mid salary end we had direct stimulus, tax rebates and modest asset (home/stock) appreciation. In the high salary end we had PPP loans (direct stimulus on steroids) and huge asset appreciation. All of this leads to more money available which increases demand. Near me, beach rentals have gotten up to $25,000 per week for a house. A ridiculous sum of money to stay at a house for a week! But if you're "making" $25,000 per month in the stock market? Doesn't seem so crazy anymore and it's why rentals have gotten up that high.
jbay808 4y ago
Shelter inflation appears to be largely demand-induced, is the largest component of the CPI, and is highly elevated. I believe this is even more true in Australia and Canada than it is in the USA.
- arcticbull 4y ago
  This is a major cause of inflation but it's mostly a local zoning issue, not a monetary policy issue. These countries straight up refuse to build supply enough to meet demand. (1) many folks have convinced themselves housing can be both a good investment and affordable when these are antithetical goals and... (2) they've also convinced themselves that this is the one market in the history of time where supply and demand magically don't exist, and that increasing supply simply won't reduce prices for some reason.

300bps 4y ago

it's crazy because there isn't much evidence of demand induced inflation There are two fundamental components to inflation. Supply and demand. The mere fact that we have inflation means that either supply is too low or demand is too high. Your statement seems to be saying, "there is evidence that 100% of the inflation we are experiencing is from supply side". That obviously isn't true. Meanwhile, real wages, which have been fairly stagnant compared to profits over the last decades, are now down. In the U.S., this is meaningless because at the low-salary end we had direct stimulus and tax rebates. In the mid salary end we had direct stimulus, tax rebates and modest asset (home/stock) appreciation. In the high salary end we had PPP loans (direct stimulus on steroids) and huge asset appreciation. All of this leads to more money available which increases demand. Near me, beach rentals have gotten up to $25,000 per week for a house. A ridiculous sum of money to stay at a house for a week! But if you're "making" $25,000 per month in the stock market? Doesn't seem so crazy anymore and it's why rentals have gotten up that high.

jbay808 4y ago

Shelter inflation appears to be largely demand-induced, is the largest component of the CPI, and is highly elevated. I believe this is even more true in Australia and Canada than it is in the USA.

arcticbull 4y ago
This is a major cause of inflation but it's mostly a local zoning issue, not a monetary policy issue. These countries straight up refuse to build supply enough to meet demand. (1) many folks have convinced themselves housing can be both a good investment and affordable when these are antithetical goals and... (2) they've also convinced themselves that this is the one market in the history of time where supply and demand magically don't exist, and that increasing supply simply won't reduce prices for some reason.