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Anecdotally, I suspect today's inflation is caused by a couple factors. 1 Not enough Housing (where people want and NEED it) 2 Global politics exacerbating

Anecdotally, I suspect today's inflation is caused by a couple factors. 1 Not enough Housing (where people want and NEED it) 2 Global politics exacerbating energy shortages 3 Insufficient supply (generally) for demand 3 is really driven by 1 and 2, but the pandemic also had a hand in creating it. For service industries there were a lot of short term layoffs; and workers are extremely reluctant to return to jobs that don't make economic sense for them, and professions they've moved away from. 2 & 1 Regulatory changes to make it easier to build within approved project profiles would really help. The US should adopt Japan's style of area zoning and require that nation-wide (though States and more local areas should still decide which areas are zoned what). As would changes that make ALL types of energy production easier to finance and build in PRE-approved configurations. Electric trains, trucks, and cars would really help with insane energy prices caused by unfriendly global oil interests. 1 Housing hasn't kept up with job growth locations of the US, and probably internationally as well, for at least 50 years. This needs market _correction_ level directives and instead of rent-protection skyscraper, middle-sized multi-levels, townhouses, and even some single family sized houses, where they make sense, need to be built.

starfallg 4y ago
You left out the underlying factor, which was Covid stimulus including the grants and loans that were written off. Money was being created and then funneled to the sectors of the economy which were not productive (such as commercial real estate) creating stress in the sectors that were. This will inevitably cause inflation with the conditions 2 & 3 you listed. Housing is due for a correction as prices are at such high multiples of average wage. The wage price growth we see now is just the first step in bringing the ratio down.
- willnonya 4y ago
  For some reason people keep skipping over this part...
- mjevans 4y ago
  Ignored, not forgot. It'd be like 4 or 5 on the list at least, and was a 'One Time' (spread across 3 or so events within about a year) tax holiday like effect. The timing was, maybe not the best, but I've yet to see a compelling explanation for how it would have an overall effect on __long term__ inflation.
  - starfallg 4y ago
    I'm not just talking about government spending, but central bank intervention as well. It's in the trillions - https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/ https://www.bloomberg.com/graphics/2021-coronavirus-global-d...
bsder 4y ago
> 3 Insufficient supply (generally) for demand Welcom to Always Late Inventory(tm). Nobody has any inventory to absorb demand. Nobody has any excess capacity to bring online to absorb demand. Nobody is going to tool up for demand that is likely to go away once fulfilled--especially since most of them have no competitors anyway due to consolidation. Rattle this backward at each step of the supply chain. Maximally efficient is minimally robust.
- ravel-bar-foo 4y ago
  > especially since most of them have no competitors anyway due to consolidation. This is the core explanation for the observed price increases being of the same magnitude as increases in corporate profits.
29athrowaway 4y ago
There's a deficit of 600,000 residential units.
ppg677 4y ago
I think it is the labor market. Pandemic caused a lot of people to leave the labor market.
- 7speter 4y ago
  But we’re at full employment…
  - yxhuvud 4y ago
    Which is a statement that doesn't gainsay what you commented on in any way. People leaving the labor market is not measured by the unemployment rate, it is measured by the labor participation rate.
  - steve_adams_86 4y ago
    Not sure what to make it of it, but statistics suggest that our per unit output of labour has dropped substantially. So, good employment rate or not, we’re producing less with our labour either way. This is the case in the United States and Canada, at least. Not sure about the rest of the world.
    - YokoZar 4y ago
      Naively, you would expect a bit of a drop in productivity when going to full employment, as the least productive workers are generally hired last. Total production, notably, is still increasing.
  - lotsofpulp 4y ago
    Labor force participation rate is lower than pre pandemic. https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm https://www.bls.gov/charts/employment-situation/civilian-lab... I assume it resumes overall downward trend simply due to aging population.
  - icedchai 4y ago
    The people who “drop out” of the labor market (not working and don’t collect unemployment) basically are not counted. They are not considered part of the labor force. I know people who get burned out and live off their savings for long periods of time.
yucky 4y ago
1 - makes no sense. We had the same (worse, really) housing shortages pre-COVID with very little inflation.
scubakid 4y ago
Isn't it fascinating how everyone likes to theorize but no one is consistently right about the causation of macroeconomic developments? Understanding a distributed system with 7.8 billion agents is... hard.
kypro 4y ago
> Not enough Housing (where people want and NEED it) Not a new problem. Wouldn't have caused a spike. > Global politics exacerbating energy shortages Energy prices have contributed a little to US inflation, but it's not the main factor. Inflation was also an issue in 2021 before the Ukraine war, but it's a fair point as it hasn't helped in 2022. > Insufficient supply (generally) for demand This is an issue, but in recessions it's not uncommon for supply to drop. What's uncommon is for demand not to fall inline (or more than) supply, but instead skyrocket. Call me crazy, but I have a simpler explanation for the spike in inflation we saw in 2021: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL The Fed has been funding extremely reckless fiscal policy for two years. We literally shut the economy down and gave people checks for doing nothing. I don't think we need to reach for fancy explanations. The reason for inflation seems plainly obvious to me.
- bamboozled 4y ago
  I feel similar, from everything I've read, historically creating money causes inflation. We created money and we got inflation. What am I missing?
  - randomdata 4y ago
    Creating money causes inflation if it ends up in the hands of people ready to spend it. But if you printed money endlessly and gave it all to Jeff Bezos, there would be no competitive pressure to see prices rise in the general economy. He might try to buy up all the real estate or stocks, driving asset inflation, but there is little reason for him to buy up all the bread to see it appear in CPI where we measure general inflation. And by all accounts the people don't have any more money. In fact, governments around the world have been creating support packages to deal with the people not having more money to support the rising prices. This suggests that it is supply-side driven, and I'm going to suggest food in particular. The farm price for food started rising at the beginning of the pandemic when labour was difficult to secure amid illness. Then came the big fertilizer crunch which remains ongoing. Then the war in Ukraine, Europe's bread basket. And now there are looming fears over diesel availability. A quadruple whammy in short succession for something that everyone has to buy. Saving rates are crashing to support this temporary blip, but with very little income growth it doesn't look sustainable. You can't have inflation if people don't have money to spend. As we start to solve some of our food issues, fertilizer in particular, a massive deflationary event seems quite likely.
cersei 4y ago
1. I suspect that the 1% who owns 98% of the wealth parks their money into things like land and real-estate, which is causing an artificial shortage and price hikes.

starfallg 4y ago

You left out the underlying factor, which was Covid stimulus including the grants and loans that were written off. Money was being created and then funneled to the sectors of the economy which were not productive (such as commercial real estate) creating stress in the sectors that were. This will inevitably cause inflation with the conditions 2 & 3 you listed. Housing is due for a correction as prices are at such high multiples of average wage. The wage price growth we see now is just the first step in bringing the ratio down.

willnonya 4y ago
For some reason people keep skipping over this part...
mjevans 4y ago
Ignored, not forgot. It'd be like 4 or 5 on the list at least, and was a 'One Time' (spread across 3 or so events within about a year) tax holiday like effect. The timing was, maybe not the best, but I've yet to see a compelling explanation for how it would have an overall effect on __long term__ inflation.
- starfallg 4y ago
  I'm not just talking about government spending, but central bank intervention as well. It's in the trillions - https://www.bloomberg.com/graphics/2021-coronavirus-global-debt/ https://www.bloomberg.com/graphics/2021-coronavirus-global-d...

bsder 4y ago

> 3 Insufficient supply (generally) for demand Welcom to Always Late Inventory(tm). Nobody has any inventory to absorb demand. Nobody has any excess capacity to bring online to absorb demand. Nobody is going to tool up for demand that is likely to go away once fulfilled--especially since most of them have no competitors anyway due to consolidation. Rattle this backward at each step of the supply chain. Maximally efficient is minimally robust.

ravel-bar-foo 4y ago
> especially since most of them have no competitors anyway due to consolidation. This is the core explanation for the observed price increases being of the same magnitude as increases in corporate profits.

29athrowaway 4y ago

There's a deficit of 600,000 residential units.

ppg677 4y ago

I think it is the labor market. Pandemic caused a lot of people to leave the labor market.

7speter 4y ago
But we’re at full employment…
- yxhuvud 4y ago
  Which is a statement that doesn't gainsay what you commented on in any way. People leaving the labor market is not measured by the unemployment rate, it is measured by the labor participation rate.
- steve_adams_86 4y ago
  Not sure what to make it of it, but statistics suggest that our per unit output of labour has dropped substantially. So, good employment rate or not, we’re producing less with our labour either way. This is the case in the United States and Canada, at least. Not sure about the rest of the world.
  - YokoZar 4y ago
    Naively, you would expect a bit of a drop in productivity when going to full employment, as the least productive workers are generally hired last. Total production, notably, is still increasing.
- lotsofpulp 4y ago
  Labor force participation rate is lower than pre pandemic. https://www.bls.gov/charts/employment-situation/civilian-labor-force-participation-rate.htm https://www.bls.gov/charts/employment-situation/civilian-lab... I assume it resumes overall downward trend simply due to aging population.
- icedchai 4y ago
  The people who “drop out” of the labor market (not working and don’t collect unemployment) basically are not counted. They are not considered part of the labor force. I know people who get burned out and live off their savings for long periods of time.

yucky 4y ago

1 - makes no sense. We had the same (worse, really) housing shortages pre-COVID with very little inflation.

scubakid 4y ago

Isn't it fascinating how everyone likes to theorize but no one is consistently right about the causation of macroeconomic developments? Understanding a distributed system with 7.8 billion agents is... hard.

kypro 4y ago

> Not enough Housing (where people want and NEED it) Not a new problem. Wouldn't have caused a spike. > Global politics exacerbating energy shortages Energy prices have contributed a little to US inflation, but it's not the main factor. Inflation was also an issue in 2021 before the Ukraine war, but it's a fair point as it hasn't helped in 2022. > Insufficient supply (generally) for demand This is an issue, but in recessions it's not uncommon for supply to drop. What's uncommon is for demand not to fall inline (or more than) supply, but instead skyrocket. Call me crazy, but I have a simpler explanation for the spike in inflation we saw in 2021: https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL The Fed has been funding extremely reckless fiscal policy for two years. We literally shut the economy down and gave people checks for doing nothing. I don't think we need to reach for fancy explanations. The reason for inflation seems plainly obvious to me.

bamboozled 4y ago
I feel similar, from everything I've read, historically creating money causes inflation. We created money and we got inflation. What am I missing?
- randomdata 4y ago
  Creating money causes inflation if it ends up in the hands of people ready to spend it. But if you printed money endlessly and gave it all to Jeff Bezos, there would be no competitive pressure to see prices rise in the general economy. He might try to buy up all the real estate or stocks, driving asset inflation, but there is little reason for him to buy up all the bread to see it appear in CPI where we measure general inflation. And by all accounts the people don't have any more money. In fact, governments around the world have been creating support packages to deal with the people not having more money to support the rising prices. This suggests that it is supply-side driven, and I'm going to suggest food in particular. The farm price for food started rising at the beginning of the pandemic when labour was difficult to secure amid illness. Then came the big fertilizer crunch which remains ongoing. Then the war in Ukraine, Europe's bread basket. And now there are looming fears over diesel availability. A quadruple whammy in short succession for something that everyone has to buy. Saving rates are crashing to support this temporary blip, but with very little income growth it doesn't look sustainable. You can't have inflation if people don't have money to spend. As we start to solve some of our food issues, fertilizer in particular, a massive deflationary event seems quite likely.

cersei 4y ago

1. I suspect that the 1% who owns 98% of the wealth parks their money into things like land and real-estate, which is causing an artificial shortage and price hikes.