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The first order reason for inflation is, of course, a willingness to spend more. Prices flat out can't rise if buyers balk at a seller's higher expectations. Pl
by randomdata 4y ago
The first order reason for inflation is, of course, a willingness to spend more. Prices flat out can't rise if buyers balk at a seller's higher expectations. Plain and simple.
But it is well understood that said willingness changes on what buyers believe[1]. If they believe that lockdown stimulus is causing inflation, it will cause inflation. The mere existence of lockdown stimulus won't cause inflation, but the emotional response to it very well could.
And given that this appears to be a widely held belief, something even some government officials trumpet as the cause of inflation, it seems unlikely that it isn't a significant contributing factor. How is this dispelled?
[1] https://www.brookings.edu/blog/up-front/2020/11/30/what-are-inflation-expectations-why-do-they-matter/ https://www.brookings.edu/blog/up-front/2020/11/30/what-are-...
- deathanatos 4y agoOne can only balk so much at the cost of housing, energy, and food, before one is homeless, cold, and hungry. Housing has been hard to balk at for a decade for the same reason that nobody politically wants to address: a lack of supply in the market. Renters are now doubly stuck in renting, as home ownership as an alternative market is now rendered unaffordable by spiking mortgage rates. (I.e., the very "demand destruction" the fed desired. And my landlord knows it!) Energy prices are spiking due to … a lack of supply in the market. Still, the rate is allegedly +7% YoY, apparently, and my rent goes up +9.5% YoY "due to economic conditions", and my salary is -1% YoY.