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My belief is that the moment rates start going down, there's going to be another massive asset bubble which will create tremendous inflationary pressure. Histo

by spaceman_2020 4y ago

My belief is that the moment rates start going down, there's going to be another massive asset bubble which will create tremendous inflationary pressure. Historically, inflation has never come down so fast or so easily anywhere. So much of inflation is about belief and psychology. If a "good times are here again" belief takes hold, it's entirely possible that inflation will run amok, again.

danaris 4y ago
A significant chunk of current inflation is flat-out corporate greed. This can be seen from the fact that companies are posting record profits...while also saying "but we have to raise prices 20%, because of 7% inflation!"
- prottog 4y ago
  > A significant chunk of current inflation is flat-out corporate greed. This argument cannot stand until it can answer the question: why are corporations all of a sudden greedy now, and not before? If they could raise prices 20% at any time, they would. They don't, because the market won't bear it. It's nonsensical to suggest otherwise. Pemex, the Mexican state-owned oil company, made $6B in the first quarter of 2022, but lost money every single year for more than a decade before that. Why didn't they jack up prices sooner to make a profit? Delta Airlines lost a lot of money after Covid, and has yet to neither reach pre-pandemic profitability levels nor recoup the money lost during the pandemic. Are you saying if they were only greedier, they wouldn't be in this situation? Even the great devil Exxon Mobil itself had ever-shrinking margins leading into 2020 before losing money for four quarters in a row before coming back into the black. Again, is your explanation that they just forgot how to be greedy for a while?
dragonwriter 4y ago
> Historically, inflation has never come down so fast or so easily anywhere. Historically, the sharp bounceback from the brief but deep COVID recession is anomalous in a lot of ways, and the lagging brief inflation spike caused by the overshoot of stimulus in that anomalous recession is part of that. The causes aren't mysterious and just looking at the timeline of the inflation against past inflations in isolation while ignoring other relevant knowledge is...silly.
prottog 4y ago
> there's going to be another massive asset bubble which will create tremendous inflationary pressure Asset bubbles don't necessarily turn out in cost-of-living inflation, as we saw in the era of QE after 2008; it was inflationary for asset values, which kept on climbing, but prices goods and services were stable, remaining under the 2% target rate in the decade between 2009 and 2019.

danaris 4y ago

A significant chunk of current inflation is flat-out corporate greed. This can be seen from the fact that companies are posting record profits...while also saying "but we have to raise prices 20%, because of 7% inflation!"

prottog 4y ago
> A significant chunk of current inflation is flat-out corporate greed. This argument cannot stand until it can answer the question: why are corporations all of a sudden greedy now, and not before? If they could raise prices 20% at any time, they would. They don't, because the market won't bear it. It's nonsensical to suggest otherwise. Pemex, the Mexican state-owned oil company, made $6B in the first quarter of 2022, but lost money every single year for more than a decade before that. Why didn't they jack up prices sooner to make a profit? Delta Airlines lost a lot of money after Covid, and has yet to neither reach pre-pandemic profitability levels nor recoup the money lost during the pandemic. Are you saying if they were only greedier, they wouldn't be in this situation? Even the great devil Exxon Mobil itself had ever-shrinking margins leading into 2020 before losing money for four quarters in a row before coming back into the black. Again, is your explanation that they just forgot how to be greedy for a while?

dragonwriter 4y ago

> Historically, inflation has never come down so fast or so easily anywhere. Historically, the sharp bounceback from the brief but deep COVID recession is anomalous in a lot of ways, and the lagging brief inflation spike caused by the overshoot of stimulus in that anomalous recession is part of that. The causes aren't mysterious and just looking at the timeline of the inflation against past inflations in isolation while ignoring other relevant knowledge is...silly.

prottog 4y ago

> there's going to be another massive asset bubble which will create tremendous inflationary pressure Asset bubbles don't necessarily turn out in cost-of-living inflation, as we saw in the era of QE after 2008; it was inflationary for asset values, which kept on climbing, but prices goods and services were stable, remaining under the 2% target rate in the decade between 2009 and 2019.