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Don't accept free money during a pandemic? Except that would be bad too..... Govt handouts during the pandemic added significant money without increased produc

Don't accept free money during a pandemic? Except that would be bad too..... Govt handouts during the pandemic added significant money without increased production to keep people afloat, which is good short term. The cost of that is inflation medium term. Long term wages rise to offset inflation. This has always been the pattern. Adding money for nothing to the system devalues each piece of money, so inflation is expected. Long term wages for context https://www.visualizingeconomics.com/blog/2008/05/04/average-income-in-the-united-states-1913-2006 https://www.visualizingeconomics.com/blog/2008/05/04/average...

throwaway5959 4y ago
I’m so tired of this nonsense. The checks cut, at least in the US, only barely added to peoples bank accounts and were for the most part quickly spent. Just look at excess savings, there was a brief spike and now it’s back lower than ever. Stop spreading this propaganda.
- adam_arthur 4y ago
  You’re wrong. Excess savings is still elevated far above pre-pandemic trends. https://theovershoot.co/p/americas-excess-household-savings https://theovershoot.co/p/americas-excess-household-savings You’re likely referencing the savings rate, which is a different concept. This measures how much of newly earned income is saved, not how much excess savings somebody has in an absolute sense. https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT Aside from savings, household credit is still below pre-pandemic trends in real terms, just touching the nominal trend recently.
  - throwaway5959 4y ago
    > Americans liquidated more than $1 trillion of “excess” savings in 2022, eliminating more than half of the surplus accumulated since the pandemic began. Sounds like the problem is solving itself then?
    - adam_arthur 4y ago
      This is not "solving itself"... the Fed has hiked rates 5% and is still going. History shows there’s likely going to be a severe recession at the end of this
      - SideQuark 4y ago
        Yet two huge indictors of a looming recession are completely opposite end of what happens in a recession: unemployment at 50 year low and consumer spending is at an all time high.
        adam_arthur 4y ago
        Look at unemployment in 2007, or before any major recession. Its almost always quite low, which is the reason inflation is high and the Fed has to throw the economy into recession. Low unemployment is a recession precursor, not the other way around. Very clear from the data
        SideQuark 4y ago
        Every recession in over 70 years has seen a rise in unemployment before the recession started 1, shaded blocs are recessions]. So far unemployment is still trending down. And historically the length of time between recessions is quite varied. [1] https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE
        adam_arthur 4y ago
        Yes, unemployment is low and then rises. Show me on this chart where unemployment goes low and stays low for an extended period? It has never happened. Recession dynamics in relation to unemployment are well understood. Low unemployment as a driver of inflation is well understood. Fed reaction function in relation to inflation is well understood. The consequence of higher unemployment as a result of higher real rates is well understood Only immaculate disinflation can prevent a recession at this point. If fed has to induce it, a recession is all but guaranteed
- SideQuark 4y ago
  >Stop spreading this propaganda This isn't propaganda - it's econ 101. Read any intro econ textbook and all this is completely expected, historically backed up by many events for centuries in hundreds of countries. There's no propaganda. M1 money (a common measure of the money supply) went from around 4 trillion to over 16 trillion in a matter of months during the pandemic [1] as a result of the govt adding trillions of dollars - a completely unprecedented amount. Do you really think a govt can simply throw trillions into an economy at this rate and not have inflation? [1] https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
  - throwaway5959 4y ago
    k let's assume that's the case, what would you propose as the solution to mop up the 12 trillion in excess M1?
    - SideQuark 4y ago
      Nothing - you let it run it's course while mitigating inflation with Fed actions. Money will rescale as it's always done, and people will go on their way (as they're doing right now). This is how it's been done the world over, and it works pretty well, despite pop articles creating more panic than is warranted. Money has been added in the past to smooth out the 18th and 19th century boom and bust cycles, and it has worked extremely well compared to past pain. Every country on the planet has chosen central banking since the evidence it's better than the alternatives has been overwhelming for almost a century.

throwaway5959 4y ago

I’m so tired of this nonsense. The checks cut, at least in the US, only barely added to peoples bank accounts and were for the most part quickly spent. Just look at excess savings, there was a brief spike and now it’s back lower than ever. Stop spreading this propaganda.

adam_arthur 4y ago
You’re wrong. Excess savings is still elevated far above pre-pandemic trends. https://theovershoot.co/p/americas-excess-household-savings https://theovershoot.co/p/americas-excess-household-savings You’re likely referencing the savings rate, which is a different concept. This measures how much of newly earned income is saved, not how much excess savings somebody has in an absolute sense. https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT Aside from savings, household credit is still below pre-pandemic trends in real terms, just touching the nominal trend recently.
- throwaway5959 4y ago
  > Americans liquidated more than $1 trillion of “excess” savings in 2022, eliminating more than half of the surplus accumulated since the pandemic began. Sounds like the problem is solving itself then?
  - adam_arthur 4y ago
    This is not "solving itself"... the Fed has hiked rates 5% and is still going. History shows there’s likely going to be a severe recession at the end of this
    - SideQuark 4y ago
      Yet two huge indictors of a looming recession are completely opposite end of what happens in a recession: unemployment at 50 year low and consumer spending is at an all time high.
      - adam_arthur 4y ago
        Look at unemployment in 2007, or before any major recession. Its almost always quite low, which is the reason inflation is high and the Fed has to throw the economy into recession. Low unemployment is a recession precursor, not the other way around. Very clear from the data
        SideQuark 4y ago
        Every recession in over 70 years has seen a rise in unemployment before the recession started 1, shaded blocs are recessions]. So far unemployment is still trending down. And historically the length of time between recessions is quite varied. [1] https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE
        adam_arthur 4y ago
        Yes, unemployment is low and then rises. Show me on this chart where unemployment goes low and stays low for an extended period? It has never happened. Recession dynamics in relation to unemployment are well understood. Low unemployment as a driver of inflation is well understood. Fed reaction function in relation to inflation is well understood. The consequence of higher unemployment as a result of higher real rates is well understood Only immaculate disinflation can prevent a recession at this point. If fed has to induce it, a recession is all but guaranteed
SideQuark 4y ago
>Stop spreading this propaganda This isn't propaganda - it's econ 101. Read any intro econ textbook and all this is completely expected, historically backed up by many events for centuries in hundreds of countries. There's no propaganda. M1 money (a common measure of the money supply) went from around 4 trillion to over 16 trillion in a matter of months during the pandemic [1] as a result of the govt adding trillions of dollars - a completely unprecedented amount. Do you really think a govt can simply throw trillions into an economy at this rate and not have inflation? [1] https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- throwaway5959 4y ago
  k let's assume that's the case, what would you propose as the solution to mop up the 12 trillion in excess M1?
  - SideQuark 4y ago
    Nothing - you let it run it's course while mitigating inflation with Fed actions. Money will rescale as it's always done, and people will go on their way (as they're doing right now). This is how it's been done the world over, and it works pretty well, despite pop articles creating more panic than is warranted. Money has been added in the past to smooth out the 18th and 19th century boom and bust cycles, and it has worked extremely well compared to past pain. Every country on the planet has chosen central banking since the evidence it's better than the alternatives has been overwhelming for almost a century.