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Inflation is never linear, and tends to over/under shoot. Under normal circumstances, supply chain issues (otherwise known as supply reduction) results in dema
by qeternity 4y ago
Inflation is never linear, and tends to over/under shoot.
Under normal circumstances, supply chain issues (otherwise known as supply reduction) results in demand being priced out of the market. But we didn’t do that. We gave stimmie checks, and gas cards, and increased unemployment benefits, and paused loan repayments.
When there’s not enough of thing X it means some people won’t get thing X. Giving people money to make it “more affordable” just pushes price higher without increasing affordability (as the market still settles on a market clearing price).
- arcticbull 3y agoJapan had the same monetary policy for the same period of time and saw zero inflation. It's not monetary policy. There's no reason to think that 15 years later some magical thing happened to flush all the pressure that had built up out of the pipes. It was due to a combination of fiscal stimulus, yes, to a degree - and also supply chain issues, a land war in Europe, shutdowns in China, and myriad other confounding factors. There's been a lot of perfect storms lately.
- qeternity 3y agoJapan now has actual inflation and is going to be completely powerless to stop it.
- arcticbull 3y agoThat's a great theory. Let's see how it plays out. Looks like it's down to 3.2% from 4.3% at the start of the year. [1] [1] https://tradingeconomics.com/japan/inflation-cpi https://tradingeconomics.com/japan/inflation-cpi
- makomk 3y agoHaving any inflation at all is remarkable for Japan - they've basically had deflation since the early 90s. The measures they've been using to keep inflation that low also look unsustainable (their foreign currency reserves are going to be eaten away).