4 ms·

It shouldn’t matter much whether inflation is low or high as long as it is stable. Every supposed effect of inflation seems to be mostly an effect of either wea

It shouldn’t matter much whether inflation is low or high as long as it is stable. Every supposed effect of inflation seems to be mostly an effect of either wealth redistribution or uncertainty.

contravariant 3y ago
Well it needs to be somewhat reasonable for that to work. It might not matter much whether money has a half-life of 20 or 30 years, but if it becomes 10 days or 1000 years then that is a quite significant change in the way that money works.
analog31 3y ago
It can also be seen as a form of wealth redistribution. People who have the flexibility to change their prices or wages in sync with inflation won't see its effects as much as those who are either locked into long term obligations or have less economic mobility.
- s1artibartfast 3y ago
  This doesn't hold up because there are a number of ways to invest your wealth to protect it from inflation.
  - analog31 3y ago
    Many workers have little or no wealth to invest, and possibly limited job mobility.
ComputerGuru 3y ago
But that’s what the article is really about. It shows how there is an intrinsic link between the rate of inflation and the volatility of that rate YoY.
- LudwigNagasena 3y ago
  Is that because the inflation is high, or is it because it deviates from the Fed target too far?
  - ComputerGuru 3y ago
    I mean they are inextricably linked cofactors, but given that the observed increase volatility is measured as the absolute value (can be in either direction, i.e. ±) I would venture to say that at least some of it is regardless of Fed (re)action. However, I would also posit that it just doesn't matter since the feds will continue (as they've said and shown) to take action so long as the inflation rate isn't at their target rate, so cofactor A automatically implies cofactor B and we just have to deal with that fallout.
    - LudwigNagasena 3y ago
      The Fed is not a force of nature, its response to the rise of inflation is absolutely crucial and important for economy, and it is not in any metaphysical way coupled to the rise of inflation — it can act as it pleases.
      - ComputerGuru 3y ago
        From our helpless perspective, the Fed might as well be.

It shouldn’t matter much whether inflation is low or high as long as it is stable. Every supposed effect of inflation seems to be mostly an effect of either wealth redistribution or uncertainty.

contravariant 3y ago

Well it needs to be somewhat reasonable for that to work. It might not matter much whether money has a half-life of 20 or 30 years, but if it becomes 10 days or 1000 years then that is a quite significant change in the way that money works.

analog31 3y ago

It can also be seen as a form of wealth redistribution. People who have the flexibility to change their prices or wages in sync with inflation won't see its effects as much as those who are either locked into long term obligations or have less economic mobility.

s1artibartfast 3y ago
This doesn't hold up because there are a number of ways to invest your wealth to protect it from inflation.
- analog31 3y ago
  Many workers have little or no wealth to invest, and possibly limited job mobility.

ComputerGuru 3y ago

But that’s what the article is really about. It shows how there is an intrinsic link between the rate of inflation and the volatility of that rate YoY.

LudwigNagasena 3y ago
Is that because the inflation is high, or is it because it deviates from the Fed target too far?
- ComputerGuru 3y ago
  I mean they are inextricably linked cofactors, but given that the observed increase volatility is measured as the absolute value (can be in either direction, i.e. ±) I would venture to say that at least some of it is regardless of Fed (re)action. However, I would also posit that it just doesn't matter since the feds will continue (as they've said and shown) to take action so long as the inflation rate isn't at their target rate, so cofactor A automatically implies cofactor B and we just have to deal with that fallout.
  - LudwigNagasena 3y ago
    The Fed is not a force of nature, its response to the rise of inflation is absolutely crucial and important for economy, and it is not in any metaphysical way coupled to the rise of inflation — it can act as it pleases.
    - ComputerGuru 3y ago
      From our helpless perspective, the Fed might as well be.