8 ms·

Fed Says Inflation Progress Has Stalled, Extends Wait-and-See Stance

45 points by samspenc 2y ago

hartator 2y ago
Really hope we are not gonna to have Japanese-like stagflation for next decade.
- jbm 2y ago
  Japan had deflation and as a normal person it was great. Less people got rich off the stock market casino though
  - hartator 2y ago
    Interesting. I guess things getting cheaper and cheaper can be enjoyable. What was your experience in term of doing business?
  - cs702 2y ago
    When deflation becomes a self-reinforcing deflationary loop, as in the 1930's in the US, it's horrible: https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/blog/2023/aug/ov/ovblog_deflationaryloop.gif https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed... That's why Japan has been trying to fight deflation for decades.
    - cryptonector 2y ago
      One of the key things that made the 30s so horrible was that Hoover and Roosevelt both pressured industry to not cut wages, which they complied with, but they cut employment instead.
      - WalterBright 2y ago
        The key thing was the Fed mismanaging and misunderstanding how money worked. My dad (grew up in the 30s) said that simply "nobody had any money".
        throw0101b 2y ago
        > The key thing was the Fed mismanaging and misunderstanding how money worked. The key thing was the Fed was (early on) complying with how the gold standard worked, which is a finite amount of cash being available, and only being able to be increased by having more of the shiny stuff. > When the Great Depression hit in 1929, the Fed’s instinct was to do little and let the economy and markets correct. But the Fed seemed to have no sense of how big the credit bubble from the 1920s was. Consequently, from 1929–1933, the Fed remained committed to a tight monetary policy. Under the gold standard then in force, when the gold balances held by the government contracted, the money supply did so as well. Faced with the increasing economic turmoil, US businesses and the public at large trusted gold more than paper currency. Overseas investors, fearing a potential devaluation of the dollar, preferred gold too. This created a gold drain. As the Fed’s gold stocks declined, the United States unwittingly reduced credit in the economy. Over the 1929–1933 period, the US money supply contracted sharply, declining by roughly one third between 1929 and 1933, and the country experienced its worst ever downturn, with unemployment soaring to roughly 25%. * https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost-of-1937-the-fed-stalls-on-rate-hike/ https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost... This is one of the reason why the gold standard (or any "hard" currency) is a bad idea: * https://www.moneyandbanking.com/commentary/2016/12/14/why-a-gold-standard-is-a-very-bad-idea https://www.moneyandbanking.com/commentary/2016/12/14/why-a-... The sooner the US (and other countries) got off the gold standard, the sooner their economies started to recover: > In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%. * https://delong.typepad.com/delong_long_form/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html https://delong.typepad.com/delong_long_form/2013/10/the-grea... There was a misstep in 1936 when there was pressure to raise rates and also to reduce spending due to deficits, and so rates were raised and austerity was enacted… and the economy tanked again.
      - deleted 2y ago
        [deleted]
      - imtringued 2y ago
        Cutting wages never works because you need to cut the wages according to the marginal utility of a dollar and cut the wages where the utility per dollar is lowest. Now here is a rhetorical question, who exactly do you think has the power to set wages? Obviously those with a low marginal utility of money. This means the wages of those with the highest marginal utility get cut. The money saved from the wage cuts will find its way to the capital markets, while the money spent on consumption has decreased leading to a reinforcement of the problem. This will have to continue until the person with the lowest marginal utility of money has received a wage cut, which generally happens when the company goes bankrupt.
        cryptonector 2y ago
        Perhaps, but when the industry doesn't cut wages because the government insists on it, and instead you get high unemployment, that's not better.
        randoglando 2y ago
        What does "marginal utility of money" mean? Is the person with the lowest "marginal utility of money" the CEO?
    - WalterBright 2y ago
      There is no more a deflationary loop than an inflationary loop. Inflation/deflation happens when there is a mismatch between the supply of money and the value of goods and services in the economy. This mismatch usually happens because the central bank prints deficit money. Deflation in the 1930s happened because the Fed went the other way, refusing to create money. This continued until the late 30s when the Fed changed course, and (you guessed it) produced lots of inflation.
      - wslh 2y ago
        Not an endorsement for deflation but this week I discovered this [1] because the Argentinian president mentioned that. In that context it makes me thought that the president cherry picked that work because his government economic measures are in that direction now. [1] "In Defense of Deflation": https://news.ycombinator.com/item?id=40206205 https://news.ycombinator.com/item?id=40206205
      - imtringued 2y ago
        The fed doesn't print "deficit money". They are forbidden from doing that and even if they did, who is going to spend it? The treasury prints money. Remember when Janet Yelled said she is ready to mint a one trillion USD coin in case it is needed to avoid the debt ceiling. What the Fed does is a duration transformation. Commercial banks can deposit US treasuries at the central bank and receive a claim on those treasures in the form of liquid central bank reserves. This is done because people keep holding more and more short term duration deposits in their checking accounts or at brokerage accounts. Buying a 10 year treasury with deposits that only have a 1 day duration is quite insane. This means that in practice whatever deposits you are keeping in your account are missing from the economy. The US federal government can run a deficit and it can run it regardless of the financing conditions. It will merely pay an exorbitant interest rate if it chooses to do so. Here is a loosely related paper: https://www.elsevier.es/en-revista-investigacion-economica-122-articulo-money-generalized-exchange-a-critical-S0185166715000375 https://www.elsevier.es/en-revista-investigacion-economica-1... In an equilibrium economy, the expected net money supply is always zero, that is, every dollar in the money supply is offset by a dollar in debt. So called inside money. If the neoclassical theory is true, then attempts at extracting seigniorage would immediately be spotted and no inflation could ever occur. The inverse is also true. If the government artificially restricted the money supply, people would find alternative means of providing themselves with the ability to exchange. So the expectation is that the government has zero power or ability to influence the economy with monetary policy. The only reason why it would have the ability to do so, is because it has made those alternatives illegal.
    - mupuff1234 2y ago
      Economists say that, but I'd be curious to hear from the "common person" in Japan what they thought about the lack of GDP growth. Now almost certain it's not great for humanity in a long term view (less investments in the future etc) but I'm not sure it has to be worse for the present generation.
    - narimoney 2y ago
      then an inflationary loop is just as scary... https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wage-Price-Spiral.jpg https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wa...
    - vsuperpower2020 2y ago
      And when inflation becomes a self-reinforcing inflation loop, we get zimbabwae and argentina and venezuela. The US suffered a few years where I lost a bit over 10% of my savings and income per year. Inflation is currently taught as "correct" in schools but I suspect that's just the current trend.
      - kevin_thibedeau 2y ago
        It's "correct" for those with deep pockets who want the benefit of near zero interest rates steering people into their investment schemes. Force everyone onto a treadmill they control to reap exclusive rewards from the capital of others.
        imtringued 2y ago
        You know those investment schemes are endorsed because they create jobs? Figure out a way to keep everyone employed without them and you have solved the problem.
  - blackeyeblitzar 2y ago
    This is something I learned the other day. Inflation and deflation are both redistributing wealth. Each transaction has someone who is winning and losing. One isn’t automatically worse or better. Maybe it is that both can be bad if there is a lot of it.
    - rootusrootus 2y ago
      > One isn’t automatically worse or better. Is that really true? Deflation sounds conclusively worse. Everyone starts to hoard money instead of spend it, and the economy goes into a tailspin. Any debt you pay back is with dollars that are worth less. Most anyone in debt, which is a lot of people, should prefer inflation.
      - ysavir 2y ago
        We probably shouldn't be basing our economy on debts then, as we tend to do.
        cyberax 2y ago
        Why? Debts are like levers, they multiply both growth potential, and failure potential.
        TimeBearingDown 2y ago
        Very true. My impression of the US over the past two decades at least though, is that financial services are bleeding many Americans dry even while they believe it’s all to their preferences - that they’re using the levers correctly, while any outside observer would say they’re being taken advantage of, even if it is their choice. Total credit card interest and fees paid by Americans are up 47% from the high of 2019 • Overall economic output continues to increase, but it drains so quickly, and increasingly to depreciating assets. Of the young adults I know, I ask if they do even have a rough budget. Only two couples said yes, none of the singles or other couples. I know many are paying large sums to interest on consumer debt, with student loans looming for later. I don’t have any other statistics, and now will seek them. It raises the question at least, how might we assess the benefit achieved thanks in part to loans to the majority of households over the past 50-100 years? • https://wallethub.com/edu/how-much-americans-pay-in-credit-card-interest-and-fees/129964 https://wallethub.com/edu/how-much-americans-pay-in-credit-c...
  - cyberax 2y ago
    > Japan had deflation and as a normal person it was great. BS. Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! Japan has essentially zero GDP growth since 1990-s as a result.
    - Glacia 2y ago
      >Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! I'm pretty sure Japan never had big unemployment problems, so your claim is BS. >Japan has essentially zero GDP growth since 1990-s as a result. GDP is a useless metric, only useful for politicians to brag about their "achievements".
      - cyberax 2y ago
        > I'm pretty sure Japan never had big unemployment problems, so your claim is Japan is solving unemployment by essentially creating BS jobs, like people standing on a corner and holding a sign saying that there's a corner nearby. Meanwhile, good high-paying jobs are extremely hard to get into, and are very stressful. Remember when it turned out during Fukushima accident that lots of people normally hired to work on the power plant, were essentially unqualified day laborers? That's why. Japan is NOT in a good place economically. They are essentially wasting millions of lifetimes of human capital.
    - HPsquared 2y ago
      And yet, somehow, Japan's Human Development Index has been increasing consistently over the last 30 years. https://hdr.undp.org/data-center/specific-country-data#/countries/JPN https://hdr.undp.org/data-center/specific-country-data#/coun...
      - cyberax 2y ago
        It's mostly a reflection of rising life expectancy. That's great, but it's not really a result of the Japanese economic development.
  - laidoffamazon 2y ago
    Uh, no? Japanese people are far poorer than Americans. Japan's GDP PPP Per capita is $33.8k, America's was $76.3k in 2022. That's more than double.
  - frumper 2y ago
    Except several decades ago we shifted normal people's retirement accounts from pensions to stock market casino accounts.
- gudd0g 2y ago
  [dead]
- Analemma_ 2y ago
  Unemployment is the lowest it has been in 50 years and US GDP has been growing 3-4% annually and is expected to keep doing so. It is ludicrous to fret about stagflation in these conditions.
- laidoffamazon 2y ago
  We're seeing positive, consistent growth and high nominal GDP growth since 2021. In what universe is that stagnation? What do you think the stag- in stagflation means?!
  - jameslk 2y ago
    Annualized GDP growth rate has slowed to 1.6% QoQ compared to 3.4% from the prior quarter. Meanwhile, inflation has continued to climb above the Fed’s target. This doesn’t necessarily indicate we’re in stagflation, but it certainly is an indication we’re moving a bit in the direction of stagflation. OP didn’t claim we’re in stagflation either.
    - laidoffamazon 2y ago
      Not really, one quarter doesn't mean that much. When we had stagflation both inflation and unemployment was far higher. Please learn from history.
      - jameslk 2y ago
        Please don’t be condescending. I said a bit in the direction.
- xhrpost 2y ago
  The problem is inflation isn't coming down, why the concern for deflation? Edit: think I misread your comment. You're not referencing the current deflation in Japan but rather some inflation in the past?
  - ajross 2y ago
    Because it reinforces a prior. It's absolutely amazing the extent to which people who Really Want the Economy to Be Bad will jump between contradictory arguments. When inflation was high it was clearly due to spending, when it came down it was clearly not coming down enough. "Stagflation" is a particularly weird direction to take, as by definition it requires a contraction of the economy ("less stuff to buy with the same money supply == inflation"), and both GDP and population growth remain positive in the USA.
    - toomuchtodo 2y ago
      You are correct that population growth is positive in the US, but most recently it has been to a surge in immigration and the growth has been very mild. Whether population growth remains will be a function of immigration policy and enforcement in the near term. https://www.brookings.edu/articles/new-census-estimates-show-a-tepid-rise-in-u-s-population-growth-buoyed-by-immigration/ https://www.brookings.edu/articles/new-census-estimates-show... ("Brookings: New census estimates show a tepid rise in U.S. population growth, buoyed by immigration") https://www.axios.com/2024/04/25/us-births-drop-2023 https://www.axios.com/2024/04/25/us-births-drop-2023 ("The U.S. fertility rate in 2023 amounted to about 1.62 births per woman — well below the "replacement rate" of 2.1 that would allow a generation to completely replace itself.")
      - ajross 2y ago
        There's been no "surge" in immigration, except in the very short term where migration caught up with the backlog due to the pandemic. There was a steady increase of the foreign-born population fraction between 1970 and ~2010, and it's been essentially flat since then. This site has a great graph about half way down: https://www.migrationpolicy.org/article/frequently-requested-statistics-immigrants-and-immigration-united-states-2024 https://www.migrationpolicy.org/article/frequently-requested... You keep doing this thing where you cite headlines that cover half of your idea and then claiming that they support the whole, and they just don't. Yes, US birth rates are dropping (among both native-born and immigrant populations). No, that doesn't have anything to do with immigration per se, nor is it response to the (correct) point that the population is growing.
readthenotes1 2y ago
It's gotten so bad, even a governor has noticed: https://www.texastribune.org/2024/03/15/texas-greg-abbott-institutional-homebuyers/ https://www.texastribune.org/2024/03/15/texas-greg-abbott-in... "But this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. This must be added to the legislative agenda to protect Texas families.” (Rent/cost if ownership are fairly big contributions to current inflation)
- mey 2y ago
  Would love to see what would happen if governments put some interesting tax policies in place. Taxing Non-primary residences at a higher rate. Taxing empty units at a higher rate to prevent price fixing due to artificial supply control. And when I say empty unit, I would include commercial in that list. Land that is sitting unused, that is zoned to be commercial, industrial, residential, should be taxed at a higher rate to encourage it's sale and/or development for it's zoned purpose.
  - denimnerd42 2y ago
    seems very very hard to get right. non primary residences (and all other property) are already taxed at higher rate in Texas w/ our homestead exemptions. It's hard to say how discouraging capital from entering the market will decrease prices. If companies are willing to put up capital to rent homes that should theoretically increase the supply of residences available for rent. You could argue price fixing or other issues are at stake but it seems more complicated than a single line issue. Typically single family homes aren't good targets for rental so we may see this whole experiment fail naturally. Many areas the math just doesn't work. The target price when this idea started was like a $200-250,000 home. There aren't many ways to get one of those right now. As you go up in price it's harder and harder to find a tenant that would prefer to rent. I think Abbott is just trying to blow the wind in a different direction as one of the causes of real estate price explosion in big cities in Texas is due to migration of people due to corporate tax incentives he is behind which is a good thing for those that already own but bad for those that don't.
chefkd 2y ago
Does anyone well versed in economics see a big similarity between [1960s & 2010s] / [1970s & 2020s]? It seems super similar in terms of social protests & inflation that followed immediately after
- laidoffamazon 2y ago
  It's closer in similarity to 1946/47, where there was a massive shift in consumer habits because of an external event.
  - chefkd 2y ago
    Can it be reversed? Or what reversed it the previous times it happened? Do we just wait for consumer behavior to shift back and whatever the Fed does it doesn't matter?
    - laidoffamazon 2y ago
      Consumer behavior is fine. Consumer sentiment isn't but improved a bunch since last year. It's irrational malaise
- HPsquared 2y ago
  And 1920s/1930s. Edit: all three are inflationary expansion followed by hangover.
mensetmanusman 2y ago
You can’t policy your way out of a shrinking workforce.
- robotnikman 2y ago
  And yet plenty of people I know are struggling to get a job in their field...
  - mensetmanusman 2y ago
    The fields are rearranging. Elderly and hospice care is where growth is at.
    - delfinom 2y ago
      Minimum wage jobs where you are treated like dirt?
    - bcrosby95 2y ago
      And you make shit money there too. Unless you're at the top sucking everyone dry.
      - jrs235 2y ago
        Which is why we need [stronger] unions and protections.
  - silverquiet 2y ago
    Does their field include sitting in a comfortable chair in an air-conditioned office (perhaps even in their home)? Those seem to be pretty tough to get.
  - ajross 2y ago
    "In their field" is probably the magic to that sentence. Cobblers, blacksmiths and habberdashers have it rough too. Economies change. It's absolutely true that there are people coming out of school with humanities degrees that in previous generations would have guaranteed them a professional career, and finding they don't any more. But then there aren't nearly enough nursing graduates, and those of us here in the tech community are living way beyond what our parents would have expected from a "computer?!" education. And come next generation, we may find that some of us have been replaced by AI and our kids will want training in prompt engineering or whatever. But "no job in my field" isn't the same as "no reasonable job available".
lamontcg 2y ago
Not really that surprising. They won't stop until they generate a recession and higher unemployment and surplus labor.
lolol12qw 2y ago
[flagged]
sampa 2y ago
bbbut, remember that inflation is transitory PS just like they missed the window for hikes, now they miss the window for cuts, again
- HPsquared 2y ago
  Debt, like entropy, always seems to increase.
xhrpost 2y ago
Interesting that they are also slowing down the reduction of their assets portfolio. Isn't the inflation primarily caused by their massive increase of the M1 money supply? And wouldn't a reduction in assets mean a reduction in M1?

45 points by samspenc 2y ago

hartator 2y ago

Really hope we are not gonna to have Japanese-like stagflation for next decade.

jbm 2y ago
Japan had deflation and as a normal person it was great. Less people got rich off the stock market casino though
- hartator 2y ago
  Interesting. I guess things getting cheaper and cheaper can be enjoyable. What was your experience in term of doing business?
- cs702 2y ago
  When deflation becomes a self-reinforcing deflationary loop, as in the 1930's in the US, it's horrible: https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/blog/2023/aug/ov/ovblog_deflationaryloop.gif https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed... That's why Japan has been trying to fight deflation for decades.
  - cryptonector 2y ago
    One of the key things that made the 30s so horrible was that Hoover and Roosevelt both pressured industry to not cut wages, which they complied with, but they cut employment instead.
    - WalterBright 2y ago
      The key thing was the Fed mismanaging and misunderstanding how money worked. My dad (grew up in the 30s) said that simply "nobody had any money".
      - throw0101b 2y ago
        > The key thing was the Fed mismanaging and misunderstanding how money worked. The key thing was the Fed was (early on) complying with how the gold standard worked, which is a finite amount of cash being available, and only being able to be increased by having more of the shiny stuff. > When the Great Depression hit in 1929, the Fed’s instinct was to do little and let the economy and markets correct. But the Fed seemed to have no sense of how big the credit bubble from the 1920s was. Consequently, from 1929–1933, the Fed remained committed to a tight monetary policy. Under the gold standard then in force, when the gold balances held by the government contracted, the money supply did so as well. Faced with the increasing economic turmoil, US businesses and the public at large trusted gold more than paper currency. Overseas investors, fearing a potential devaluation of the dollar, preferred gold too. This created a gold drain. As the Fed’s gold stocks declined, the United States unwittingly reduced credit in the economy. Over the 1929–1933 period, the US money supply contracted sharply, declining by roughly one third between 1929 and 1933, and the country experienced its worst ever downturn, with unemployment soaring to roughly 25%. * https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost-of-1937-the-fed-stalls-on-rate-hike/ https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost... This is one of the reason why the gold standard (or any "hard" currency) is a bad idea: * https://www.moneyandbanking.com/commentary/2016/12/14/why-a-gold-standard-is-a-very-bad-idea https://www.moneyandbanking.com/commentary/2016/12/14/why-a-... The sooner the US (and other countries) got off the gold standard, the sooner their economies started to recover: > In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%. * https://delong.typepad.com/delong_long_form/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html https://delong.typepad.com/delong_long_form/2013/10/the-grea... There was a misstep in 1936 when there was pressure to raise rates and also to reduce spending due to deficits, and so rates were raised and austerity was enacted… and the economy tanked again.
    - deleted 2y ago
      [deleted]
    - imtringued 2y ago
      Cutting wages never works because you need to cut the wages according to the marginal utility of a dollar and cut the wages where the utility per dollar is lowest. Now here is a rhetorical question, who exactly do you think has the power to set wages? Obviously those with a low marginal utility of money. This means the wages of those with the highest marginal utility get cut. The money saved from the wage cuts will find its way to the capital markets, while the money spent on consumption has decreased leading to a reinforcement of the problem. This will have to continue until the person with the lowest marginal utility of money has received a wage cut, which generally happens when the company goes bankrupt.
      - cryptonector 2y ago
        Perhaps, but when the industry doesn't cut wages because the government insists on it, and instead you get high unemployment, that's not better.
      - randoglando 2y ago
        What does "marginal utility of money" mean? Is the person with the lowest "marginal utility of money" the CEO?
  - WalterBright 2y ago
    There is no more a deflationary loop than an inflationary loop. Inflation/deflation happens when there is a mismatch between the supply of money and the value of goods and services in the economy. This mismatch usually happens because the central bank prints deficit money. Deflation in the 1930s happened because the Fed went the other way, refusing to create money. This continued until the late 30s when the Fed changed course, and (you guessed it) produced lots of inflation.
    - wslh 2y ago
      Not an endorsement for deflation but this week I discovered this [1] because the Argentinian president mentioned that. In that context it makes me thought that the president cherry picked that work because his government economic measures are in that direction now. [1] "In Defense of Deflation": https://news.ycombinator.com/item?id=40206205 https://news.ycombinator.com/item?id=40206205
    - imtringued 2y ago
      The fed doesn't print "deficit money". They are forbidden from doing that and even if they did, who is going to spend it? The treasury prints money. Remember when Janet Yelled said she is ready to mint a one trillion USD coin in case it is needed to avoid the debt ceiling. What the Fed does is a duration transformation. Commercial banks can deposit US treasuries at the central bank and receive a claim on those treasures in the form of liquid central bank reserves. This is done because people keep holding more and more short term duration deposits in their checking accounts or at brokerage accounts. Buying a 10 year treasury with deposits that only have a 1 day duration is quite insane. This means that in practice whatever deposits you are keeping in your account are missing from the economy. The US federal government can run a deficit and it can run it regardless of the financing conditions. It will merely pay an exorbitant interest rate if it chooses to do so. Here is a loosely related paper: https://www.elsevier.es/en-revista-investigacion-economica-122-articulo-money-generalized-exchange-a-critical-S0185166715000375 https://www.elsevier.es/en-revista-investigacion-economica-1... In an equilibrium economy, the expected net money supply is always zero, that is, every dollar in the money supply is offset by a dollar in debt. So called inside money. If the neoclassical theory is true, then attempts at extracting seigniorage would immediately be spotted and no inflation could ever occur. The inverse is also true. If the government artificially restricted the money supply, people would find alternative means of providing themselves with the ability to exchange. So the expectation is that the government has zero power or ability to influence the economy with monetary policy. The only reason why it would have the ability to do so, is because it has made those alternatives illegal.
  - mupuff1234 2y ago
    Economists say that, but I'd be curious to hear from the "common person" in Japan what they thought about the lack of GDP growth. Now almost certain it's not great for humanity in a long term view (less investments in the future etc) but I'm not sure it has to be worse for the present generation.
  - narimoney 2y ago
    then an inflationary loop is just as scary... https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wage-Price-Spiral.jpg https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wa...
  - vsuperpower2020 2y ago
    And when inflation becomes a self-reinforcing inflation loop, we get zimbabwae and argentina and venezuela. The US suffered a few years where I lost a bit over 10% of my savings and income per year. Inflation is currently taught as "correct" in schools but I suspect that's just the current trend.
    - kevin_thibedeau 2y ago
      It's "correct" for those with deep pockets who want the benefit of near zero interest rates steering people into their investment schemes. Force everyone onto a treadmill they control to reap exclusive rewards from the capital of others.
      - imtringued 2y ago
        You know those investment schemes are endorsed because they create jobs? Figure out a way to keep everyone employed without them and you have solved the problem.
- blackeyeblitzar 2y ago
  This is something I learned the other day. Inflation and deflation are both redistributing wealth. Each transaction has someone who is winning and losing. One isn’t automatically worse or better. Maybe it is that both can be bad if there is a lot of it.
  - rootusrootus 2y ago
    > One isn’t automatically worse or better. Is that really true? Deflation sounds conclusively worse. Everyone starts to hoard money instead of spend it, and the economy goes into a tailspin. Any debt you pay back is with dollars that are worth less. Most anyone in debt, which is a lot of people, should prefer inflation.
    - ysavir 2y ago
      We probably shouldn't be basing our economy on debts then, as we tend to do.
      - cyberax 2y ago
        Why? Debts are like levers, they multiply both growth potential, and failure potential.
        TimeBearingDown 2y ago
        Very true. My impression of the US over the past two decades at least though, is that financial services are bleeding many Americans dry even while they believe it’s all to their preferences - that they’re using the levers correctly, while any outside observer would say they’re being taken advantage of, even if it is their choice. Total credit card interest and fees paid by Americans are up 47% from the high of 2019 • Overall economic output continues to increase, but it drains so quickly, and increasingly to depreciating assets. Of the young adults I know, I ask if they do even have a rough budget. Only two couples said yes, none of the singles or other couples. I know many are paying large sums to interest on consumer debt, with student loans looming for later. I don’t have any other statistics, and now will seek them. It raises the question at least, how might we assess the benefit achieved thanks in part to loans to the majority of households over the past 50-100 years? • https://wallethub.com/edu/how-much-americans-pay-in-credit-card-interest-and-fees/129964 https://wallethub.com/edu/how-much-americans-pay-in-credit-c...
- cyberax 2y ago
  > Japan had deflation and as a normal person it was great. BS. Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! Japan has essentially zero GDP growth since 1990-s as a result.
  - Glacia 2y ago
    >Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! I'm pretty sure Japan never had big unemployment problems, so your claim is BS. >Japan has essentially zero GDP growth since 1990-s as a result. GDP is a useless metric, only useful for politicians to brag about their "achievements".
    - cyberax 2y ago
      > I'm pretty sure Japan never had big unemployment problems, so your claim is Japan is solving unemployment by essentially creating BS jobs, like people standing on a corner and holding a sign saying that there's a corner nearby. Meanwhile, good high-paying jobs are extremely hard to get into, and are very stressful. Remember when it turned out during Fukushima accident that lots of people normally hired to work on the power plant, were essentially unqualified day laborers? That's why. Japan is NOT in a good place economically. They are essentially wasting millions of lifetimes of human capital.
  - HPsquared 2y ago
    And yet, somehow, Japan's Human Development Index has been increasing consistently over the last 30 years. https://hdr.undp.org/data-center/specific-country-data#/countries/JPN https://hdr.undp.org/data-center/specific-country-data#/coun...
    - cyberax 2y ago
      It's mostly a reflection of rising life expectancy. That's great, but it's not really a result of the Japanese economic development.
- laidoffamazon 2y ago
  Uh, no? Japanese people are far poorer than Americans. Japan's GDP PPP Per capita is $33.8k, America's was $76.3k in 2022. That's more than double.
- frumper 2y ago
  Except several decades ago we shifted normal people's retirement accounts from pensions to stock market casino accounts.
gudd0g 2y ago
[dead]
Analemma_ 2y ago
Unemployment is the lowest it has been in 50 years and US GDP has been growing 3-4% annually and is expected to keep doing so. It is ludicrous to fret about stagflation in these conditions.
laidoffamazon 2y ago
We're seeing positive, consistent growth and high nominal GDP growth since 2021. In what universe is that stagnation? What do you think the stag- in stagflation means?!
- jameslk 2y ago
  Annualized GDP growth rate has slowed to 1.6% QoQ compared to 3.4% from the prior quarter. Meanwhile, inflation has continued to climb above the Fed’s target. This doesn’t necessarily indicate we’re in stagflation, but it certainly is an indication we’re moving a bit in the direction of stagflation. OP didn’t claim we’re in stagflation either.
  - laidoffamazon 2y ago
    Not really, one quarter doesn't mean that much. When we had stagflation both inflation and unemployment was far higher. Please learn from history.
    - jameslk 2y ago
      Please don’t be condescending. I said a bit in the direction.
xhrpost 2y ago
The problem is inflation isn't coming down, why the concern for deflation? Edit: think I misread your comment. You're not referencing the current deflation in Japan but rather some inflation in the past?
- ajross 2y ago
  Because it reinforces a prior. It's absolutely amazing the extent to which people who Really Want the Economy to Be Bad will jump between contradictory arguments. When inflation was high it was clearly due to spending, when it came down it was clearly not coming down enough. "Stagflation" is a particularly weird direction to take, as by definition it requires a contraction of the economy ("less stuff to buy with the same money supply == inflation"), and both GDP and population growth remain positive in the USA.
  - toomuchtodo 2y ago
    You are correct that population growth is positive in the US, but most recently it has been to a surge in immigration and the growth has been very mild. Whether population growth remains will be a function of immigration policy and enforcement in the near term. https://www.brookings.edu/articles/new-census-estimates-show-a-tepid-rise-in-u-s-population-growth-buoyed-by-immigration/ https://www.brookings.edu/articles/new-census-estimates-show... ("Brookings: New census estimates show a tepid rise in U.S. population growth, buoyed by immigration") https://www.axios.com/2024/04/25/us-births-drop-2023 https://www.axios.com/2024/04/25/us-births-drop-2023 ("The U.S. fertility rate in 2023 amounted to about 1.62 births per woman — well below the "replacement rate" of 2.1 that would allow a generation to completely replace itself.")
    - ajross 2y ago
      There's been no "surge" in immigration, except in the very short term where migration caught up with the backlog due to the pandemic. There was a steady increase of the foreign-born population fraction between 1970 and ~2010, and it's been essentially flat since then. This site has a great graph about half way down: https://www.migrationpolicy.org/article/frequently-requested-statistics-immigrants-and-immigration-united-states-2024 https://www.migrationpolicy.org/article/frequently-requested... You keep doing this thing where you cite headlines that cover half of your idea and then claiming that they support the whole, and they just don't. Yes, US birth rates are dropping (among both native-born and immigrant populations). No, that doesn't have anything to do with immigration per se, nor is it response to the (correct) point that the population is growing.

readthenotes1 2y ago

It's gotten so bad, even a governor has noticed: https://www.texastribune.org/2024/03/15/texas-greg-abbott-institutional-homebuyers/ https://www.texastribune.org/2024/03/15/texas-greg-abbott-in... "But this corporate large-scale buying of residential homes seems to be distorting the market and making it harder for the average Texan to purchase a home. This must be added to the legislative agenda to protect Texas families.” (Rent/cost if ownership are fairly big contributions to current inflation)

mey 2y ago
Would love to see what would happen if governments put some interesting tax policies in place. Taxing Non-primary residences at a higher rate. Taxing empty units at a higher rate to prevent price fixing due to artificial supply control. And when I say empty unit, I would include commercial in that list. Land that is sitting unused, that is zoned to be commercial, industrial, residential, should be taxed at a higher rate to encourage it's sale and/or development for it's zoned purpose.
- denimnerd42 2y ago
  seems very very hard to get right. non primary residences (and all other property) are already taxed at higher rate in Texas w/ our homestead exemptions. It's hard to say how discouraging capital from entering the market will decrease prices. If companies are willing to put up capital to rent homes that should theoretically increase the supply of residences available for rent. You could argue price fixing or other issues are at stake but it seems more complicated than a single line issue. Typically single family homes aren't good targets for rental so we may see this whole experiment fail naturally. Many areas the math just doesn't work. The target price when this idea started was like a $200-250,000 home. There aren't many ways to get one of those right now. As you go up in price it's harder and harder to find a tenant that would prefer to rent. I think Abbott is just trying to blow the wind in a different direction as one of the causes of real estate price explosion in big cities in Texas is due to migration of people due to corporate tax incentives he is behind which is a good thing for those that already own but bad for those that don't.

chefkd 2y ago

Does anyone well versed in economics see a big similarity between [1960s & 2010s] / [1970s & 2020s]? It seems super similar in terms of social protests & inflation that followed immediately after

laidoffamazon 2y ago
It's closer in similarity to 1946/47, where there was a massive shift in consumer habits because of an external event.
- chefkd 2y ago
  Can it be reversed? Or what reversed it the previous times it happened? Do we just wait for consumer behavior to shift back and whatever the Fed does it doesn't matter?
  - laidoffamazon 2y ago
    Consumer behavior is fine. Consumer sentiment isn't but improved a bunch since last year. It's irrational malaise
HPsquared 2y ago
And 1920s/1930s. Edit: all three are inflationary expansion followed by hangover.

mensetmanusman 2y ago

You can’t policy your way out of a shrinking workforce.

robotnikman 2y ago
And yet plenty of people I know are struggling to get a job in their field...
- mensetmanusman 2y ago
  The fields are rearranging. Elderly and hospice care is where growth is at.
  - delfinom 2y ago
    Minimum wage jobs where you are treated like dirt?
  - bcrosby95 2y ago
    And you make shit money there too. Unless you're at the top sucking everyone dry.
    - jrs235 2y ago
      Which is why we need [stronger] unions and protections.
- silverquiet 2y ago
  Does their field include sitting in a comfortable chair in an air-conditioned office (perhaps even in their home)? Those seem to be pretty tough to get.
- ajross 2y ago
  "In their field" is probably the magic to that sentence. Cobblers, blacksmiths and habberdashers have it rough too. Economies change. It's absolutely true that there are people coming out of school with humanities degrees that in previous generations would have guaranteed them a professional career, and finding they don't any more. But then there aren't nearly enough nursing graduates, and those of us here in the tech community are living way beyond what our parents would have expected from a "computer?!" education. And come next generation, we may find that some of us have been replaced by AI and our kids will want training in prompt engineering or whatever. But "no job in my field" isn't the same as "no reasonable job available".

lamontcg 2y ago

Not really that surprising. They won't stop until they generate a recession and higher unemployment and surplus labor.

lolol12qw 2y ago

[flagged]

sampa 2y ago

bbbut, remember that inflation is transitory PS just like they missed the window for hikes, now they miss the window for cuts, again

HPsquared 2y ago
Debt, like entropy, always seems to increase.

xhrpost 2y ago

Interesting that they are also slowing down the reduction of their assets portfolio. Isn't the inflation primarily caused by their massive increase of the M1 money supply? And wouldn't a reduction in assets mean a reduction in M1?