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Inflation is a complicated topic that doesn't get adequately captured in the sound bites. I kept hearing clips of voters saying they want prices to go back dow

Inflation is a complicated topic that doesn't get adequately captured in the sound bites. I kept hearing clips of voters saying they want prices to go back down, but my understanding of the economics is that this would be terrible. Instead, IMO, what we need is for wages to increase while minimizing the inflationary effect of wage increases. That's not a catchy slogan, however. Parallel to this, I don't think the post COVID inflation is really due to politicians.

caeril 2y ago
> my understanding of the economics is that this would be terrible Deflation is only "terrible" because we have collectively decided to build an economy on debt instead of savings (Keynesian instead of Friedmanian). In a different economic order, prices declining would be a good thing for everyone. But we're stuck with it, so inflation it is.
- AlexandrB 2y ago
  Doesn't deflation especially disadvantage the young - since you're usually not born with savings of your own.
  - RpmReviver 2y ago
    Depends how much deflation there is with wages compared to everything else, there's a scenario that they have an opportunity to start saving The majority of the expenses for the disadvantaged young are housing, gas, and food. With housing being 4x more expensive than 4 or 5 years it basically puts all the disadvantaged from even buying a house and then puts them at the mercy of the renters market
- atq2119 2y ago
  There are a number of issues with this comment. One of them is that debt and saving are just sides of the same coin. More importantly, everybody can see that debt for investment allows more growth. Just think about how many more people can afford to own their own home thanks to taking on debt. This allows them to pay a mortgage instead of rent, which allows them to build up wealth. Equivalent effects exist in industry. Debt is an extremely useful tool. We made the right choice here as a society.
- bluedevil2k 2y ago
  What?? This isn’t correct at all. A deflationary economic environment is bad no matter the fiscal policy or monetary policy we have in place. You propose it would be better if we pushed for savings. Well if we all know that prices in a few weeks/months/years will be less than today, then spending drops. Friedman pushed velocity of money, even he would agree that a lower velocity would crush an economy.
  - rdlw 2y ago
    I never got this line of thinking. I'm already disincentivized from spending because simple investments are likely to outpace inflation. That's a good reason to save as much as I can, but I still buy things, and it's not like I can put off buying food for a year so that prices drop. What's so different about this incentive to save and it being a part of the economy?
    - bluedevil2k 2y ago
      HN crowd, with our stock portfolio, is not like most Americans whose only savings are in bank accounts.
      - rdlw 2y ago
        Yes, because most people spend most of their money. I'm saying deflation seems unlikely to change that, since a strong incentive to save money already exists, in the form of retirement fund.
- bluedevil2k 2y ago
  And Friedman never pushed an economy of savings, not sure where you’re getting that from. If anything, he wanted people spending faster. * https://www.investopedia.com/terms/m/milton-friedman.asp https://www.investopedia.com/terms/m/milton-friedman.asp
- pyrale 2y ago
  A working economy means professional activity to make goods and services. Deflation actively kills that by incentivizing people to defer or cancel their purchases in favor of savings. So economic activity collapses. There is no such thing as a durable deflationary market if it’s not justified by productivity gains and volume - and there is definitely no such thing as a durable deflationary economy.
  - Detrytus 2y ago
    The US was "a durable deflationary economy" for pretty much the whole 19th century, and first decade of 20th century. Things started to change once FED was created and given power over money supply.
    - dead_gunslinger 2y ago
      [dead]
    - pyrale 2y ago
      > for pretty much the whole 19th century Not sure what you're refering to, the 1873 panic wasn't exactly the finest hour for US economy. I guess that's not what you want to get back to. As for the rest of the 19th century, the data we have is mostly consumer price indexes, but I can't recollect another durable deflationary period in the century.
- zzbzq 2y ago
  You save money in a bank, they lend it out to someone, that someone is now in debt Debt = Savings
  - ArnoVW 2y ago
    Actually, banks can "create" money from nowhere. It's called fractional-reserve banking. When you deposit money into a bank, the bank is required to keep only a fraction of that deposit as reserves. The rest can be used for lending. The exact fraction is determined by the central bank's reserve requirements. And since 2020 it has been set to... zero percent. So essentially US banks can infinitely create money.
  - CraigJPerry 2y ago
    >> in a bank, they lend it out to someone https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp#:~:text=How%20Do%20Banks%20Create%20Loans,is%20how%20they%20create%20credit https://www.investopedia.com/articles/investing/022416/why-b.... >> Debt = Savings That’s only true for public debt, excess spending (that which is not deleted through taxation) by the government shows up in savings
- deleted 2y ago
  [deleted]
throw_that_away 2y ago
We need prices to go down in specific places, like CA where I live. https://www.raleys.com/product/10400953/raley_s-shredded-four-cheese-mexican-style-blend-cheese https://www.raleys.com/product/10400953/raley_s-shredded-fou... I was looking at the price of Lays chips and it's sitting at $6 a bag ON SALE! https://www.raleys.com/product/30031044/lay_s-potato-chips-sour-cream-onion-flavored-party-size https://www.raleys.com/product/30031044/lay_s-potato-chips-s... Yes prices need to specifically go down. CA decided to DOUBLE DOWN on raising gas prices during the pandemic, and apparently they're slated to vote on another change that could raise prices by $0.45 a gallon. The world has had CHOICES to go in a specific direction, and this administration and all LEFT administrations are pushing for prices to rise, and replace all the failing families with people from China, Venezuela and whoever wants to cross the border.
- caekislove 2y ago
  [flagged]
  - asveikau 2y ago
    I think California just passed the prop to escalate some crimes to felonies, so I feel like the policy commonly used to justify this joke may be dead.
    - caekislove 2y ago
      That's great to hear!
      - asveikau 2y ago
        I actually disagree, but I'm glad you're happy.
        throw_that_away 2y ago
        Why would someone disagree with punishing crime? Are we living in reverse world where crime is the norm? How do we expect a functioning society if everything is expected to fail?
cloverich 2y ago
Prices wont come back down; but few if any swing voters understand that. They just see high prices under biden and remember lower ones under Trump. Him losing would have taken a very strong candidate given the predicament.
- therealpygon 2y ago
  Well, with a less than 6th grade literacy rate for 54% of Americans, it isn’t exactly surprising that many people have a hard time understanding any nuance. I once heard a woman explaining to her captive audience’s amazement how the colors of a “yingyang” were because “ying” means white and “yang” means black. Aside from being wholely incorrect (reversed), the concepts and meaning behind the yin yang of the balance between “light and dark” is completely lost on her. The extent of her knowledge will always be whatever someone she believed told her. Edit: I forgot to mention, the reason for the colors. “Ying” has an i, for wh”i”te, “Yang” has an “a” for bl”a”ck. It wasn’t even a light/dark thing, it was because she believes the translated name shares a common letter with the color, so that is the reason for those colors. That is the reason why I’m not surprised by the results.
barake 2y ago
Over 50% of the increased prices are from producers not just recouping their additional expenses, but also increasing profit margins. Typically you would expect this to be an opportunity for competition, but generally speaking companies are suspiciously raising prices together. They've taken advantage of the COVID shortage and inflation narratives to squeeze consumers. https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/ https://fortune.com/2024/01/20/inflation-greedflation-consum... https://www.marketplace.org/2024/08/05/ftc-grocery-prices/ https://www.marketplace.org/2024/08/05/ftc-grocery-prices/
- stackskipton 2y ago
  >Typically you would expect this to be an opportunity for competition What competition? Most of them have merged into massive blobs.
  - ToucanLoucan 2y ago
    Corporate consolidation is one of the biggest and least talked about boogeymen of our current era, one which is set to get even worse under Trump's second term. The Biden admin barely, kind of, got anti-trust authorities somewhat working again, and that will be demolished on day 1 of Trump. Bigger corpos means bigger donations to bigger candidates. The entire system runs on money and nobody's got money to put in like these supercorps. We live in Gerontocracy that is actively building a Corporatocracy to replace it after the Boomers die off entirely and no money will ever go to the working class again.
    - mtswish 2y ago
      > The Biden admin barely, kind of, got anti-trust authorities somewhat working again, and that will be demolished on day 1 of Trump. You are grossly underselling the work of Lina Khan and the FTC.
      - ToucanLoucan 2y ago
        And what will it matter when on day 1 of the next administration, it's all blown out the airlock? If your change is no more durable than a single election, you didn't accomplish shit.
kccoder 2y ago
Of course deflation would be terrible for the economy. Expecting the average voter to understand the intricate complexities of how economies work vs I don't have enough money to buy things, so I want prices to drop, is sadly a losing proposition.
FuckButtons 2y ago
Any real political problem is multifaceted, deeply interconnected with the way the country works and its place in the world. But peoples experiences of them are not, inflation manifests as someone being able to afford rent one year, and not the next. A good politician, can speak to the experience, but fix the problem. A good salesman can sell you a solution, even if it doesn't fix the problem. And the democratic party, seems mostly interested in talking about the problem and ignoring the experience.
jasondigitized 2y ago
All that mattered was that bread is $4.50

caeril 2y ago

> my understanding of the economics is that this would be terrible Deflation is only "terrible" because we have collectively decided to build an economy on debt instead of savings (Keynesian instead of Friedmanian). In a different economic order, prices declining would be a good thing for everyone. But we're stuck with it, so inflation it is.

AlexandrB 2y ago
Doesn't deflation especially disadvantage the young - since you're usually not born with savings of your own.
- RpmReviver 2y ago
  Depends how much deflation there is with wages compared to everything else, there's a scenario that they have an opportunity to start saving The majority of the expenses for the disadvantaged young are housing, gas, and food. With housing being 4x more expensive than 4 or 5 years it basically puts all the disadvantaged from even buying a house and then puts them at the mercy of the renters market
atq2119 2y ago
There are a number of issues with this comment. One of them is that debt and saving are just sides of the same coin. More importantly, everybody can see that debt for investment allows more growth. Just think about how many more people can afford to own their own home thanks to taking on debt. This allows them to pay a mortgage instead of rent, which allows them to build up wealth. Equivalent effects exist in industry. Debt is an extremely useful tool. We made the right choice here as a society.
bluedevil2k 2y ago
What?? This isn’t correct at all. A deflationary economic environment is bad no matter the fiscal policy or monetary policy we have in place. You propose it would be better if we pushed for savings. Well if we all know that prices in a few weeks/months/years will be less than today, then spending drops. Friedman pushed velocity of money, even he would agree that a lower velocity would crush an economy.
- rdlw 2y ago
  I never got this line of thinking. I'm already disincentivized from spending because simple investments are likely to outpace inflation. That's a good reason to save as much as I can, but I still buy things, and it's not like I can put off buying food for a year so that prices drop. What's so different about this incentive to save and it being a part of the economy?
  - bluedevil2k 2y ago
    HN crowd, with our stock portfolio, is not like most Americans whose only savings are in bank accounts.
    - rdlw 2y ago
      Yes, because most people spend most of their money. I'm saying deflation seems unlikely to change that, since a strong incentive to save money already exists, in the form of retirement fund.
bluedevil2k 2y ago
And Friedman never pushed an economy of savings, not sure where you’re getting that from. If anything, he wanted people spending faster. * https://www.investopedia.com/terms/m/milton-friedman.asp https://www.investopedia.com/terms/m/milton-friedman.asp
pyrale 2y ago
A working economy means professional activity to make goods and services. Deflation actively kills that by incentivizing people to defer or cancel their purchases in favor of savings. So economic activity collapses. There is no such thing as a durable deflationary market if it’s not justified by productivity gains and volume - and there is definitely no such thing as a durable deflationary economy.
- Detrytus 2y ago
  The US was "a durable deflationary economy" for pretty much the whole 19th century, and first decade of 20th century. Things started to change once FED was created and given power over money supply.
  - dead_gunslinger 2y ago
    [dead]
  - pyrale 2y ago
    > for pretty much the whole 19th century Not sure what you're refering to, the 1873 panic wasn't exactly the finest hour for US economy. I guess that's not what you want to get back to. As for the rest of the 19th century, the data we have is mostly consumer price indexes, but I can't recollect another durable deflationary period in the century.
zzbzq 2y ago
You save money in a bank, they lend it out to someone, that someone is now in debt Debt = Savings
- ArnoVW 2y ago
  Actually, banks can "create" money from nowhere. It's called fractional-reserve banking. When you deposit money into a bank, the bank is required to keep only a fraction of that deposit as reserves. The rest can be used for lending. The exact fraction is determined by the central bank's reserve requirements. And since 2020 it has been set to... zero percent. So essentially US banks can infinitely create money.
- CraigJPerry 2y ago
  >> in a bank, they lend it out to someone https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp#:~:text=How%20Do%20Banks%20Create%20Loans,is%20how%20they%20create%20credit https://www.investopedia.com/articles/investing/022416/why-b.... >> Debt = Savings That’s only true for public debt, excess spending (that which is not deleted through taxation) by the government shows up in savings
deleted 2y ago
[deleted]

throw_that_away 2y ago

We need prices to go down in specific places, like CA where I live. https://www.raleys.com/product/10400953/raley_s-shredded-four-cheese-mexican-style-blend-cheese https://www.raleys.com/product/10400953/raley_s-shredded-fou... I was looking at the price of Lays chips and it's sitting at $6 a bag ON SALE! https://www.raleys.com/product/30031044/lay_s-potato-chips-sour-cream-onion-flavored-party-size https://www.raleys.com/product/30031044/lay_s-potato-chips-s... Yes prices need to specifically go down. CA decided to DOUBLE DOWN on raising gas prices during the pandemic, and apparently they're slated to vote on another change that could raise prices by $0.45 a gallon. The world has had CHOICES to go in a specific direction, and this administration and all LEFT administrations are pushing for prices to rise, and replace all the failing families with people from China, Venezuela and whoever wants to cross the border.

caekislove 2y ago
[flagged]
- asveikau 2y ago
  I think California just passed the prop to escalate some crimes to felonies, so I feel like the policy commonly used to justify this joke may be dead.
  - caekislove 2y ago
    That's great to hear!
    - asveikau 2y ago
      I actually disagree, but I'm glad you're happy.
      - throw_that_away 2y ago
        Why would someone disagree with punishing crime? Are we living in reverse world where crime is the norm? How do we expect a functioning society if everything is expected to fail?

cloverich 2y ago

Prices wont come back down; but few if any swing voters understand that. They just see high prices under biden and remember lower ones under Trump. Him losing would have taken a very strong candidate given the predicament.

therealpygon 2y ago
Well, with a less than 6th grade literacy rate for 54% of Americans, it isn’t exactly surprising that many people have a hard time understanding any nuance. I once heard a woman explaining to her captive audience’s amazement how the colors of a “yingyang” were because “ying” means white and “yang” means black. Aside from being wholely incorrect (reversed), the concepts and meaning behind the yin yang of the balance between “light and dark” is completely lost on her. The extent of her knowledge will always be whatever someone she believed told her. Edit: I forgot to mention, the reason for the colors. “Ying” has an i, for wh”i”te, “Yang” has an “a” for bl”a”ck. It wasn’t even a light/dark thing, it was because she believes the translated name shares a common letter with the color, so that is the reason for those colors. That is the reason why I’m not surprised by the results.

barake 2y ago

Over 50% of the increased prices are from producers not just recouping their additional expenses, but also increasing profit margins. Typically you would expect this to be an opportunity for competition, but generally speaking companies are suspiciously raising prices together. They've taken advantage of the COVID shortage and inflation narratives to squeeze consumers. https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/ https://fortune.com/2024/01/20/inflation-greedflation-consum... https://www.marketplace.org/2024/08/05/ftc-grocery-prices/ https://www.marketplace.org/2024/08/05/ftc-grocery-prices/

stackskipton 2y ago
>Typically you would expect this to be an opportunity for competition What competition? Most of them have merged into massive blobs.
- ToucanLoucan 2y ago
  Corporate consolidation is one of the biggest and least talked about boogeymen of our current era, one which is set to get even worse under Trump's second term. The Biden admin barely, kind of, got anti-trust authorities somewhat working again, and that will be demolished on day 1 of Trump. Bigger corpos means bigger donations to bigger candidates. The entire system runs on money and nobody's got money to put in like these supercorps. We live in Gerontocracy that is actively building a Corporatocracy to replace it after the Boomers die off entirely and no money will ever go to the working class again.
  - mtswish 2y ago
    > The Biden admin barely, kind of, got anti-trust authorities somewhat working again, and that will be demolished on day 1 of Trump. You are grossly underselling the work of Lina Khan and the FTC.
    - ToucanLoucan 2y ago
      And what will it matter when on day 1 of the next administration, it's all blown out the airlock? If your change is no more durable than a single election, you didn't accomplish shit.

kccoder 2y ago

Of course deflation would be terrible for the economy. Expecting the average voter to understand the intricate complexities of how economies work vs I don't have enough money to buy things, so I want prices to drop, is sadly a losing proposition.

FuckButtons 2y ago

Any real political problem is multifaceted, deeply interconnected with the way the country works and its place in the world. But peoples experiences of them are not, inflation manifests as someone being able to afford rent one year, and not the next. A good politician, can speak to the experience, but fix the problem. A good salesman can sell you a solution, even if it doesn't fix the problem. And the democratic party, seems mostly interested in talking about the problem and ignoring the experience.

jasondigitized 2y ago

All that mattered was that bread is $4.50