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'the deficit' isn't really driving inflation, as evidenced by japan's huge deficit and relatively low inflation. If you want to talk about what's going to caus

'the deficit' isn't really driving inflation, as evidenced by japan's huge deficit and relatively low inflation. If you want to talk about what's going to cause inflation in the future? It will almost certainly be some combination of tariffs and a lack of workers due to deportation. I'm not supporting industries that thrive off exploiting the undocumented, I'm merely stating the fact that deporting them will raise inflation.

rayiner 2y ago
What if I told you that we exploit cheap immigrant labor in order to avoid inflation while continuing to print money? It’s an equation.
normalaccess 2y ago
The fact that every dollar that is printed MUST be paid back to the Federal Reserve Bank with interest means that every dollar printed is worth less than it's face value. This is the original and primary source of inflation. All debt biassed currencies have this, not as a defect, but as a feature. If you own the bank you can do some money magic and get filthy rich. The Federal reserve Over the last 100 years the dollar has lost something like 96% of it's value. It's old and quite corny but this video gives the cliff notes on how the FED works https://youtu.be/mII9NZ8MMVM https://youtu.be/mII9NZ8MMVM
- somewhereoutth 2y ago
  Modern banking systems allow the banks themselves to 'print' dollars - by originating loans. The Fed (and central banks elsewhere) steer this money creation process through various mechanisms. However it is NOT the case that 'every dollar must be paid back to the Fed'. The reason for this expanding money supply is to facilitate an expanding economy.
  - normalaccess 2y ago
    You are right, part of every dollar must be paid back. If there is any interest on a loan then you need to pay back more than 100% the original cost. Our FED operates the same way, the government must pay back the FED's loans, and these loans have interest. When the US was printing greenbacks without the FED there was no one to "pay them back to". This is how the USA operated before 1913.
    - wahern 2y ago
      Inflation existed before 1913. What was different was that inflationary periods were counterbalanced by periods of deflation. There's a reason why the Federal Reserve has two primary missions--stable prices and maximum employment. Deflationary periods cause massive unemployment and declines in investment, so they really want to avoid deflationary periods. Ask any economically literate historian about the devastation deflation causes at the individual level; it's far, far worse than inflation at nominally comparable levels. This is why the Fed is biased toward inflation. 20th (post-Bretton Woods) and 21st century inflationary periods haven't been any worse than the 19th century or early, but we have avoided severe deflationary periods, and that's absolutely worth the small long-term inflation. It's also arguably kept prices more stable, but confounders (technology, etc) make comparisons with the 19th century industrial revolution complicated--the emergence and rapid evolution (to this day) of the commodification of goods and services.
      - WalterBright 2y ago
        > it's far, far worse than inflation at nominally comparable levels. I haven't seen any evidence for that. > This is why the Fed is biased toward inflation. The Fed is biased toward inflation because that way the government can spend more without raising taxes.
        wahern 2y ago
        Try reading, Lords of Finance: The Bankers Who Broke the World. It won the 2010 Pulitzer Prize for History, among other accolades. I certainly enjoyed it, though I read it on the heels of the 2008 financial crisis, which may have made it feel especially salient.
- throw0101d 2y ago
  > It's old and quite corny but this video gives the cliff notes on how the FED works This is nothing like how the Fed, or banks, work: depositor's money is not given out to people who get loans. Tobin called this the "Old View" in 1963: * https://elischolar.library.yale.edu/cowles-discussion-paper-series/388/ https://elischolar.library.yale.edu/cowles-discussion-paper-... It's beyond old now: * https://www.bankofengland.co.uk/explainers/how-is-money-created https://www.bankofengland.co.uk/explainers/how-is-money-crea... * https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 * https://rationalreminder.ca/podcast/132 https://rationalreminder.ca/podcast/132
tonymet 2y ago
the inflation of 2020-2024 (some by trump 45) is somehow the result of trump 47?
- WalterBright 2y ago
  The 2020 inflation was the result of 2019 deficits. After that, the deficits were due to Biden.
  - Jtsummers 2y ago
    > The 2020 inflation was the result of 2019 deficits. After that, the deficits were due to Biden. Double check your timeline, Biden did not become president until 2021 so you cannot lay the 2020 deficit on him. The single highest deficit year was Trump's FY 2020 with a deficit of $3.3 trillion. It came down the next year (FY 2021) which can either be credited to Biden or shared between Biden and Trump since it spans both their terms.
    - WalterBright 2y ago
      Fair enough. I was a year off.
  - throw0101d 2y ago
    > The 2020 inflation was the result of 2019 deficits. There was no inflation in 2020, the year that COVID hit. Many places experienced a month or two of deflation due to shutdowns. Remember when oil price went negative? * https://www.cbc.ca/news/business/oil-negative-price-1.5538996 https://www.cbc.ca/news/business/oil-negative-price-1.553899... Inflation didn't start going up until 2021, and some of that was due to base effects: * https://www.investopedia.com/terms/b/base-effect.asp https://www.investopedia.com/terms/b/base-effect.asp * https://blog.ons.gov.uk/2021/05/19/beware-base-effects/ https://blog.ons.gov.uk/2021/05/19/beware-base-effects/
    - deleted 2y ago
      [deleted]

rayiner 2y ago

What if I told you that we exploit cheap immigrant labor in order to avoid inflation while continuing to print money? It’s an equation.

normalaccess 2y ago

The fact that every dollar that is printed MUST be paid back to the Federal Reserve Bank with interest means that every dollar printed is worth less than it's face value. This is the original and primary source of inflation. All debt biassed currencies have this, not as a defect, but as a feature. If you own the bank you can do some money magic and get filthy rich. The Federal reserve Over the last 100 years the dollar has lost something like 96% of it's value. It's old and quite corny but this video gives the cliff notes on how the FED works https://youtu.be/mII9NZ8MMVM https://youtu.be/mII9NZ8MMVM

somewhereoutth 2y ago
Modern banking systems allow the banks themselves to 'print' dollars - by originating loans. The Fed (and central banks elsewhere) steer this money creation process through various mechanisms. However it is NOT the case that 'every dollar must be paid back to the Fed'. The reason for this expanding money supply is to facilitate an expanding economy.
- normalaccess 2y ago
  You are right, part of every dollar must be paid back. If there is any interest on a loan then you need to pay back more than 100% the original cost. Our FED operates the same way, the government must pay back the FED's loans, and these loans have interest. When the US was printing greenbacks without the FED there was no one to "pay them back to". This is how the USA operated before 1913.
  - wahern 2y ago
    Inflation existed before 1913. What was different was that inflationary periods were counterbalanced by periods of deflation. There's a reason why the Federal Reserve has two primary missions--stable prices and maximum employment. Deflationary periods cause massive unemployment and declines in investment, so they really want to avoid deflationary periods. Ask any economically literate historian about the devastation deflation causes at the individual level; it's far, far worse than inflation at nominally comparable levels. This is why the Fed is biased toward inflation. 20th (post-Bretton Woods) and 21st century inflationary periods haven't been any worse than the 19th century or early, but we have avoided severe deflationary periods, and that's absolutely worth the small long-term inflation. It's also arguably kept prices more stable, but confounders (technology, etc) make comparisons with the 19th century industrial revolution complicated--the emergence and rapid evolution (to this day) of the commodification of goods and services.
    - WalterBright 2y ago
      > it's far, far worse than inflation at nominally comparable levels. I haven't seen any evidence for that. > This is why the Fed is biased toward inflation. The Fed is biased toward inflation because that way the government can spend more without raising taxes.
      - wahern 2y ago
        Try reading, Lords of Finance: The Bankers Who Broke the World. It won the 2010 Pulitzer Prize for History, among other accolades. I certainly enjoyed it, though I read it on the heels of the 2008 financial crisis, which may have made it feel especially salient.
throw0101d 2y ago
> It's old and quite corny but this video gives the cliff notes on how the FED works This is nothing like how the Fed, or banks, work: depositor's money is not given out to people who get loans. Tobin called this the "Old View" in 1963: * https://elischolar.library.yale.edu/cowles-discussion-paper-series/388/ https://elischolar.library.yale.edu/cowles-discussion-paper-... It's beyond old now: * https://www.bankofengland.co.uk/explainers/how-is-money-created https://www.bankofengland.co.uk/explainers/how-is-money-crea... * https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... * https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625 * https://rationalreminder.ca/podcast/132 https://rationalreminder.ca/podcast/132

tonymet 2y ago

the inflation of 2020-2024 (some by trump 45) is somehow the result of trump 47?

WalterBright 2y ago
The 2020 inflation was the result of 2019 deficits. After that, the deficits were due to Biden.
- Jtsummers 2y ago
  > The 2020 inflation was the result of 2019 deficits. After that, the deficits were due to Biden. Double check your timeline, Biden did not become president until 2021 so you cannot lay the 2020 deficit on him. The single highest deficit year was Trump's FY 2020 with a deficit of $3.3 trillion. It came down the next year (FY 2021) which can either be credited to Biden or shared between Biden and Trump since it spans both their terms.
  - WalterBright 2y ago
    Fair enough. I was a year off.
- throw0101d 2y ago
  > The 2020 inflation was the result of 2019 deficits. There was no inflation in 2020, the year that COVID hit. Many places experienced a month or two of deflation due to shutdowns. Remember when oil price went negative? * https://www.cbc.ca/news/business/oil-negative-price-1.5538996 https://www.cbc.ca/news/business/oil-negative-price-1.553899... Inflation didn't start going up until 2021, and some of that was due to base effects: * https://www.investopedia.com/terms/b/base-effect.asp https://www.investopedia.com/terms/b/base-effect.asp * https://blog.ons.gov.uk/2021/05/19/beware-base-effects/ https://blog.ons.gov.uk/2021/05/19/beware-base-effects/
  - deleted 2y ago
    [deleted]