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It's always been incredible to me that inflation is treated as though it emerges organically, "aww shucks, I sure wish my money didn't keep losing value randoml

• Analemma_ 1y ago
  It’s not “people” pressuring the Fed to lower rates, it’s one person in particular. All the other intelligent people around know that lowering interest rates when you just added a boatload of inflationary pressure is idiotic, but that doesn’t count for anything anymore.
  • SamPatt 1y ago
    I hear you, he's the most vocal at the moment, but low interest rates have been popular among many policymakers and intellectuals throughout the history of monetary policy. _The Price of Time: The Real Story of Interest_ by Edward Chancellor goes in depth on this, a really interesting read.
• bryanlarsen 1y ago
  Go back and listen to the first 10 minutes of the debate again. Kamala tried to warn us about this. It's also quite clear that Kamala lost the first 10 minutes of the debate. It's only later on when Trump went full-Trump that Kamala was able to turn the debate around. You can blame it on Kamala, Trump, the media or the American public, but this sort of stuff is very hard to communicate effectively. Tariffs are taxes and are inflationary. "China is going to pay" is a lie. People tried to communicate this, but weren't believed, so gave up.
  • belter 1y ago
    https://youtu.be/4dOgWZsDB6Q?t=574 https://youtu.be/4dOgWZsDB6Q?t=574
• ceedan 1y ago
  If only we could find some way to raise taxes for people who make so much money that they wouldn't be impacted by those taxes.....
  • SamPatt 1y ago
    When life becomes more expensive due to taxation (inflation is effectively a tax), I'm very skeptical that the solution is more taxation.
    • MurkyLabs 1y ago
      It's less about raising taxes on people making less than 250,000 a year and more on getting people who make over 1,000,000 pay taxes at all. Sure there's plenty of people who aren't rich that commit tax fraud but the IRS is pretty good at getting them. Getting the millionaires who can throw lawyers at them to waste time makes it not worth it. The rich get richer and the poor get poorer
      • hiatus 1y ago
        People making one million dollars a year are people like doctors and lawyers and are most certainly paying taxes. One million dollars today was ~$680k in 2008.
      • FredPret 1y ago
        I don't know how this is even a talking point. The top 5% of taxpayers in the USA pay 61% of the taxes. The top 1% pay 30-40% of all the taxes and have done so for decades. https://usafacts.org/articles/who-pays-the-most-income-tax/ https://usafacts.org/articles/who-pays-the-most-income-tax/ https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025/#:~:text=High%2DIncome%20Taxpayers%20Paid%20the%20Majority%20of%20Federal%20Income%20Taxes https://taxfoundation.org/data/all/federal/latest-federal-in...
        • travisporter 1y ago
          I think looking at the top 5% of wealth, not just taxpayers, may open up the conversation on both sides
• anthonypasq 1y ago
  Inflation only makes people that don't own assets poorer. People that own assets (houses and stocks) are inflation resistant.
  • belter 1y ago
    And the companies that those stocks are a value representation of, sell their products to who? "Inflation’s Impact on Stock Returns" - https://www.investopedia.com/articles/investing/052913/inflations-impact-stock-returns.asp https://www.investopedia.com/articles/investing/052913/infla... "...Since the 1930s, the research suggests that almost every country suffered its worst real returns during high inflation periods..."
  • chung8123 1y ago
    I think this only works to a point. For example the house you own will be in a weird situation if the government debt is so big it is paying all the tax revenue to pay debt. The area will likely become less desirable as people leave to go to less debt ridden places.
  • SamPatt 1y ago
    I own a house and stocks. And cars and other assets. Inflation still makes me poorer. I have a family of five. No matter how much my home value increases or how well the market does, I still need to pay to live.
    • ryanblakeley 1y ago
      People who have so much in assets that they can live (and support their family) with the interest they earn on those assets, and by a huge margin, not just comfortably retired people. Those are the people who get richer, at the expense of your kids. Inflationary housing expenses are a drop in the bucket when someone's assets are in the billions.
    • deleted 1y ago
      [deleted]
    • aurareturn 1y ago
• xphos 1y ago
  I don't think the administration is taking positive steps combat inflation they basically received an economy at 3% and stayed at 3% inflation. Which is above the Fed target of 2%. Now you might ask why the Fed targets 2% and not 0% and that's because a world where inflation is 0% is brutal for debtors which is basically everyone. The fact that inflations occurs basically guarantees that people who don't over leverage won't be stuck in perpetual debt. That means people can take out loans, start companies and buy equipment to grow the economy. If we had 0% inflation all of that activity becomes much harder. Another way to see it is: If you have mortgage inflation comes of the liability of that debt since inflation is not just inflating all the bad parts but all the parts of the economy. And de-risks investment mostly because debt is in nominal terms. Now you cannot have rabid inflation but its not just as though anything above 0% inflation is bad.
  • seanmcdirmid 1y ago
    0% is also way too close to deflation, which the Fed wants to avoid more than anything else. With deflation, you stop consuming because tomorrow the prices will be lower. The economy can easily sink into a death spiral.
  • vlovich123 1y ago
    > That means people can take out loans, start companies and buy equipment to grow the economy. If we had 0% inflation all of that activity becomes much harder. Then why did firms love to take out loans and grow during 0% rates and start shedding workers as soon as the rates went up?
    • jklein11 1y ago
      I think you might be conflating the interest rate's that the federal reserve sets and the inflation rate. The federal reserve rate is essentially how much the US pay's their debtors. Bank's use this as a benchmark for how much they lend to their own borrowers. The inflation rate is a calculation done based on a basket of goods. if the price of that basket of goods goes up, inflation is up. if it goes down, inflation is down. When the federal reserve lowers their rates, it makes it easier to get money, and therefore the price of the basket of goods goes up. When they make their rates higher, money is harder to get, and the price of the basket of goods goes down. The only problem with this is that there is also less money for labor, which means that unemployment goes up. The Feds job is to balance these two things.
• rich_sasha 1y ago
  I mean, that's a bit of a simplistic take. I'm all for accountability for politicians, but a lot of inflation does kind of happen on it's own. The biggest inflation shock of recent era was Russian invasion of Ukraine. And, fine, that didn't "just" happen, but hard to blame Western politicians for it. Western governments had to make a choice between inflation and security. You might disagree with the choice, but it's a balance. Further, inflation and growth are largely affected by a single lever, central bank rates, and making growth better makes inflation worse, in general. Central banks (mostly) diligently try to walk the right path. Of course I'm not referring to cases where politicians just say, hey you there Independent Central Bank Head, lower rates or else. But that case is an exception. Then, salaries may or may not keep up with inflation. Inflation is generally bad, as businesses have a hard time lowering notional salaries - but they can more easily not increase them with inflation. But as a strict matter they can do it anyway and labour force can get screwed if they don't hold enough bargaining power. So I would say that largely, yes, inflation does just happen, and it can be exacerbated by some degree (none to massively) by bad politics. But I think to say it's always just bad government is not right.
• deleted 1y ago
  [deleted]
• FrustratedMonky 1y ago
  "well-understood outcomes" -- Not well understood by everyone. I think we all know some people that don't understand. (maybe a lot of people).
• cynicalkane 1y ago
  Excessive inflation is destructive but it requires a better explanation than that. In a vacuum, if we all have 3-10% more money and things are 3-10% more expensive, we're not poorer unless there are secondary effects that make us poorer. It's the secondary effects that inflation has on investment, markets, and transfer of wealth that are negative. The effects of debt collapse during economic crisis is a considerably more expensive effect, and not one that's good for the poor, or the rich, or the middle class or anyone. If you "genuinely cannot understand this", consider that the traditional perspective is that the point of an economy is to produce useful goods and services, not to produce an aesthetically pleasing inflation number. Recall that, in early 2020, markets were facing the greatest panic since the 1929 crash. The debt collapse and deflation that followed then precipitated an enormous amount of misery. I'm personally pretty happy we didn't get another Great Depression; Covid was bad enough without that happening.
  • cowpig 1y ago
    > if we all have 3-10% more money and things are 3-10% more expensive Who has 3-10% more money, exactly?
    • yread 1y ago
      Not the people with savings account
    • pmg101 1y ago
      Anyway with money invested in inflation-hedged assets. Also anyone with a wage since wages rise with inflation too (not always and not always immediately, but generally correlated).
      • cowpig 1y ago
        Not abstractly. Specifically, in the United States, since COVID. The parent reply hand-waves away a point about bad policy by making an abstract point about inflation from money-printing, as if citizens of the United States are molecules in a thought experiment about the laws of physics, as opposed to individual people affected in specific (differing) ways by policies.
• zahlman 1y ago
  > Now we'll all be 3%-10% poorer We won't all, because we can invest savings instead of holding them in cash. A positive inflation rate, around 2% per year, is deliberately targeted as a long-term average. This is because having a constant expectation of declining value pressures consumers to consume, which keeps money moving through the economy. (We aren't all entrepreneurs, so we can't all be motivated by the opportunity cost of not starting a business.) > In fact, I see people pressuring the Fed to lower (!) rates There have been such calls because the inflation problem that prompted spiking the interest rates appeared to have been mostly resolved, because interest rates at the current level are expected to continue exerting downward pressure on inflation, and mostly because high rates have other negative effects. Boom-bust cycles are not inherently bad. In the long run, history shows that the booms more than outweigh the busts, and suggests (at least to me) that the net result is better than it would be with slower constant growth (which is hard to manage, since you never know when the next big technological innovation will come). > the tariffs don't seem to be going anywhere While high in historical perspective, the tariffs are not effectively as high as the headlines make them sound, and there is a lot more to the economy than foreign trade. > government spending and debt are at all-time highs. The system is largely designed to work this way — in all developed nations, not just the US.
  • paulpauper 1y ago
    While high in historical perspective, the tariffs are not effectively as high as the headlines make them sound, and there is a lot more to the economy than foreign trade. Agree. the service sector is a huge part of the economy. Imported durable goods, which are most affected by the tariffs, are only a small part of US consumer spending.
    • zahlman 1y ago
      Notably, per TFA: > Services inflation provided much of the push higher, rising 1.1% in July for the largest gain also since March 2022. Trade services margins climbed 2%, coming amid ongoing developments in President Donald Trump's tariff implementations. Figuring out and applying the rules seems to be having more of an effect than the rules themselves. Which is a good reason not to expect a 0.9% monthly shock to translate into an 11.4% annualized inflation (even setting aside that core CPI is a much different measure from base PPI): they won't have to keep figuring out the rules.
• taneq 1y ago
  > This is the result of policy decisions with well-understood outcomes. All the things you mentioned, certainly, but there's a more direct, more obvious route for policy to control inflation. It is (at least in Australia) one of several artificial measures generated based on the weighted changes in pricing of a "basket of goods" selected by the Australian Bureau of Statistics, the specifics of which is altered unilaterally, somewhat regularly and relatively opaquely (the info is public but you have to go digging and general discussions tend to ignore it and just say "inflation" or "the CPI". So inflation is literally defined by these decisions. And while I'm sure the majority are well-meaning, there are still so many very plausible, very easily defendable ways to influence the outcome. eg. iirc around 2021 they decided to count capital gains on housing against the CPI "because families' net worth was increasing" despite the fact that a whole bunch of people were struggling to buy groceries. Such an accountant-ish thing to do.
• paulpauper 1y ago
  Now we'll all be 3%-10% poorer, in a single year, yet I see no accountability. In fact, I see people pressuring the Fed to lower (!) rates, the tariffs don't seem to be going anywhere, and government spending and debt are at all-time highs. This would only be true if you kept your money under a mattress. Stocks and real estate have posted strong real returns. Even risk-free interest exceeds 3%. Same for increased wages. Stocks and home ownership are time-tested, effective hedges against loss of purchasing power. the tariffs don't seem to be going anywhere, and government spending and debt are at all-time highs. I agree the tariffs were a mistake, but the national debt at all time highs does not mean Americans become poorer. The fallacy of composition is to assume that the national debt is like a household debt. The national debt does not affect the ability of Americans to accumulate significant real-levels of wealth with investments and income.
  • fuzzfactor 1y ago
    A very well-regarded assessment. Conventional wisdom may not be wise enough when times get too unconventional though :) And who knows how much is too much? There is always overwhelming unexpressed pressure before the dam breaks unexpectedly and you are worse off having stock than cash. It's critical that there be no consensus about an impending downturn, otherwise there may not be enough leverage imposed on the unexpected element of surprise for those in position to be able to weather a storm which wrecks all boats.
• guelo 1y ago
  > 0% interest rates for years You rail against people not acknowledging empirical economics yet you throw in this empirically false factoid. Inflation was historically low during about a decade of ZIRP.