4 ms·

inflation - economics; a general increase in prices and fall in the purchasing value of money. https://www.google.com/webhp?espv=2&es_th=1&ie=UTF-8#q=define+in

by pmorici 12y ago

inflation - economics; a general increase in prices and fall in the purchasing value of money. https://www.google.com/webhp?espv=2&es_th=1&ie=UTF-8#q=define+inflation https://www.google.com/webhp?espv=2&es_th=1&ie=UTF-8#q=defin... So is the "Everything Boom" going to be the new polite way of saying inflation is happening? I mean that is the expected outcome of the economic policies of the past several years is it not?

api 12y ago
The problem is that everything is inflating except wages, which are still under extreme deflationary pressure due to outsourcing and automation. Stagnant or deflating wages means stagnant or falling consumer spending, resulting in an environment where there don't seem to be any good growth investments (no customers). As a result, you get bubbles in "safe" assets like real estate and bonds and lots of trendy speculation. I'd say both inflation and deflation are happening. We're getting inflation everywhere it's harmful, and deflation everywhere it's harmful. We are in a depression.
- dnautics 12y ago
  so this is a complete misuse of the concept of inflation and deflation. The correct way to phrase this is: Our inflation rate is on the upswing (so that's like a third derivative), but workers are getting screwed because their wages are under downward pressure.
- opendais 12y ago
  Inflation is normal: http://www.bls.gov/news.release/cpi.nr0.htm http://www.bls.gov/news.release/cpi.nr0.htm It is well in line with historic norms. Wage Growth is net positive adjusted for inflation again: http://www.nytimes.com/2014/04/05/business/economy/sign-of-spring-for-pay-real-wage-growth-in-some-places.html http://www.nytimes.com/2014/04/05/business/economy/sign-of-s... It has a nice graph if you scroll down and don't want to read. The underlying problem with trying to "fix" wages is the simple fact that with globalization you can't really push the wages for the US much higher than they are [except at the bottom where you can't really outsource the guy working in fast food for minimum wage]. It seems to be more the standard bubble event on investments due to cheap credit and poor allocation of tax burdens/govt spending. We need to do things like shift the tax burden to Capital and reduce it on the poorest of the working population. We need to fix our infrastructure issues while we can do so on cheap credit and when interest rates rise we simply cut back to "normal" (which is really just generating a different kind of debt, you can't ignore infrastructure forever).
  - shaunrussell 12y ago
    > It is well in line with historic norms. The CPI (used to gauge inflation) has been modified in a variety of ways over the past 35 years. Various estimates of what the annual rate would have been over the past four years if earlier methods of calculation had been continued come up with numbers in the 5%-to-10% range. http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
    - opendais 12y ago
      That isn't true at all :/ http://www.bls.gov/cpi/cpiqa.htm#Question_5 http://www.bls.gov/cpi/cpiqa.htm#Question_5 Its a variance of less than 00.3% due to methodology changes. I understand its a popular myth. Please provide a source that accurately copies the methodology from the 1970s and agrees with your claim. If you are unable to do so without citing Shadowstats or another source that wants money to see their full methodology, its an invalid claim intended to milk money from people with fixed belief systems.
  - canvia 12y ago
    Interesting article about inflation: http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
    - opendais 12y ago
      Yes, if you cherrypick items you can find item X changed faster than the total basket for CPI. CPI is intended to gauge the general rate of inflation over the economy as a whole, not that of specific purchasing patterns by individuals. As such, comparing a CPI from years ago (1999) to now (2014) is roughly equivalent. You can claim the number itself is wrong but not that is wrong compare to the values it held previously under the same methodology. [e.g. CPI can be claimed to be X% lower than reality, but if CPI is 2.7% in 1999 and 2.1% in 2014 under the same methodology the relative level of inflation is effectively identical] Even the title is wrong: "If There’s No Inflation, Why Are Prices Up So Much?" If you look at the CPI from that point in time: http://www.bls.gov/news.release/archives/cpi_03152013.htm http://www.bls.gov/news.release/archives/cpi_03152013.htm It shows 2% inflation. It is a linkbait article with a false premise and lots of cherrypicking. 1999: http://www.bls.gov/news.release/history/cpi_01142000.txt http://www.bls.gov/news.release/history/cpi_01142000.txt
- eru 12y ago
  Shouldn't outsourcing increase median wages globally?
  - lmm 12y ago
    It probably does. Maybe wages in many places are up, and the companies that sell to those places are doing well. But the article is quite US-focussed.
    - eru 12y ago
      The discussion on HN is quite US-focussed. The article surprisingly less so.
dnautics 12y ago
correct. Demand-siders have insisted that we all need to start spending more money to kick the economy into gear. Broadly, the only tool to do this is to "print money"; read: lower interest rates, twiddle with the reserve ratio requirement, directly pay off banks for certain types of activities. Supposedly this will make people want to buy things now (instead of later). There is this odd effect though, that increasing prices also can make people insecure, as in: Worldwide, more money is piling into savings than businesses believe they can use to make productive investments. In other words, the people WANT deflation. The net effect though is we will be transferring wealth from the poor to the rich; and then the bubble will pop, the rich will cash out of their assets early, and people with slower investment classes (401ks, pension funds, etc.) will get screwed. And some of these other people will even get fired, putting them into even greater risk. I'm not going to defend "supply-side" economics, either, because that's got it's own brand of stupid going on. There is a modest distinction between bubbles and inflation. While inflation guns bubbles and aggregates small, local bubbles into bigger, systemic bubbles, there can be bubbles during deflationary periods, and systemic inflation doesn't necessarily end in a bubble. Bubbles are characterized by a specific set of price dynamics that are guided by human psychology; the most characteristic, but hardest to notice, is when the asset price collapses, typically around twice the speed that it rose.
- Ma8ee 12y ago
  It's nothing wrong with demand side economics in this situation. The problem is that the current policy only make capital available to those who already have more than they know what to do with, such as banks and big investors. The middle class who usually drives demand are still struggling to pay of the mortgage of the house they bought during the bubble.
- praxulus 12y ago
  >Demand-siders have insisted that we all need to start spending more money to kick the economy into gear. Pretty much. >Broadly, the only tool to do this is to "print money"; read: lower interest rates, twiddle with the reserve ratio requirement, directly pay off banks for certain types of activities. Well, those are the only tools central banks have available to them, but there are much better options. Unfortunately those tools are only available to legislatures, who have decided not to use them.
aidenn0 12y ago
No, because this is talking specifically about prices of investments, not prices of consumer goods. And it's talking about prices of investments in relation to the rate of return. An example: buying debt is more expensive, if the price is the same, but the interest rate is lower. If the price of e.g. a car or a sandwich is the same as before then we haven't had inflation.

by pmorici 12y ago

api 12y ago

The problem is that everything is inflating except wages, which are still under extreme deflationary pressure due to outsourcing and automation. Stagnant or deflating wages means stagnant or falling consumer spending, resulting in an environment where there don't seem to be any good growth investments (no customers). As a result, you get bubbles in "safe" assets like real estate and bonds and lots of trendy speculation. I'd say both inflation and deflation are happening. We're getting inflation everywhere it's harmful, and deflation everywhere it's harmful. We are in a depression.

dnautics 12y ago
so this is a complete misuse of the concept of inflation and deflation. The correct way to phrase this is: Our inflation rate is on the upswing (so that's like a third derivative), but workers are getting screwed because their wages are under downward pressure.
opendais 12y ago
Inflation is normal: http://www.bls.gov/news.release/cpi.nr0.htm http://www.bls.gov/news.release/cpi.nr0.htm It is well in line with historic norms. Wage Growth is net positive adjusted for inflation again: http://www.nytimes.com/2014/04/05/business/economy/sign-of-spring-for-pay-real-wage-growth-in-some-places.html http://www.nytimes.com/2014/04/05/business/economy/sign-of-s... It has a nice graph if you scroll down and don't want to read. The underlying problem with trying to "fix" wages is the simple fact that with globalization you can't really push the wages for the US much higher than they are [except at the bottom where you can't really outsource the guy working in fast food for minimum wage]. It seems to be more the standard bubble event on investments due to cheap credit and poor allocation of tax burdens/govt spending. We need to do things like shift the tax burden to Capital and reduce it on the poorest of the working population. We need to fix our infrastructure issues while we can do so on cheap credit and when interest rates rise we simply cut back to "normal" (which is really just generating a different kind of debt, you can't ignore infrastructure forever).
- shaunrussell 12y ago
  > It is well in line with historic norms. The CPI (used to gauge inflation) has been modified in a variety of ways over the past 35 years. Various estimates of what the annual rate would have been over the past four years if earlier methods of calculation had been continued come up with numbers in the 5%-to-10% range. http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
  - opendais 12y ago
    That isn't true at all :/ http://www.bls.gov/cpi/cpiqa.htm#Question_5 http://www.bls.gov/cpi/cpiqa.htm#Question_5 Its a variance of less than 00.3% due to methodology changes. I understand its a popular myth. Please provide a source that accurately copies the methodology from the 1970s and agrees with your claim. If you are unable to do so without citing Shadowstats or another source that wants money to see their full methodology, its an invalid claim intended to milk money from people with fixed belief systems.
- canvia 12y ago
  Interesting article about inflation: http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
  - opendais 12y ago
    Yes, if you cherrypick items you can find item X changed faster than the total basket for CPI. CPI is intended to gauge the general rate of inflation over the economy as a whole, not that of specific purchasing patterns by individuals. As such, comparing a CPI from years ago (1999) to now (2014) is roughly equivalent. You can claim the number itself is wrong but not that is wrong compare to the values it held previously under the same methodology. [e.g. CPI can be claimed to be X% lower than reality, but if CPI is 2.7% in 1999 and 2.1% in 2014 under the same methodology the relative level of inflation is effectively identical] Even the title is wrong: "If There’s No Inflation, Why Are Prices Up So Much?" If you look at the CPI from that point in time: http://www.bls.gov/news.release/archives/cpi_03152013.htm http://www.bls.gov/news.release/archives/cpi_03152013.htm It shows 2% inflation. It is a linkbait article with a false premise and lots of cherrypicking. 1999: http://www.bls.gov/news.release/history/cpi_01142000.txt http://www.bls.gov/news.release/history/cpi_01142000.txt
eru 12y ago
Shouldn't outsourcing increase median wages globally?
- lmm 12y ago
  It probably does. Maybe wages in many places are up, and the companies that sell to those places are doing well. But the article is quite US-focussed.
  - eru 12y ago
    The discussion on HN is quite US-focussed. The article surprisingly less so.

dnautics 12y ago

correct. Demand-siders have insisted that we all need to start spending more money to kick the economy into gear. Broadly, the only tool to do this is to "print money"; read: lower interest rates, twiddle with the reserve ratio requirement, directly pay off banks for certain types of activities. Supposedly this will make people want to buy things now (instead of later). There is this odd effect though, that increasing prices also can make people insecure, as in: Worldwide, more money is piling into savings than businesses believe they can use to make productive investments. In other words, the people WANT deflation. The net effect though is we will be transferring wealth from the poor to the rich; and then the bubble will pop, the rich will cash out of their assets early, and people with slower investment classes (401ks, pension funds, etc.) will get screwed. And some of these other people will even get fired, putting them into even greater risk. I'm not going to defend "supply-side" economics, either, because that's got it's own brand of stupid going on. There is a modest distinction between bubbles and inflation. While inflation guns bubbles and aggregates small, local bubbles into bigger, systemic bubbles, there can be bubbles during deflationary periods, and systemic inflation doesn't necessarily end in a bubble. Bubbles are characterized by a specific set of price dynamics that are guided by human psychology; the most characteristic, but hardest to notice, is when the asset price collapses, typically around twice the speed that it rose.

Ma8ee 12y ago
It's nothing wrong with demand side economics in this situation. The problem is that the current policy only make capital available to those who already have more than they know what to do with, such as banks and big investors. The middle class who usually drives demand are still struggling to pay of the mortgage of the house they bought during the bubble.
praxulus 12y ago
>Demand-siders have insisted that we all need to start spending more money to kick the economy into gear. Pretty much. >Broadly, the only tool to do this is to "print money"; read: lower interest rates, twiddle with the reserve ratio requirement, directly pay off banks for certain types of activities. Well, those are the only tools central banks have available to them, but there are much better options. Unfortunately those tools are only available to legislatures, who have decided not to use them.

aidenn0 12y ago

No, because this is talking specifically about prices of investments, not prices of consumer goods. And it's talking about prices of investments in relation to the rate of return. An example: buying debt is more expensive, if the price is the same, but the interest rate is lower. If the price of e.g. a car or a sandwich is the same as before then we haven't had inflation.