paultuttle's post wrt his parents and the ever-rapidly-increasing apt rents in his area got me to thinkin'-- inflation is killing this country, and I am wondering what actions the government could realistically take to address it? Specifically, if any of you here are old enough to remember when Nixon put a wage-and-price freeze on (1973?), what do you recall about the actual consequences of this action? And what happened when he lifted it? After this experience, i know we limped through the rest of the 70s with inflation murdering us, and now we see inflation that is almost as bad as the worst of those days. There has to be something that could realistically be done, but the fact that we went through 40 years of extremely minimal inflation seems to have caused somewhat of a great forgetting, to the point where most American adults have little memory of prior inflationary eras, and this is especially true for most politicians (though obviously Joe Biden would not be amongst these)...
The government could do a few things at the margins (e.g. eliminate tariffs on imports from China), but they won't have big effects. This is just a perfect storm of supply problems and high demand and inflation will be a problem until supply increases and/or for demand decreases.
Hopefully we will WIN (whip inflation now!).
Government interventions really dont fix the problems. For instance, let's say that we put a ceiling on gas at $3. Would your life be better? No, because if the true price of gas is $4, then no one will sell it at the lower fixed price. So you can buy all the gas they will sell for only $3. But there just wont be any to pump!
(I also remember odd and even license plate days).
What I REALLY remember is Paul Volker beating inflation by raising interest rates! I remember the prime rate being 18%. I remember some of my friends with older parents (and have heard of it from other, older coworkers) that they would go to the bank every payday and put as much as they could in the longest CDs they could get or buying 30 year bonds. For them, it made a great retirement!!
So I dont think that the government can use tax policy and spending to get out of it. They could RAISE TAXES and cut spending, and risk putting us in a recession, but recessions and inflation are usually mutually exclusive, though not unheard of.
Still, I think that the Covid problem and solutions are adding up. Factories in many places were shut down (and still are in many Chinese cities as they continue to shut down entire cities). So there is a problem with with too little supply.
Then there is the stimulus money and the end of Covid - ready or not!! People are READY to spend the money that they have saved, and are ready to experience those deferred vacations and stuff.
When too many dollars are chasing too few goods, and then there is a surplus of 'free' money, then it is not a surprise that prices are rising.
As for rent, home prices are up, so rent should be up. During COVID, many landlords took a beating from dishonest tenants that could have paid, but as they could not be evicted, didnt! So some of those landlords have to raise the rent to repay the added money that they are out or had to borrow, or however they made it through!
Then there are used cars. When there were mask restrictions and office closures, who needed to rent a car? Rental agencies sold off their cars. Now, they are buying them back, and worse, the new cars that they and others want are stuck at the factory awaiting chips, among other components, that were not produced as the manufactures were shut down!
Finally, the backlog of container ships that were in the news. COVID shut down the ability to staff the unload spots, and then, on the way back, they could not get those containers back!
Yes, the Federal Reserve held interest rates low for too long. [Maybe because Powell wanted to get reappointed as Chairman of the board of governors by Biden, maybe not.] The big Covid fiscal stimulus was thus financed by printing money. [That wasn't necessarily wrong, there was just too much of it.] The Fed is in fact raising interest rates, which will reduce printing of money, which will reduce inflation, but it is doing it damned slowly by historical standards.
Lowering tariffs is good quite apart from combating inflation, but lowering all tariffs would not change the overall price level. The increased demand for foreign goods results in a depreciation of the currency, leaving the overall domestic price level of foreign goods unchanged.
What is terribly, terribly misguided is blaming inflation on evil corporations. They must be damned stupid if they waited for Covid to raise their prices!
Someone once said "a price is information wrapped in an incentive". One doesn't want to fix prices by decree. If prices cannot ration, something else will -- waiting on line for gasoline, empty shelves, informal rationing [one per customer], and so on. In the limit we get to the former Soviet Union [you can get that car in seven years, but, hey, you can have bread tomorrow].
More thoughts on inflation - It is NOT the current government's fault edition:
Let's talk about food inflation for a moment. Eggs... Well, there are 2 problems for egg producers. If you have been watching the news (chicken wing prices, for instance) you will note that there has been an outbreak of bird flu that has killed (or caused to be killed) entire farms of fowl. The second shoe is a two part problem (for 2 feet). We have had droughts in the grain areas reducing harvests, and most of Ukraine's 2021 harvest is stuck in Ukraine (or moved to Russia).
Pork prices... several factors here, some mentioned above, regarding grain prices. Others are COVID related. Entire processing plants were shut down from COVID, because the workers spread it quickly, and then the processors were 'spread out' (slowing them down) to avoid further spread.
Another issue is political, but California related. California law requires certain 'cruelty free' processes be followed in the pork production process for all pork sold in California. Well there are not a lot of places that could do that initially, it takes time to adjust to the demands placed on the producers, it increases costs of the producers, and the end result is a much higher price for beacon!
Fuel prices are adding to transportation costs, and retailers and transportation companies are simply no longer able to absorb those costs. Last week the news had interviews with truckers indicating that it was now costing $1000 to fill up a truck!
My local McDonalds has on its sign that starting wages are now at least $13 an hour (26ooo a year for a 2000 hour work year). The fall out from The Great Resignation is that people are demanding higher wages to go to work, and as illustrated by Musk last week, they want to work from home!
None of these inflation drivers are 'the fault' of Washington!
Quote from: clean on June 05, 2022, 10:50:52 AM
More thoughts on inflation - It is NOT the current government's fault edition:
Let's talk about food inflation for a moment. Eggs... Well, there are 2 problems for egg producers. If you have been watching the news (chicken wing prices, for instance) you will note that there has been an outbreak of bird flu that has killed (or caused to be killed) entire farms of fowl. The second shoe is a two part problem (for 2 feet). We have had droughts in the grain areas reducing harvests, and most of Ukraine's 2021 harvest is stuck in Ukraine (or moved to Russia).
Pork prices... several factors here, some mentioned above, regarding grain prices. Others are COVID related. Entire processing plants were shut down from COVID, because the workers spread it quickly, and then the processors were 'spread out' (slowing them down) to avoid further spread.
Another issue is political, but California related. California law requires certain 'cruelty free' processes be followed in the pork production process for all pork sold in California. Well there are not a lot of places that could do that initially, it takes time to adjust to the demands placed on the producers, it increases costs of the producers, and the end result is a much higher price for beacon!
Fuel prices are adding to transportation costs, and retailers and transportation companies are simply no longer able to absorb those costs. Last week the news had interviews with truckers indicating that it was now costing $1000 to fill up a truck!
My local McDonalds has on its sign that starting wages are now at least $13 an hour (26ooo a year for a 2000 hour work year). The fall out from The Great Resignation is that people are demanding higher wages to go to work, and as illustrated by Musk last week, they want to work from home!
None of these inflation drivers are 'the fault' of Washington!
Glad you brought this up, Clean. We mustn't confuse changes in relative prices with a change in the price level. To get the relative price change, subtract the inflation rate form the individual per cent price change. All the examples stem from supply shocks.
Except for wages. Real wages are falling [a little], i.e the wage increase is less than the price level increase.
If memory serves, before the COVID shutdown, I remember McDonalds offering $10 an hour, and higher wages for the late shift. So $13 an hour is a 30% increase in the wage (expense) while inflation since the start of covid is not yet 30%!
similarly, my preferred Whataburger meal is a Whatajunior (#7) before covid it was less than $6, and last week it was $7.15! That is a $1.15 increase (a 20% increase over that time) - still higher than inflation!
Quote from: clean on June 05, 2022, 02:15:36 PM
If memory serves, before the COVID shutdown, I remember McDonalds offering $10 an hour, and higher wages for the late shift. So $13 an hour is a 30% increase in the wage (expense) while inflation since the start of covid is not yet 30%!
similarly, my preferred Whataburger meal is a Whatajunior (#7) before covid it was less than $6, and last week it was $7.15! That is a $1.15 increase (a 20% increase over that time) - still higher than inflation!
Sure, Clean. It is
average wages that are lagging inflation, not necessarily
McDonald's wages. As I don't run McDonald's, I have no clue why.
With wages as with prices, we must get away from the idea that rising wages or prices
cause inflation. Nay, together they
are inflation. Rising prices are the definition of inflation, not its cause.
What one observes with your McDonald's data is a change in relative wages and prices. To figure out how much, subtract the inflation rate. Then there might be something worth analyzing to do with the market McDonald's operates in. But that's not about inflation.
Therefore, let's not lose sight of the theory that too much of the government deficit financed by printing money is what has caused our current inflation.
The question is where those extra dollars are going.
If wages are going up and prices are going up, how much is going to executives and shareholders, and how much is going to make sure the employees earn a living wage?
Quote from: ciao_yall on June 05, 2022, 02:50:02 PM
The question is where those extra dollars are going.
If wages are going up and prices are going up, how much is going to executives and shareholders, and how much is going to make sure the employees earn a living wage?
Wages on average are going up
less [a little] than prices. Workers are worse off. Capital owners are better off [expectations of future profits aside]. That's why we have an employment boom at the moment -- the demand for labor has gone up. The "great resignation" it's been called, workers switching jobs for better pay. This will not last much longer. Wages -- again, on average -- will catch up. Once the inflation comes to be expected, it won't matter [except for fixed long term contracts for a while].
The only person to make sure an employee earns a living wage is the person him or herself.
Quote from: ciao_yall on June 05, 2022, 02:50:02 PM
The question is where those extra dollars are going.
If wages are going up and prices are going up, how much is going to executives and shareholders, and how much is going to make sure the employees earn a living wage?
It looks like housing and government spending.
I see no relief from inflation anytime soon. The supply problems have to be solved first. I am happy to see the wage increases for the lowest paid workers. However, we can expect more automation in those sectors.
Quote from: Anselm on June 05, 2022, 03:03:43 PM
Quote from: ciao_yall on June 05, 2022, 02:50:02 PM
The question is where those extra dollars are going.
If wages are going up and prices are going up, how much is going to executives and shareholders, and how much is going to make sure the employees earn a living wage?
It looks like housing and government spending.
I see no relief from inflation anytime soon. The supply problems have to be solved first. I am happy to see the wage increases for the lowest paid workers. However, we can expect more automation in those sectors.
Supply problems, and they existed broadly for lack of labor, are at worst very specific and limited at the moment. Total real output is now comfortably above pre-covid levels.
How soon inflation comes down depends on the Fed right now.
Awright you gots me. I am for all intents in purpose a socialist, when it comes to government regulation of the economy. Too many people are in real want, privation, and suffering now, and corporate profits are extremely high. Minimum wage at the federal level was bad at $7.25 in 2007. You get the idea. I think the Amazons of the world should actually pay taxes. Sue me.
Quote from: kaysixteen on June 05, 2022, 06:12:01 PM
Awright you gots me. I am for all intents in purpose a socialist, when it comes to government regulation of the economy. Too many people are in real want, privation, and suffering now, and corporate profits are extremely high. Minimum wage at the federal level was bad at $7.25 in 2007. You get the idea. I think the Amazons of the world should actually pay taxes. Sue me.
Dear K-16, in my yute I was a socialist, too! I sure as hell hope we all were.
Amazon's owners
do pay taxes. The minimum wage makes people we want to help unemployed or otherwise worse off.
None of what I explicate says you can't help people. Give money to people one want's to help.
We have policies for this, and they are often not ungenerous, just often full of dysfunctional conditions, such as you earn $1 more and there's no more Medicaid for you.
QuoteI think the Amazons of the world should actually pay taxes.
What taxes are they not paying?
They pay unemployement taxes they pay social security taxes on the wages they pay. IF they dont pay property taxes it is because the local governments trying to entice them to open a distribution center in THEIR town, have offered tax holidays.
Income taxes? Why doesnt Amazon pay income taxes? They booked huge losses early on. Using the current tax code, they can use these losses to offset profits in later years. If I remember the numbers, companies can carry losses forward up to 15 years. IF the losses are sufficient to offset the later profits, then taxable income is zero, and taxes on zero are zero.
As a natural person, you can similarly carry losses forward. You can deduct up to $3,000 in investment losses forward every year. In addition, if you sell your house for a profit, it is tax free up to $250,000 in profit.
There are also some incentives that companies may be given to support societal goals, that may reduce taxes. For individuals, mortgage interest is tax deductible (though less beneficial after the last tax reform that increased the standard deduction). Student loan interest is deductible, and capital gains are taxed at favorable rates.
Quote from: kaysixteen on June 05, 2022, 06:12:01 PM
Awright you gots me. I am for all intents in purpose a socialist, when it comes to government regulation of the economy.
Why are there no longer basically any countries that call themselves socialist? (Except maybe Cuba and/or North Korea and/or China)? Why didn't all of those people in
communist socialist countries realize how good they had it? (None of the countries uninformed Americans call "socialist" in Europe or elsewhere are remotely "socialist"; they just have more sane government programs.)
As bad as inflation is in North America, it is running far worse in many places. We're getting disturbing reports of very high food prices in the Middle East and elsewhere. That should be a matter of concern for everybody.
Quote from: apl68 on June 06, 2022, 07:45:49 AM
As bad as inflation is in North America, it is running far worse in many places. We're getting disturbing reports of very high food prices in the Middle East and elsewhere. That should be a matter of concern for everybody.
Careful, that's a change in
relative prices. Food price hikes are caused by high oil prices and Ukraine. Inflation -- the change in the overall price level -- varies from country to country, Jordon, e.g., had 3.6% year-on-year in April of this year. In contrast, Egypt had 12.1% in March.
It's not food prices that drive inflation, it's central banks printing money to finance government deficits.
Ok, now I admit I did use the term 'socialist' as a bit of a trollish line, but I am at pains to point out (as I think I have probably done somewhere here or in the old fora before), that 'socialism' is essentially a meaningless buzzword. As Lawrence O'Donnell notes, there is no such thing as 'socialism' exactly, there is a plethora of 'socialisms' ( I am paraphrasing him here), but he specifically well-noted that there is 'good socialism' and 'bad socialism'. Also, because most Americans over 30-ish are reflexively hostile to 'socialism', many people, esp conservatives, redefine those socialist programs that benefit themselves as something other than socialism, in order to keep on lobbying the term negatively against those programs they hate, most of which do not benefit them. One such program that they do like is programs that give the Amazons of the world exemptions from local property taxes and the like, for instance.
Inflation is always and everywhere a monetary phenomenon.
The conventional view is that the Federal Reserve must raise nominal interest rates above the inflation rate to reduce inflation and they're not even close to doing that yet.
If you want to lower the relative price of specific goods like food and energy, you need to encourage more supply (and/or reduce demand), and the opposite happens with price controls. Reducing regulation and taxation (and increasing subsidies) on (marginal) producers, NOT consumers, would likely increase supply the fastest. You could also try to reduce demand like was done back in the 1970s by imposing a 55 mph highway speed limit and getting people and businesses to set their thermostats higher in the summer and lower in the winter, but those measures weren't very popular.
First part is good, Anon.
As for relative prices, or individual prices, a higher price is an incentive to supply more.
One doesn't want to reduce demand for any particular commodity. Think reducing the speed limit to zero; that'll reduce demand for gas!
Reducing one price -- say gasoline -- by reducing the excise tax on it implies the tax money is missing elsewhere. Typically, future generations make up for it. That's why it's popular. :-)
Quote from: kaysixteen on June 06, 2022, 07:05:57 PM
Ok, now I admit I did use the term 'socialist' as a bit of a trollish line, but I am at pains to point out (as I think I have probably done somewhere here or in the old fora before), that 'socialism' is essentially a meaningless buzzword. As Lawrence O'Donnell notes, there is no such thing as 'socialism' exactly, there is a plethora of 'socialisms' ( I am paraphrasing him here), but he specifically well-noted that there is 'good socialism' and 'bad socialism'. Also, because most Americans over 30-ish are reflexively hostile to 'socialism', many people, esp conservatives, redefine those socialist programs that benefit themselves as something other than socialism, in order to keep on lobbying the term negatively against those programs they hate, most of which do not benefit them.
Again, "those socialist programs" that exist in
all kinds of countries that aren't socialist aren't specifically "socialist" programs. In Canada, the three main *national political parties; Conservative (centre-right), Liberal (centre-left), and NDP (left). The NDP have NEVER formed the government nationally (although have in some provinces), and the federal government has historically gone back and forth between Liberal and Conservative (i.e.
centre-left and
centre-right). Things like universal healthcare are supported by
all parties. UNIVERSAL HEALTHCARE IS NOT A SOCIALIST POLICY; IT'S THE NORM IN MOST DEVELOPED COUNTRIES.
The only way to call all kinds of programs "socialist" is if you define the USA, being the outlier, as the
only NON-socialist country in the developed world. (In which case, if "socialist" just means "not like in the USA", then it's a pretty much useless term.)
(*There are some regional variations, such as in Quebec)
Quote from: dismalist on June 06, 2022, 07:17:18 PM
First part is good, Anon.
As for relative prices, or individual prices, a higher price is an incentive to supply more.
One doesn't want to reduce demand for any particular commodity. Think reducing the speed limit to zero; that'll reduce demand for gas!
Reducing one price -- say gasoline -- by reducing the excise tax on it implies the tax money is missing elsewhere. Typically future generations. That's why it's popular. :-)
I agree that higher prices provide an incentive to supply more. Higher prices also discourage demand, so demand is discouraged indirectly with lower speed limits, which admittedly is not as clear and efficient a signal as a higher price. My view is that if there is to be a government policy to lower the prices of food, energy, and housing it should be focused on the supply side.
Quote from: kaysixteen on June 06, 2022, 07:05:57 PM
Ok, now I admit I did use the term 'socialist' as a bit of a trollish line, but I am at pains to point out (as I think I have probably done somewhere here or in the old fora before), that 'socialism' is essentially a meaningless buzzword. As Lawrence O'Donnell notes, there is no such thing as 'socialism' exactly, there is a plethora of 'socialisms' ( I am paraphrasing him here), but he specifically well-noted that there is 'good socialism' and 'bad socialism'. Also, because most Americans over 30-ish are reflexively hostile to 'socialism', many people, esp conservatives, redefine those socialist programs that benefit themselves as something other than socialism, in order to keep on lobbying the term negatively against those programs they hate, most of which do not benefit them. One such program that they do like is programs that give the Amazons of the world exemptions from local property taxes and the like, for instance.
Classic socialism involves government (public) ownership of the means of production: all of it or major industries. It becomes blurry with the liberal welfare/administrative state. Take health care, which is now a very large industry in OECD countries. Britain's NHS is socialist because the government owns and operates the health care service while government single payer is part socialist because government displaces private health insurance (and as single payer exercises great influence over health care) but leaves provision of most health care services to the private sector. The distinction likewise becomes blurry when the goal is to provide cradle to grave care (e.g., "The Life of Julia") with an administrative nanny state.
QuoteClassic socialism involves government (public) ownership of the means of production: all of it or major industries. It becomes blurry with the liberal welfare/administrative state. Take health care... .
Absolutely, Anon, and to Marsh, too:
No one pursues classic socialism -- public ownership of the means of production -- anymore. [Cuba, North Korea, Venezuela, and who knows who else are beyond the pale].
The programs of the political left that amount to insurance -- health, old age, accident, unemployment, Bismarck's laws of the 1880's, and more recently aid to the poor, have all been institutionalized in various ways in rich countries, and yes, even the United States. [Don't let the rhetoric fool.] It's just the methods are different. This is European social democracy, a reaction against communism, that has been realized, not classic socialism.
[Permit me to insert a personal observation here: Living in a certain European country for a long time, I was a pronounced free marketeer. Living in another for a few years, I was a radical right wing usurpist. Returning to the United States, I became slightly left of center compared to the population as a whole (not compared to college faculty, of course).
And I never changed my views!]
Because the social democratic agenda has more or less been fulfilled, and the ideology has run its course, parties of the left have to find new support groups, or interest groups, and of course, a new ideology to bind them together. Hence the global warmingism, racialism and sexism of narrow definition on the part of the newest left. The non favored are relegated to the right and denounced as populists, something the Left once wished it were.
There, I feel so much better! :-)
Quote from: Anon1787 on June 06, 2022, 07:07:10 PM
Inflation is always and everywhere a monetary phenomenon.
The conventional view is that the Federal Reserve must raise nominal interest rates above the inflation rate to reduce inflation and they're not even close to doing that yet.
If you want to lower the relative price of specific goods like food and energy, you need to encourage more supply (and/or reduce demand), and the opposite happens with price controls. Reducing regulation and taxation (and increasing subsidies) on (marginal) producers, NOT consumers, would likely increase supply the fastest.
The Fed eased up a lot on "printing money", so that should cool the economy and inflation somewhat.
My sense on US inflation is that people felt deprived after Covid and now want to buy a whole lot of stuff. The stuff-makers in China aren't able to crank up the flow fast enough so that stuff costs more. But also expensive stuff. Somewhat fancy cars have an extra dealer markup larger than a year of PhD stipend. The demand is sharp. On the other side, unemployment is really low. Workers have some pricing power for a change. Even lowly professors are skipping to better schools or even non-schools for better pay and working conditions. And a lot of people, even after this spring, have a strong enough retirement fund that they are leaving work behind. Because the economy is strong, not because it is weak.
QuoteMy sense on US inflation is that people felt deprived after Covid and now want to buy a whole lot of stuff.
They want to buy now, yes, but it's not about feeling deprived. It's about the demand for holding money, holding not spending. The huge, I mean huge, increase in the supply of money during covid did not immediately result in inflation because the cash was not spent. It was held, on account everybody was scared out of their brains. Now that covid is over, that cash is being spent. Hence inflation.
Quote from: dismalist on June 08, 2022, 01:39:19 PM
QuoteMy sense on US inflation is that people felt deprived after Covid and now want to buy a whole lot of stuff.
They want to buy now, yes, but it's not about feeling deprived. It's about the demand for holding money, holding not spending. The huge, I mean huge, increase in the supply of money during covid did not immediately result in inflation because the cash was not spent. It was held, on account everybody was scared out of their brains. Now that covid is over, that cash is being spent. Hence inflation.
Good perspective. The money supply is definitely up, if unevenly. Deprived vs scared-out-of-brain probably also unevenly distributed.
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
That new car? Nope. I'm keeping my old car until it dies, even though I can afford a new car. The incidental impulse items at the cash register? I used to get them quite a bit. Now I take a pass. The semi-daily drive-through coffee? Nope. I'll brew it my damn self when I get home. Family vacation? I drained all my travel miles to pay for travel for this year's (and next year's family vacation) before those bastards at the airlines jack up the rewards thresholds even further.
Yes, I still have to buy food. Regarding food, I'm eating less & buying less food--out of spite, so I'm losing weight!! I'm cooking more at home.
I can't believe I'm saying this, but inflation (in addition to the pandemic) has taught me that I've been really dumb with my money with some things, and I've realized that I can do without a lot of things, and I'm just as happy.
Yes, I still have to buy gas, but I'm driving less & driving smarter.
So, I partially retreated as a consumer, from the economy, mainly out of protest. I'm learning that I don't need to buy & do nearly as much stuff as I thought I needed, in order to be happy. This plus the pandemic really clarified what is really important.
Yeah, I know. People like me are not good for the economy. Fvck it. Fvck 'em all. Let's all stop buying and doing stupid s**t and let's collectively sort out the useless stuff in our society and lives. It's time to continue the reboot that the pandemic started.
Package sizes are shrinking too:
https://wtop.com/asia/2022/06/no-youre-not-going-crazy-package-sizes-are-shrinking/ (https://wtop.com/asia/2022/06/no-youre-not-going-crazy-package-sizes-are-shrinking/)
Posted on WTOP online 6/8/22
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
That new car? Nope. I'm keeping my old car until it dies, even though I can afford a new car. The incidental impulse items at the cash register? I used to get them quite a bit. Now I take a pass. The semi-daily drive-through coffee? Nope. I'll brew it my damn self when I get home. Family vacation? I drained all my travel miles to pay for travel for this year's (and next year's family vacation) before those bastards at the airlines jack up the rewards thresholds even further.
Yes, I still have to buy food. Regarding food, I'm eating less & buying less food--out of spite, so I'm losing weight!! I'm cooking more at home.
I can't believe I'm saying this, but inflation (in addition to the pandemic) has taught me that I've been really dumb with my money with some things, and I've realized that I can do without a lot of things, and I'm just as happy.
Yes, I still have to buy gas, but I'm driving less & driving smarter.
So, I partially retreated as a consumer, from the economy, mainly out of protest. I'm learning that I don't need to buy & do nearly as much stuff as I thought I needed, in order to be happy. This plus the pandemic really clarified what is really important.
Yeah, I know. People like me are not good for the economy. Fvck it. Fvck 'em all. Let's all stop buying and doing stupid s**t and let's collectively sort out the useless stuff in our society and lives. It's time to continue the reboot that the pandemic started.
Ah, yes lightning, the Law of Demand. We're all the same.
The economy? The economy is us! So fxxk it is the theoretically sanctioned response.
Quote from: hmaria1609 on June 08, 2022, 07:23:41 PM
Package sizes are shrinking too:
https://wtop.com/asia/2022/06/no-youre-not-going-crazy-package-sizes-are-shrinking/ (https://wtop.com/asia/2022/06/no-youre-not-going-crazy-package-sizes-are-shrinking/)
Posted on WTOP online 6/8/22
Not
too, hmaraia. This is inflation being disguised. No woik after we pick up the trick. And we pick it up pretty fast.
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
You are doing your part to Whip Inflation Now. No need to feel spite, just civic pride.
Quote from: Hibush on June 09, 2022, 07:31:57 AM
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
You are doing your part to Whip Inflation Now. No need to feel spite, just civic pride.
No, buying less alone does not whip inflation. The extra savings would have to be held in the form of money to fight inflation. Buying extra financial or real assets with the extra savings doesn't help, either: The money would just go to somebody else. But of course the extra savings held as money loses value at the rate of inflation, so nobody does it. :-)
My measure of how inflation affects the "normal" citizen is the menu at my favorite (sue me) fast food breakfast location. A Sausage McMuffin (no egg) has been on the dollar menu for years at, well, $1.00. Price after early this year is $1.59.
No change in ingredients or size. One English muffin, one sausage patty, one slice of American processed cheese-like food.
Quote from: jimbogumbo on June 09, 2022, 07:31:29 PM
My measure of how inflation affects the "normal" citizen is the menu at my favorite (sue me) fast food breakfast location. A Sausage McMuffin (no egg) has been on the dollar menu for years at, well, $1.00. Price after early this year is $1.59.
No change in ingredients or size. One English muffin, one sausage patty, one slice of American processed cheese-like food.
The classic error of confusing a change in the overall price level with a change in relative prices! :-)
Subtract the overall inflation rate from the McDonald's price rise rate, and get the relative change in McDonald's price.
Of course everyone's overall inflation rate is different from the headline CPI series. 'Ya gotta reweight all price changes with your personal consumption expenditures.
The thing is, a number of things that average people buy on a very regular basis have seen conspicuous price rises. Things like gas--which most people have to buy regularly--and familiar fast-food specials, and some common foodstuffs at grocery stores. Dramatic increases in conspicuous items that many people find it hard to do without creates a perception that inflation is far higher than the carefully-calculated official rate. It's hard to convince people that the true average rate of inflation is "only" 8% or so when people see multiple items that they buy regularly going up by far more than that.
And, again, food and fuel prices, especially food, are going up so fast in many of the world's poorer countries that there's a real threat of hunger.
I saw that my portfolio went up by $33 yesterday. I laugh at inflation! A rather hollow laugh, however.
Quote from: apl68 on June 10, 2022, 07:05:42 AM
The thing is, a number of things that average people buy on a very regular basis have seen conspicuous price rises. Things like gas--which most people have to buy regularly--and familiar fast-food specials, and some common foodstuffs at grocery stores. Dramatic increases in conspicuous items that many people find it hard to do without creates a perception that inflation is far higher than the carefully-calculated official rate. It's hard to convince people that the true average rate of inflation is "only" 8% or so when people see multiple items that they buy regularly going up by far more than that.
And, again, food and fuel prices, especially food, are going up so fast in many of the world's poorer countries that there's a real threat of hunger.
Also, the things that change price quickly are the things that we can actually control what we spend. My electric, water, mortgage, whatever--those are all fixed costs, essentially, meaning I pay whatever the bill says. I can decide how much I spend on groceries, or rather, how much I eat based on what I'm willing and able to spend.
Quote from: pgher on June 10, 2022, 03:44:19 PM
Quote from: apl68 on June 10, 2022, 07:05:42 AM
The thing is, a number of things that average people buy on a very regular basis have seen conspicuous price rises. Things like gas--which most people have to buy regularly--and familiar fast-food specials, and some common foodstuffs at grocery stores. Dramatic increases in conspicuous items that many people find it hard to do without creates a perception that inflation is far higher than the carefully-calculated official rate. It's hard to convince people that the true average rate of inflation is "only" 8% or so when people see multiple items that they buy regularly going up by far more than that.
And, again, food and fuel prices, especially food, are going up so fast in many of the world's poorer countries that there's a real threat of hunger.
Also, the things that change price quickly are the things that we can actually control what we spend. My electric, water, mortgage, whatever--those are all fixed costs, essentially, meaning I pay whatever the bill says. I can decide how much I spend on groceries, or rather, how much I eat based on what I'm willing and able to spend.
The guys who make the indices try to handle that with calculating "core" inflation, i.e. Consumer Price Index excluding food and energy, on the rationale that these prices are volatile, à la Pgher. [I'm in at least two minds about this, likely more.] At the moment the "core" inflation rate is just a tad below the whole inflation rate.
What is surely making our observations different from the published Consumer Price Index is that the CPI is precise for a consumer unit [family, household, individual] with mean income. Consumption structure changes with income, and mean income is pretty high. E.g., mean family income in 2021 was $80, 000. Wish they calculated for consumer units with median income.
Again, the concept for each individual is straightforward: Take all price changes and weight them by one's own dollar consumption structure last year. That is an overstatement of the increase in the cost of living. Do the weighting with this year's dollar consumption structure. That is an understatement. All on account substitution is assumed away in both cases.
Get both measures for oneself. Take the geometric mean. That's close to the true change in the cost of living for oneself. :-)
I don't do the calculations for myself. I just intuit or feel that my cost of living has not gone up quite as much as the CPI. I never drove much, e.g., so the rise in gasoline prices doesn't affect me much. If one has to drive a lot, one is hurt more.
Quote from: Hibush on June 09, 2022, 07:31:57 AM
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
You are doing your part to Whip Inflation Now. No need to feel spite, just civic pride.
During the Great Recession, I made a car purchase. Some people saw my purchase as something that would stimulate the economy, if more people made purchases like I did.
I went huh? Economic citizenship? I got a great deal because cars weren't selling because no one seemed to have any money to spend, and the salesperson was willing to cut me a good deal. And, that's why I bought that car during the Great Recession. I still have that car, today, and it still runs great with no signs of end-of-life. <knock on wood>
And today, I will drive my great car, until a car salesman cuts me a reasonable deal on a new one. No takers? Fvck 'em.
Quote from: lightning on June 12, 2022, 06:17:40 PM
Quote from: Hibush on June 09, 2022, 07:31:57 AM
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
You are doing your part to Whip Inflation Now. No need to feel spite, just civic pride.
During the Great Recession, I made a car purchase. Some people saw my purchase as something that would stimulate the economy, if more people made purchases like I did.
I went huh? Economic citizenship? I got a great deal because cars weren't selling because no one seemed to have any money to spend, and the salesperson was willing to cut me a good deal. And, that's why I bought that car during the Great Recession. I still have that car, today, and it still runs great with no signs of end-of-life. <knock on wood>
And today, I will drive my great car, until a car salesman cuts me a reasonable deal on a new one. No takers? Fvck 'em.
This is how a bazaar works. Wonderful! But it has nothing to do with inflation.
Quote from: dismalist on June 12, 2022, 07:42:27 PM
Quote from: lightning on June 12, 2022, 06:17:40 PM
Quote from: Hibush on June 09, 2022, 07:31:57 AM
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
You are doing your part to Whip Inflation Now. No need to feel spite, just civic pride.
During the Great Recession, I made a car purchase. Some people saw my purchase as something that would stimulate the economy, if more people made purchases like I did.
I went huh? Economic citizenship? I got a great deal because cars weren't selling because no one seemed to have any money to spend, and the salesperson was willing to cut me a good deal. And, that's why I bought that car during the Great Recession. I still have that car, today, and it still runs great with no signs of end-of-life. <knock on wood>
And today, I will drive my great car, until a car salesman cuts me a reasonable deal on a new one. No takers? Fvck 'em.
This is how a bazaar works. Wonderful! But it has nothing to do with inflation.
I never said my actions had anything to do with inflation. If anything, my posts (and other posters' posts) show that "inflation" doesn't have to be an all-comsuming issue for the individual consumer. Consumers are not powerless, regardless of "the economy."
Quote from: lightning on June 12, 2022, 07:54:08 PM
Quote from: dismalist on June 12, 2022, 07:42:27 PM
Quote from: lightning on June 12, 2022, 06:17:40 PM
Quote from: Hibush on June 09, 2022, 07:31:57 AM
Quote from: lightning on June 08, 2022, 07:06:47 PM
I'm now NOT buying stuff that I don't need to buy--not because I can't afford it, but out of spite.
You are doing your part to Whip Inflation Now. No need to feel spite, just civic pride.
During the Great Recession, I made a car purchase. Some people saw my purchase as something that would stimulate the economy, if more people made purchases like I did.
I went huh? Economic citizenship? I got a great deal because cars weren't selling because no one seemed to have any money to spend, and the salesperson was willing to cut me a good deal. And, that's why I bought that car during the Great Recession. I still have that car, today, and it still runs great with no signs of end-of-life. <knock on wood>
And today, I will drive my great car, until a car salesman cuts me a reasonable deal on a new one. No takers? Fvck 'em.
This is how a bazaar works. Wonderful! But it has nothing to do with inflation.
I never said my actions had anything to do with inflation. If anything, my posts (and other posters' posts) show that "inflation" doesn't have to be an all-consuming issue for the individual consumer. Consumers are not powerless, regardless of "the economy."
If inflation -- an increase in the average price level -- is expected, there are indeed no worries -- all prices and wages change at the same rate, and no one is worse off, past long term contracts aside, but they too will adjust. Alas, real world inflations are punctuated by attempts to stop them with monetary policy and government spending desires to accelerate them. This chaos -- unexpected inflation -- makes life difficult for all of us. Like right now. Especially if attempts to stop it consist of idiocy such as price controls. Which we have, little noticed.
When it's a question of changing
relative prices, you are absolutely correct. Takeout pizza is more expensive, I make my own. Gas price too high? I take the bus.
I totally agree about the economy: "The economy" is a not always useful definition. The real economy is us.
Cheers. :-)
Again, I want to come back to my original point-- I get that there would be some negative consequences to forceful government actions to repress inflation now, but so many real Americans are being slammed by it now, metaphorically murdered, that something has to be done, negative consequences be damned.
Well the Federal Reserve is raising interest rates. This will get the money supply to contract or grow more slowly. That will bring inflation down, likely bring a recession, too.
There's nothing new or strange about this situation.
Quote
...so many real Americans are being slammed by it now, metaphorically murdered, that something has to be done, negative consequences be damned.
I just spent twice as much on food at my two usual grocery stores as I would just a couple of years ago. I got the usual meat, seafood, produce, fruit, and dairy--nothing in wrappers, cans, or boxes today. This must be much worse for people with children as they would be spending not only on packaged food but also on diapers and other stuff that children need. NYC lost so many jobs because of the pandemic, so I'm not sure how these people and their families are managing to feed themselves.
Quote from: dismalist on June 09, 2022, 07:36:47 PM
Quote from: jimbogumbo on June 09, 2022, 07:31:29 PM
My measure of how inflation affects the "normal" citizen is the menu at my favorite (sue me) fast food breakfast location. A Sausage McMuffin (no egg) has been on the dollar menu for years at, well, $1.00. Price after early this year is $1.59.
No change in ingredients or size. One English muffin, one sausage patty, one slice of American processed cheese-like food.
The classic error of confusing a change in the overall price level with a change in relative prices! :-)
Subtract the overall inflation rate from the McDonald's price rise rate, and get the relative change in McDonald's price.
Of course everyone's overall inflation rate is different from the headline CPI series. 'Ya gotta reweight all price changes with your personal consumption expenditures.
Using 2012 as a baseline my sandwich should be $1.27, not $1.59.
Quote from: jimbogumbo on June 13, 2022, 03:00:41 PM
Quote from: dismalist on June 09, 2022, 07:36:47 PM
Quote from: jimbogumbo on June 09, 2022, 07:31:29 PM
My measure of how inflation affects the "normal" citizen is the menu at my favorite (sue me) fast food breakfast location. A Sausage McMuffin (no egg) has been on the dollar menu for years at, well, $1.00. Price after early this year is $1.59.
No change in ingredients or size. One English muffin, one sausage patty, one slice of American processed cheese-like food.
The classic error of confusing a change in the overall price level with a change in relative prices! :-)
Subtract the overall inflation rate from the McDonald's price rise rate, and get the relative change in McDonald's price.
Of course everyone's overall inflation rate is different from the headline CPI series. 'Ya gotta reweight all price changes with your personal consumption expenditures.
Using 2012 as a baseline my sandwich should be $1.27, not $1.59.
We have overall inflation going on simultaneously with relative price changes. Do not confuse the two. Find the relative price change by subtracting the overall inflation rate.
No worries: It's a classic error. :-)
Quote from: kaysixteen on June 13, 2022, 08:45:19 AM
Again, I want to come back to my original point-- I get that there would be some negative consequences to forceful government actions to repress inflation now, but so many real Americans are being slammed by it now, metaphorically murdered, that something has to be done, negative consequences be damned.
It depends on whether the negative consequences of government action have long term negative effects like price controls, which should not be ignored.
If you're a Keynesian or think that in setting monetary policy the Federal Reserve plays a game of chicken with the federal government, then monetary tightening should be complemented with
fiscal tightening (i.e. less government spending and higher taxes targeting consumption).
Quote from: Anon1787 on June 13, 2022, 03:47:54 PM
Quote from: kaysixteen on June 13, 2022, 08:45:19 AM
Again, I want to come back to my original point-- I get that there would be some negative consequences to forceful government actions to repress inflation now, but so many real Americans are being slammed by it now, metaphorically murdered, that something has to be done, negative consequences be damned.
It depends on whether the negative consequences of government action have long term negative effects like price controls, which should not be ignored.
If you're a Keynesian or think that in setting monetary policy the Federal Reserve plays a game of chicken with the federal government, then monetary tightening should be complemented with fiscal tightening (i.e. less government spending and higher taxes targeting consumption).
Oooh, that last thought is wise! The idea is that the higher tax revenues will lower the need to print money to finance the deficit. This makes the new intended future paths of prices and wages credible, and no recession occurs.
I find it hard to imagine this will occur here and now.