inflation

[Langue_doc]

...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.

[jimbogumbo]

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.

[dismalist]

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. :-)

[Anon1787]

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).

[dismalist]

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.