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Why Inflation Looks Likely To Stay Above the Pre-Pandemic Norm (economist.com) 225

Posted by msmash from the closer-look dept.
Even as supply-chain snarls ease, wage growth and price expectations are ticking up. The Economist: The bad news on inflation just keeps coming. At more than 9% year on year across the rich world, it has not been this high since the 1980s -- and there have never been so many "inflation surprises," where the data have come in higher than economists' forecasts (see chart in the linked story). This, in turn, is taking a heavy toll on the economy and financial markets. Central banks are raising interest rates and ending bond-buying schemes, crushing equities. Consumer confidence in many places is now even lower than it was in the early days of the covid-19 pandemic. "Real-time" economic indicators of everything from housing activity to manufacturing output suggest that economic growth is slowing sharply.

What consumer prices do next is therefore one of the most important questions for the global economy. Many forecasters expect that annual inflation will soon ebb, in part because of last year's sharp increases in commodity prices falling out of the year-on-year comparison. In its latest economic projections the Federal Reserve, for instance, expects annual inflation in America (as measured by the personal-consumption-expenditure index) to fall from 5.2% at the end of this year to 2.6% by the end of 2023. You might be forgiven for not taking these prognostications too seriously. After all, most economists failed to see the inflationary surge coming, and then wrongly predicted it would quickly fade. In a paper published in May, Jeremy Rudd of the Fed made a provocative point: "Our understanding of how the economy works -- as well as our ability to predict the effects of shocks and policy actions -- is in my view no better today than it was in the 1960s." The future path of inflation is, to a great extent, shrouded in uncertainty.

Some indicators point to more price pressure to come in the near term. Alternative Macro Signals, a consultancy, runs millions of news articles through a model to construct a "news inflation pressure index." The results, which are more timely than the official inflation figures, measure not just how frequently price pressures are mentioned, but also whether the news flow suggests that pressures are building up. In both America and the euro area the index is still miles above 50, indicating that pressures are continuing to build. Inflation worry-warts can point to three other indicators suggesting that the rich world is unlikely to return to the pre-pandemic norm of low, stable price growth any time soon: rising wage growth, and increases in the inflation expectations of both consumers and companies.
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Why Inflation Looks Likely To Stay Above the Pre-Pandemic Norm More

Why Inflation Looks Likely To Stay Above the Pre-Pandemic Norm

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  • 5.2%? (Score:4, Insightful)

    by TheRealMindChild ( 743925 ) on Monday June 27, 2022 @01:58PM (#62655070) Homepage Journal

    5.2% ... GTFO. That number is absolutely bullshit.

  • Didn't see it coming? (Score:3)

    by El Fantasmo ( 1057616 ) on Monday June 27, 2022 @02:00PM (#62655076)

    I'm not sure I believe economists failed to see it coming. I think there are 2 things at play.
    1. They thought they could provide proper economic countermeasures to offset inflation
    OR
    2. They saw it coming and refused to set the economic world on fire by saying it could to be significantly bad; thereby, pushing the impact farther into the future giving us a little more time to figure out how to handle it before the blame game starts.

    • The majority of Economists are locked in to crafting a narrative sanctioned by The Church of the Immaculate Neoliberal at the expense of ignoring most of reality. They criticize any economic model that doesn't perpetuate the fantasy of trickle down, supply and demand, perfect competition, and rate tuning as "unscientific." When your models fail to predict anything outside of status-quo conditions, it's a poorly trained and developed model.

    • Re:Didn't see it coming? (Score:5, Interesting)

      by quantaman ( 517394 ) on Monday June 27, 2022 @02:41PM (#62655222)

      3. I think the economy is fundamentally unpredictable.

      The problem is that the economy is run by humans who can read economics papers and listen to economists. If economists recognize conditions that will cause a recession and say a recession might be coming, then businesses start adapting to the more hostile economic forecast and the recession never happens. If economists say inflation is coming they increase output to take advantage of the higher prices and extra capital and the inflation tapers out.

      It's like a hockey team finding a superior offensive system, they dominate for a bit, but eventually other teams learn to copy and adapt and balance is restored.

      Economists help the economy run more efficiently, but banks and finance will always push the system to the new limits, and this will eventually cause an unexpected breakdown of one type or another.

      • Re: (Score:3, Interesting)

        by aaarrrgggh ( 9205 )

        It is worse than that... it is unpredictably run by (unintentional) competing interests. Inflation has been understated for decades, largely due to cheap Chinese imports. Impact that source of moderation and you are in the 5-7% range historically.

        Monetary policy is likely only 30-50% of the economy in the past 30 months. It is less now due to Putin.

        My B.S. in BS says the correct action is likely to accept the 5-7% inflation and try to pull people out of early retirement or passive income... or open up the g

      • The fact that the Great Recession of 2008 didn't turn into a full blown depression and overall the growth of the world's economy since 1945 has been stellar compared with any other period of history. They don't get it 100% right - any more than doctors cure every patient - but they're a LOT better at it than they used to be.

    • Who says that economists didn't see it coming and didn't share their views with policymakers. I'm not an economist and I predicted the outcome of the pandemic stimulus checks.
    • A lot of economists saw it coming. Their views were just poo-pooed by the ones who've been saying party on for the last few years. Specifically, there were many articles in Spring 2020 arguing against the Fed loosening up and specifically saying that a massive increase of the money supply would result in the return of inflation, possibly even hyperinflation. They weren't listened too and the Fed proceeded to expand the money supply by about 40%. We, of course, will now see a total of about 40% inflation as

  • Maybe the biggest thing that makes it unpredictable is that we don't know what policymakers will do, largely at the behest of their voters.

    During the pandemic, there were some good reasons for the government to indiscriminately hand out dollars. They handed out a LOT of dollars. Maybe too much, maybe not, but a lot. When there are more dollars to go around, when they are less rare, they are easier to get. People are less anxious to get more. That is, they value additional less. People putting less value on a dollar is inflation.

    More dollars spread around= each dollar is less valuable, able to buy less.

    Will politicians try to buy votes, by handing out dollars, not caring that they are actually destroying the economy? Will they be statesmen, doing what's best for everyone? There's no telling to what extent they'll do different things.

    We do know that production of most everything is accelerating. That reduces inflation. We know that for some things, like chips, it'll be several more months before a lot of the capacity comes online. We don't know precisely how selfish and foolish politicians will be.

    While Biden is by no means inspiring, he is at least not a noob and so far seems to have at least a little bit of statesmanship. For example he doesn't support permanently destroying the Supreme Court just because one ruling went a different way than he wanted.

    • More dollars spread around= each dollar is less valuable, able to buy less.

      What makes each dollar less valuable is that we added dollars to the economy without bothering to add more things to buy to the economy. More dollars, same amount of goods - > pretty much a textbook definition of inflation.

    • ... he doesn't support permanently destroying the Supreme Court ...

      US politicians bitched about giving the working class, $600 dollars and housing, also about Biden's massive infrastructure spending, because inflation. But the Orange leader's cash 'hand-out' wasn't a problem for those nay-sayers. Even now, no-one's talking about how it gave the upper middle-class more money to throw around (because corporations used the money to buy-back shares and bonds).

  • I think inflation will go down some (Score:4, Informative)

    by wakeboarder ( 2695839 ) on Monday June 27, 2022 @02:04PM (#62655084)

    The first thing was all the fake money, from stimulus and from the fed. The worst thing was economists said there would be no consequences, those economists should have their careers ended or thrown into prison for telling the politicians such lies. The other problem is we had 3million people retire, because who wants to work through a pandemic? Things were supposed to get better after the pandemic, but supply chains with no inventory slack don't have storms abate in a few quarters. Along with the supply chain crunch and then a war from history's stupidest dictator which made it worse. Not to mention china shutting down again. It's the perfect storm for inflation. But this will come to an end, already metals are at some of their lowest prices in decades and they are a canary in the coal mine. We are probably headed for a deep recession but who knows. All of the fake money makes economic forecasting and pricing worthless, so good luck. I think inflation will trend down from here, 22 will be a not so great year and a small chance that russia might wake up and admit its mistakes. China will come back online and the retirees will be replaced so more people to work.

  • So there are two ways to tackle inflation (Score:5, Interesting)

    by rsilvergun ( 571051 ) on Monday June 27, 2022 @02:05PM (#62655094)
    The first is the way we normally do it, raise interest rates. The goal here is to slow economic growth so that companies will begin layoffs which will depress wages and therefore depressed spending. Essentially your balancing the books on the backs of the middle class.

    The second is widespread government investment in cities, infrastructure and education. You essentially have the government come in and build out new cities by preparing the land in advance and running the utilities. This is the expensive part of building a city and if the government does it you'll bring in a ton of real estate investors eager to expand into the cheap land. From there you subsidize higher education so that you have a large number of college graduates who paid little or no tuition because of the heavy subsidies in the back end. These graduates become employees that produce many times more productivity than they cost to educate. Government statistics show they're very few of what we would call useless degrees awarded. For everyone underwater basket weaver or social worker we get about 30 engineers and another 50 computer scientists and about 100 doctors.

    All of this leads to increased productivity and therefore more goods and services and housing available for everyone which in turn reduces inflation. This is what we did during Reagan's term. Reagan and the Democrats compromised whereby Reagan got all the military spending he wanted and the Democrats got the infrastructure and education spending. It's led to things like the .com and housing booms. Mind you a lack of Wall Street regulation turns those both into bubbles but we could have easily solved that just by keeping the main Street and Wall Street Bank separate like we used to. Sadly the Democrats lost that fight and frankly of a few of them helped lose it.

    The takeaway though is that there are solutions to controlling inflation that don't involve you losing your job or working dozens of hours of unpaid over time when your coworkers lose their jobs

    • Re: (Score:3, Insightful)

      by rskbrkr ( 824653 )
      Listen. I know that government spending has resulted in inflation, but they can stop inflation if they just spent more money.

      Not sure if anyone believes that we are turning out 150 STEM graduate for everyone with a humanities degree.

      • You spend money on things that produce more stuff. Cities, infrastructure and education. The way you keep inflation in check without screwing over working Americans is you make more stuff as the population grows. The problem is doing that requires very expensive long-term investments that do not pay off in a single lifetime. Private companies are not going to build cities or pay for inner city youths to get their doctorates. Because even though for society at large the gains are worth it the cost of doing t

    • Re:So there are two ways to tackle inflation (Score:5, Interesting)

      by serafean ( 4896143 ) on Monday June 27, 2022 @02:33PM (#62655198)

      What worked in the recent past might not work today, hear me out:

      The population pyramid is completely different today than in the 70s. Boomers will retire within the next 24 months. Implying labour shortage. Depressing wages might not happen. This also implies that active retirement investment capital will get pulled out of the market.

      Inflation implies a supply side issue (or too much money in the system, but this still manifests are not enough supply), as long as this issue isn't resolved, inflation will continue. If this supply side issue is on inelastic and non-substitutable resources, demand destruction will not happen without heavy social consequences. (such resources are for example food, water, energy, base materials such as concrete...).

      Building out cities requires construction materials. Given that already now there are supply issues with construction sand, and replacement materials aren't yet being used...

      > This is the expensive part of building a city and if the government does it you'll bring in a ton of real estate investors eager to expand into the cheap land
      Land is not infinite. Expanding cities creates more energy demand. If you want to talk climate change, creating more energy demand is not the way to go. And in any case, fossil fuels are not infinite either.

      • You are right on some of this.

        One thing is clear. There is not enough labor in the United States to handle what is needed.

        The old economy you talk about had a whole lot of places that hired "illegals," from farms to factories. That was all stopped, and nothing replaced it.

        The birth rate in the United States isn't enough to make up for this. I'm no economist, but its pretty clear to me that you can't grow an economy to a larger size when you have the same, or less people.

        --
        The economy, stupid - James Ca

        • Re: (Score:2)

          by kackle ( 910159 )

          The old economy you talk about had a whole lot of places that hired "illegals," from farms to factories. That was all stopped, and nothing replaced it.

          You're not from around here, are ya'?

      • Automation and productivity gains can make up for that. Inflation is due to a shortage of goods coupled with massive mega mergers allowing companies to charge pretty much whatever they want and finally companies buying up all the houses and apartments to rent them back at extremely high rates. You counter that by producing more stuff and you're correct that if we need it a large population of young people it would be hard to produce more stuff and control inflation the way I'm describing. But modern factori

      • Re: (Score:2)

        by Hodr ( 219920 )

        Boomers that are STILL working will by and large be the poor planners. They won't have large 401ks or company based pensions. A huge percentage of them will be living entirely off of social security.

        That means less money to spend which will also reduce demand for goods/services.

    • Re:So there are two ways to tackle inflation (Score:5, Insightful)

      by ArmoredDragon ( 3450605 ) on Monday June 27, 2022 @03:05PM (#62655324)

      The first is the way we normally do it, raise interest rates. The goal here is to slow economic growth so that companies will begin layoffs which will depress wages and therefore depressed spending. Essentially your balancing the books on the backs of the middle class.

      No, the goal of raising the interest rate is to reduce the money supply. Reducing the money supply doesn't mean destroying money, it means making it less available. For example, the money supply for housing is very high because borrowing money to buy housing is really cheap, so people are willing to spend more money that they don't even have. However, if we raise the cost of borrowing money, then people will spend less of this money that they never had. That may or may not have the effect of squeezing wage growth. Sometimes it does, but not always. However, high wage growth and high inflation tend to go well with one another. Side note: You more than likely don't realize this, but when you complain about the 1% making a disproportionately high amount of money, most of what you're actually complaining about is people making money that technically doesn't even exist. And I'm not talking about non-cash currency. It's pointless for me to explain what this means to somebody like you though.

      The second is widespread government investment in cities, infrastructure and education. You essentially have the government come in and build out new cities by preparing the land in advance and running the utilities. This is the expensive part of building a city and if the government does it you'll bring in a ton of real estate investors eager to expand into the cheap land. From there you subsidize higher education so that you have a large number of college graduates who paid little or no tuition because of the heavy subsidies in the back end.

      The fundamental cause of inflation is there being a very high money supply, typically accompanied by a high velocity of money. Doing what you said here just aggravates this. Even Keynesian economists will disagree with you here, and they're generally in favor of government spending.

      These graduates become employees that produce many times more productivity than they cost to educate. Government statistics show they're very few of what we would call useless degrees awarded. For everyone underwater basket weaver or social worker we get about 30 engineers and another 50 computer scientists and about 100 doctors.

      Mostly yes, but not lately. You're no doubt aware of the student debt crisis. I know you won't believe this, but that too is caused by an excessively high money supply. Student loans are also the cause of this, not the solution. Like housing, people tend to be comfortable spending money that they don't actually have. Only for student loans it's even worse, because they very stupidly assume that they'll be able to pay it off later. I say very stupidly because most of the people that take out these loans really aren't smart enough to go to college to begin with. If they were, they should have easily seen this coming. So because of the over abundance of student loans, universities are very comfortable increasing their tuition rates, because they know people will pay.

      This is why, no matter which side of the debate on student loan forgiveness you sit on, you really shouldn't be in favor of forgiving anything until the bleeding has stopped, otherwise right after the current set is forgiven, we're just going to end up right back where we started, only this time the government is insolvent, which would create a disaster on a scale that you can't even imagine. And yes, it would be insolvent. The fact is you can't tax your way out of that problem. The Laffer Curve is a real thing. France found that out the hard way 10 years ago. Raising taxes too high literally caused a reduction in tax revenue.

      I know, in your mind, that is impossible, but nonetheless that's exactly what happened, French president Francois Hollan

      • their goal is to reduce hiring in an effort to slow wage growth. [mronline.org]

        They spin it as a net positive because your now lower wages will go farther. It is, of course, bunk. There are plenty of ways to control inflation without hurting middle class wages. Our go-to solution for inflation has been low wages for 40+ years now. Maybe it's time to try something else? I listed out several solutions, we could also enforce anti-trust law while we're at it.

        • their goal is to reduce hiring in an effort to slow wage growth.

          The websites you read is rather telling about both your own ability to discern bullshit from what's actually happening and your ability to reason. Although he did use words to that effect, the author of the article matter of factly inserts words into his mouth that he didn't say as if he actually said it, and I really doubt that you took that as anything but 100% factual. First, he doesn't have the power to control anybody's wages. Second, he is correct that wage inflation directly relates to overall inflat

          • Bottom line is, you can't both have a constant stream of rising wages AND not have inflation.

            Of course you can, well not a constant stream nothing lasts for ever. But if you increase efficiency wages can increase, if your plumber guy gets a new tool that means he can do twice as many toilets in the same time, he can get paid twice as much and still charge the same amount per toilet.

            Is it possible to increase efficiency enough, don't know but it at least seems at least a possibility. I think that was the point of increasing education. Also I don't think they meant increase student borrowing from the

    • You seem to leave out the fact that Fed interest rates are not supposed to be at near-zero forever. There is a good argument to be made that the Fed should have raised them sooner, but arguing that they should stay low forever just ignores how money works.

      That being said, along the lines of what you are saying, the Fed has been doing far too much of the government's job for it. In times of recession the government is supposed to spend money, not just give tax breaks or similar generic cashouts, but spen

    • I'm not agreeing that social workers are useless, but 2 minutes of googling says your degree facts came out of your butt. This doesn't inspire confidence in the rest of your claims.

      Social workers: [socialworklicensemap.com]As of 2020, the employment of social workers data from the BLS estimates that there are 715,600 social workers employed in the United States.

      Doctors: [statista.com]As of May 2022, the total number of professionally active physicians in the United States amounted to 1,073,616 physicians.

    • Re: (Score:2)

      by eepok ( 545733 )

      The first is the way we normally do it, raise interest rates. The goal here is to slow economic growth so that companies will begin layoffs which will depress wages and therefore depressed spending. Essentially your balancing the books on the backs of the middle class.

      Hold on. Check your hyper-simplistic BS. The intent, causes, and effects of the Fed changing interest rates are deep and complex, but they have absolutely nothing with the desire to instigate layoffs, depressing wages, or depressing spending. It has everything to do with moderating gambling-level speculative investment (stocks of companies racing to "get big quick") and greatest-fool investment planning (housing bubbles, crypto., stocks with no potential of profitability). Low interest rates are fuel on a s

  • I was born and live in Venezuela.

    Wake me up when inflation hits 100% per year. That way, I can go, make some coffee or tea, drink it, get the caffeine hit, and be fully alert for the next part...

  • Economics (Score:5, Interesting)

    by Areyoukiddingme ( 1289470 ) on Monday June 27, 2022 @02:18PM (#62655144)

    Economics isn't a science because fundamentally it's about attempting to describe the choices of masses of humans, while foolishly pretending that all of those decisions are being made by rational actors in their own best interests. They're not.

    People are dumb, panicy animals making emotionally-driven decisions almost exclusively. And sprinkled throughout the panicked herd is a population of back-biting, chiseling little weasels who would sell their grandmother for a buck. Twice. They have an affect all out of proportion to their numbers, especially because our current global economic system tends to grant outsized financial rewards for such behavior.

    Now put on your tin foil hats for a moment and consider just how appallingly few people it takes to decide that two years of wage pressure must be punished because it's threatening to have a real affect on profits for the first time in two generations and that's intolerable, so it's time to put the screws to the plebs and sharply raise prices for literally everything, regardless of demand.

    I'm not saying there's a not-very-secret cabal of multi-billionaires who are afraid of losing their grip because the lower classes are getting too financially comfortable, but I'm not saying there isn't. I am saying that annual meeting in Davos, Switzerland isn't attended by the more generous souls on the planet.

    • Re:Economics (Score:4, Interesting)

      by JBMcB ( 73720 ) on Monday June 27, 2022 @03:50PM (#62655516)

      Economics isn't a science because fundamentally it's about attempting to describe the choices of masses of humans, while foolishly pretending that all of those decisions are being made by rational actors in their own best interests. They're not.

      It's a social science, in that economists are trying to model human behavior using scientific methods.

      People are dumb, panicy animals making emotionally-driven decisions almost exclusively.

      There is basic economics, a selection of supply and demand graphs, as well as charts dealing with inflation, deflation, and various scenarios dealing with relative utility, need and want. These all assume perfectly rational actors with ideal access to information.

      Then there is everything else. Panic buying, buying objects due to advertising, or status, or class signifiers. Replacement commodities, price stickiness, and all the other messy human factors. All that other stuff is why there are economics classes after ECON101.

    • Re:Economics (Score:4, Interesting)

      by ArchieBunker ( 132337 ) on Monday June 27, 2022 @03:57PM (#62655544)

      Now put on your tin foil hats for a moment and consider just how appallingly few people it takes to decide that two years of wage pressure must be punished because it's threatening to have a real affect on profits for the first time in two generations and that's intolerable, so it's time to put the screws to the plebs and sharply raise prices for literally everything, regardless of demand.

      I'm not saying there's a not-very-secret cabal of multi-billionaires who are afraid of losing their grip because the lower classes are getting too financially comfortable, but I'm not saying there isn't. I am saying that annual meeting in Davos, Switzerland isn't attended by the more generous souls on the planet.

      Bingo. https://www.yardeni.com/pub/sp... [yardeni.com]

    • Economics isn't a science because fundamentally it's about attempting to describe the choices of masses of humans, while foolishly pretending that all of those decisions are being made by rational actors in their own best interests. They're not.

      Errr no. Firstly that's not the definition of "science" and secondly economics does not pretend anything, they make assumptions and models based on different actions. There's whole subfields of economics specifically dedicated to modelling how different actors behave. It's almost like you once saw the prisoner's dilemma and decided "this is all of economics" and left it at that.

  • we know this was started by the release of the held-back demand due to the pandemic. so, it is the people that caused it. and they are still a major factor in the cause. so, just ask them if they are going to pay extra for everything they want and continue making the rich even richer. ask "how how high a price are you going to keep buying gas? $10/gal? $30/gal? $100/gal?"

    • Most people will not start limiting their travel until either a) there actually is a gas shortage and you have to line up at the pump or b) they run out of money and their credit card has stopped working.

  • How can a discussion of inflation be taken seriously if a primary inflation cause is not in the conversation?

  • More money has been pumped in to chase less goods and services. It's math.

    Biden's solution? "Let's pump more money!"

  • Everyone's blaming the inflation on the pandemic, but it's only partially responsible. The reality is that if you look at the population pyramids of most of the big players in the world they have a large number of people retiring, and a smaller generation of people graduating to take their place. The retirees are starting to spend their retirement savings, and with lack of replacement labour means there isn't enough supply to meet that demand, so prices are going up. That's inflation. That demand/supply

  • Some indicators point to more price pressure to come in the near term. Alternative Macro Signals, a consultancy, runs millions of news articles through a model to construct a "news inflation pressure index."

    So, you take the mass of worldwide internet opinions and then crank that through an opaque model to yield a number. I guess that's an indicator of some sort, but not necessarily of "more price pressure to come in the near term."

  • Everything is linked to the cost of gas and diesel. Delivery, production, heating, energy, etc.

    I don't see lines at the pumps, bit I do see the Refiners and Producers jacking up the prices for more profit margins. Big oil is sticking it to Biden for his restrictions on everything they try to do. They consider it an assault on their business so have decided to make profits now before future restrictions and (in several decades) lower consumption squeezes their flowing profits. And, obviously, Big oil does
  • Can it really be considered an inflation when corporations are making record profits? Tax the corporations on profits, and tax the ultra wealthy their fair share.
  • It is amazing the hold these money stealing billionaire elites have over the rest of us... one little midget human.


    But, but, but...

    But would you kill baby Hitler?
  • ...and that is growth in the money supply. Interest rates are far below inflation rates, which begets more inflation. Interest rates should be nearly 10% now.
  • If you just bought a house, even though interest rates are rising (which sucks for you if you got a variable rate mortgage) it also means that the principal is being discounted by the inflation rate every year, which right now is higher than the interest rate you're likely paying. The principal is fixed in dollars, but your income is going to rise by 8% per year. Nice.

    • If you just bought a house, even though interest rates are rising (which sucks for you if you got a variable rate mortgage) it also means that the principal is being discounted by the inflation rate every year, which right now is higher than the interest rate you're likely paying. The principal is fixed in dollars, but your income is going to rise by 8% per year. Nice.

      My state experienced 12% inflation YoY, yet my salary only went up by 1%.

      • My state experienced 12% inflation YoY, yet my salary only went up by 1%.

        If your salary only went up by 1% last year, you really need to find a different job. Workers averaged an increase in 6.5% at the end of 2021. By the end of this year, it is predicted that workers' earnings will increase by nearly 10%, especially with the labor market being so worker-friendly.

        That's not to say salaries are keeping up with broader inflation. They are clearly not, but if you're only getting 1% raises, your employers a

    • If you just bought a house, even though interest rates are rising (which sucks for you if you got a variable rate mortgage) it also means that the principal is being discounted by the inflation rate every year, which right now is higher than the interest rate you're likely paying. The principal is fixed in dollars, but your income is going to rise by 8% per year. Nice.

      Correct, except that, with many people paying more for basic necesities + a very expensive loan, less people will be able to buy your house, this could lead to two equaly bad outcomes (and a third, nice outcome that you just said):

      1.) Your house diminishes in value, because there is high supply of houses, but less people looking/able to buy one.
      2.) Your house increases it's "paper value", but no one is willing to buy it, which leads to higher property taxes.
      3.) As parent said, the principal of the house get

  • Simple quotes that Gov't doesn't heed. (Score:3)

    by Virtucon ( 127420 ) on Monday June 27, 2022 @03:34PM (#62655460)

    "You can't spend your way to prosperity." - Edward Prescott

    "Printing money is merely taxation in another form. Rather than robbing citizens of their money, government robs their money of its purchasing power." - Peter Schiff

    We have cost pressures from supply chain issues and the fed is printing money, increasing the money supply devaluing the existing currency already in circulation or saved. We've also declared open war on our existing energy supplies and suppliers which is driving up costs of everything making it worse.

    To solve this, get spending under control, reduce waste and work on the supply chain issues otherwise we'll see a repeat of the late 70s and early 80s.

    "If you find yourself in a hole, stop digging" - Will Rogers

  • "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation" -- attr. Vladimir Lenin

    Consider that sentiment, and then consider that for all practical purposes, the bourgeois = the middle class. And then consider the palpable, visceral hatred the baby bolsheviks in this country (usa) have against the "bougies." Further consider this left-leaning cabal of baby bolsheviks, having been brain-washed by communist / marxist professors in college, now comprise the base of t

    • "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation" -- attr. Vladimir Lenin

      Consider that sentiment, and then consider that for all practical purposes, the bourgeois = the middle class. And then consider the palpable, visceral hatred the baby bolsheviks in this country (usa) have against the "bougies." Further consider this left-leaning cabal of baby bolsheviks, having been brain-washed by communist / marxist professors in college, now comprise the base of the Democrat party. Their mandate seems indeed to be "crush the bougies and give us the $". Which won't happen. We'll get crushed, and the top 1% gets the $, and you get NOTHING.

      When I see the policy decisions made by the current warm-ish body inhabiting the White House, I have to first consider it could be just flat-out incompetence. But I also have to consider it could be something else.

      I, for one, think it's deliberate. Happened with Carter, happened with Obama. Carter's you can blame on the Arabs turning off the spigot in '73 to "punish" us for our support of Israel, but Obama's energy cost spike was all down to policy.

      And so's Biden's energy spike / inflation. It's not putin, it's 100% Biden's policies. Let's stop the drilling in the US. Let's stop being a net exporter. Let's go back to being solely an importer. Let's piss all over the domestic oilmakers, and then beg them to make more. And let's beg s'more from Saudi... instead of making our own, which we are perfectly capable of doing.

      I truly feel for the people who now have to choose between food and gas. But y'all voted for it, so I can't feel *too*much. You did it to yourselves.

      The Left truly operate like children, all based on emotion, zero on fact. Feels Good is better than Is Right. Well, thanks to that thinking, we're on the precipice of doing the mid 20th-century over again.

      Biden = Obama's (illegitimate) 3rd term. Same people, *cough*Susan Rice*cough, same policies, same result: A broken and broke-r America.

      If inflation was produced by Grandpa Biden only, Europe and other countries around the world would not have high inflation too. Look around, the USoA is not the center of the world (neither if my country, for what is worth). As many things is life, the cause of the current inflation is multifactorial and complex.

      As for gasoline and combustible prices, please remeber that what comes out of the earth is PETROLEUM, it has to be refined to transform it in asphalt, gasoline, jet fuel, diesel, fuel oil for heatin

  • Since the article is introduced with the premise that knowledge of macroeconomic factors hasn’t improved since the 1960s, I am going to interject my healthy set of speculation which would appear to be just as valid according to their own admissions. Factor 1: Cost of Energy, With global conflicts, generating sanctions and disrupting the flow of oil their is bound to be inflation. It will be further compounded by the climate crisis which will create longer term transition costs resulting in mor
  • - Basic food types' and gas prices are fixed by the government - Other every day goods' prices are through the roof (15-70%) price increase - Food portions/packaging shrinking every couple of weeks/months I literally need about 50% more money to get the same amount of food than before covid. Also, lets not talk about housing costs which are sky high at the moment. So, excuse me if my "percieved state of the economy" seems to be off compared to their magical devaluation number. They can go and stick that n

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