Inflation Discussion

OK State Fan

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IMHO as a non economist the reason we can print tons of money and not see hyperinflation thus far is that the printed money never reaches the hands of the consumer. It is distributed to the institutions who do not loan it out but rather choose less risky options like equity markets to park the money and make a return. Furthermore, there are so many dollars in circulation that printing a few trillion here or there is nothing to the overall supply of money. We have inflation now that is maybe transitory since the fed actually dumped helicopter money in the form of stimulus to the actual citizens rather washing it through the banking system. Likewise, huge companies like Apple hold billions on there balance sheets and never use it. If they were to all start spending their reserves at once we could see inflation because the funds would actually be used to consume resources. If things got tight politicians would pick hyperinflation over a depression every time imho, of course they would help out their banker friends by changing the law to make fixed mortgages and such adjustable in a way that would "protect" the banking system.
Also imho, as long as all the major countries in the world play along with this together it will work for an extended time unless you get a rogue group like a China that quits playing then things could get interesting.
PS: I still do not believe the CPI as an accurate measure of inflation.
 

GoPokes43

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Any idea what those profit seeker might be doing to fill the gap?
A small portion goes to new hires, but in the case of one of my lumber clients, mostly going to forest leases and buying used equipment. So, helping out land owners and investors. Of course, it eventually gets spent through the economy. In the short term, it's a squeeze on the lower paid folks. In the medium term, it hurts lenders (but they recover in falling rate environments). In the long term, it really can hurt retirees. Lastly, if other countries don't experience the concurrent devaluation of their currency, then imports become more expensive.
 

2012Bearcat

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Inflation is just the law of supply and demand applied to everything all at once. If inflation hits and a dollar loses 20% of its purchasing power, my mortgage payments stay the same meaning the real cost of my mortgage goes down for me, and the income stream my bank receives from me is worth less.

What about all of those that are young, just graduated college and are starting their careers? I remember when I graduated high school 1980, we were coming out of a period of inflation. It was damn tough to start out. Thankfully Reagan took over and the economy took off, giving us a long period of a growing economy, then Clinton fvcked it all up.
 

Ponca Dan

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citation needed. In fact I would say this has been denied empirically by the Japan over the last 20 years.

Dan over the last decade we have had unprecedented levels of the type of government financing I prefer, and yet here we are with a decade of the lowest inflation this country has ever seen, and you and aixpert are doing victory laps while the market is pricing in a 2.43% rate of inflation over the next five years.
No victory lap here, Pilt. All I asked of you is to admit inflation is primarily caused because dollars are printed faster than goods and services are available. I won’t argue with you about the last decade, I have no doubt you can talk circles around me in that regard. The Biden administration has dumped trillions of dollars into the economy, the hope being there will be a similar increase in goods and services once the country is permitted to reopen following government required shutdowns. But for now the inflation rate is 8%. Maybe things will work out. But for now 8% inflation is here, and I think it is primarily because of the extra cash funneled into the economy. I’m sure that is blasphemy to MMT advocates, but free market economists are expressing concern.
 

07pilt

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A small portion goes to new hires, but in the case of one of my lumber clients, mostly going to forest leases and buying used equipment. So, helping out land owners and investors. Of course, it eventually gets spent through the economy. In the short term, it's a squeeze on the lower paid folks. In the medium term, it hurts lenders (but they recover in falling rate environments). In the long term, it really can hurt retirees. Lastly, if other countries don't experience the concurrent devaluation of their currency, then imports become more expensive.
What percentage of your monthly personal consumption is lumber, versus what percentage is labor intensive?
 

07pilt

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What about all of those that are young, just graduated college and are starting their careers? I remember when I graduated high school 1980, we were coming out of a period of inflation. It was damn tough to start out. Thankfully Reagan took over and the economy took off, giving us a long period of a growing economy, then Clinton fvcked it all up.
Net debtors graduating into a hot jobs market? Sounds awful.
 

07pilt

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No victory lap here, Pilt. All I asked of you is to admit inflation is primarily caused because dollars are printed faster than goods and services are available. I won’t argue with you about the last decade, I have no doubt you can talk circles around me in that regard. The Biden administration has dumped trillions of dollars into the economy, the hope being there will be a similar increase in goods and services once the country is permitted to reopen following government required shutdowns. But for now the inflation rate is 8%. Maybe things will work out. But for now 8% inflation is here, and I think it is primarily because of the extra cash funneled into the economy. I’m sure that is blasphemy to MMT advocates, but free market economists are expressing concern.
Dan, all I am telling you that empirically that isn't true.

The inflation rate is nowhere close to 8%.
 

Medic007

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Net debtors graduating into ramped up unemployment bennies is a hotter thing than the hot jobs market. Sounds awful.
Yes, it seems the government overpaying for zero productivity might not have been the best idea. Agreed.
 
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Dan, all I am telling you that empirically that isn't true.

The inflation rate is nowhere close to 8%.
I have read your many comments with an open and objective mind and have come to the conclusion that you have no idea what you speak of with with regards to dollars fluctuations on the international market. I have no doubt you paid a lot of attention in your economy classes but you show zero practical knowledge. I lived and worked internationally for 35 years and still doing so. I lived in France when the dollars was sinking fast against the franc (before the euro). My expenses were i francs. I bought a new Mercedes at duty free in Amsterdam when the dollar was very strong against the Deutsche mark. Let me give you some very simple insight that I am sure you will try to complicate with a classroom type of dissertation filled with meaningless jargon. When a braindead dickhead in the White House decides to sanction or impose limitations on US productivity and the masses are forced to purchase imported goods at a cheaper price than US good then we have a slip in the value of our currency. Foreign supplier provide less goods for the same money as before. When we are energy efficient and independent of imports our dollar is strong (last Sept/Oct). When that independence is taken away by Washington DC then we buy oil at a higher price than we can produce it ourselves. The price at the pump goes up and the dollar goes weaker. The dollar has weakened against the euro by 12% since Biden took office. The charts on Google will show less but they are not buying or selling currency. Shutting down Keystone Pipeline was pure and simple treason against the citizens of this country and most are too ignorant to understand the true impact of this action. The USA is in a constant battle to keep the dollar as the global currency. The only thing supporting this measure is oil is traded in USD. If Oil is ever benchmarked by the euro we are as dead as the Roman Empire. Every dollar in the world that is transferred between any two countries in the world goes through NYC first. This will stop if the euro replaces the dollar. Arab nations benchmark their currency against the dollar. Meaning the rate always stays the same. This keeps the dollar fairly buoyant against oil imports. What if this changed to euro benchmark? The USA would be bankrupt in 24 hours. Your supply and demand speak is talking around the edges which you do a lot.
 
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I was shocked to see 12% increase 2021 income projection when I checked today. That is all due to equity increase... thank you Joe, more please.
You cannot be serious??? Equity increase. The value of your house increased by 50% this year. Your $400k house is now worth $600K. Money in the bank right? Until you go to buy a $600K house and pay $900K. Smoke and mirrors bullshit from another liberal left dipshit. Put your money in the bank and watch your spending power diwindle like that drawer full of Snickers bars in that desk of yours.
 
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davidallen

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You cannot be serious??? Equity increase. The value of your house increased by 50% this year. Your $400k house is now worth $600K. Money in the bank right? Until you go to buy a $600K house and pay $900K. Smoke and mirrors bullshit from another liberal left dipshit.
Um no. The portion of my income that is based on equity has increased sufficiently to provide an overall boost 0f 12% to my projected 2021 comp. Lets say I made $1 last year, and with typical increases I started 2021 on track to make $1.10 all in. Based on the increased value of stock grants, I am currently on track to make $1.23 or so. Apply whatever multiplier you like to that $1. As I said, thank you Joe, may we have some more? Of course, what the market giveth, the market may taketh away. Good to be on a montly vesting so I can make decisions on a more granular basis.

Oh and the house went up from $1.2 to $1.6 over the past two years, but we aren't looking to mover or anything...
 
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Um no. The portion of my income that is based on equity has increased sufficiently to provide an overall boost 0f 12% to my projected 2021 comp. Lets say I made $1 last year, and with typical increases I started 2021 on track to make $1.10 all in. Based on the increased value of stock grants, I am currently on track to make $1.23 or so. Apply whatever multiplier you like to that $1. As I said, thank you Joe, may we have some more? Of course, what the market giveth, the market may taketh away. Good to be on a montly vesting so I can make decisions on a more granular basis.

Oh and the house went up from $1.2 to $1.6 over the past two years, but we aren't looking to mover or anything...
Granted your $1 is now worth $1.23 but in a Biden world. What you aren’t e not considering is that your $1.23 will buy you less than when you had $1.00. BTW: I don't think you want to start a discussion of the value of our houses.
 
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davidallen

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Granted your $1 is now worth $1.23 but in a Biden world. What you aren’t e not considering is that your $1.23 will buy you less than when you had $1.00. BTW: I don't think you want to start a discussion of the value of our houses.
You started the house conversation - not that I have any hesitation to discuss it. As mentioned elsewhere, time to start looking at retirement property. Wyoming looks interesting, as does the coastal range.

As to the new world order, I would be giving back a good chunk of those gains in additional taxes (adjusting for the expected blip in inflation) - all good.
 

Ponca Dan

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Dan, all I am telling you that empirically that isn't true.

The inflation rate is nowhere close to 8%.
I like you, Pilt, immensely. But I don’t know anything about you. I know who Arnold Kling is. He says 8%. I’ll stick with him.
 
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You started the house conversation - not that I have any hesitation to discuss it. As mentioned elsewhere, time to start looking at retirement property. Wyoming looks interesting, as does the coastal range.

As to the new world order, I would be giving back a good chunk of those gains in additional taxes (adjusting for the expected blip in inflation) - all good.
My reference to a house was purely an example to show how inept your equity increase analysis is. I really have trouble understanding your position but I do know your analysis is wrong. By all indications you are ok with paying more taxes and absorbing the impact of escalating inflation in order to have Biden in the White House. You do not work hard enough for your money if you are ok with paying higher taxes and getting nothing for it.
 
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You started the house conversation - not that I have any hesitation to discuss it. As mentioned elsewhere, time to start looking at retirement property. Wyoming looks interesting, as does the coastal range.

As to the new world order, I would be giving back a good chunk of those gains in additional taxes (adjusting for the expected blip in inflation) - all good.
Wyoming and Montana are not your bastions of liberal politics. You should stay in Washington or Oregon and live in your declining hospitable environment. Defund your police and rename your town Thunder Dome. Take Arizona off your retirement search. You are far too liberal for this atmosphere. We are far to right wing republican here. We have openly welcomed west coasters to Scottsdale this past 24 months. 90% of them that I know are Conservative Republicans. The other 10% are Conservative Democrats.
 

GoPokes43

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What percentage of your monthly personal consumption is lumber, versus what percentage is labor intensive?
I've spent about $40k on lumber so far this year. Of course that pales in comparison to the taxes I'm paying today.
 

07pilt

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I have read your many comments with an open and objective mind and have come to the conclusion that you have no idea what you speak of with with regards to dollars fluctuations on the international market. I have no doubt you paid a lot of attention in your economy classes but you show zero practical knowledge. I lived and worked internationally for 35 years and still doing so. I lived in France when the dollars was sinking fast against the franc (before the euro). My expenses were i francs. I bought a new Mercedes at duty free in Amsterdam when the dollar was very strong against the Deutsche mark. Let me give you some very simple insight that I am sure you will try to complicate with a classroom type of dissertation filled with meaningless jargon. When a braindead dickhead in the White House decides to sanction or impose limitations on US productivity and the masses are forced to purchase imported goods at a cheaper price than US good then we have a slip in the value of our currency. Foreign supplier provide less goods for the same money as before. When we are energy efficient and independent of imports our dollar is strong (last Sept/Oct). When that independence is taken away by Washington DC then we buy oil at a higher price than we can produce it ourselves. The price at the pump goes up and the dollar goes weaker. The dollar has weakened against the euro by 12% since Biden took office. The charts on Google will show less but they are not buying or selling currency. Shutting down Keystone Pipeline was pure and simple treason against the citizens of this country and most are too ignorant to understand the true impact of this action. The USA is in a constant battle to keep the dollar as the global currency. The only thing supporting this measure is oil is traded in USD. If Oil is ever benchmarked by the euro we are as dead as the Roman Empire. Every dollar in the world that is transferred between any two countries in the world goes through NYC first. This will stop if the euro replaces the dollar. Arab nations benchmark their currency against the dollar. Meaning the rate always stays the same. This keeps the dollar fairly buoyant against oil imports. What if this changed to euro benchmark? The USA would be bankrupt in 24 hours. Your supply and demand speak is talking around the edges which you do a lot.
Maybe if you paid more attention in class you could distill this wall of text into a more concise point.
 

07pilt

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You cannot be serious??? Equity increase. The value of your house increased by 50% this year. Your $400k house is now worth $600K. Money in the bank right? Until you go to buy a $600K house and pay $900K. Smoke and mirrors bullshit from another liberal left dipshit. Put your money in the bank and watch your spending power diwindle like that drawer full of Snickers bars in that desk of yours.
Don't put your money in the bank, dumbass.
 

07pilt

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I like you, Pilt, immensely. But I don’t know anything about you. I know who Arnold Kling is. He says 8%. I’ll stick with him.
Ignore me, Ignore Kling. Look at the data yourself. If you have to rely on experts to tell you what the data means, look at the experts with skin in the game: bond traders.
 

Ponca Dan

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Ignore me, Ignore Kling. Look at the data yourself. If you have to rely on experts to tell you what the data means, look at the experts with skin in the game: bond traders.
I have neither the time nor the patience to study the data tea leaves. I leave it to economists who study those things for a living, and who then tell me what they think. Take John Cochrane, for example. An economist whose area of concentration for the last 40 years has been inflation. Here’s a one hour talk he gave recently. At one point he suggests we ignore the bond market’s speculations regarding inflation because it has been wrong in its predictions almost without exception. So I’ll take your first advice and ignore you. But as for the others, until they lie to me I’ll listen to what they have to say.


 

07pilt

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I have neither the time nor the patience to study the data tea leaves. I leave it to economists who study those things for a living, and who then tell me what they think. Take John Cochrane, for example. An economist whose area of concentration for the last 40 years has been inflation. Here’s a one hour talk he gave recently. At one point he suggests we ignore the bond market’s speculations regarding inflation because it has been wrong in its predictions almost without exception. So I’ll take your first advice and ignore you. But as for the others, until they lie to me I’ll listen to what they have to say.


Compare the bond market's track record with Cochrane's. Are you saying the market is wrong and we should listen to some ivory tower bureaucrat? What a change of heart.

If you trust Cochrane and Kling so much, please put some skin in the game, Dan.
 

Ponca Dan

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Compare the bond market's track record with Cochrane's. Are you saying the market is wrong and we should listen to some ivory tower bureaucrat? What a change of heart.

If you trust Cochrane and Kling so much, please put some skin in the game, Dan.
I have put my “skin” in a tin can and put the can in a hole I dug in my back yard.

I would add that the market is the market, it’s neither right or wrong, it just is what it is. All the “talk” about the market is nothing more than opinions from ivory tower economists. Cochrane’s reputation as understanding the nature of inflation is sterling. So, yes, I’ll take his word until it is obvious he is lying.
 

07pilt

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I have put my “skin” in a tin can and put the can in a hole I dug in my back yard.

I would add that the market is the market, it’s neither right or wrong, it just is what it is. All the “talk” about the market is nothing more than opinions from ivory tower economists. Cochrane’s reputation as understanding the nature of inflation is sterling. So, yes, I’ll take his word until it is obvious he is lying.
No it is not. The market has him beat by a mile.
 

OKSTATE1

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With a world wide economy we are not going to have some of the old school inflation that is caused by a specific region within the US not being able to keep up with demand within our own country. Plenty of cheap labor exists world wide and with a true global economy long-term shortages of product that can drive up prices is far less likely, This is why generally speaking, the thought that the US and the world will have long-term inflation due to supply shortages is not realistic. We have far more countries and more labor than ever before to meet supply. We have countries that are competing against China now in terms of labor costs.

This is why generally speaking in terms of overall supplies of goods, inflationary pressures as seen by market analysts is transitory and as the globe recovers from the pandemic and manufacturing capacity increases, the supply chain will recover and for those slow to recover plenty of opportunities exist globally to fill the need.
 
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Ponca Dan

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No it is not. The market has him beat by a mile.
I have no idea what you’re saying here. The NY Times piece from 2012 says nothing controversial. The Intelligencer piece is one opponent’s opinion of what he says.

The fact is the man has written dozens - if not hundreds - of academic papers analyzing the data, concentrating on the prospects for inflation, over the last 40-45 years, some of them he got right and occasionally he got it wrong. If he continually missed things by a mile, as you are implying, no one would take his opinions seriously. Maybe the Keynesians or MMTers dismiss him, but his reputation within the economics profession is very high. Interventionist economists may disagree with him, but they listen closely to what he has to say.
 

07pilt

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I have no idea what you’re saying here. The NY Times piece from 2012 says nothing controversial. The Intelligencer piece is one opponent’s opinion of what he says.

The fact is the man has written dozens - if not hundreds - of academic papers analyzing the data, concentrating on the prospects for inflation, over the last 40-45 years, some of them he got right and occasionally he got it wrong. If he continually missed things by a mile, as you are implying, no one would take his opinions seriously. Maybe the Keynesians or MMTers dismiss him, but his reputation within the economics profession is very high. Interventionist economists may disagree with him, but they listen closely to what he has to say.
Academia is about ideology not accuracy. Bond traders who where as as wrong as Cochrane these last 15 years were fired long ago.
 

Ponca Dan

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Academia is about ideology not accuracy. Bond traders who where as as wrong as Cochrane these last 15 years were fired long ago.
I appreciate the heads up, but I think I’ll stick with Cochrane for the time being.
 

Ponca Dan

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And why wouldn't you. No consequences for being wrong so just believe whatever makes you feel good.
Yeah, that’s the reason. It makes me feel good even though an unknown poster on a tiny obscure message board tells me he is right and John Cochrane is always a mile off.
 

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