Reply to Can someone explain to me why we have such high inflation now?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Amazing how Americans don't understand basic econ. You thought all those stimmi checks, PPP loans, and other free give aways had no consequences?  The US gov have away multiple trillion dollar+ stimuli.  The Fed juiced the economy with zero percent interest rates, doubled the supply of money in only 2 years, and expanded the balance sheet to $9 trillion dollars (it was only $800B around 2008).  When you have that much cash and credit liquidity in the system you get persistent inflation.  How in the hell do American consumers STILL have a voracious appetite for vacations, cars, electronics, dining out, etc. even though prices are skyrocketing?  It's because people have too much money. The stamina for price hikes that Americans have is absurd.  It means inflation is sticky and very difficult to dislodge.

The latest CPI report tanked the markets. It was very bad.  It clearly shows inflation is being driven by excessive demand as well as an overly tight labor market and not so much due to supply constraints.  Yes, the labor market is too hot. Unemployment also needs to go back up to reduce the strangle the labor market has on inflation.

The fed is now raising interest rates and quantitative tightening to remove money and liquidity from the economy.  Costs to borrow are skyrocketing. It will bring down asset values, remove.miney from the system, and hopefully cause unemployment to go up. The net result will hopefully be taming of this terrible inflation.[/quote]
So, you are basically saying that having peasants have more money, assets, and control in the labor market is bad.  I see.  Too much money in the hands of regular people is bad, they feel too comfortable, start demanding things, spending, and don't want to work too hard or work at all.   It's great that there is little wealth for the people and when they are outbidding each other for crappy wages en masse,  right?[/quote]

Except everything is opposite of what you are wasting your breath over. The 'peasants' actually have LESS real money now because of inflation.  That's what feeble minds like yours cannot comprehend - the fact that more money =/= more wealth and buying power.  Need proof?

https://www.bls.gov/news.release/realer.nr0.htm

Real earnigns are decreasing.  What simp minds like your cannot understand is that if the labor market is too hot, wages rise too fast. Do you think business owners eat the losses? No, they'll just increase prices, which ultimately causes wage-price spirals. In the end, sure, wages rise, but actual real earnigns go down and all you're doing in the process is ruining everyone's entire life's savings in the process, thereby decreasing wealth for everyone in the middle class.  The Fed is actually extraordinarily concerned with data showing a decline in real earnings, because it is bad for Americans.  An overly tight labor market they is not productive is actually terrible for the economy and everyone in the country because wage price spirals will crush savers.[/quote]

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