Anonymous
10/06/2023 08:24
Subject: Re:Inflation: explain it to me like I'm 5
Anonymous wrote:It's very simple. People who claim no one knows why are just being disingenuous or blindly partisan.
A staggering amount of money was flooded into the economy in a short time period, both from the multiple COVID relief stimuluses plus the Biden's IIJA. Then we had a long mortgage relief break for affected people and the student loan pause. At the same time there had been a shock to the supply chains due to COVID and offshoring. Then you had a sudden decrease in the number of available labor due to COVID policies, leading to higher labor costs. The cumulative effect was suddenly a huge amount more money was chasing after a reduced supply of goods. When such a thing happens, you get inflation.
Once inflation takes off, it becomes very difficult to tame because people demand more money to keep up with rising costs, which means people have more money to chase after the same basket of goods, and which in turn means employers and suppliers have to raise the cost of doing business.
Inflation never disappears to return to the old price levels. Defeating inflation means prices stop going up. People may herald a few cuts here and there but in reality, prices just level off to a new norm.
This would make total sense if there wasn't a global economy. Inflation is everywhere and not as bad in the US as a lot of our competitors. Some countries with austerity budgets have worse inflation than we do.
Here' a look at how the rest of the world is faring
https://www.ft.com/content/088d3368-bb8b-4ff3-9df7-a7680d4d81b2
Anonymous
10/06/2023 08:20
Subject: Inflation: explain it to me like I'm 5
When supply of things dry up but demand doesn’t go away prices go up— that is the core of inflation and that’s what happened during the pandemic.
On top of that the Saudis and the Russians are driving gas prices up by manipulating oil markets and it looks like petroleum companies have decided they’d rather close refineries because they can make more money by creating shortages than making more product.
On top of that the Saudis and the Russians are driving gas prices up by manipulating oil markets and it looks like petroleum companies have decided they’d rather close refineries because they can make more money by creating shortages than making more product.
Anonymous
10/05/2023 20:21
Subject: Inflation: explain it to me like I'm 5
Anonymous wrote:Anonymous wrote:UK has had worse inflation than the US without any of the US monetary or fiscal interventions cited by PPs— no student loan pause, no IIJA etc.
So who is being disingenuous?
UK has huge amounts of money printing
Money Supply M2 in the United Kingdom averaged 1393444.91 GBP Million from 1986 until 2023, reaching an all time high of 3217985.00 GBP Million in September of 2022 and a record low of 167337.00 GBP Million in December of 1986.
Exactly. People are like, “Inflation is a worldwide phenomenon, so our government’s printing insane amounts of money can’t be the cause!”
Except that all other countries just followed the US in pursuing the same reckless policies.
Anonymous
10/05/2023 20:08
Subject: Inflation: explain it to me like I'm 5
Read the Wikipedia entry on inflation in Argentina. It explains the phenomenon well. It is a monetary phenomenon and it's global.
In the U.S. 20% of all dollars in existence were printed since the start of Covid and then pushed into the economy through the banks to drive up asset prices. Combined with the zero interest rate policy it worked - too well. The Fed and Treasury were complacent because despite rampant money printing since the financial crisis and artificially suppressed interest rates, and lots of tax cuts, inflation had remained low. But the massive stimulus during Covid - along with all the moratoria - was too much. Inflation became rampant throughout the world as all the central banks followed a similar path. It will only settle down once that massive increase in money is withdrawn, which the various central banks (except Japan) are in the process of doing. But they don't want to crash the global economy, so it's a slow process. If we're really lucky it will work and eventually inflation will return to the 1 to 3 percent range. But based on past experiences - the 40s and 70s - for example, it will take time and there will be more spikes.
In the U.S. 20% of all dollars in existence were printed since the start of Covid and then pushed into the economy through the banks to drive up asset prices. Combined with the zero interest rate policy it worked - too well. The Fed and Treasury were complacent because despite rampant money printing since the financial crisis and artificially suppressed interest rates, and lots of tax cuts, inflation had remained low. But the massive stimulus during Covid - along with all the moratoria - was too much. Inflation became rampant throughout the world as all the central banks followed a similar path. It will only settle down once that massive increase in money is withdrawn, which the various central banks (except Japan) are in the process of doing. But they don't want to crash the global economy, so it's a slow process. If we're really lucky it will work and eventually inflation will return to the 1 to 3 percent range. But based on past experiences - the 40s and 70s - for example, it will take time and there will be more spikes.
Anonymous
10/05/2023 19:59
Subject: Inflation: explain it to me like I'm 5
The government is the source and cause of inflation. And no, prices won’t go back down. When they say “inflation is coming down” - that just means prices are still going higher, just slower.
Anonymous
10/05/2023 19:41
Subject: Inflation: explain it to me like I'm 5
As an extra thought to what's already been written, i think businesses used to more frequently lower prices if things weren't selling. Now if something isn't selling or renting, they seem to be raising prices to makeup for it. Not selling enough hotel rooms at 150/night? Raise them to 200-250/night to offset costs. But now even less people can afford to go or shop there, OR spend additional money at that business while there, and the cycle continues.
Anonymous
10/05/2023 19:37
Subject: Inflation: explain it to me like I'm 5
Yes because 1986 is a relevant period for comparison
Anonymous
10/05/2023 19:29
Subject: Inflation: explain it to me like I'm 5
Anonymous wrote:UK has had worse inflation than the US without any of the US monetary or fiscal interventions cited by PPs— no student loan pause, no IIJA etc.
So who is being disingenuous?
UK has huge amounts of money printing
Money Supply M2 in the United Kingdom averaged 1393444.91 GBP Million from 1986 until 2023, reaching an all time high of 3217985.00 GBP Million in September of 2022 and a record low of 167337.00 GBP Million in December of 1986.
Anonymous
10/05/2023 19:09
Subject: Inflation: explain it to me like I'm 5
UK has had worse inflation than the US without any of the US monetary or fiscal interventions cited by PPs— no student loan pause, no IIJA etc.
So who is being disingenuous?
So who is being disingenuous?
Anonymous
10/05/2023 18:59
Subject: Inflation: explain it to me like I'm 5
The definition of inflation is increasing “inflating” the money supply. The inflated money supply makes prices increase unless there is a corresponding increase in goods and services. It is a 100 percent monetary phenomenon caused by the FED and Treasury.
Anonymous
10/05/2023 14:34
Subject: Re:Inflation: explain it to me like I'm 5
It's very simple. People who claim no one knows why are just being disingenuous or blindly partisan.
A staggering amount of money was flooded into the economy in a short time period, both from the multiple COVID relief stimuluses plus the Biden's IIJA. Then we had a long mortgage relief break for affected people and the student loan pause. At the same time there had been a shock to the supply chains due to COVID and offshoring. Then you had a sudden decrease in the number of available labor due to COVID policies, leading to higher labor costs. The cumulative effect was suddenly a huge amount more money was chasing after a reduced supply of goods. When such a thing happens, you get inflation.
Once inflation takes off, it becomes very difficult to tame because people demand more money to keep up with rising costs, which means people have more money to chase after the same basket of goods, and which in turn means employers and suppliers have to raise the cost of doing business.
Inflation never disappears to return to the old price levels. Defeating inflation means prices stop going up. People may herald a few cuts here and there but in reality, prices just level off to a new norm.
A staggering amount of money was flooded into the economy in a short time period, both from the multiple COVID relief stimuluses plus the Biden's IIJA. Then we had a long mortgage relief break for affected people and the student loan pause. At the same time there had been a shock to the supply chains due to COVID and offshoring. Then you had a sudden decrease in the number of available labor due to COVID policies, leading to higher labor costs. The cumulative effect was suddenly a huge amount more money was chasing after a reduced supply of goods. When such a thing happens, you get inflation.
Once inflation takes off, it becomes very difficult to tame because people demand more money to keep up with rising costs, which means people have more money to chase after the same basket of goods, and which in turn means employers and suppliers have to raise the cost of doing business.
Inflation never disappears to return to the old price levels. Defeating inflation means prices stop going up. People may herald a few cuts here and there but in reality, prices just level off to a new norm.
Anonymous
10/05/2023 12:45
Subject: Inflation: explain it to me like I'm 5
No one really knows why and the answer is probably that it’s a lot of things. My answer would be that companies increased prices during the pandemic due to supply chain issues and then some decided to never lower them
Anonymous
10/05/2023 12:02
Subject: Inflation: explain it to me like I'm 5
Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?
The “and” is not necessary/actually cuts against. People had too much money—both that they earned and were given/didn’t need to pay on debts—which they used to buy things like cars and houses, creating a shortage in available cars and houses, causing prices to rise.
Still other shortages of goods were caused by supply chain problems, which also caused prices to rise (supply not meeting demand).
Anonymous
10/05/2023 11:59
Subject: Inflation: explain it to me like I'm 5
Anonymous
10/05/2023 11:56
Subject: Inflation: explain it to me like I'm 5
Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?