The coming inflation and its effect on the economy.

[+and-then]

https://www.dailymail.co.uk/news/article-9690281/Wholesale-prices-jump-6-6-fastest-rise-record.html

https://www.marketwatch.com/story/an-inflation-storm-is-coming-for-the-u-s-housing-market-11623419869

I've asked this question a few times here and received no response.  The 6.6% rise in wholesale prices is the highest EVER for that period of time.  

Yellin is telling Americans that the inflation will have positive effects and we shouldn't be concerned.  So, who believes that pumping another few trillion dollars into an economy that's already nearly 30T$ in debt, will NOT cause runaway inflation?  If you support the idea that we won't see crippling levels of inflation ahead can you please explain HOW we avoid it?

 

[Autochthon1990]

Because inflation is better then people starving in the streets, there was no good answer to getting through the Covid pandemic, just some had less horrible consequences then others. Doing nothing was not an option.

[Silver]

50 minutes ago, and then said:

https://www.dailymail.co.uk/news/article-9690281/Wholesale-prices-jump-6-6-fastest-rise-record.html

https://www.marketwatch.com/story/an-inflation-storm-is-coming-for-the-u-s-housing-market-11623419869

I've asked this question a few times here and received no response.  The 6.6% rise in wholesale prices is the highest EVER for that period of time.  

Yellin is telling Americans that the inflation will have positive effects and we shouldn't be concerned.  So, who believes that pumping another few trillion dollars into an economy that's already nearly 30T$ in debt, will NOT cause runaway inflation?  If you support the idea that we won't see crippling levels of inflation ahead can you please explain HOW we avoid it?

 

The same thing is predicted for the UK.

I guess inflation is inevitable when you suddenly release consumers from 12 months of restriction.

I would be interested to know the figures, but a lot of people have saved money while in lockdown, not suffered economic hardship, and are gagging to go out and spend some of it. Wages are going up because of labour shortages.

It will be very hard for people who are struggling already.

[Buzz_Light_Year]

15 minutes ago, Autochthon1990 said:

Because inflation is better then people starving in the streets

Not a keen observer of history are you?

[Autochthon1990]

1 minute ago, Buzz_Light_Year said:

Not a keen observer of history are you?

A small bit of inflation caused by a cash infusion does not mean Zimbabwe or the Weimar Republic. 

[Silver]

10 minutes ago, Autochthon1990 said:

A small bit of inflation caused by a cash infusion does not mean Zimbabwe or the Weimar Republic. 

Quite.

This is an old article, but it is a good discussion on the good and bad effects of inflation:

Most central banks favour an inflation target that is in the region of 2% to 2.5%. The Bank of England's target of 2% under the CPI measure is fairly typical. Some economists argue there should be a higher target in times of recession, such as 3%. This can promote higher growth, by keeping interest rates lower for longer.

But whatever the precise level, most do agree that a little dose of inflation is absolutely essential.

"The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague," said the Austrian philosopher and economist Ludwig von Mises.

"Inflation is a policy."

 How can inflation be good for you? - BBC News

Edited June 16, 2021 by ted hughes

[Buzz_Light_Year]

1 hour ago, Autochthon1990 said:

A small bit of inflation

Assuming a small bit will be the end result.

[spartan max2]

I think the Fed just believes they can out the breaks on inflation at anytime by raising interest rates. So they aren't concerned.

Time will tell if that's true or not.

All I know if my employer better be marching the inflation rate. 

[Dark_Grey]

Between investment firms buying real estate by the neighborhood and the insane rate of "quantitive easing" last year, I think we are headed for record inflation once this bubble pops. This is 2008 all over again with the banks assuring us everything is fine but this time the crash will be bigger. Big enough to "reset" everything in a "great" way. Hackers will be used as a shadowy excuse as to why prices are climbing and UFO coverage will provide the distraction until d-day.

The Goal is to Save Wall Street

Quote

Studies show that the Federal Reserve (Fed) has taken advantage of emergency repo operations, injecting more than $ 9 trillion into the market since September 2019. A recent research report reveals the daily money flow of the Federal Reserve while showing that the Fed will not publicly share information about buyers with whom it cooperates to pump money into the market. Estimates are that 22% of the circulating US dollar was printed in 2020.

Read that and then read it again. 20% of ALL US dollars ever printed were printed last year. Are you ready for $300 loaves of bread? 

[L.A.T.1961]

Its a tricky problem and not knowing just how an economy will behave going forward makes adjusting policy difficult.

Quite often the interest rates and other policies are running behind the economic curve. 

This causes stronger intervention, when changes are made, with things like interest rates, and can throw the brakes on too much causing an over shoot in the other direction and a possible recession. 

But inflation this time seems to be caused by strong demand and not enough goods or services.

In the UK bank of England have said they will not slavishly follow 2% inflation target and will resist putting up interest rates and focus on growth. At least in the short term.

 

 

[Robotic Jew]

I'm not against being concerned about the debt and possible inflation from it. What bothers me is chanting "Spend! Spend! Spend!" when you're guy is in office and then screaming fire when the other side gets in. 

[+Desertrat56]

6 hours ago, Autochthon1990 said:

Because inflation is better then people starving in the streets, there was no good answer to getting through the Covid pandemic, just some had less horrible consequences then others. Doing nothing was not an option.

Inflation causes people starving in the streets.   People pretend like the economy is reflected in Wall Street but the economy is reflected in how well we can live on the money we make.  Inflation means same wages and less spending power, everything costs exponentially more and wages are not raised to compensate.   The deficit is part of that but the actual raising of prices is more complex, and partly driven by the commodities market futures and wall street, as well as surplus or lack of products.  

[Gromdor]

I don't see why everyone is upset- we knew this was coming years ago.  Did you think stuff like trade wars and tariffs lowered prices?  And then of course the whole Covid thing.

[RavenHawk]

On 6/16/2021 at 4:21 AM, Autochthon1990 said:

Because inflation is better then people starving in the streets, there was no good answer to getting through the Covid pandemic, just some had less horrible consequences then others. Doing nothing was not an option.

Is it better to prolong the starvation?  Inflation is part of the equation.  Something like 2% inflation is expected, but when you encourage inflation (As St Bidet has), you don’t get something that is 2%.  You get hyper-inflation.  In 20-20 hindsight, it would have been better to do nothing, or at least not do what we did.  We have all these studies coming out from the Cleveland Clinic, St Barnabas, Israel, Sweden, etc. stating how everything we’ve done was ineffective or even cost more lives.  We shouldn’t have panicked.  That was the main thing.  Panic causes loss of life.  We should have focused on building up people’s immune system with mega-doses of D, C, and Zinc (note for the next one).  focused on treatments utilizing Hydroxychloroquine and other treatments.  All of those that didn’t segregate the more susceptible and those that vilified HCQ only because Trump supported it should be charged with manslaughter.    Covid was yet another weapon the Left used to try to seize control.

 

[Gromdor]

On 6/16/2021 at 5:13 PM, RavenHawk said:

Is it better to prolong the starvation?  Inflation is part of the equation.  Something like 2% inflation is expected, but when you encourage inflation (As St Bidet has), you don’t get something that is 2%.  You get hyper-inflation.  In 20-20 hindsight, it would have been better to do nothing, or at least not do what we did.  We have all these studies coming out from the Cleveland Clinic, St Barnabas, Israel, Sweden, etc. stating how everything we’ve done was ineffective or even cost more lives.  We shouldn’t have panicked.  That was the main thing.  Panic causes loss of life.  We should have focused on building up people’s immune system with mega-doses of D, C, and Zinc (note for the next one).  focused on treatments utilizing Hydroxychloroquine and other treatments.  All of those that didn’t segregate the more susceptible and those that vilified HCQ only because Trump supported it should be charged with manslaughter.   Covid was yet another weapon the Left used to try to seize control.

 

 

 

Those studies were right- our Covid response was a mess that cost 600,000 American lives.  As for the HCQ- Studies show that it was worthless but it didn't stop places like India from trying it anyways: India distributed over 100 million HCQ tablets for Covid-19 — Quartz India (qz.com)

[Tatetopa]

12 hours ago, ted hughes said:

I guess inflation is inevitable when you suddenly release consumers from 12 months of restriction.

Also, cut production of all goods and services at the same time.

[+Desertrat56]

Just now, Tatetopa said:

Also, cut production of all goods and services at the same time.

And don't forget the tariffs and anti-trade policies that were put in place before the virus hit.   Those are factors that are being ignored, mainly by the extremely polarized.

[RavenHawk]

5 hours ago, Gromdor said:

I don't see why everyone is upset- we knew this was coming years ago.  Did you think stuff like trade wars and tariffs lowered prices?  And then of course the whole Covid thing.

We knew what would happen if a Democrat took power.  Do you really think we would have had this level of inflation if Trump was in office?  Of course not.  Yes, inflation would have still happened, but it would be in that 2% range.  Remaining energy independent would have secured protection from hyperinflation.  From day one, St Bidet removed those protections.  Wood is out of sight.  Fuel is going through the roof and probably will hit $7 a gallon by the end of summer.  Everything in our society, is either made with and/or is transported by oil.  But to be complete, we are starting to see a shortage of products because there is a shortage of workers to produce.  Even though it seems that people have money, they can’t spend it.  That creates a death spiral.  We’ve gone to being the most prosperous that we have ever been and we’ll end up a third world nation.  Even if Trump is reelected in 2024, I don’t think he has the magic to get us out of that.  I know, it’s never as bad as it seems, but it’s seeming to be very bad.

 

[aztek]

a small bit of inflation means 2x4 is 5,50 instead of 4.99, but when it is 7.99  from 4.99 that is not a small bit, 

[Gromdor]

7 minutes ago, RavenHawk said:

We knew what would happen if a Democrat took power.  Do you really think we would have had this level of inflation if Trump was in office?  Of course not.  Yes, inflation would have still happened, but it would be in that 2% range.  Remaining energy independent would have secured protection from hyperinflation.  From day one, St Bidet removed those protections.  Wood is out of sight.  Fuel is going through the roof and probably will hit $7 a gallon by the end of summer.  Everything in our society, is either made with and/or is transported by oil.  But to be complete, we are starting to see a shortage of products because there is a shortage of workers to produce.  Even though it seems that people have money, they can’t spend it.  That creates a death spiral.  We’ve gone to being the most prosperous that we have ever been and we’ll end up a third world nation.  Even if Trump is reelected in 2024, I don’t think he has the magic to get us out of that.  I know, it’s never as bad as it seems, but it’s seeming to be very bad.

Energy independence is a myth unless you have solar panels on your roof or a wind generator on your property.  You are still dependent on oil, gas, and electricity from an outside source that is affected by global market rates, unplanned winter freezes, or greedy Russian hackers.

As for the inflation rates.  I knew it was going to happen regardless who was president.  In fact, everyone knew inflation was coming.  I planned for it- after all inflation isn't bad if you are prepared for it.  Higher interest rates on investments and assets appreciating in value are two things I can list right off the top of my head.  

[RavenHawk]

26 minutes ago, Gromdor said:

Those studies were right- our Covid response was a mess that cost 600,000 American lives.

That’s what I said.  Putting infected back into nursing homes, masking, shunning of HCQ were all a disaster.  The Left saw this as a means to take Trump out so a portion of that 600k were sacrificed to grab power.

 

As for the HCQ- Studies show that it was worthless but it didn't stop places like India from trying it anyways: India distributed over 100 million HCQ tablets for Covid-19 — Quartz India (qz.com)

That is an old report, tainted with bias.  1 million tablets for 1 billion people??  I would think that they were being under served.  According to a more recent report from St Barnabas (NJ), when the dosage was at a certain level, the survival rate was 200%.

 

https://www.kusi.com/medrxiv-study-hydroxychloroquine-and-zinc-treatments-increased-covid-survival-rate-by-almost-three-times/

 

[Gromdor]

1 minute ago, RavenHawk said:

That’s what I said.  Putting infected back into nursing homes, masking, shunning of HCQ were all a disaster.  The Left saw this as a means to take Trump out so a portion of that 600k were sacrificed to grab power.

That is an old report, tainted with bias.  1 million tablets for 1 billion people??  I would think that they were being under served.  According to a more recent report from St Barnabas (NJ), when the dosage was at a certain level, the survival rate was 200%.

https://www.kusi.com/medrxiv-study-hydroxychloroquine-and-zinc-treatments-increased-covid-survival-rate-by-almost-three-times/

200% survival rate, huh?  That's really good.  That would mean out of every 100 people infected 200 lived.  

[+and-then]

7 hours ago, Dark_Grey said:

Read that and then read it again. 20% of ALL US dollars ever printed were printed last year. Are you ready for $300 loaves of bread? 

THIS^  I make no claim to understand the science of economics but I'm 60 years old and what we are seeing today goes against EVERYTHING we've been led to believe over my entire lifespan.  The sad thing is that our tribalism has reached the point that half the nation will watch the crash and their reaction will not be to blame the government that's responsible.  They'll be blaming the Bad Orange Man even though he isn't in power and didn't add 6T$ in less than 6 months.

 

[Dark_Grey]

18 hours ago, and then said:

THIS^  I make no claim to understand the science of economics but I'm 60 years old and what we are seeing today goes against EVERYTHING we've been led to believe over my entire lifespan.  The sad thing is that our tribalism has reached the point that half the nation will watch the crash and their reaction will not be to blame the government that's responsible. 

Covid was the vehicle for the biggest transfer of wealth in human history. Independent businesses were crushed while a handful of billionaires made fortunes. It makes the missing trillions pre-9/11 look like chump change. Even stimulus checks went mostly to big businesses, at least initially. Remember all those CEOs that stepped down just as covid was getting started? The writing has been on the wall for years and now it's a mad dash to hoard as much as you can before it all comes down.

Quote

They'll be blaming the Bad Orange Man even though he isn't in power and didn't add 6T$ in less than 6 months.

Everyone in power will be pointing fingers but almost all of them are complicit somehow. They'll most likely blame Russian hackers.

[Duke Wellington]

On 6/16/2021 at 8:31 AM, and then said:

https://www.dailymail.co.uk/news/article-9690281/Wholesale-prices-jump-6-6-fastest-rise-record.html

https://www.marketwatch.com/story/an-inflation-storm-is-coming-for-the-u-s-housing-market-11623419869

I've asked this question a few times here and received no response.  The 6.6% rise in wholesale prices is the highest EVER for that period of time.  

Yellin is telling Americans that the inflation will have positive effects and we shouldn't be concerned.  So, who believes that pumping another few trillion dollars into an economy that's already nearly 30T$ in debt, will NOT cause runaway inflation?  If you support the idea that we won't see crippling levels of inflation ahead can you please explain HOW we avoid it?

 

Its best not to get swept along by alarmists because the corona dip will have a post corona rally.

For a country like the USA they should aim for 2% to 2.5% inflation per annum. Just as you have seen measures taken to protect incomes and the economy during corona, there will be steps afterwards to calm the inflation.

Inflation reduces the value of money. Below 2% and your money on global average increases in value, but there is a money shortage due to the lack of printing extra dollars which can hit government budgets. Above 2.5% and your exports become more expensive while your imports get cheaper,  compared to the global average. That reduces purchasing power. But at the same time due to lots of extra money being printed it means a national debt has its value eroded away in real value.

The USA would be safe all the way up to about $60 trillion before it hits a Greece moment. This is because its the currency of the largest superpower, a rich developed nation, and backed by the petrodollar. The USA is half way there so at some point there is going to be a reduction in spending. This will most likely occur during the corona rally, and be the tool they use to calm inflation.

All is good in the USA, the real problem coming in the west is with Italy.