Economy GOP back to Inflation worries. "Hyperinflation" (Update: 2022 Inflation Highest in 40 Years)

[woodguyatl]

Housing is going to be awful soon enough. Big finance like Black Rock is buying houses for cash. I am from the DC area. My parents bought their house in 1987 for 147K or so. I looked at Red Fin now and my old house is worth 506K. No one will be able to afford housing. And The Hill is right, the govt solutions is more finance, which leads to more speculation and this leads to crazy housing bubbles.

That is a pretty crappy rate of return, especially in the DC area. That is a booming market and has been for 30 years. For example, that is roughly a 4% rate of return. That same money in the stock market would be about $2.3 million now.

 

[Jack V Savage]

Just browsing through and this caught my eye. That seems debatable no?

Wouldn't it depend on the debt and the situation. How would the cost of commonly consumed items going up help people whom already have racked up debt and are living beyond their means, can't even afford living pay check to pay check as it is. They will just go further into debt right?.

Inflation drives (and is driven by) wage increases, among other things. If it rises more than expected (as reflected in interest rates), the burden of fixed debt falls. On an individual level, sure, things could be different, but for the population as a whole, all things equal, unexpectedly high inflation would mean fewer foreclosures.

 

[Jack V Savage]

We've also gotten away with feeling some of the effects of inflation because of two main reasons: technology and cheap products from China. But technology is slowing down and the China sinkhole can only make things so cheap for so long (they are also adversarial in nature so depending on them in the long run is not a good idea).

This is conceptually wrong. Technological advancement is part of the reason that inflation tends to be understated by official measures of it, and trade making people richer overall isn't related to inflation.

 

[Jack V Savage]

As an economics grad I cannot stress this enough. The metrics for inflation are hilarious and inaccurate. They don't take into account a number of big life expenses and tend to focus on a few day to day products that don't tend to see much changes in price. It's a scam. Most people aren't even aware of inflation, and they just baffle the normies with BS to make them feel good, mean while the giant wealth building machine (the Fed) prints money whenever the good ol' boys want to take wealth from the poor.

As I pointed out and explained earlier in this thread, the metrics for inflation uniformly overstate it. If you actually attempt to clarify your thinking, it should be immediately obvious that inflation cannot be materially understated without it becoming extremely obvious.

Its funny to me how liberals can on one hand argue that its unfair that have master's degrees in software engineering and can't afford anything more than a tiny cuck pod because of the cost of housing and their crippling student loan debt, while complaining about how easy boomers had it when they could afford college, two homes, and a boat on an entry level assembly line worker salary...and these same liberals will turn around and tell us inflation is not a valid fear.

Well, part of the issue is that you're misrepresenting what other people think. But, yeah, some leftists look at the past through rose-colored glasses. And obviously inflation would have nothing to do with long-term changes in the affordability of houses, boats, etc. The implication of your theory is that supply and demand and bargaining power are unrelated to prices, for example.

 

[Denter]

That is a pretty crappy rate of return, especially in the DC area. That is a booming market and has been for 30 years. For example, that is roughly a 4% rate of return. That same money in the stock market would be about $2.3 million now.

True, but you gotta live somewhere.

 

[Jack V Savage]

No in an era of automation and mass immigration. The fed dumps helicopter money on the companies. There is no gurantee that money will drive wage increases. That would be Reaganomics, which we all know is a failed theory.

Good lord. I'll resist the urge to comment on every bit of implied wrongness in this and just note that if you're saying that you understand that inflation isn't the only thing that drives price increases, you're closer to understanding the issue than you were yesterday. Congratulations!

 

[Jack V Savage]

True, but you gotta live somewhere.

You still do if you sell your house.

Really, we'd all be much better off if we took off restrictions on housing construction and just let the markets handle it.

 

[Scheme]

This is conceptually wrong. Technological advancement is part of the reason that inflation tends to be understated by official measures of it, and trade making people richer overall isn't related to inflation.

If your technology makes you able to output 2 apples instead of 1 per year, then the cost of apples would go down as the supply of apples increased.

If you were normally buying buying $200 coats from American businesses, and then the option to pay $40 for coats from Chinese businesses was made available, even if your money supply inflates you wouldn't think it did because it is hidden in the fact that you got a cheaper product elsewhere. Which has happened across the board in America (which also had a lot of other negative affects on the American economy, such as loss of jobs and revenue from those American companies).

 

[Jack V Savage]

If your technology makes you able to output 2 apples instead of 1 per year, then the cost of apples would go down as the supply of apples increased.

If you were normally buying buying $200 coats from American businesses, and then the option to pay $40 for coats from Chinese businesses was made available, even if your money supply inflates you wouldn't think it did because it is hidden in the fact that you got a cheaper product elsewhere. Which has happened across the board in America (which also had a lot of other negative affects on the American economy, such as loss of jobs and revenue from those American companies).

No, because the actual economy is not just coats. The cost of coats going down means people can buy more stuff (including services) and are richer, but if the money supply is rising faster than the availability of new stuff, we'll still see an overall increase in prices. So you're right that trade makes us richer but wrong that it "hides" inflation.

 

[Scheme]

No, because the actual economy is not just coats. The cost of coats going down means people can buy more stuff (including services) and are richer, but if the money supply is rising faster than the availability of new stuff, we'll still see an overall increase in prices. So you're right that trade makes us richer but wrong that it "hides" inflation.

That's exactly what is happening. Costs of the major expenses of things we can't outsource are skyrocketing and putting a large part of the population in debt, and as a result a lot of people are almost forced into buying Chinese products to be able to afford anything.

Do you seriously believe that with M3 money supply going up almost 5x since 2000, that Americans have 5x as many products/services since then? Do you think the average American owns 5x the houses, can afford 5x their medical costs, 5x their student debt that they did in 2000? I think most people would argue the average American can afford less than they did in 2000.

 

[Jack V Savage]

That's exactly what is happening. Costs of the major expenses of things we can't outsource are skyrocketing and putting a large part of the population in debt, and as a result a lot of people are almost forced into buying Chinese products to be able to afford anything.

You're telling a story that doesn't really fit with the numbers. You also never addressed the point that if inflation was rising faster than the evidence shows, that means growth was lower (and if it was notably faster, growth was negative), which is inconsistent with your comments about the economy over the past few years. I think we both know what's going on there, but I'd like to see how you explain the contradiction without acknowledging it.

Do you seriously believe that with M3 money supply going up almost 5x since 2000, that Americans have 5x as many products/services since then? Do you think the average American owns 5x the houses, can afford 5x their medical costs, 5x their student debt that they did in 2000? I think most people would argue the average American can afford less than they did in 2000.

This is another conceptual error. I seriously believe that evidence is a better guide to truth than hackery. Since the start of 2000, U.S. GDP is up about 115%. Population is up in that same period by about 17%.

 

[Jack V Savage]

So why can't I, a married couple with two Masters in STEM fields, afford to live in the same neighborhood as my single mom who is a janitor at a GE factory?

If you think that you're a married couple with two Masters in STEM fields, you're probably too ill to hold a job. Also: https://www.bizjournals.com/sanfrancisco/news/2017/06/02/bart-janitors-overtime-pay.html.

More seriously, wages are way up from a generation ago. Not sure what you're on about.

 

[Scheme]

You're telling a story that doesn't really fit with the numbers. You also never addressed the point that if inflation was rising faster than the evidence shows, that means growth was lower (and if it was notably faster, growth was negative), which is inconsistent with your comments about the economy over the past few years. I think we both know what's going on there, but I'd like to see how you explain the contradiction without acknowledging it.



This is another conceptual error. I seriously believe that evidence is a better guide to truth than hackery. Since the start of 2000, U.S. GDP is up about 115%. Population is up in that same period by about 17%.

If you think my comment saying "Trump is the GOAT president of all time" wasn't ironic then I don't know what to tell you. Perhaps you could choose a serious post of mine to critique, rather than one made in jest?

Your GDP number isn't adjusted for real inflation, or even government stated inflation. And if you think a 17% increase in population should relate to 500% increase in the money supply then I don't know what to tell you.

I've already gone through the major debts that Americans hold and showed that they increase over inflation anywhere from 5-20% a year. I've already discussed the factors that help hide inflation for consumer goods.

Also if your talking points include bringing up irrelevant arguments and belittling me (both of which I can easily do back to you), then I am done trying to argue with you.

 

[Jack V Savage]

If you think my comment saying "Trump is the GOAT president of all time" wasn't ironic then I don't know what to tell you. Perhaps you could choose a serious post of mine to critique, rather than one made in jest?

OK, so you weren't consistently celebrating the supposedly great economy during Trump's presidency and attributing it to him? All the posts you made along those lines were just jokes? I notice that none of the inflation truthers ITT have actually put a number on their claims, but there's simply not a lot of room for you not to be thinking that the economy was contracting on a per-capita basis throughout Trump's presidency if you're maintaining that inflation is higher than the evidence shows.

Your GDP number isn't adjusted for real inflation, or even government stated inflation. And if you think a 17% increase in population should relate to 500% increase in the money supply then I don't know what to tell you.

Right because I'm not double-counting. Real growth in that period is about 45%. I'm pointing this out because my position is that evidence is better than making stuff up, not that growth has been 500%. If you want to disagree with me, disagree with my actual comments.

I've already gone through the major debts that Americans hold and showed that they increase over inflation anywhere from 5-20% a year. I've already discussed the factors that help hide inflation for consumer goods.

Inflation hasn't been anywhere close to 5% to 20% a year. If you think it has, that implies *massive* contraction in per-capita GDP over even a single year. It would compound greatly over multiple years. No factors hide inflation for consumer goods. CPI overstates actual inflation.

Also if your talking points include bringing up irrelevant arguments and belittling me (both of which I can easily do back to you), then I am done trying to argue with you.

I don't have any talking points. We have fundamentally different aims here (I'm trying to get at the truth), while you're trying to make argument-like comments to express your partisanship.

 

[Scheme]

OK, so you weren't consistently celebrating the supposed great economy during Trump's presidency and attributing to him? All the posts you made along those lines were just jokes? I notice that none of the inflation truthers ITT have actually put a number on their claims, but there's simply not a lot of room for you not to be thinking that the economy was contracting on a per-capita basis throughout Trump's presidency if you're maintaining that inflation is higher than the evidence shows.



Right because I'm not double-counting. Real growth in that period is about 45%. I'm pointing this out because my position is that evidence is better than making stuff up, not that growth has been 500%. If you want to disagree with me, disagree with my actual comments.



Inflation hasn't been anywhere close to 5% to 20% a year. If you think it has, that implies *massive* contraction in per-capita GDP over even a single year. It would compound greatly over multiple years. No factors hide inflation for consumer goods. CPI overstates actual inflation.



I don't have any talking points. We have fundamentally different aims here (I'm trying to get at the truth), while you're trying to make argument-like comments to express your partisanship.

Lol there you go again. You are "getting at the truth", while I am being "partisan". You sound like Rachel Maddow and Sean Hannity.

And yes, I broke down the year over year inflation of the biggest debts Americans hold here, showing it was anywhere from 5-15% YOY:

https://educationdata.org/average-cost-of-college

Real education costs have risen 560% for public 4 year colleges

https://www.inflationtool.com/us-dollar/1960-to-present-value
$1 in 1960 is worth $8.86 today, an increase of 886%
https://www.thebalance.com/causes-of-rising-healthcare-costs-4064878
Healthcare costs in 1960 were $147, they are now $11,172, an increase of 7700% with inflation
So real healthcare costs have gone up ~860%, or ~14.3% a year.

Case-Shiller National Home Price Index vs Consumer Price Index shows that repeat sales of homes always outpace CPI by >0.45% every month since the index was established, and that number is growing at a rapid pace recently:
https://fred.stlouisfed.org/graph/?g=786h (make sure you slide it to 2021)
Note that that index only tracks resales of homes (which generally tend to sell for less than new constructions, so that number underrepresents home inflation). Also worth noting the housing crash in 2008 was pretty much the only reason we haven't skyrocketed further

And I've explained to you, if you get real lower prices as a result of trade, then that will offset the increased money supply. That's basic economics, if you dispute that then there's nothing left to discuss, as you have a flawed view of economics.

Oh and you are a partisan hack, what I say is the truth, while what you say is partisan lies. I'm so smart and great. Glad I decided to argue like you.

 

[Jack V Savage]

Lol there you go again. You are "getting at the truth", while I am being "partisan". You sound like Rachel Maddow and Sean Hannity.

???

And yes, I broke down the year over year inflation of the biggest debts Americans hold here, showing it was anywhere from 5-15% YOY:

Is your contention that inflation is 5% to 15% a year or that some prices rising at above-average rates? The latter is obviously true and irrelevant to the discussion. The former is ridiculous.

And I've explained to you, if you get real lower prices as a result of trade, then that will offset the increased money supply. That's basic economics, if you dispute that then there's nothing left to discuss, as you have a flawed view of economics.

What do you mean "offset the increased money supply"?

Oh and you are a partisan hack, what I say is the truth, while what you say is partisan lies. I'm so smart and great. Glad I decided to argue like you.

No, but it fits when I say it. Because I'm simply calling for looking at the evidence and applying logic, while you're insisting that the evidence should be ignored in favor of partisan lines (forget what collected data show--Republicans want you to believe that inflation is high), and ignoring logical contradictions (ex: if inflation is 5% to 20% a year, that means that we had extreme contractions during the period when you were celebrating economic growth and attributing it to a politician you like).

 

[BForrester]

So why can't I, a married couple with two Masters in STEM fields, afford to live in the same neighborhood as my single mom who is a janitor at a GE factory?

Bloomington isn't that expensive. Are you poor from a lack of fiscal discipline or saddled with debt (student loans)? I don't have a MS in a STEM field (just a lowly B.S.), but I somehow manage to afford a house in Carmel where the median house price is more than $150,000 higher than Bloomington. I also don't have student debt, no cable TV, drive a 12 year-old car, etc.

The big difference is, I'm 20 years into my career and you're fairly new in yours.

 

[Denter]

If you think that you're a married couple with two Masters in STEM fields, you're probably too ill to hold a job. Also: https://www.bizjournals.com/sanfrancisco/news/2017/06/02/bart-janitors-overtime-pay.html.

More seriously, wages are way up from a generation ago. Not sure what you're on about.

The point he's trying to make- which is a fair one- is that costs of certain things viewed as necessary to living a middle class life- housing (in some areas), college, healthcare- have been getting more expensive faster than incomes are growing. That is is true and really affects people's perceptions of losing purchasing power, even though computers are now dirt cheap and incredibly efficient compared to a generation ago.

 

[Jack V Savage]

The point he's trying to make- which is a fair one- is that costs of certain things viewed as necessary to living a middle class life- housing (in some areas), college, healthcare- have been getting more expensive faster than incomes are growing. That is is true and really affects people's perceptions of losing purchasing power, even though computers are now dirt cheap and incredibly efficient compared to a generation ago.

That's an entirely separate issue. I've made the point before that inflation isn't the only factor in price changes (it's not even close to the most significant one, generally). Those three things (with your parenthetical taken into account) are an issue, and liberals have made solving that issue one of their main policy goals. The mistake of conflating that with inflation really compounds, too. I remember some people in the WR saying that if there had been no inflation since the 1920s, people would make what they currently make and houses would cost $20K. Any policy prescriptions that follow such misguided thinking are going to be a disaster.

 

[BForrester]

My mom lives in Louisville. She bought her home in mid-2000s for ~$95k. It would probably sell for $300k now. I actually looked into moving back to near my mom now that I have a kid and it would be nice to have a Grandparent to help. I wouldn't be able to afford to live in the neighborhood I grew up in, despite being a data analyst with a masters degree and married to a pharmaceutical scientist a masters degree. My mom is a custodian with no significant other.

Give it time...you're still young in your career. Get a few years worth of raises/promotions and things will look a lot different.