Wouldn't the evidence of inflation occurring in other countries suggest that COVID is its primary driver, rather than a specific monetary policy? (though it does seem that the scale of inflation in the U.S. is a little higher than elsewhere)
Other countries seem to have been pursuing broadly similar monetary policy to the US, at least in the Western world - even the EU and its member states have got in on it this time around.
US is world reserve currency. We have the ability to print unlimited dollars. All other currencies are primarily backed by US dollars. Most important commodities like oil are priced in USD. Therefore, US drives inflation globally.
No. If the GBP goes up 10% relative to USD, and oil prices go up by 10% in USD, then oil prices remained flat in countries using the GBP, but increase for those using USD.
It's incredible. It's the same strategy that some politicians use in Argentina: they find any kind of thing to blame for inflation, except for monetary policy.
Americans, please don't imitate Argentina, keep a healthy economy.
I know that if Red Team had won the election Blue Team would be running news stories every day about the dangers of inflation and how it is hurting the middle class. Instead, we are seeing pundits downplay inflation as either something 'transitory' or something beneficial:
"Why the inflation we're seeing now is a good thing" -MSNBC tweet that got deleted.
Edit:
"Yes, inflation is back, and you should probably be relieved if not outright happy."
Yes, they are running stories about inflation. I think the key difference is how they're going about doing it. I sense that they are intentionally covering the situation in non-inflammatory way. This is a departure from how the NYT and WaPost will cover a story when they have an ideological axe to grind. For instance, they bring on experts to talk about inflation in an clinical and analytical way. They talk about the benefits of inflation to try an reassure people it is okay. They aren't going to some small town and taking candid shots of average Joes and Janes looking sad and worried about rising prices. While they mention rising wages, they aren't emphasizing how the rise in wages is lower than the inflation itself. In essence, I sense they are trying to avoid having people get riled up whereas if Red Team were in charge they'd be painting the picture as bleak and terrible.
This was a trending topic on Twitter last week, and some of the criticism was how the story ignored the hundreds of dollars this family would have received from the Child Tax Credit to offset the costs.
> I sense that they are intentionally covering the situation in non-inflammatory way.
We want more of this though right?
I sense that many people can't understand the difference between opinions or editorials and news.
I sense that many people actually enjoy the inflammatory way news is sometimes covered unless it's different from the way they'd like to see it.
I sense that people can't understand how a single new outlet can have varying opinions and points of view on a single issue and will choose a single one out of many to make their point.
Imagine how different things would be if people were intelligent consumers of news.
I don't think you can have a news industry dependent on clicks and profits and have no sensationalism. I also don't think you can have a completely unbiased media when people, based on their consumption, don't seem to want it. It's unrealistic given the different biases and motivations that people have.
>> I sense that they are intentionally covering the situation in non-inflammatory way.
>We want more of this though right?
Yes, in principle, but with the caveat that they don't do this in a partisan and selective way. For instance the whole "Kids in Cages" phenomenon is still happening but we never hear about it anymore - in fact they're just called "Child Migrant Facilities" by the press secretary and the media is basically silent compared to the fervor they were covering the situation previously. To me at least, the fact that they calmed down isn't a consolation because I sense they're just doing it because their preferred team is in charge now.
I think journalists are masters of rhetoric and can spin a situation in so many diverse ways while still being almost entirely accurate and truthful. It all depends on what facets of the situation they want to present and the insinuations that come along with it.
There have been facilities before, but this isn’t happening the same way it was where separation was on purpose. There are stories covering the current conditions, but I think you’re overlooking the fact that the prior administration and supporters seemed to embrace and encourage that narrative because they saw it as a deterrent.
> I think journalists are masters of rhetoric
You should meet the average journalist. Just like any other industry, the vast majority are unremarkable people. They’re not rhetorical masterminds. Like most people they see and write things from their point of view.
What’s more interesting to me is how some of the biggest names in media are obviously the rhetorical masters you speak of. I’m referring specifically to the TV and YouTube stars. Some of them are incredibly good at being convincing even if often contradictory or wrong. I also think video can be effective in ways text cannot be.
It's never "transitory", thats a bullshit world the Fed is using to keep people call. The prices are never going to go back to normal even if the rise of inflation ends we don't go back to normal prices unless things deflate.
"Transitory" is a deceptively clever phrase. It implies the situation will go back to normal, or even reverse. Truthfully, it just means the increased rate of change in inflation is expected to decrease. Reminds me of a second derivative.
I don't believe used car prices will be inflated forever, once supply catches up dealer markups on new cars will go back to normal, shipping costs will likely even out, etc.
What I'm saying is there are reasons to believe it can go back to normal.
People were flagged on HN just 6 months ago for mentioning inflation. There was relentless suppression on HN about inflation until media started reversing the story.
The narrative in the media would be have taken a whole another level - scare mongering, etc if it wasn’t the Blue team in the office. I don’t really trust anything but hard numbers from sites such as TradingEconomics or FT.
I have no horse in this race but Blue teams vs Red team is getting really dull and frankly annoying. Everyone seems to be wearing tinted glasses. I have higher standards for media and information that I listen and trust - opinions on HN doesn’t cut the mustard. Usually it’s safe to assume that opposite of the current HN zeitgeist is true (I only joke slightly).
They are two heads of the same beast, moving back and forth very rapidly and calling it progress.
Meanwhile popular policies like universal healthcare[0] and marijuana legalization[1] are never addressed. ( To name a few, there are many more ).
And the reason is clear. Tying healthcare to employment keeps people from organizing effectively. If you have a family, and you are on strike, your employer cutting off your healthcare is a brutal move. Also, people get fat off the bureaucracy.
Similar for marijuana legalization. Need to keep the prisons fed with new "forced customers" so the gravy train keeps rolling.
I kind of wish we had near 0% inflation rate like Japan. I understand there are downsides to this, and one of the most concerning ones to me is the need to compete with China for economic dominance, since no other country really comes close to America in terms of economic power except maybe China.
If the party in power is the one the media outlet favors then the party can do no wrong. If the media outlet doesn't support the party then every step the party takes is wrong with no exceptions.
I know HN doesn't like it when you criticize the US left but I'm here with you. I didn't buy a single word out of the Biden administration pre-election. The "never Trump" people were so blinded by Trump that they didn't realize the other guy was a worse bought and paid for puppet than Hilary. Hilary at least had a functioning brain and could reign in the Dems. Biden doesn't even know it's Wednesday.
Let's avoid turning things overtly political. It's understandable that government policy will be discussed in a thread about inflation, but it does no help on HN to veer into everyday smearing.
Biden is used by the D party and allowed a little leeway when he's clear. To be fair, I'm not sure Biden is worse than Trump, who ran amok. It will take decades to recover from the damage done to parts of the country and world (eg lifting the freeze on coal-leases, lift ban on personnel landmines, judge appointments, etc).
"People", in this case mostly the media I think, seem to just pick something random.
I watch the stock market which is even worse for this. Every day you'd see "Stocks down as investors weigh COVID", followed by "Stocks up as investor COVID fears wane". Which may be true, but not alternating seemingly every single day for a while.
It's like someone sees something happen, wants to write an article, and the boss says "nope, put something catchy on the title."
I remember thinking $50k was an awesome salary when I first started working. Now I think "damn how do families survive off that kind of household income" after seeing essential goods and services cost roughly 1.5x what they were pre stimulus.
Median household income has gone up. It's currently the highest it's ever been in real terms. Households are better off today then they have ever been in their day-to-day affordability of goods.
You also can't cherry-pick a handful of things that have gone up a lot and then assume that it applies to everything. Some things have gone up in price, others haven't. Inflation is sitting at about 6%, which after a decade+ of sub-2% might seem like such a shock, but it isn't really a big deal.
Real wages have been stagnant since 1970s in the US. Median household incomes have only gone up because some people work in highly paid industries, like IT, plus household incomes include income from stocks and real estate AND most households now are two working adults.
Average hourly wage near me is like $12/hr. That's basically 50k in a 2 adult household. If anyone is projecting it's you thinking everyone has a middle class job...
Aren't more products being bought than ever despite the supposed supply chain issue? If there is more stuff and still not enough then shouldn't we assume that there is too much money? It looks like standard inflation by a devaluing of the dollar to me.
> Aren't more products being bought than ever despite the supposed supply chain issue? If there is more stuff and still not enough then shouldn't we assume that there is too much money?
This doesn't rule out a "demand spike following COVID" as mentioned by the parent. It's like a cartoon where someone (COVID) steps on the hose and a big bulge of water (demand + extra savings) forms. Now that bulge is working its way through the economy causing shortages (analogy completely falls apart here).
The snake swallowing an elephant theory of the price level would explain a one time increase in the price level, but not higher constant inflation, and certainly not an increasing rate of inflation.
Why not? It's not like there's a switch somewhere which instantly restored the entire global economy to 2019. Things like shipping or the semiconductor shortage have widespread impacts which are often not obvious if you aren't following a particular field enough to be aware of the dependency web and they can take months to resolve because that has to happen at each bottleneck and things like contractual agreements and labor shortages are not trivial to resolve.
That last part is a key one to remember: the pandemic isn't even close to over. Ignoring the people who are dead or suffering long-term health problems, there are a ton of people who either left the workforce for various reasons (childcare, health, etc.) or switched fields and/or locations. That directly increases costs to businesses which have to pay more in wages but it also will have ripple effects for years anywhere buyers are chasing a supply chain which is limited by worker shortages.
A shortage somewhere takes awhile to be noticed. Once stocks deplete, this causes excess orders to start to be generated by folks to replenish (or create) their own personal stocks from suppliers with low or inconsistent supplies, which generates excess demand. As this happens more and more, you get a demand shock with excess orders and lower and lower supplies. See the ongoing and expanding chip shortage. This has happened with ammunition multiple times in the US in the last few decades, along with many other components and parts.
Eventually the panic buying slows or stops and the orders clear, but it can take years for this to happen.
To the best of my knowledge, it's unclear whether we're looking at "higher constant inflation" at all. And we probably won't know, except in hindsight and some years hence.
I'm not sure a distinction really matters at this point. Supply chain issues are complex and not within the direct control of policymakers. The money supply, on the other hand, is.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output" -Milton Friedman
Edit - it's true. There's a very well established connection between inflation and money supply. Hell, the entire point of QE is to try stimulate inflation to encourage spending to encourage growth. It's not some unknown effect...
