Where will inflation stop?

So it looks like a lot of the inflation is caused by...CEOs personally profiteering from the spectre of inflation?

https://www.cnn.com/2022/03/28/business/ceo-pay-inflation-prices/index.html

CrustyRedXpress said:

1988RedT2 said:

Gonna get worse before it gets better. 

For this to "get worse" do you mean that we'll have out of control inflation, out of control stag-flation, or a recession triggered by the fed raising the rates too far, too quickly?

I assume that the Fed can control inflation through rate hikes (a la Volker in the early 80's) and will do so if necessary, so out-of-control inflation seems unlikely. We're in a period of historically low unemployment, so stagflation seems unlikey as well. 

So the risk is that the Fed has to kill the economy to drive down inflation, correct?

Stagflation is very real right now. Smaller containers, higher prices, lower quality, yet at the same time, record profits and dividends. Sure, wages finally started going up after almost 50 years of being stagnant, but the buying power is still less than it's ever been, so that's a wash. 

Never let a good tragedy go to waste I guess. 

At this point, where as a family of 4 we're halfway to the federal poverty line, berkeley it, crash the whole berkeleying economy. Destroy fiat currencies worldwide, go back to the gold standard, and start cutting heads off in C suites. Might actually see some positive changes for the low income people if we do that. This printing money at interest from nothing to give to C suites and corporations hasn't worked and is only making things worse for everyone but those at the top who own everyone that could make a difference. Cut off the supply entirely.

RevRico said:

Stagflation is very real right now. Smaller containers, higher prices, lower quality

That's just regular inflation. Stagflation is if we get high inflation plus high unemployment and/or low GDP growth. 

https://www.investopedia.com/terms/s/stagflation.asp

Big changes since this thread started. Rates are going up but the war in Ukraine has thrown everything in the air again. Generally it seems like the likelihood of some kind of downturn has increased.

84FSP said:

In reply to STM317 :

I feel slightly better about a $28 Trillion deficit seeing this.  Slightly.

Debt.

Deficit is how much annual outgo is not matched by annual income.

We have had a negative deficit about three decades ago, as it should be: the economy was strong, which is when austerity measures should be taken.

The debt is not too much a problem as long as the dollar (and the US government) is seen as a safe reliable place to park money.  That isn't borrowed money like a bank loan, it is how much money other countries have invested in bonds that will need to be serviced at a later date.  

RevRico said:

CrustyRedXpress said:

1988RedT2 said:

Gonna get worse before it gets better. 

For this to "get worse" do you mean that we'll have out of control inflation, out of control stag-flation, or a recession triggered by the fed raising the rates too far, too quickly?

I assume that the Fed can control inflation through rate hikes (a la Volker in the early 80's) and will do so if necessary, so out-of-control inflation seems unlikely. We're in a period of historically low unemployment, so stagflation seems unlikey as well. 

So the risk is that the Fed has to kill the economy to drive down inflation, correct?

Stagflation is very real right now. Smaller containers, higher prices, lower quality, yet at the same time, record profits and dividends. Sure, wages finally started going up after almost 50 years of being stagnant, but the buying power is still less than it's ever been, so that's a wash. 

Never let a good tragedy go to waste I guess. 

 

At this point, where as a family of 4 we're halfway to the federal poverty line, berkeley it, crash the whole berkeleying economy. Destroy fiat currencies worldwide, go back to the gold standard, and start cutting heads off in C suites. Might actually see some positive changes for the low income people if we do that. This printing money at interest from nothing to give to C suites and corporations hasn't worked and is only making things worse for everyone but those at the top who own everyone that could make a difference. Cut off the supply entirely.

While that's an understandable feeling. The reality of any radicle action like that will be what occurred in the French Revolution.  
 Yeh, some entitled people lost their heads. But the stuff after was horrible for the average Frenchmen.  Those at the bottom often starved  to death or were drafted into the army to be killed in some battle. Don't forget all the peasants that were killed on the way to Waterloo. Then returning as a defeated army meant not a lot got back unscathed. 
     Flawed as our democracy is, it's  still better than any alternative.   Don't ever expect any sudden big change but rather  a gradual improvement.

Given the division in our country that improvement will come at a  cost to one side.  

Just learn to ignore all the made up divisions politicians offer to earn your vote.   Try to figure out where any politician gets his money from.  Those who rely on the wealthy will ultimately benefit the wealthy. Those who rely on the people will ultimately benefit the people. 

Two pieces from Larry Summers. He's been on team non-transitory for more than a year and is frequently cited as somebody who correctly predicted the current levels of inflation.

This essay is from almost a year ago:

http://larrysummers.com/2021/05/24/the-inflation-risk-is-real/

This interview (in podcast or transcript) is from today:

https://www.nytimes.com/2022/03/29/opinion/ezra-klein-podcast-lawrence-summers.html

The podcast/transcript is longer, but I thought it had a lot of great stuff in it.

These discussions about inflation are amusing.  No one has defined it yet, although Curtis came pretty close. 

Inflation = increase in the supply of money.  It's that simple.  Right now we are making more money than ever all via computer while chasing fewer goods (supply chain issues).  This means inflation is going to be really, really high for quite a while.  This problem isn't political.  Both parties have been doing this for decades now. 

Everyone knows how this party ends on a personal level.  We all know someone that has gone bankrupt and lost it all.  Now we are just playing the same game on a large scale with everyone's money!  Woohoo!  Buckle up and enjoy the ride.  Oh and if you don't have a stocked pantry, get one. 

In reply to AnthonyGS (Forum Supporter) :

Wait on your doom and gloom forecast. Just read a little history.  Then consider the effects of a mortgage. The payment stays fixed while your income goes up. 
  I bought a little house on a Lake post Vietnam for $27,800  payments were less than $600  a month. Today that same place would sell for north of 1.5 million. 
   The only real trouble with inflation is your income lags.  Making less than $20,000 a year in 1975 I was solidly in middle class.  I've always earn a middle class income, yet I live in a neighborhood with people who earn millions. 
  Inflation is good if you don't bury your head in sand. 

Pete. (l33t FS) said:

84FSP said:

In reply to STM317 :

I feel slightly better about a $28 Trillion deficit seeing this.  Slightly.

Debt.

Deficit is how much annual outgo is not matched by annual income.

We have had a negative deficit about three decades ago, as it should be: the economy was strong, which is when austerity measures should be taken.

The debt is not too much a problem as long as the dollar (and the US government) is seen as a safe reliable place to park money.  That isn't borrowed money like a bank loan, it is how much money other countries have invested in bonds that will need to be serviced at a later date.  

Amen!   Look at the US like a bank would.  Trillions of debt?  So what?  Net value is millions of times debt. 

I don't know when inflation will stop but here is the amount since 1913 when the Federal Reserve system and Income tax started.  Deficit spending, money supply increases, quantitative easing, and especially Modern Monetary Theory (known as Zimbabwe Monetary Theory in the Austrian Economist world) are reasons inflation won't stop increasing.

Inflation Calculator | Find US Dollar's Value from 1913-2022 (usinflationcalculator.com) - Here is the link if you want to play around with it to compare your salary to past times.  

AnthonyGS (Forum Supporter) said:

These discussions about inflation are amusing.  No one has defined it yet, although Curtis came pretty close. 

 

Inflation = too many dollars chasing too few goods and services.

Imagine the entire economy consisting of twelve eggs and twelve dollars...eggs are $1.00 each.

Fabricate six dollars (deficit spending) without increasing the number of eggs...eggs are now $1.50 each ($18 / 12 eggs)

Eat three of the twelve eggs (supply chain issues) without reducing the money in circulation...eggs are now $2.00 each ($18 / 9 eggs)

In reply to RX Reven' :

What happens when one person accumulates 90% of the money, keeping it out of circulation?

Inflation is annoying, but stagnant monetary value causes the economy to stagnate, and deflation is downright destructive.

AnthonyGS (Forum Supporter) said:

This problem isn't political.  Both parties have been doing this for decades now.

The fact that both parties have been doing it != this problem isn't political.

At.  All.

jharry3 said:

 

I don't know when inflation will stop but here is the amount since 1913 when the Federal Reserve system and Income tax started.  Deficit spending, money supply increases, quantitative easing, and especially Modern Monetary Theory (known as Zimbabwe Monetary Theory in the Austrian Economist world) are reasons inflation won't stop increasing.

Inflation Calculator | Find US Dollar's Value from 1913-2022 (usinflationcalculator.com) - Here is the link if you want to play around with it to compare your salary to past times.  

One minor correction. Income tax started during the civil war.  Not 1913

Pete. (l33t FS) said:

In reply to RX Reven' :

What happens when one person accumulates 90% of the money, keeping it out of circulation?

Inflation is annoying, but stagnant monetary value causes the economy to stagnate, and deflation is downright destructive.

Plus. Inflation is a good thing if properly taken advantage of. 
  Any fixed asset like real estate will appreciate at both the rate of inflation and the rate of declining availability. 
     Look at what your parents paid for their house.  Look at its current value.   In the meantime the payments have remained the same.  While their income has gone up.  

frenchyd said:

jharry3 said:

 

I don't know when inflation will stop but here is the amount since 1913 when the Federal Reserve system and Income tax started.  Deficit spending, money supply increases, quantitative easing, and especially Modern Monetary Theory (known as Zimbabwe Monetary Theory in the Austrian Economist world) are reasons inflation won't stop increasing.

Inflation Calculator | Find US Dollar's Value from 1913-2022 (usinflationcalculator.com) - Here is the link if you want to play around with it to compare your salary to past times.  

One minor correction. Income tax started during the civil war.  Not 1913

And then was repealed in 1872. I suspect he was talking about 1913 being when the 16th Amendment was ratified making the income tax permanent. 

Pete. (l33t FS) said:

In reply to RX Reven' :

What happens when one person accumulates 90% of the money, keeping it out of circulation?

The velocity of money gets retarded:

This is not desired but the only solution is redistribution which disincentivizes the most productive amongst us.

Essentially, in absolute terms, our median standard of living has never been higher (winning) but in relative terms, the rich keep getting richer which causes broad resentment.

There is absolutely nothing stopping all of us from becoming billionaires but the media and politicians like to promote the misnomer that money is somehow finite "you don't have a lot of money because that rich guy is hording it" to stoke contention as it gets clicks and votes.   

In reply to RX Reven' :

Interesting take.   I would disagree, access to education, access to friends controlling resources, ambition,  and time.   Limit many from achieving wealth. ( billions). 
    For the sake of simplification. Let's assume next week all the money would be equally divided by the 330 million Americans.  
     Can you imagine the numbers of cars, refrigerators, houses, etc etc etc. that would be purchased?  
      Sales taxes paid, income taxes paid,  property taxes paid. 
    Now such a radicle approach would discourage ambition and drive, so it simply is not an option. 
   But neither is it an option to allow fewer and fewer people access to the entry point to all that wealth. 
     The French Revolution has to serve as an example of the futility  of that approach. 
 

In reply to frenchyd :

Or maybe the words of Thomas Jefferson need to be realized as a reminder.

The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is its natural manure.

Voting clearly hasn't worked, letting corporations take over government clearly hasn't worked. Buckling down and working 20 hours a day 6 days a week sure as hell isn't working. 

In reply to z31maniac :

Income tax is only one way that taxes can be collected.  The result is a massive tax code written to benefit the few at the expense of the many. 
  Lawyers with expensive educations are required to successfully navigate our tax code. To the tune of $1000+ an hour  which only the wealthiest can afford. 
     A  sales tax is a simple tax totally eliminating income tax. And wouldn't require any forms filled out. 

frenchyd said:

In reply to RX Reven' :

   But neither is it an option to allow fewer and fewer people access to the entry point to all that wealth. 
  
 

I don't think this is the case. The hyper rich are getting richer, no doubt, but the number of folks getting rich is also increasing. 

In reply to barefootcyborg5000 :

The number or percentage?   Yes the number is increasing while the percentage is decreasing. 
 But the number of poor is also growing while the percentage is also increasing. 

   You need to look at the whole picture to understand. That's an impossibly big ask. 

frenchyd said:

In reply to z31maniac :

Income tax is only one way that taxes can be collected.  The result is a massive tax code written to benefit the few at the expense of the many. 
  Lawyers with expensive educations are required to successfully navigate our tax code. To the tune of $1000+ an hour  which only the wealthiest can afford. 
     A  sales tax is a simple tax totally eliminating income tax. And wouldn't require any forms filled out. 

 I was just pointing out the income tax was ratified to be permanent in 1913 with the 16th Amendment.  

If you want to talk about tax reform...........I'm 100% for www.fairtax.org. But it will never happen because it takes the power from the bureaucrats and how they use the tax code to incentivize certain behaviors. 

RX Reven' said:

Pete. (l33t FS) said:

In reply to RX Reven' :

What happens when one person accumulates 90% of the money, keeping it out of circulation?

The velocity of money gets retarded:

This is not desired but the only solution is redistribution which disincentivizes the most productive amongst us.

Essentially, in absolute terms, our median standard of living has never been higher (winning) but in relative terms, the rich keep getting richer which causes broad resentment.

There is absolutely nothing stopping all of us from becoming billionaires but the media and politicians like to promote the misnomer that money is somehow finite "you don't have a lot of money because that rich guy is hording it" to stoke contention as it gets clicks and votes.   

The other option is increasing the money supply, which is, in a roundabout way, redistribution, but "softer".  It also encourages spending and investment vs. parking the money somewhere it cannot do anything.

In reply to z31maniac :

You may be right.  It would take either a complete bi partisan commitment or a party in control  willing to listen  to people they represent rather than their donor base.