It looks like inflation is here

[Jimmy Higgins]

It won't be even. It will even out in the end as the fundamental forces are still the same.

Apparently Republicans feel differently since they keep giving rich people tax breaks and subsidies. It never evens out in the end for them. They just get richer and richer.

Changing the tax rate changes the forces at work. A one-time wage increase does not.

I own a modest home, a pair of modest cars, I save for retirement, I don't spend much on credit, I haven't bee on a week plus long vacation in years. And I couldn't possibly do any of this at $15 an hour.

I'm tired of reading about how $15 an hour is some sort of large amount of money. We have a lot of grandpas out there complaining about what they could buy with a nickel.

I'm tired of reading that providing health care is too expensive for companies. America seemingly has raced itself to the bottom, more content with quarterly sales than any semblance of a sustainable national model of employment.

I'm sick of my tax dollars being spent to house people making less than $15 an hour! Why in the heck am I subsidizing a company's workers' ability to support themselves? Because other people think their labor isn't worth it? Well, that doesn't seem to matter because my taxes goes to subsidize their housing and food anyway. A company has no problem having their workers on government support?! I suppose we can blame the poor again... but that still means I'm paying to subsidize their home and food.

The only right-wing solution looks to be to replace their labor with computers and machines and grind the poor into cow feed.

 

[Loren Pechtel]

Changing the tax rate changes the forces at work. A one-time wage increase does not.

I own a modest home, a pair of modest cars, I save for retirement, I don't spend much on credit, I haven't bee on a week plus long vacation in years. And I couldn't possibly do any of this at $15 an hour.

I'm tired of reading about how $15 an hour is some sort of large amount of money. We have a lot of grandpas out there complaining about what they could buy with a nickel.

I'm tired of reading that providing health care is too expensive for companies. America seemingly has raced itself to the bottom, more content with quarterly sales than any semblance of a sustainable national model of employment.

I'm sick of my tax dollars being spent to house people making less than $15 an hour! Why in the heck am I subsidizing a company's workers' ability to support themselves? Because other people think their labor isn't worth it? Well, that doesn't seem to matter because my taxes goes to subsidize their housing and food anyway. A company has no problem having their workers on government support?! I suppose we can blame the poor again... but that still means I'm paying to subsidize their home and food.

The only right-wing solution looks to be to replace their labor with computers and machines and grind the poor into cow feed.

None of this has anything to do with what I said.

The end effect of doubling minimum wage will be doubling the price of everything, thus eroding half the value of your savings.

 

[laughing dog]

Changing the tax rate changes the forces at work. A one-time wage increase does not.

I own a modest home, a pair of modest cars, I save for retirement, I don't spend much on credit, I haven't bee on a week plus long vacation in years. And I couldn't possibly do any of this at $15 an hour.

I'm tired of reading about how $15 an hour is some sort of large amount of money. We have a lot of grandpas out there complaining about what they could buy with a nickel.

I'm tired of reading that providing health care is too expensive for companies. America seemingly has raced itself to the bottom, more content with quarterly sales than any semblance of a sustainable national model of employment.

I'm sick of my tax dollars being spent to house people making less than $15 an hour! Why in the heck am I subsidizing a company's workers' ability to support themselves? Because other people think their labor isn't worth it? Well, that doesn't seem to matter because my taxes goes to subsidize their housing and food anyway. A company has no problem having their workers on government support?! I suppose we can blame the poor again... but that still means I'm paying to subsidize their home and food.

The only right-wing solution looks to be to replace their labor with computers and machines and grind the poor into cow feed.

None of this has anything to do with what I said.

The end effect of doubling minimum wage will be doubling the price of everything, thus eroding half the value of your savings.

That outcome requires that all wages and salaries ( even those higher than the doubled minimum wage) double and that no firms change the usage of labor - both highly unrealistic assumptions. Especially given the relatively low number of workers earning the federal minimum wage.

 

[Jimmy Higgins]

None of this has anything to do with what I said.

It has everything to do with it.

The end effect of doubling minimum wage will be doubling the price of everything, thus eroding half the value of your savings.

Price of service =/ cost of labor. It isn't even close. Jebus! Raising the labor rate doesn't even increase the cost of that worker to the company 1 to 1, forget about the price of production or service.

Prices will likely increase, but the percentage increase to level things off isn't going to be 1 to 1. So hamburger meals go up a buck or two. OMFG!

And all of this, just to get to $15 an hour, an amount that isn't much at all. It was back before you cared about the kids on the front lawn, but not today.

 

[Loren Pechtel]

None of this has anything to do with what I said.

It has everything to do with it.

The end effect of doubling minimum wage will be doubling the price of everything, thus eroding half the value of your savings.

Price of service =/ cost of labor. It isn't even close. Jebus! Raising the labor rate doesn't even increase the cost of that worker to the company 1 to 1, forget about the price of production or service.

Prices will likely increase, but the percentage increase to level things off isn't going to be 1 to 1. So hamburger meals go up a buck or two. OMFG!

And all of this, just to get to $15 an hour, an amount that isn't much at all. It was back before you cared about the kids on the front lawn, but not today.

Fundamentally, all costs are either taxes or labor. Materials are just somebody else's labor.

The market sets the ratio between the income from various jobs, raising the base amount will not change this, in time the ratios will reassert themselves. The only way to stay ahead is to keep inflating things--at which point inflation becomes expected and factored in, to continue to stay ahead requires ever greater inflation.

 

[laughing dog]

It has everything to do with it.

Price of service =/ cost of labor. It isn't even close. Jebus! Raising the labor rate doesn't even increase the cost of that worker to the company 1 to 1, forget about the price of production or service.

Prices will likely increase, but the percentage increase to level things off isn't going to be 1 to 1. So hamburger meals go up a buck or two. OMFG!

And all of this, just to get to $15 an hour, an amount that isn't much at all. It was back before you cared about the kids on the front lawn, but not today.

Fundamentally, all costs are either taxes or labor. Materials are just somebody else's labor.

The market sets the ratio between the income from various jobs, raising the base amount will not change this, in time the ratios will reassert themselves.

You keep handwaving this assertion. There is no reason to expect that once the relative wages and prices change that they will "reassert" themselves to the same relative position. There is nothing in economic theory or economic practice or economic reality that suggests such that the relative wages and prices will return to the same ratios. None.

 

[Swammerdami]

The end effect of doubling minimum wage will be doubling the price of everything, thus eroding half the value of your savings.

Fundamentally, all costs are either taxes or labor. Materials are just somebody else's labor.

The market sets the ratio between the income from various jobs, raising the base amount will not change this, in time the ratios will reassert themselves. The only way to stay ahead is to keep inflating things--at which point inflation becomes expected and factored in, to continue to stay ahead requires ever greater inflation.

You are really on a roll!

Land everywhere in the world rents for $0.00 per acre. The laundromat lets you use their washing machines for free. And when the Saudis pump oil out of the ground they charge only the wages paid the pumpers.

Smith, Marx, Keynes, Friedman, Hayek, von Mises — none of them figured this all out. Are you going to tell us which textbook gave you these novel insights?

 

[bilby]

Some wage-led inflation would be no bad thing for most folks anyway. Inflation isn't simply a loss of purchasing power, but a redistribution of it. If someone pays more, someone gets more. There are winners and losers ..and reasons the powers that be are obsessed with inflation.

Debtors (e.g. students, and middle-class homeowners) are the beneficiaries of inflation. Banks would be the big losers. That's why it's unlikely to happen.

You logic does appear valid excepting that the US government is also a huge debtor as well. At 120% debt to GDP the US treasury has only 3 options at this point:

1. Austerity on steroids (this will never happen for political reasons)
2. Massive default with the complete loss of global reserve currency
3. Huge inflation of our currency in order to reduce the magnitude of debt.

When the push finally comes to shove, I'm betting the politicians will go with number 3. The bankers are powerful but they are going to be thrown under the bus with the rest of the savers.

The US government isn't a debtor in any real sense. It's literally impossible for the US government to be unable to pay any debt denominated in US dollars. And the national debt is just an accounting phenomenon. Basically, money is debt, debt is money, and in the absence of a national debt there wouldn't be sufficient US dollars in circulation to keep your economy operating.

In no way does the US government suffer if its debts increase, nor would it benefit from their reduction.

People worry about the US government's debt because they incorrectly think it's like other debts. But it's not. Unless it's denominated in a currency the US doesn't issue. If America owed trillions of euros, that would be potentially worrying. But it doesn't, so it isn't.

 

[bilby]

The end effect of doubling minimum wage will be doubling the price of everything, thus eroding half the value of your savings.

Fundamentally, all costs are either taxes or labor. Materials are just somebody else's labor.

The market sets the ratio between the income from various jobs, raising the base amount will not change this, in time the ratios will reassert themselves. The only way to stay ahead is to keep inflating things--at which point inflation becomes expected and factored in, to continue to stay ahead requires ever greater inflation.

You are really on a roll!

Land everywhere in the world rents for $0.00 per acre. The laundromat lets you use their washing machines for free. And when the Saudis pump oil out of the ground they charge only the wages paid the pumpers.

Smith, Marx, Keynes, Friedman, Hayek, von Mises — none of them figured this all out. Are you going to tell us which textbook gave you these novel insights?

Sounds like Marx to me. It's the labour theory of value, with a slight tweak.

 

[Jason Harvestdancer]

We've got from "there is no inflation" to "inflation is low" to "inflation is transitory" to "inflation is good".



After being mercilessly mocked, they "updated" the article.

It's not certain rising wages will be enough to outpace inflation

You can tell by the url what the story title used to be.

 

[Jimmy Higgins]

Well, I’m glad at least someone reads CNBC. Would be a dramatic waste of effort if zero people read it.

Short term supply issues due to booming demand are hiking prices. It’d be a bit early for stimulus checks to burden the economy with inflation after the economy froze last year and lost around a trillion dollars.

 

[bilby]

Inflation is an inevitable consequence of insufficient taxation.

 

[TV and credit cards]

There seems to be a push pull going on between booming recovery and delta variant. Investors don’t know whether to shit or go blind. Fed Chair Jerome Powell will be here this week to sort it all out, or not.

 

[Jimmy Higgins]

There seems to be a push pull going on between booming recovery and delta variant. Investors don’t know whether to shit or go blind. Fed Chair Jerome Powell will be here this week to sort it all out, or not.

Powell's issue is that the solution for a recovery is to tell the market the spigot is getting squeezed off and ridiculously stupid free money and it'll just be stupid free money, and that makes the market all sad.

 

[Gospel]

Ok, Yellen, you can raise the rates now. I've refinanced down a full point and a half.

 

[Jason Harvestdancer]

Inflation is an inevitable consequence of insufficient taxation.

Wow.

 

[Swammerdami]

I just "ran some numbers." I'll share them in case they interest others. These are the average annual inflation rates in the U.S.A. for each of ten decades, measured via the usual CPI. (Note that the geometric mean of (1 + Infl_rate) is needed here, not an arithmetic mean.)

1920's : -0.1%
1930's : -2.1%
1940's : 5.6%
1950's : 2.0%
1960's : 2.3%
1970's : 7.1%
1980's : 5.5%
1990's : 3.0%
2000's : 2.6%
2010's : 1.8%

What I see from this table is that the Fed has done a pretty good job of meeting its 2% target. No "hyperinflation" here!

• The prosperous 1990's and 2000's had inflation higher than 2%.
• The low inflation of the 2010's is a symptom of a major financial crisis and subsequent weirdness.
• The U.S. was still on a gold standard in the 1920's. The deflation in the 1930's was concentrated in 1931,32,33. The rest of that decade had slight INflation.
• The years with highest inflation during the "Carter stagflation" were, in descending inflation order, 1980, 1979, 1974, 1981, 1975.
• Taking the 20-year period 1970-1989 as a whole, and defining 3% inflation as "normal", we see an EXTRA price boost totaling 88% compared with "normal"; i.e. the annual inflation over this 20-year period averaged 6.3%.
• The ten high-inflation years of the "Carter stagflation" were 1973-1982, not on a decade boundary. Breaking the 20-year period into the 10-year inflationary period and ten other years, the average inflation rates are 8.7% and 3.9% respectively.
• How bad is 8.7% inflation compared with a 3% "normal"? I don't know, but this stagflation is frequently pointed to as the major post-war financial problem. (Which was considered worse? The Stag- or the -Flation?)
• Price hikes, when they occur, are often NOT undone. Is this correct?

I did this study to see what bad inflation, by U.S. standards, would look like.

What inflation rate is predicted for 2021 or 2022? A sharp one-time price hike in response to stimulus or Covid shortages should be OK; Problems come when market expectations change, and a vicious wage-price cycle occurs. Is this what happened under Carter?

The huge debt bubbles are worrying. I remain bemused about market complacency. If I were an active investor I'd be seeking investments likely to be resistant to inflation. As is, we're planning to buy a house in Chiang Mai, and have acquired some precious metals.

Inflation is an inevitable consequence of insufficient taxation.

Wow.

I think bilby's observation was once conventional wisdom. But now the world economy is afloat in uncharted waters. Old financial indicators no longer make sense. The "money supply" has skyrocketed but Trillions of this "new money" is held at the Fed in excess reserve accounts. Banks are being paid Billions in interest by the government for these useless accounts.

 

[bilby]

I just "ran some numbers." I'll share them in case they interest others. These are the average annual inflation rates in the U.S.A. for each of ten decades, measured via the usual CPI. (Note that the geometric mean of (1 + Infl_rate) is needed here, not an arithmetic mean.)

1920's : -0.1%
1930's : -2.1%
1940's : 5.6%
1950's : 2.0%
1960's : 2.3%
1970's : 7.1%
1980's : 5.5%
1990's : 3.0%
2000's : 2.6%
2010's : 1.8%

What I see from this table is that the Fed has done a pretty good job of meeting its 2% target. No "hyperinflation" here!

• The prosperous 1990's and 2000's had inflation higher than 2%.
• The low inflation of the 2010's is a symptom of a major financial crisis and subsequent weirdness.
• The U.S. was still on a gold standard in the 1920's. The deflation in the 1930's was concentrated in 1931,32,33. The rest of that decade had slight INflation.
• The years with highest inflation during the "Carter stagflation" were, in descending inflation order, 1980, 1979, 1974, 1981, 1975.
• Taking the 20-year period 1970-1989 as a whole, and defining 3% inflation as "normal", we see an EXTRA price boost totaling 88% compared with "normal"; i.e. the annual inflation over this 20-year period averaged 6.3%.
• The ten high-inflation years of the "Carter stagflation" were 1973-1982, not on a decade boundary. Breaking the 20-year period into the 10-year inflationary period and ten other years, the average inflation rates are 8.7% and 3.9% respectively.
• How bad is 8.7% inflation compared with a 3% "normal"? I don't know, but this stagflation is frequently pointed to as the major post-war financial problem. (Which was considered worse? The Stag- or the -Flation?)
• Price hikes, when they occur, are often NOT undone. Is this correct?

I did this study to see what bad inflation, by U.S. standards, would look like.

What inflation rate is predicted for 2021 or 2022? A sharp one-time price hike in response to stimulus or Covid shortages should be OK; Problems come when market expectations change, and a vicious wage-price cycle occurs. Is this what happened under Carter?

The huge debt bubbles are worrying. I remain bemused about market complacency. If I were an active investor I'd be seeking investments likely to be resistant to inflation. As is, we're planning to buy a house in Chiang Mai, and have acquired some precious metals.

Inflation is an inevitable consequence of insufficient taxation.

Wow.

I think bilby's observation was once conventional wisdom. But now the world economy is afloat in uncharted waters. Old financial indicators no longer make sense. The "money supply" has skyrocketed but Trillions of this "new money" is held at the Fed in excess reserve accounts. Banks are being paid Billions in interest by the government for these useless accounts.

Which wouldn't be inflationary if those billions were being recovered from the banking sector and its high earning executives (and other wealthy beneficiaries of this largesse) in taxes.

Low taxes are inflationary.

 

[Loren Pechtel]

Which wouldn't be inflationary if those billions were being recovered from the banking sector and its high earning executives (and other wealthy beneficiaries of this largesse) in taxes.

Low taxes are inflationary.

This is eat-the-rich thinking.

Those billions aren't particularly going to the banking sector and certainly not to it's executives.

 

[bilby]

Which wouldn't be inflationary if those billions were being recovered from the banking sector and its high earning executives (and other wealthy beneficiaries of this largesse) in taxes.

Low taxes are inflationary.

This is eat-the-rich thinking.

Those billions aren't particularly going to the banking sector and certainly not to it's executives.

Well they sure as fuck aren't going to homeless people or those living in poverty. And it's not difficult to see where the money is going - it's going to those people whose net worth is rapidly increasing. So those are the people to tax. I'm not suggesting a special tax to target a particular subset of high income earners, I am saying increase taxes on ALL high income earners. And on ALL of their sources of income, particularly the fringe benefits.

Regardless, money put into the economy and not removed via taxation is inflationary, if it doesn't cause growth sufficient to absorb it.

Taxes in the US, particularly on the very high income earners, are ridiculously low. The US government is derelict in its duty to prevent unreasonable increases in wealth inequality. Nobody works hard enough to deserve a suborbital joyride. Particularly not while people are sleeping in the streets.

Dumb regurgitation of right-wing soundbites doesn't change that. Nobody's saying "eat the rich". Make the fuckers pay a reasonable and equitable amount of tax.