What’s Causing the Weird Inflation?

[ZiprHead]

And is there anything Biden can do to make it subside before it adds to the Democrats’ woes in 2022?

Even after Joe Biden and the Democrats reach agreement on a budget deal that delivers some impressive benefits, the current outbreak of entirely atypical inflation could sink the Democrats in the 2022 midterms. Rising gas prices, higher grocery bills, and unaffordable rents are much more vivid to most voters than even major improvements in public infrastructure and child care.

What exactly is going on, how quickly might inflation subside, and what can the administration do to help it along?

Basically, we have a collision of long-term structural forces and unexpected short-term supply shocks. The irony is that Biden’s remedies of reshoring production are just what are needed. But they will take time.

Contrary to the conservative story, this inflation is not mainly the result of higher wages. Some workers, mainly in food service, have gotten substantial wage increases, but median worker compensation is up only 3.7 percent over a year ago, compared to an increase in the Consumer Price Index of 5.4 percent. Most workers are falling behind.

The big source of the price increases are supply bottlenecks caused by an overreliance on a global supply chain, coupled with corporate concentrations that government too willingly accepted. This was a crisis waiting to happen, and it took only a faster-than-anticipated recovery.

No previous postwar recovery led to price hikes resulting from supply constraints. The current situation is entirely the result of perverse structural changes in the economy. If you unpack the several elements of the supply chain system, each has been made more vulnerable in recent decades by bad corporate practices tolerated by bad government policies.

More in the link.

 

[RVonse]

If the government prints money and gives it away as a stimulus,....that's not only inflation but inflation with real velocity. Add to that there are many people either not employed or not producing as much because of covid. The real question to be asked is why you wouldn't expect inflation under these circumstances?

None of this had anything to do with the democrats though....the same inflation would still be pesent (with the exception of gas prices) if Trump was still in office.

The democrats will still get punished for it though.

 

[Jimmy Higgins]

If the government prints money and gives it away as a stimulus,....that's not only inflation but inflation with real velocity. Add to that there are many people either not employed or not producing as much because of covid. The real question to be asked is why you wouldn't expect inflation under these circumstances?

None of this had anything to do with the democrats though....the same inflation would still be pesent (with the exception of gas prices) if Trump was still in office.

The democrats will still get punished for it though.

There wasn’t inflation from the stimulus due to the substantial drop in spending prior.

 

[Jason Harvestdancer]

Surprisingly, the author says a few things that are exactly spot-on.

We are facing a delayed reckoning for several decades of bad policy.

Several decades ... which means this mess is definitely bi-partisan in spite of efforts by each side to blame the other. It is as if most commentators think stimulus packages from "our side" work miracles while stimulus packages from "the other side" only do bad things.

He's very good at identifying the symptoms, although not as good at figuring out what causes the symptoms.

 

[TV and credit cards]

This is what pisses me off most about Democrats, the passivity. Why isn’t Biden pressing Taiwan and South Korea for preference on chips? Why is his administration sitting on their hands while US energy producers focus on their investors? From my view, this is the stuff that gets assclowns like Trump in office. It’s such easy pickings to point to shortages and high prices and blame it on those in power. I feel we have a choice between ineffectual Democrats or Republicans who will shit all over the Constitution.
Folks like Larry Summers and Wall Street for that matter will not only blame worker productivity but bet that it will be the same that will right the ship. Workers just need to be hungry enough. And they are probably right. And if that doesn’t work, press for more uneducated immigrants to keep wages from rising.

Will we regulate to keep the needed extra capacity in the system? Nah. Unused space, idle equipment, and unharried workers do not a dollar make. Will manufacturers move away from a just in time supply system? Not likely. Wasteful spending.
And what of this make it in America plan that will likely bear little fruit? How do they remain economically viable long term? Permanent higher prices, government subsidies, or immigrants?

There’s always this protective wall around international corporations when it comes to geopolitics politicians are loathe to breech. Should the US get preferential treatment from Taiwan when it comes to chips? No. We should protect Taiwan from China so they can sell their chips to China. Free markets.

 

[barbos]

This is what pisses me off most about Democrats, the passivity. Why isn’t Biden pressing Taiwan and South Korea for preference on chips?

So you suggest to piss off Europe again now?

 

[Jarhyn]

This is what pisses me off most about Democrats, the passivity. Why isn’t Biden pressing Taiwan and South Korea for preference on chips?

So you suggest to piss off Europe again now?

And China and Japan and India and Australia...

Until the chip fabs outside of Taiwan spin up, everyone is playing nice with our only basket of golden eggs.

As soon as that is not an 'immediate' concern, china will be in there so fast you'll barely be able to say 'phyrric victory', and someone else will make sure those fabs are a stinking hole.

Then the people who do own fabs at that point will have to worry about sabotage or attack because a chip fab is more valuable and vulnerable in this world than a nuclear enrichment facility.

 

[TV and credit cards]

This is what pisses me off most about Democrats, the passivity. Why isn’t Biden pressing Taiwan and South Korea for preference on chips?

So you suggest to piss off Europe again now?

And China and Japan and India and Australia...

Until the chip fabs outside of Taiwan spin up, everyone is playing nice with our only basket of golden eggs.

As soon as that is not an 'immediate' concern, china will be in there so fast you'll barely be able to say 'phyrric victory', and someone else will make sure those fabs are a stinking hole.

Then the people who do own fabs at that point will have to worry about sabotage or attack because a chip fab is more valuable and vulnerable in this world than a nuclear enrichment facility.

Negative. I'm simply responding to this passage in the article:

He could be leaning on our two prime East Asian protectorates, Taiwan and Korea, which produce the lion’s share of advanced semiconductors, via Taiwan’s TSMC and South Korea’s Samsung, to give priority to American buyers. Wouldn’t this be economic nationalism at the expense of Europe? Amazingly, no. The prime customer of Taiwan’s semiconductor exports is … China.

Wait, China is threatening to invade Taiwan and China is also Taiwan’s prime customer? Yup. So it would send a double signal if the U.S. requested its Taiwanese ally to divert some chips to the U.S.

So, more preference over China and China alone.

 

[Jarhyn]

This is what pisses me off most about Democrats, the passivity. Why isn’t Biden pressing Taiwan and South Korea for preference on chips?

So you suggest to piss off Europe again now?

And China and Japan and India and Australia...

Until the chip fabs outside of Taiwan spin up, everyone is playing nice with our only basket of golden eggs.

As soon as that is not an 'immediate' concern, china will be in there so fast you'll barely be able to say 'phyrric victory', and someone else will make sure those fabs are a stinking hole.

Then the people who do own fabs at that point will have to worry about sabotage or attack because a chip fab is more valuable and vulnerable in this world than a nuclear enrichment facility.

Negative. I'm simply responding to this passage in the article:

He could be leaning on our two prime East Asian protectorates, Taiwan and Korea, which produce the lion’s share of advanced semiconductors, via Taiwan’s TSMC and South Korea’s Samsung, to give priority to American buyers. Wouldn’t this be economic nationalism at the expense of Europe? Amazingly, no. The prime customer of Taiwan’s semiconductor exports is … China.

Wait, China is threatening to invade Taiwan and China is also Taiwan’s prime customer? Yup. So it would send a double signal if the U.S. requested its Taiwanese ally to divert some chips to the U.S.

So, more preference over China and China alone.

Yeah, no, even then, that would be war. Do you not understand how delicate this is and that such pressure on a situation where all the world's eggs are in the same basket will ruin our omelettes for everyone?

Humans are wired, when they feel that a situation is not balanced and "fair", to flip the table.

The last thing we need is people encouraging exactly the kind of behavior that gets tables flipped, especially before we have any other tables down on which to play.

 

[ZiprHead]

This is what pisses me off most about Democrats, the passivity. Why isn’t Biden pressing Taiwan and South Korea for preference on chips?

So you suggest to piss off Europe again now?

And China and Japan and India and Australia...

Until the chip fabs outside of Taiwan spin up, everyone is playing nice with our only basket of golden eggs.

As soon as that is not an 'immediate' concern, china will be in there so fast you'll barely be able to say 'phyrric victory', and someone else will make sure those fabs are a stinking hole.

Then the people who do own fabs at that point will have to worry about sabotage or attack because a chip fab is more valuable and vulnerable in this world than a nuclear enrichment facility.

Negative. I'm simply responding to this passage in the article:

He could be leaning on our two prime East Asian protectorates, Taiwan and Korea, which produce the lion’s share of advanced semiconductors, via Taiwan’s TSMC and South Korea’s Samsung, to give priority to American buyers. Wouldn’t this be economic nationalism at the expense of Europe? Amazingly, no. The prime customer of Taiwan’s semiconductor exports is … China.

Wait, China is threatening to invade Taiwan and China is also Taiwan’s prime customer? Yup. So it would send a double signal if the U.S. requested its Taiwanese ally to divert some chips to the U.S.

So, more preference over China and China alone.

I'm sure that would help ease the tensions between China and Taiwan.