GOOD inflation vs BAD inflation

Thank you for asking... The answer is yes! Read my sig!!!!

Banks tend to only loan money to people who can pay it back. So another indicator of good inflation: more people that are able to pay back their loans.

Look... this is not too complicated. People are buying more, wages for the lower income earners have shot up, unemployment is at one of its lowest points, so people can AFFORD to buy more even at higher prices, people no longer need to work two or more jobs to make a living wage, ...

This inflation, so far, has turned out to be GOOD. Good for low income workers, good for businesses that can compensate their workers appropriately, good for the economy.... even for the stock market (which is not an actual indicator but... even for them). So it is now just plain GOOD.

 

Right! They used GrubHub.

The fact that you rely on such nonsense to try to fabricate an ad hoc argument is sufficient indicator that right wingers got to the point where they have no response.

 

The inflation we are seeing has a few causes. First, Biden extended unemployment payments well beyond what he should have, creating demand, but no supply. People who were making a killing sitting on their duffs didn't want to work. The biggest problem for the service sector where I am is that people still don't want to work. Eventually the well will run dry and they will become productive. Those people who were smart used their time developing new skills and perhaps new businesses.

On day zero, we were energy independent. On day 1, we were begging Russia and the Saudis to shoot themselves in both feet by ramping up production. Energy is required for everything and to transport every product. Crude oil is used to manufacture products across the economy.

As though we didn't have enough problems, California created bottlenecks at ports we rely on for most imports. There are 100 ships waiting to be offloaded with products to balance demand. Some problems we face are transitory, others are not. DC and CA created all of them.

 

Even though I disagree, I can at least understand your position. Those that support big government love when the tax man gets a raise even though the wage earners are no better off. All any politician has to do is get someone to view the damage they cause as "good".

 

Did you not notice all the restaurants that closed temporarily and some which will never reopen? People ate at home.

You have failed to prove any of my statements wrong. Only nonsensical statements and insults.

 

good inflation?

yikes

I am sure the millions upon millions who have nothing invested in the market, making a subpar wage won't agree

 

I don't think inflation can ever be good.

It is the result of a number of circumstances, the relative weight of which differ every time.

Imho, the causes we have here are:

1. An excess of available money that was created by the Trump and Biden support plans to people during the worst moment of the pandemic. That made a large number of people to not re-start working, leading to a lack (probably temporary) of manpower just at the moment the economy was exiting lethargia;
2. A fast rebound of the economy: people, businesses, institutions going into a buying spree to fill up stocks in anticipation for a suddenly booming demand;
3. Supply not immediately able to satisfy surging demand due to the combination of 1 and 2 above, plus the fact that factories had been producing at a slower pace during the pandemic.

I would add to that that some goods (like electronic products) were already getting scarce before the pandemic and that producers are tempted to hold to their stocks thereby artificially creating shortages in order to push prices up, and you have an amost complete picture.

When demand is high for goods that are in short supply, prices inevitably go higher.

If the economic rebound had been much slower, i.e. with points 2 and 3 being much less important in the picture, one might have considered that a slight inflation might have been, not good, but a good sign that people had more money to spend (due to the effect of point 1) and that the economy slowly picking up created a moderate new offer of jobs leading to moderate salary increases.

Growing the economy to the satisfaction of consumers while keeping inflation under control at an acceptable level is obviously a very delicate balancing act.

 

You need to read about economics. Your assessment is so wrong it should be embarrassing. Prices are not up because of economic activity. Or in your words “because people can afford them”. Otherwise you would not see the rampant theft problems we’re having.

your header on your post made me click because I was almost in amazement I could agree with you on something because some inflation is good. Inflation encourages spending. An economy literally relies on the flow of money. If you knew your dollars would be worth more tomorrow than they are today, like gold (deflation), why would you spend it unless you had to. Why buy one new phone today when you can buy two next month with the same money? Deflation is obviously bad and it would slow the economy. So controlled inflation is good.


However, you saying that inflation is a sole indicator of money flow is absolutely absurd. Banks play a larger roll in that than inflation by far. Plus the current inflation is driven not by product demand but by supply. If the demand held and supply increased (repair the supply chain) you would see prices drop.

The big problem is that governments all over the world interrupted the free markets supply chain and now they can’t fix it. Free money definitely doesn’t fix supply issues because the motive to produce it or to go to work is gone.

There are other issues as well. For example meat processing has gone completely crazy. I could have found a butcher to cut up a cow in as little as a week pre pandemic. Now they’re 6 to 10 months out. Do you think that’s because of supply chain or consumer demand? It’s not because more people want a whole beef in their freezer. It’s because the big supply chains shut down for covid issues and put the load on small butchers. These butchers increased their cost including to the regular folk that used them before. It has nothing to with the ability to “afford”. It has everything to do with supply chain.

in fact, your comment proves you literally have no clue on this subject at all. I’m amazed at how wrong you are. Truly… flabbergasted. People should be required to read economics before they can vote.

 

I think the inflation we have been experiencing has been due to Trump's, and Biden's stimulus bills, where the government floods the economy with fiat currency, unpaid for with taxes or borrowing, which creates a 'too few goods chancing too many dollars' scenario.

The point is, getting past the pandemic, there won't be any need more more stimulus bills, and thus inflation will settle by 2022, or thereabouts to normal 2.5% per year levels.

The minimum wage increases will help a lot, but they are not the prime mover of inflation, fiat currency faster than production can absorb it is the reason for inflation. I know the MMTers disagree with that, but they are, in my view, wrong on that point.

 

I can partially agree with you on this. You’re right minimum wage increases are not the prime mover of inflation in this scenario. Free market minimum wage increases are far better than government forced. If they’re doing it now it’s because they quite literally have to because of the market. These types of wage increases typically stick around and this will be the reason for the end result but not the current one.

I too believe that the stimulus is not helping and played it’s part. But I still think the largest problem is supply chain.

 

It couldn't be more simple. When the government creates money out of thin air, it dilutes the value of all the other money. It IS the cause of inflation. Nothing else in the country can create inflation. Nothing else can create money. It has always been the cause of inflation. Don't confuse inflation with prices. It is about the value of the dollar.

 

It's one of the few points where I agree with neoliberal economists But, it's not so much that they create it out of thin air that causes inflation, it's the large amount of it that does, an amount above and beyond the rate the GPD can absorb the dollars, sometimes referred to as 'quantitative easing'.

 

Handing out money, per se, doesn't cause inflation. It only causes inflation if fiat currency is used to prop up demand ( stimulus ) and finance the deficit, and the fiat currency introduced into the economy arrives faster than the GDP can absorb it.

IN the last 20 years, prior to the two big stimulus packages, there have been three major incidences of 'quantitative easing' ( money printing ) and none of them resulted in inflation (more than the 2.5% normal )

You can QE during a recession and prevent deflation ( which is technically inflation, but you just don't see it )

And that was the case before this year, the QE of the stimulus prevented inevitable deflation ( which did occur with gas and some other things ) so it serves to prop up demand, keeping jobs, etc., but, as demand caught up, and the dollars still out there, and goods not being able to be produced fast enough (due to pandemic interruptions in the supply ) to meet that demand, we gots some inflation, but it's because of shortages, not allowing demand to keep up with the dollars.

the concept of inflation is simple, but the nuts and bolts of how it actually happens, not always that simple.

 

It is being paid with money the US does not have. That increases the amount of currency held by the public. That means there is a larger amount of money competing for the same amount of goods. That is the very definition of inflation.

How on earth do you think that can possibly finance the deficit? It increases the deficit.

 

No, creating a small amount of money out of thin air just causes a small amount of inflation. What has been going on this year has been a large creation of money, hence a large amount of inflation. But much of what looks like inflation happening at the moment results from higher prices due to product shortages. It is a double whammy as they might say. The product shortages will fix themselves over time. The inflation part of the problem, of course, is permanent.

Quantitative easing is merely another term for creating money out of thin air. It is a "governmentspeak" term. So is expanding the money supply. It is one activity with many names.

 

Spending has nothing to do with inflation directly. The problem occurs when money that didn't exist is spent. Government spends money into existence and that dilutes the value of the existing money. If the government wants to increase spending then it needs either to increase revenue or to reduce other spending. There is no free ride. There never has been.

2% inflation is not normal. It is engineered because government gets away with it.

Deflation is the opposite of inflation. Deflated dollars gain value.

It could be more simple. Government needs to live within its means. It needs to practice fiscal responsibility. It needs to stop borrowing, pay its debts and start limiting spending to current revenue. But government won't do that so that is the problem.

 

Your 'sig' doesn't mean you actually do research, you've proven that time and time again.

What a creative spin on facts, I have to give you that. Where does household debt come from? What is the revenue source, and how is it used?

Apparently, you haven't figured out who the only winner is when inflation happens. It's the tax man, and if you think that's 'good', it may explain some of your other disconnected thoughts. PLEASE do some reading.

 

What????? Your argument is that if there were economic activity there wouldn't be thieves?

What nonsense!

I never use expressions like "sole indicator" in discussions like this. Binary thinking is a typical trait on the right. Not so much on the left. many factors intervene in every single aspect of the economy. As well as in every single aspect of... EVERYTHING.

Rule of thumb: any time you feel the need to attribute an expression like "never", "always", "sole indicator",... and similar to your opponent (especially to me), but are unable to QUOTE it; you are likely resorting to a strawman. You are attempting to attribute binary thinking to the other person and, even though binary thinking is very typical on the right, it is rare on the left.

So you are left with the first nonsense about "theft". Clear indicator (though not sole indicator) that you are incapable of countering any of my REAL arguments. And the more often right wingers try and fail to rebut arguments and fail (because they have to come up with a strawman), the stronger my point becomes.

Look... if you are going to refer to something I DID say... quote it! If you can't quote it, that is another clear indicator that you are probably trying to fabricate a strawman.

 

I have called you out numerous times for using all inclusive terms.

 

Thanks. But if you couldn't manage to understand it the first time, and can't manage to go back to my original response to you, then my repeating it here yet again probably won't help.

 

Continued chanting. No new argumentation presented.

 

The main reason the supply chain is broken is because of all the layoffs due to covid. You can't compare what is happening now to a full on supply of goods being bought by folks with money to spend. The bottleneck has created a limited supply of goods and people who have the money to spend after years of stimulus provided by both monetary and fiscal policies and folks returning to work.

 

Absolutely right. If anything, it might be the other way around: Inflation, the stimulus bills,... and many other factors have caused minimum wage increases. And people have more money, so they buy more, and this is ONE of many factors that increase inflation. And I agree the cycle will probably end at some point in 2022. But, in the end, some things will remain. They will still have many of those things they bought with the extra money, most will still have this new higher paying job they didn't have before, many people who used to have to work two or three jobs won't have to do that anymore.... I see the long-term consequences as very positive especially for people in the lower and middle class.

 

Never as part of my arguments. You might see them, for example, when I make fun of somebody who I don't take seriously. So it is possible you will have seen me use them more than most others have.

 

There you go again. "never". Are you saying you have never used an all inclusive term as part of your argument? Really?