At Whole Foods, with a bottle of olive oil in my hand, a woman
beside me says "That used to be $3.00 cheaper!" "It's called
inflation, "I said. "You mean Greedflation," said she. Lina Kahn of
the FTC agrees with the woman. Or so she told Leslie Stahl.
Thus the economic ignorance of the American public AND our
heads of gov't. policy. As if adding 1 trillion stimulus to
the economy won't harm it a bit. Think if I told her Milton
Freidman said that "Inflation is at all times and every where a
monetary phenomenon she would have changed her mind?"
May I wax poetic or philosophical -----
Milton Friedman's famous statement, "Inflation is always and
everywhere a monetary phenomenon," encapsulates his core belief
that inflation is primarily caused by an increase in the money
supply relative to the economy's ability to produce goods and
services. His argument was that, over the long term, inflation
cannot occur without excessive growth in the money supply. This
idea forms a pillar of monetarism, a school of thought Friedman
championed.
Why Some Consider This "Hollow":
There are several reasons why some might find this view too
simplistic or limited:
Inflation Drivers Beyond Money Supply:
Critics argue that inflation is not solely driven by the
money supply but can also be influenced by supply-side factors,
like oil price shocks, wars, natural disasters, or supply chain
disruptions. For instance, the oil crises in the 1970s, which led
to stagflation, were caused more by supply shocks than monetary
policy.
Cost-push inflation happens when the cost of production
(e.g., wages or raw materials) increases and businesses pass those
costs onto consumers, independent of the money supply.
Velocity of Money:
Another critique stems from the role of the velocity of money
(the rate at which money circulates in the economy). Even if the
money supply increases, if the velocity of money slows down (as
seen in recessions or periods of financial uncertainty), inflation
might not rise as expected. Japan’s experience with persistent
deflation despite monetary stimulus is a case in point.
Demand-Pull Inflation:
Demand-pull inflation occurs when demand for goods and
services outstrips supply, causing prices to rise. While Friedman
would argue that this is indirectly caused by an increase in the
money supply, critics point out that fiscal policies (such as
government spending) or factors like consumer confidence can spur
demand even without monetary expansion.
Excellent addition to the discussion gents. Yes, it is
complicated. Yet, as a simple trader (and a novice student of
economics at best) all the explanations in the world do not
obfuscate (for me, anyway) the fact that the Fed runs the printing
press. Call it government spending if you like. It's a system in
which they can create all they need to spend. Let us hope the
dollar never loses its favor as the world currency!
The DXY is an illusion. The destruction of our USD purchasing
power has been steady and the decline accelerated over the last 4
years. Don't take my word for either fact - look it up on FRED.
The data is there for everyone to see - but you have to know
what you're looking for (search "purchasing power" once on the FRED
website).
Inflation is made difficult to understand because ignorance
benefits Governments and elites on the good side of the assets /
annual costs ratio where inflation actually starts to be a great
benefit.
It's not that complicated if you first scale back to a closed
system of say 100 villagers with a supply of 10,000 shells that
have been machined down to a form they consider currency.
Yes, the chief is allowed to create more currency, but
it takes time and resources and most are familiar with about how
long it would take and the resources available (think back to gold
days also). Therefore, it is IMPOSSIBLE for the aggregate
price level to rise because an upper bound is established by the
total amount of currency in the system. Increasing prices for goods
and services in high demand or short supply would necessarilly lead
to
substitution. There is no way around
this.....unless there is a
counterfeiter in the system. If someone figured
out to machine shell currency at 10x the normal rate, that person
would take this currency, unbeknownst to the other villagers, and
purchase goods and services with the currency. Furthermore, he/she
would be relatively price insensitive (relative to the sensitivity
of others who don't have the ability to counterfeit currency).
Sound familiar?
All the nonsense about various types of inflation is just
distraction. Cost pull / demand push type discussions are fine for
figuring out if just eggs are expensive, but If you have broad
based, aggregate inflation of the price level in the economy (which
includes all asset prices, which includes the equity markets,
unlike what CPI includes), it can only be because there is an
active counterfeiter in the system, counterfeiting at a level that
would make this mathmatically possible (because it overcomes the
substitution effect).
If this explanation is complicated, it's my fault and not
because it's actually complicated.
The sheeple phenomenon is quite amazing and I think most of us
now realize after the pandemic that it's much worse than anyone
imagined. You can tell the masses almost anything and they won't
question it as long as it comes from the right person. No
amount of people that actually understand finance could explain to
that person how incredibly small grocers margins are...because she
heard something else on TV via the mainstream news (Lina Khan is an
attorney, so yeah, strike 3 from the start)
Yeah, us peasants have no idea. Just listen to Fed speakers.
If you listen again today, they actually did a jumbo rate cut
because everything is so perfect, as perfect as maybe in all of
history. And the only way to keep it so perfect was to cut rates
aggressively. Fed speakers channeling their inner Trump
(ironically).
My wife says egg prices
Big first half winner VITL bottomed out at the beginning ...
Posted by steve on 23rd of Sep 2024 at 02:59 pm
My wife says egg prices going back up but no worries according to Yellen at the grocery store
At Whole Foods, with a
Posted by brophy on 23rd of Sep 2024 at 03:46 pm
At Whole Foods, with a bottle of olive oil in my hand, a woman beside me says "That used to be $3.00 cheaper!" "It's called inflation, "I said. "You mean Greedflation," said she. Lina Kahn of the FTC agrees with the woman. Or so she told Leslie Stahl. Thus the economic ignorance of the American public AND our heads of gov't. policy. As if adding 1 trillion stimulus to the economy won't harm it a bit. Think if I told her Milton Freidman said that "Inflation is at all times and every where a monetary phenomenon she would have changed her mind?"
May I wax poetic or
Posted by steveo on 23rd of Sep 2024 at 04:04 pm
May I wax poetic or philosophical -----
Milton Friedman's famous statement, "Inflation is always and everywhere a monetary phenomenon," encapsulates his core belief that inflation is primarily caused by an increase in the money supply relative to the economy's ability to produce goods and services. His argument was that, over the long term, inflation cannot occur without excessive growth in the money supply. This idea forms a pillar of monetarism, a school of thought Friedman championed.
Why Some Consider This "Hollow":
There are several reasons why some might find this view too simplistic or limited:
Inflation Drivers Beyond Money Supply:
Critics argue that inflation is not solely driven by the money supply but can also be influenced by supply-side factors, like oil price shocks, wars, natural disasters, or supply chain disruptions. For instance, the oil crises in the 1970s, which led to stagflation, were caused more by supply shocks than monetary policy.
Cost-push inflation happens when the cost of production (e.g., wages or raw materials) increases and businesses pass those costs onto consumers, independent of the money supply.
Velocity of Money:
Another critique stems from the role of the velocity of money (the rate at which money circulates in the economy). Even if the money supply increases, if the velocity of money slows down (as seen in recessions or periods of financial uncertainty), inflation might not rise as expected. Japan’s experience with persistent deflation despite monetary stimulus is a case in point.
Demand-Pull Inflation:
Demand-pull inflation occurs when demand for goods and services outstrips supply, causing prices to rise. While Friedman would argue that this is indirectly caused by an increase in the money supply, critics point out that fiscal policies (such as government spending) or factors like consumer confidence can spur demand even without monetary expansion.
Excellent addition to the discussion
Posted by brophy on 23rd of Sep 2024 at 05:09 pm
Excellent addition to the discussion gents. Yes, it is complicated. Yet, as a simple trader (and a novice student of economics at best) all the explanations in the world do not obfuscate (for me, anyway) the fact that the Fed runs the printing press. Call it government spending if you like. It's a system in which they can create all they need to spend. Let us hope the dollar never loses its favor as the world currency!
The DXY is an illusion.
Posted by bthefnd on 23rd of Sep 2024 at 05:22 pm
The DXY is an illusion. The destruction of our USD purchasing power has been steady and the decline accelerated over the last 4 years. Don't take my word for either fact - look it up on FRED. The data is there for everyone to see - but you have to know what you're looking for (search "purchasing power" once on the FRED website).
Here you go. Suggest holding
Posted by bthefnd on 23rd of Sep 2024 at 05:43 pm
Here you go. Suggest holding a ruler to the screen to examine the difference in slope over various time periods.
Inflation is made difficult to
Posted by bthefnd on 23rd of Sep 2024 at 04:29 pm
Inflation is made difficult to understand because ignorance benefits Governments and elites on the good side of the assets / annual costs ratio where inflation actually starts to be a great benefit.
It's not that complicated if you first scale back to a closed system of say 100 villagers with a supply of 10,000 shells that have been machined down to a form they consider currency.
Yes, the chief is allowed to create more currency, but it takes time and resources and most are familiar with about how long it would take and the resources available (think back to gold days also). Therefore, it is IMPOSSIBLE for the aggregate price level to rise because an upper bound is established by the total amount of currency in the system. Increasing prices for goods and services in high demand or short supply would necessarilly lead to substitution. There is no way around this.....unless there is a counterfeiter in the system. If someone figured out to machine shell currency at 10x the normal rate, that person would take this currency, unbeknownst to the other villagers, and purchase goods and services with the currency. Furthermore, he/she would be relatively price insensitive (relative to the sensitivity of others who don't have the ability to counterfeit currency). Sound familiar?
All the nonsense about various types of inflation is just distraction. Cost pull / demand push type discussions are fine for figuring out if just eggs are expensive, but If you have broad based, aggregate inflation of the price level in the economy (which includes all asset prices, which includes the equity markets, unlike what CPI includes), it can only be because there is an active counterfeiter in the system, counterfeiting at a level that would make this mathmatically possible (because it overcomes the substitution effect).
If this explanation is complicated, it's my fault and not because it's actually complicated.
The sheeple phenomenon is quite
Posted by bthefnd on 23rd of Sep 2024 at 03:51 pm
The sheeple phenomenon is quite amazing and I think most of us now realize after the pandemic that it's much worse than anyone imagined. You can tell the masses almost anything and they won't question it as long as it comes from the right person. No amount of people that actually understand finance could explain to that person how incredibly small grocers margins are...because she heard something else on TV via the mainstream news (Lina Khan is an attorney, so yeah, strike 3 from the start)
It's a Khan Job
Posted by steve on 23rd of Sep 2024 at 03:55 pm
It's a Khan Job
Posted by bthefnd on 23rd of Sep 2024 at 04:09 pm
Baddah boom! Steve'll be here
Posted by brophy on 23rd of Sep 2024 at 03:57 pm
Baddah boom! Steve'll be here all week, folks. 3 shows nightly! Don't forget to tip your waitress.
They have to make a
Posted by rbreese on 23rd of Sep 2024 at 03:50 pm
They have to make a little money to pay the inflated wages employees make.
Yeah, us peasants have no
Posted by bthefnd on 23rd of Sep 2024 at 03:03 pm
Yeah, us peasants have no idea. Just listen to Fed speakers. If you listen again today, they actually did a jumbo rate cut because everything is so perfect, as perfect as maybe in all of history. And the only way to keep it so perfect was to cut rates aggressively. Fed speakers channeling their inner Trump (ironically).
Just got back from grocery
Posted by kab34 on 23rd of Sep 2024 at 03:01 pm
Just got back from grocery store - $3.64 for a dozen eggs. Should we talk meat prices, too? And there is no inflation, my a**!
Yep, even at Aldi....3.19 and
Posted by steveo on 23rd of Sep 2024 at 04:05 pm
Yep, even at Aldi....3.19 and not organic, not even brown.