Inflation is a complicated topic that doesn't get adequately captured in the sound bites.
I kept hearing clips of voters saying they want prices to go back down, but my understanding of the economics is that this would be terrible. Instead, IMO, what we need is for wages to increase while minimizing the inflationary effect of wage increases. That's not a catchy slogan, however.
Parallel to this, I don't think the post COVID inflation is really due to politicians.
Over 50% of the increased prices are from producers not just recouping their additional expenses, but also increasing profit margins.
Typically you would expect this to be an opportunity for competition, but generally speaking companies are suspiciously raising prices together. They've taken advantage of the COVID shortage and inflation narratives to squeeze consumers.
Corporate consolidation is one of the biggest and least talked about boogeymen of our current era, one which is set to get even worse under Trump's second term. The Biden admin barely, kind of, got anti-trust authorities somewhat working again, and that will be demolished on day 1 of Trump.
Bigger corpos means bigger donations to bigger candidates. The entire system runs on money and nobody's got money to put in like these supercorps. We live in Gerontocracy that is actively building a Corporatocracy to replace it after the Boomers die off entirely and no money will ever go to the working class again.
> If your change is no more durable than a single election, you didn't accomplish shit.
That is the way that the country works! The system is working as intended if a single government appointment can't unilaterally destroy monopolies in a single term.
What do you think inflation is? Demand shoots up, suppliers raise prices or run out, and it takes time for new capacity to be rewarded and created. There's no collusion here.
Inflation isn't just a fiscal (even though Biden failed on the fiscal side as well) or monetary phenomena, it's psychological - i.e. expectations about future prices.
Because the Biden administration was characteristically incompetent (Remember Treasury Secretary doing interviews saying that inflation was just a short-term blip and not persistent?) inflation started to get out of control. Once that happened, 30+ years of low inflation expectations went out the window. Market psychology changed, and because people now expected prices to rise, they weren't as resistant to individual price changes. This gave producers (along with legit covid supply side issues) breathing room to increase prices.
Of course deflation would be terrible for the economy. Expecting the average voter to understand the intricate complexities of how economies work vs I don't have enough money to buy things, so I want prices to drop, is sadly a losing proposition.
Any real political problem is multifaceted, deeply interconnected with the way the country works and its place in the world. But peoples experiences of them are not, inflation manifests as someone being able to afford rent one year, and not the next.
A good politician, can speak to the experience, but fix the problem. A good salesman can sell you a solution, even if it doesn't fix the problem. And the democratic party, seems mostly interested in talking about the problem and ignoring the experience.
A working economy means professional activity to make goods and services. Deflation actively kills that by incentivizing people to defer or cancel their purchases in favor of savings. So economic activity collapses.
There is no such thing as a durable deflationary market if it’s not justified by productivity gains and volume - and there is definitely no such thing as a durable deflationary economy.
The US was "a durable deflationary economy" for pretty much the whole 19th century, and first decade of 20th century. Things started to change once FED was created and given power over money supply.
Not sure what you're refering to, the 1873 panic wasn't exactly the finest hour for US economy. I guess that's not what you want to get back to.
As for the rest of the 19th century, the data we have is mostly consumer price indexes, but I can't recollect another durable deflationary period in the century.
Depends how much deflation there is with wages compared to everything else, there's a scenario that they have an opportunity to start saving
The majority of the expenses for the disadvantaged young are housing, gas, and food. With housing being 4x more expensive than 4 or 5 years it basically puts all the disadvantaged from even buying a house and then puts them at the mercy of the renters market
Actually, banks can "create" money from nowhere. It's called fractional-reserve banking. When you deposit money into a bank, the bank is required to keep only a fraction of that deposit as reserves. The rest can be used for lending.
The exact fraction is determined by the central bank's reserve requirements. And since 2020 it has been set to... zero percent.
So essentially US banks can infinitely create money.
What?? This isn’t correct at all. A deflationary economic environment is bad no matter the fiscal policy or monetary policy we have in place. You propose it would be better if we pushed for savings. Well if we all know that prices in a few weeks/months/years will be less than today, then spending drops. Friedman pushed velocity of money, even he would agree that a lower velocity would crush an economy.
I never got this line of thinking. I'm already disincentivized from spending because simple investments are likely to outpace inflation. That's a good reason to save as much as I can, but I still buy things, and it's not like I can put off buying food for a year so that prices drop. What's so different about this incentive to save and it being a part of the economy?
Yes, because most people spend most of their money. I'm saying deflation seems unlikely to change that, since a strong incentive to save money already exists, in the form of retirement fund.
There are a number of issues with this comment. One of them is that debt and saving are just sides of the same coin.
More importantly, everybody can see that debt for investment allows more growth. Just think about how many more people can afford to own their own home thanks to taking on debt. This allows them to pay a mortgage instead of rent, which allows them to build up wealth.
Equivalent effects exist in industry.
Debt is an extremely useful tool. We made the right choice here as a society.
Prices wont come back down; but few if any swing voters understand that. They just see high prices under biden and remember lower ones under Trump. Him losing would have taken a very strong candidate given the predicament.
Well, with a less than 6th grade literacy rate for 54% of Americans, it isn’t exactly surprising that many people have a hard time understanding any nuance. I once heard a woman explaining to her captive audience’s amazement how the colors of a “yingyang” were because “ying” means white and “yang” means black. Aside from being wholely incorrect (reversed), the concepts and meaning behind the yin yang of the balance between “light and dark” is completely lost on her. The extent of her knowledge will always be whatever someone she believed told her.
Edit: I forgot to mention, the reason for the colors. “Ying” has an i, for wh”i”te, “Yang” has an “a” for bl”a”ck. It wasn’t even a light/dark thing, it was because she believes the translated name shares a common letter with the color, so that is the reason for those colors. That is the reason why I’m not surprised by the results.
Yes prices need to specifically go down. CA decided to DOUBLE DOWN on raising gas prices during the pandemic, and apparently they're slated to vote on another change that could raise prices by $0.45 a gallon. The world has had CHOICES to go in a specific direction, and this administration and all LEFT administrations are pushing for prices to rise, and replace all the failing families with people from China, Venezuela and whoever wants to cross the border.
This post is a wonderful microcosm of why everyone is so divided and tribal now.
Here we have someone sharing a real world example of out of control inflation, which is true across all groceries no one grounded in reality would deny that.
Rather than acknowledge these concerns in anyway, you took time out of your day to imply because they used 1 unhealthy example this runaway inflation is actually a good thing because they will be forced to eat 'healthier'. Completely ignoring how expensive those 'healthy' items are as well (and that they continue to rise).
Then you use your anecdotal experience to further your dismission with 'well, ackkkstually ime prices don't go down so your concerns are invalid.'
This exact attitude is why there is nation-wide a mandate to eliminate the left from all pillars of power. And this is coming from someone who campaigned for Bernie.
Why would someone disagree with punishing crime? Are we living in reverse world where crime is the norm? How do we expect a functioning society if everything is expected to fail?
Probably the biggest one is that I do not believe that punishment is an effective deterrent most of the time. People will keep committing crimes even if the punishment is harsh.
Another is that our prisons need to be less about punishment and more about rehabilitation. A punishment-heavy criminal justice system creates more recidivism, people leave prison worse off than when they started, they might enter as petty offenders and leave as "jaded, hardened criminals".
Another is that many crimes are driven by the perpetrator having issues with poverty, drugs, etc., which should be addressed differently.
Another is that prisons are already overcrowded, underfunded, courts are not efficient, etc., so adding more felony convictions makes those problems worse and is expensive.
Another is that reformed felons have trouble finding employment when they get out. In some states they lose their right to vote.
Another is that some people are falsely accused and falsely convicted, or, I've heard this is most common, charged in excess of their actual involvement in the crime.
Another is that sometimes accused criminals have families. When you traumatize the offender's kids, you may create more criminality in the kids.
These are a few, expressed briefly and quickly. Others can probably explain it better, or with more time put into reserach.
I kept hearing clips of voters saying they want prices to go back down, but my understanding of the economics is that this would be terrible. Instead, IMO, what we need is for wages to increase while minimizing the inflationary effect of wage increases. That's not a catchy slogan, however.
Parallel to this, I don't think the post COVID inflation is really due to politicians.