Tax on the poor?: What's the cause of USA inflation?

[Phillip9]

4 hours ago, GammaGlobulin said:

What’s the cause of rampant inflation in the USA?

 

Too many jobs.  Not enough people who want to work lower and medium paying jobs.

[scottiejohn]

40 minutes ago, GammaGlobulin said:

 

No.

My statement, as originally posted, stated my meaning.

Meaning is important these days.

I meant what I said, and I said what I meant, in this case.

 

And I disagree!

Are you saying that we are not allowed to disagree?

[gearbox]

3 hours ago, Dcheech said:

Jesus Wept.

 

Have you not noticed inflation in Thailand? You have not noticed that worldwide inflation bedevils countries from China to Canada, Albania to Argentina today? Next rhetorical question,  did you notice another worldwide event in the last five years, something besides the ever-growing WOKE menace.  ...... Say a Virus?

Every country in the world was pumping money into their economy to keep it chugging down the road and not spiral into recession/depression. When confronted with a pandemic, or lockdown, like the recent worldwide virus originating in Wuhan China. Countries pump money into the economy to keep people spending, to keep the economy from locking up. The by product is inflation and yes it is worldwide. NOTE recent US campaign rhetoric aside (as in Bidenomics) Trump started doing exactly this in his last year, 2020. No real choice, it is the only economic answer that might work. Biden continued it. This is a no brainer as only one economic theory works in these conditions  - just deal with it - 'Keynsian economics'. as true today as it was in the 1930's and one that conservatives and liberals use. Conservatives just don't like to talk about it, but they use it. 

Recession/Depression - or - Inflation?

It is not even a choice GG

 

 

Where is the high inflation in the case of China?

 

https://www.statista.com/statistics/270338/inflation-rate-in-china/

[GammaGlobulin]

1 hour ago, scottiejohn said:

And I disagree!

Are you saying that we are not allowed to disagree?

 

No, this is/was not my meaning.

I was merely pointing out to one commenter here, in particular, that he agrees with me that the Natural Sciences, according to his view and my view, are most important.

And, in this we share zero disagreement.

He and I can easily agree to not disagree in our views about the Natural Sciences.

Do you agree that my  original statement, as posted, was correct?

Or, do you disagree???

 

 

 

[atpeace]

Keep it simple.  How much mony has the world added to the money supply since Covid.  I bet the inflation matches relatively close as percentage.  Handout aren't free 🙂

[Will B Good]

What's the cause of USA inflation?

 

Biden, Biden, Biden........and thank God (as he sent him) Trump has promised to reduce grocery prices.....watch the prices fall off a cliff Jan 21

[Walker88]

tl:DON'T r

 

Oh, it’s not so simple. EVERYTHING is connected.

 

There are always poor and always will be poor. The world has lifted billions out of poverty, so that in most countries being poor is a lot more comfortable than it was 500 years ago. The gimmick the world collectively agreed on was fiat money. Print money now, and it lifts people up, either through a social safety net or because an entrepreneur borrows this printed money and starts a business that employs people. All well and good.

 

The problem arises when debt has to be repaid. The way the world addressed that was to gear economies to an “acceptable” level of inflation, which for the US Fed is 2%. That allows debts to be inflated away, or at least get serviced, which is good enough. Nobody thinks sovereign debt will ever be repaid.

 

Now that system requires lots of fine tuning, along with a good deal of luck. Absent a Black Swan event, or else leaders who abuse the privilege of conjuring money, it works for a long time.

 

Covid was a Black Swan. Folks can argue it was handled poorly, but the fact is as it arose, nobody knew how severe it might become. Once nations decided to shut down, money printing had to go into overdrive. That has resulted in inflation, exacerbating the abuse of the money printing privilege leaders have.

 

In the US, we had both. The tax cut for the wealthy---about the only “accomplishment” of the two years when Republicans controlled the House, Senate and White House....just added debt. In the 4 years from January 2017 to January 2021, $8,400,000,000,000 was added to the US National Debt. That equates to $25,000 for every man, woman and child in the country, or $1000 for every person on Earth. That is a lot of spending power, and all those trillions chased goods and services, resulting in the inflation the US experienced. Most of the rest of the world did the same thing, so inflation was worldwide.

 

Politicians or wannabe autocrats know the average person is dumb, and nether understands economics nor that correlation does not equal causation. If inflation is today, then the blame goes to whomever happens to be in charge today. Also, when someone claims “only I can fix it”, people want to believe. There is precious little link between anything Biden did and the inflation that was present when he was in the White House, nor does the POTUS elect have the slightest clue about how to address it.

 

Now sometimes things settle down on their own, or with a boost from Fed policy. US inflation peaked at 9%, and is now running about 2.7%, less than most nations. Inflation, however, is a measure of ALL prices, and the index is based on a theoretical basket of goods and services the average consumer might use. People tend to see only one thing---such as the price of eggs---and extrapolate that over everything to arrive at a false idea of overall inflation. Yes, egg prices are up, but guess what’s down? Fuel. Rent, at least rent relative to home ownership, is also down. In fact, it is now 35% cheaper to rent than buy a home in the US.

 

A good deal of inflation results from cheap money chasing assets. The last decade or so has seen the elite accumulate a much higher percent of assets in all economies. The qini coefficient is on the rise everywhere. That puts pricing power into the hands of the elite, who can then impose their own wants on to the masses.

 

I am not of the opinion that things will get any better, because society has much less need for the number of people it has. Many of the things that have benefited economies in the last few decades have been stopgap solutions to an intractable problem. Debt soared in order to make work for the masses. In the US, access to home equity allowed the middle class to live above their means. That also required key asset prices like homes to remain stable. In 2008 a bubble burst, and that threw everything into a period of madness and decline…until ZIRP, or free money for years on end. That ran its course when inflation finally arose.

 

The can has been kicked down the road for years, and maybe it can continue to be kicked. I think not. Human labor is increasingly losing its pricing power, and there are fewer stopgap measures to support those who need support. Debt levels are too high, and central banks are stuck between a rock and a hard place: if rates stay low, inflation will jump….if rates rise, debt service becomes more difficult. Each 1% upward shift in the US Yield Curve adds $360 billion per year in the budget deficit. Despite the US being viewed as the worst offender of debt, very few major economies are any better, and most have a worse debt-to-GDP ratio. Japan is the worst. In Europe, maybe only the Netherlands has a decent ratio; the rest top the US'.

 

Hard choices must be made, and those making the choices tend to think of themselves first, so it isn’t going to get any better for the masses. Cut government spending, and the masses suffer. Keep spending, and inflation hurts….the masses.

 

So inflation has not been a “tax on the poor”. It is a consequence of measures taken to lift the poor from poverty, in contrast to what the poor experienced from Oldavai Gorge until maybe the Marshall Plan or Lyndon Johnson’s Great Society.

[swissie]

40 minutes ago, Walker88 said:

tl:DON'T r

 

Oh, it’s not so simple. EVERYTHING is connected.

 

There are always poor and always will be poor. The world has lifted billions out of poverty, so that in most countries being poor is a lot more comfortable than it was 500 years ago. The gimmick the world collectively agreed on was fiat money. Print money now, and it lifts people up, either through a social safety net or because an entrepreneur borrows this printed money and starts a business that employs people. All well and good.

 

The problem arises when debt has to be repaid. The way the world addressed that was to gear economies to an “acceptable” level of inflation, which for the US Fed is 2%. That allows debts to be inflated away, or at least get serviced, which is good enough. Nobody thinks sovereign debt will ever be repaid.

 

Now that system requires lots of fine tuning, along with a good deal of luck. Absent a Black Swan event, or else leaders who abuse the privilege of conjuring money, it works for a long time.

 

Covid was a Black Swan. Folks can argue it was handled poorly, but the fact is as it arose, nobody knew how severe it might become. Once nations decided to shut down, money printing had to go into overdrive. That has resulted in inflation, exacerbating the abuse of the money printing privilege leaders have.

 

In the US, we had both. The tax cut for the wealthy---about the only “accomplishment” of the two years when Republicans controlled the House, Senate and White House....just added debt. In the 4 years from January 2017 to January 2021, $8,400,000,000,000 was added to the US National Debt. That equates to $25,000 for every man, woman and child in the country, or $1000 for every person on Earth. That is a lot of spending power, and all those trillions chased goods and services, resulting in the inflation the US experienced. Most of the rest of the world did the same thing, so inflation was worldwide.

 

Politicians or wannabe autocrats know the average person is dumb, and nether understands economics nor that correlation does not equal causation. If inflation is today, then the blame goes to whomever happens to be in charge today. Also, when someone claims “only I can fix it”, people want to believe. There is precious little link between anything Biden did and the inflation that was present when he was in the White House, nor does the POTUS elect have the slightest clue about how to address it.

 

Now sometimes things settle down on their own, or with a boost from Fed policy. US inflation peaked at 9%, and is now running about 2.7%, less than most nations. Inflation, however, is a measure of ALL prices, and the index is based on a theoretical basket of goods and services the average consumer might use. People tend to see only one thing---such as the price of eggs---and extrapolate that over everything to arrive at a false idea of overall inflation. Yes, egg prices are up, but guess what’s down? Fuel. Rent, at least rent relative to home ownership, is also down. In fact, it is now 35% cheaper to rent than buy a home in the US.

 

A good deal of inflation results from cheap money chasing assets. The last decade or so has seen the elite accumulate a much higher percent of assets in all economies. The qini coefficient is on the rise everywhere. That puts pricing power into the hands of the elite, who can then impose their own wants on to the masses.

 

I am not of the opinion that things will get any better, because society has much less need for the number of people it has. Many of the things that have benefited economies in the last few decades have been stopgap solutions to an intractable problem. Debt soared in order to make work for the masses. In the US, access to home equity allowed the middle class to live above their means. That also required key asset prices like homes to remain stable. In 2008 a bubble burst, and that threw everything into a period of madness and decline…until ZIRP, or free money for years on end. That ran its course when inflation finally arose.

 

The can has been kicked down the road for years, and maybe it can continue to be kicked. I think not. Human labor is increasingly losing its pricing power, and there are fewer stopgap measures to support those who need support. Debt levels are too high, and central banks are stuck between a rock and a hard place: if rates stay low, inflation will jump….if rates rise, debt service becomes more difficult. Each 1% upward shift in the US Yield Curve adds $360 billion per year in the budget deficit. Despite the US being viewed as the worst offender of debt, very few major economies are any better, and most have a worse debt-to-GDP ratio. Japan is the worst. In Europe, maybe only the Netherlands has a decent ratio; the rest top the US'.

 

Hard choices must be made, and those making the choices tend to think of themselves first, so it isn’t going to get any better for the masses. Cut government spending, and the masses suffer. Keep spending, and inflation hurts….the masses.

 

So inflation has not been a “tax on the poor”. It is a consequence of measures taken to lift the poor from poverty, in contrast to what the poor experienced from Oldavai Gorge until maybe the Marshall Plan or Lyndon Johnson’s Great Society.

In a former post, I recommended that Walker88 posts should be part of any high school curriculum in the US. Now I would augment my request: Everyone contemplating studying "economy" must read Walker88 comments first.

 

As economic "inner workings" of complicated constellations are explained here by Walker88 in terms, that even a young person, starting his career at McDonalds is capable of understanding. Priceless.

[gamb00ler]

6 hours ago, Lacessit said:

It's called the dismal science for a reason.

 

I'll stick to physics and chemistry, at least they make sense.

I dunno.... does quantum entanglement make sense to you?

Perhaps it's time to incorporate a greater measure of faith in my worldview.

[swissie]

Not to forget my dear friends.

John Maynard Keynes developped a truly remarkable economic system to keep "economic growth" in balance over time.

- During economic downturns, the state will borrow money to "soften" downturns. Once the (inevitable) recovery takes place, the borrowed funds will be repaid. A brilliant concept.

Unfortunately: During economical upswings, the borrowed monies were never paid back.

Under these circumstances, Keynes model of long-term economical equilibrium never had a chance.

 

[gamb00ler]

9 minutes ago, swissie said:

- During economic downturns, the state will borrow money to "soften" downturns. Once the (inevitable) recovery takes place, the borrowed funds will be repaid. A brilliant concept.

Unfortunately: During economical upswings, the borrowed monies were never paid back.

Under these circumstances, Keynes model of long-term economical equilibrium never had a chance.

This is one of the greatest weaknesses of democracy.  Too many voters have a short memory, a long term addiction to comfort and an aversion to economics.

[swissie]

1 hour ago, gamb00ler said:

This is one of the greatest weaknesses of democracy.  Too many voters have a short memory, a long term addiction to comfort and an aversion to economics.

In other words: The "state " give me everything" and I give nothing back, The richer I am, the less I give back to society. Things are looking good, don't they?

[1FinickyOne]

Peinting money - the more money in circulation, the less valuable it is... 

[thaibeachlovers]

16 hours ago, GammaGlobulin said:

What’s the cause of rampant inflation in the USA?

Simples- the gov'ment has been printing money backed with nothing for years. More paper floating around means it's worth less.

[mdr224]

If only there were a way to protect ourselves from inflation

[thaibeachlovers]

7 hours ago, swissie said:

Politicians or wannabe autocrats know the average person is dumb,

Well you certainly got that right, unfortunately the politicians are also dumb.

 

[thaibeachlovers]

8 hours ago, Walker88 said:

Politicians or wannabe autocrats know the average person is dumb,

Well you certainly got that right, unfortunately the politicians are also dumb.

[thaibeachlovers]

8 hours ago, Walker88 said:

Rent, at least rent relative to home ownership, is also down. In fact, it is now 35% cheaper to rent than buy a home in the US.

In countries with too many people wanting places to live that don't exist, because of government policies, rents increase. While they may be cheaper than buying a home, both are unaffordable to many.

[Hawaiian]

15 hours ago, Dcheech said:

Jesus Wept.

 

Have you not noticed inflation in Thailand? You have not noticed that worldwide inflation bedevils countries from China to Canada, Albania to Argentina today? Next rhetorical question,  did you notice another worldwide event in the last five years, something besides the ever-growing WOKE menace.  ...... Say a Virus?

Every country in the world was pumping money into their economy to keep it chugging down the road and not spiral into recession/depression. When confronted with a pandemic, or lockdown, like the recent worldwide virus originating in Wuhan China. Countries pump money into the economy to keep people spending, to keep the economy from locking up. The by product is inflation and yes it is worldwide. NOTE recent US campaign rhetoric aside (as in Bidenomics) Trump started doing exactly this in his last year, 2020. No real choice, it is the only economic answer that might work. Biden continued it. This is a no brainer as only one economic theory works in these conditions  - just deal with it - 'Keynsian economics'. as true today as it was in the 1930's and one that conservatives and liberals use. Conservatives just don't like to talk about it, but they use it. 

Recession/Depression - or - Inflation?

It is not even a choice GG

 

 

I came to same conclusion even before finishing your post.  I prefer inflation over depression because IMO the later is more damaging and a lot harder to fix.

[mdr224]

Reading this thread, some folks aware of the problem. Why are they not aware theres a solution?

[thaibeachlovers]

8 hours ago, Walker88 said:

That puts pricing power into the hands of the elite, who can then impose their own wants on to the masses.

The French aristocracy worked along those lines till the revolution, and many literally lost their heads.

The present cabal of "elites" might do well to remember that.

[thaibeachlovers]

Just now, mdr224 said:

Reading this thread, some folks aware of the problem. Why are they not aware theres a solution?

Because the solution will not happen. The elites benefit from the present situation ergo nothing will change.

[mdr224]

Just now, thaibeachlovers said:

Because the solution will not happen. The elites benefit from the present situation ergo nothing will change.

The solution is here, man. For those willing to opt out, theres been a way for the last 15 years

[thaibeachlovers]

8 hours ago, Walker88 said:

I am not of the opinion that things will get any better, because society has much less need for the number of people it has.

On that I agree 100%. The world functioned reasonably well, at least for western countries when world population was about 3 billion. It's now 8 billion and rapidly increasing. That might not matter except for the fact that AI robotics is going to remove the work that most of them do when they illegally enter western countries. I see nothing but societal chaos when that <deleted> hits the fan.

IMO it's going to get really nasty and there is no telling what the human world will look like when it's over.

[howto]

No Energy Production,  

EPA rules,  

DEI,  

Investment in Green Energy,  

Illegal Immigration,  

Insane CR Policy by Congress, 

Sanctions,  

Empire Building by USA,  

Wars,  

BRICS,  

Biden, Liberals, 

Greed,  

Etc,,,  

[Gsxrnz]

Government is the sole cause of inflation. Government interference in any form adds cost, increases and encourages waste, reduces productivity, and endorses corruption.

 

I know a bloke who recently had an oversized garage constructed on his rural property, 20 miles from nowhere. Twelve months of design, permits, licences, approvals, inspections etc. Two days to construct the building. 60% of the cost consumed by various government agencies.

 

And sadly, we allowed the government to manage mismanage our health care and decide if we live or die. There's a reason government don't get involved in the production of beer. 

 

 

[thaibeachlovers]

7 minutes ago, Gsxrnz said:

I know a bloke who recently had an oversized garage constructed on his rural property, 20 miles from nowhere. Twelve months of design, permits, licences, approvals, inspections etc. Two days to construct the building. 60% of the cost consumed by various government agencies.

If government functioned properly 70 % of the bureaucrats would have to get a proper job that pays less.

If the regulations that add unnecessary costs didn't exist entire departments could be closed.

[EVENKEEL]

8 minutes ago, Gsxrnz said:

Government is the sole cause of inflation. Government interference in any form adds cost, increases and encourages waste, reduces productivity, and endorses corruption.

 

I know a bloke who recently had an oversized garage constructed on his rural property, 20 miles from nowhere. Twelve months of design, permits, licences, approvals, inspections etc. Two days to construct the building. 60% of the cost consumed by various government agencies.

 

And sadly, we allowed the government to manage mismanage our health care and decide if we live or die. There's a reason government don't get involved in the production of beer. 

 

 

I'm in process of replacing a house that burnt down. A forking nightmare. The cost of licensed tradesman is beyond absurd. And, yes mine is rural property. Just to tap a well could run $50,000. In Calif, one reason is minimum wage in fast food is $20/hr so a person with skills is asking stupid money. I don't know, it seems hopeless.

[Lacessit]

7 hours ago, gamb00ler said:

I dunno.... does quantum entanglement make sense to you?

Perhaps it's time to incorporate a greater measure of faith in my worldview.

I quit when they brought in Hamiltonian quaternions.

[EVENKEEL]

13 hours ago, pomchop said:

Greed....fueled by too many people that do not know the difference between what they need and what they want.

That's a big part of it. Used to be a 1200 sq ft home was adequate for a family, now it has to be 3000 sq ft. Growing up I can count on one hand the times we went out to eat, no take out. Now it's a way of life.