The reason we should not be concerned about inflation

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Oldag2020
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In reply to Nitro Power • 7:31a, 6/19/21
AG
Nitro Power said:
You are still with this ***** First time it was humorous, now it's pathetic. Devaluation of money is not a good thing. Hope this helps.


Devaluation is good. It allows us to compete more effectively in foreign markets - leads to domestic job growth.
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BadMoonRisin
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7:31a, 6/19/21
AG
Hey OP let's do a thought experiment.

Let's print $1M for each and every person that lives in the United States and give it to them.

Now that we are all millionaires, what would happen to the price of goods, that we cant just make up out of nowhere and still need to be produced?
It's not the severity of the punishment that deters crime; it's the certainty of it.
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Oldag2020
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In reply to BadMoonRisin • 7:36a, 6/19/21
AG
BadMoonRisin said:
Hey OP let's do a thought experiment.

Let's print $1M for each and every person that lives in the United States and give it to them.

Now that we are all millionaires, what would happen to the price of goods, that we cant just make up out of nowhere and still need to be produced?


Obviously there is a hard limit on spending. The increase in demand must remain below our economic productive capacity.

There is an optimal level of spending(debt). Many studies have suggested our current optimal debt/gdp level is 185%. Currently our debt/gdp is around 125%. Clearly a far cry from optimal.
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mazag08
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In reply to Oldag2020 • 7:51a, 6/19/21
AG
Oldag2020 said:
BadMoonRisin said:
Hey OP let's do a thought experiment.

Let's print $1M for each and every person that lives in the United States and give it to them.

Now that we are all millionaires, what would happen to the price of goods, that we cant just make up out of nowhere and still need to be produced?


Obviously there is a hard limit on spending. The increase in demand must remain below our economic productive capacity.

There is an optimal level of spending(debt). Many studies have suggested our current optimal debt/gdp level is 185%. Currently our debt/gdp is around 125%. Clearly a far cry from optimal.


Says the kid who's never had to pay a bill with his own money.
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Deputy Travis Junior
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In reply to BudAg97 • 8:17a, 6/19/21
BudAg97 said:
OP, at least cite that wall of garbage you pasted.
Post a link.

Unless it was a result of too much Woodford.



He read an economist (Stephanie Kelton) so stupid that only Bernie listens to her.
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mazag08
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In reply to Deputy Travis Junior • 8:22a, 6/19/21
AG
Deputy Travis Junior said:
BudAg97 said:
OP, at least cite that wall of garbage you pasted.
Post a link.

Unless it was a result of too much Woodford.



He read an economist (Stephanie Kelton) so stupid that only Bernie listens to her.


That was before he tried to claim that Jamie Dimon and Chase holding cash at the moment was because he wasn't worried about inflation when the mans exact quote was the exact opposite.

His views are so backwards that when the truth is shined he is forced to look away because it challenges everything he's been taught and think he knows. He can't fathom economics working in any way that doesn't include massive government spending and high debt.
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JamesPShelley
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8:22a, 6/19/21
"Inventing a perpetual motion machine would make you wealthy beyond your dreams. There will be no perpetual motion machines".

Mr. Kristifferson - Keithley Junior High
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Deputy Travis Junior
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In reply to mazag08 • 8:37a, 6/19/21
Yep. I'm still waiting for the 100T of GDP growth from the 20T we spent over the last decade. I mean the multiplier is just 1 divided by our savings rate of 20%, right?
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BuddysBud
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In reply to rab79 • 8:39a, 6/19/21
AG
rab79 said:
Oldag2020 said:
BuddysBud said:
Oldag2020 said:
Demand is temporarily outpacing our production(supply). Due to covid shut downs and supply chain disruptions. Ex. Lumber prices were inflated, now they are correcting themselves.

Once our supply chains are back up to full capacity, the added demand created by the stimulus will not cause long lasting inflation.

Our productive capacity is so high, in fact, I believe our biggest fear should be deflation, not inflation. Our productivity growth is not disappearing any time soon. The inputs to production are 1. Technological advancements and 2. Increase in labor force. Our computing power doubles every 18 months. Clearly this growth will not disappear.

It's no accident that we have continued to spend more and more throughout the last several decades with little to zero long term negative consequences.

In fact, the fed has struggled the last decade to maintain their inflation level goal of 2%. This even Despite massive spending in 2008 and artificially low interest rates.


Another reason we should not be concerned by the massive spending is that $1 in government spending = greater than $1 in gdp growth.
Gdp growth = 1/ the propensity to save
The propensity to save is currently ~ 20%
Therefore every dollar spent today grows our gdp tomorrow by $5

This $5 of gdp growth then increases tax revenue by $5.
This increase in tax revenue is used to service the debt.

Basically, we can spend as much as we want with little to zero negative consequences. Long term inflation is not on the way.

Be sure to allocate portfolios accordingly.


This reads like a perpetual motion machine.
Put a big fan in front of a windmill to blow on the blades to generate electricity that powers the fan. The fan blowing the windmill will never stop because the windmill keeps turning by the fan blowing on it. Easy.

Look, and endless supply of energy.


That is precisely where we are. I don't believe I could have said it any better!
op is as ignorant about physics as they are about economics


OP is more than one person?
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FJB
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8:42a, 6/19/21
AG
Did Maplethorpe reincarnate as the OP?

If not, I am guessing he is smiling somewhere
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mazag08
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In reply to FJB • 8:44a, 6/19/21
AG
SexyAg said:
Did Maplethorpe reincarnate as the OP?

If not, I am guessing he is smiling somewhere


Eerily similar aren't they?
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Win At Life
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In reply to Oldag2020 • 9:06a, 6/19/21
AG
You keeo saying inflation is transitory. If so, why does a 3B/2B house PERMANENTLY cost more than the $24 000 it did in the 70's. If inflation is only transitory, when will things ever return to what they cost in the 70's?
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BCG Disciple
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9:24a, 6/19/21
AG
OP's perspective is the trending left wing theory, MMT. It is a circular theory being used to try to explain the lack of inflation when we injected trillions into our money supply during the Great Recession QE. It is a socialists power grab of an explanation.

Why didn't we have massive inflation in 2012-2016? MMT says it's because government can print without boundaries. It states the only check is inflation. It's old theory dressed up as new, with a dash of more nebulous concepts. The biggest criticism here is that MMT offers no explanation on how we get to inflation. It takes the approach used to identify porn - I'll know it when I see it. So when do we turn the printers off? Well, when there is inflation. When can we see inflation? Errrr, when it's here!!

Friedman type economics explains the lack of inflation in a way that does not attempt to move us toward socialism. We did not have the expected money multiplier because banks and companies sat on QE injections to shore up balance sheets. It did not create new loans, new deposits, new loans, etc. Partly because they didn't know the true fallout from the housing crisis, and partly because the administration was not business friendly in their rhetoric and a bank preferred to not lend and a business preferred to not spend on capex. It's why you also saw an explosion of economic activity in the trump era. To a certain extent, it was pent up demand from an idiotic administration.

In my mind, we will certainly see inflation this time around. Completely different environment with healthy balance sheets for the most part. Maybe we see USD spent internationally as a result of administration. Right now we're seeing this money go into real estate with a record number of investor buyers as smart money seeks an inflationary hedge (real estate).
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Cassius
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In reply to BCG Disciple • 9:30a, 6/19/21
BCG Disciple said:
OP's perspective is the trending left wing theory, MMT. It is a circular theory being used to try to explain the lack of inflation when we injected trillions into our money supply during the Great Recession QE. It is a socialists power grab of an explanation.

Why didn't we have massive inflation in 2012-2016? MMT says it's because government can print without boundaries. It states the only check is inflation. It's old theory dressed up as new, with a dash of more nebulous concepts. The biggest criticism here is that MMT offers no explanation on how we get to inflation. It takes the approach used to identify porn - I'll know it when I see it. So when do we turn the printers off? Well, when there is inflation. When can we see inflation? Errrr, when it's here!!

Friedman type economics explains the lack of inflation in a way that does not attempt to move us toward socialism. We did not have the expected money multiplier because banks and companies sat on QE injections to shore up balance sheets. It did not create new loans, new deposits, new loans, etc. Partly because they didn't know the true fallout from the housing crisis, and partly because the administration was not business friendly in their rhetoric and a bank preferred to not lend and a business preferred to not spend on capex. It's why you also saw an explosion of economic activity in the trump era. To a certain extent, it was pent up demand from an idiotic administration.

In my mind, we will certainly see inflation this time around. Completely different environment with healthy balance sheets for the most part. Maybe we see USD spent internationally as a result of administration. Right now we're seeing this money go into real estate with a record number of investor buyers as smart money seeks an inflationary hedge (real estate).


Inflation did occur.... In the stock market. I think a lot of that money was moving around inside the market. If you look at the end of 2013, when we ended QE, the market was flat until Trump took over.
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mazag08
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9:41a, 6/19/21
AG
https://www.aei.org/op-eds/is-the-us-economy-headed-toward-an-inflation-crisis/
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Trucker 96
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9:44a, 6/19/21
"CPA material"? I AM a CPA and this is crap.
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Tailgate88
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In reply to Oldag2020 • 9:47a, 6/19/21
AG
Oldag2020 said:
DallasAg 94 said:
Onceaggie2.0 said:
I hope OP is not in charge of anything important in their life
He is the guy with the Capital One credit card being charged 30% for a maxed out card, brand new $50K car at 10% interest, trying to get a $400K mortgage at 5% interest while making $30K/yr and can't understand why he is broke.


I'm not sure you comprehend the difference in government debt and individual debt.


How embarrassing that you have an Ag Tag.
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Trucker 96
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In reply to Oak Tree • 9:49a, 6/19/21
Oak Tree said:
Grapes said:
Greece was not the worlds reserve currency.

What does it matter if China convinces its sphere of influence to do business in the yuan. The entire world is not going to abandon the US.

Absolute worst case conservative Americans get what they want. An isolated America.


Conservatives want the Fed to stop printing money, the House to massively reduce spending, and pay off the debt. Conservatives will never get what they want because the DC Republicans don't represent them.

Democrats are giving US enemies, China and Russia, money and control over our country. Is being against that make me an isolationist?


The american public, half of which pays no income taxes, is to blame for DC Republicans being unwilling to implement disciplined policy. They don't have the stomach to do what is needed because they lose half of the public and lobbyist funding who want that govt pork right off the top
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Buglerank62
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9:54a, 6/19/21
AG
tell that story to the people of Greece. There is no free lunch. If the government keeps spending more and more and adding to the debt there will be a day of reckoning I can assure you. It may be you or your kids or your grand kids but it will come. See Venezuela, Cuba, Greece and Italy.
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82 TAMU Ag
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In reply to Oldag2020 • 9:56a, 6/19/21
AG
You sure use a lot of words to reach the wrong conclusion. There are help wanted and hiring now signs everywhere I go. Employers are having to pay more to lure lazy people off the sofa and wean them from the government teat. Those costs get passed on to consumers.

Our government continues to print trillions of dollars in an attempt to prop up a house of cards that a fart or sneeze could blow over. You can't print that much money and expect no inflation.
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mazag08
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In reply to Buglerank62 • 9:57a, 6/19/21
AG
Buglerank62 said:
tell that story to the people of Greece. There is no free lunch. If the government keeps spending more and more and adding to the debt there will be a day of reckoning I can assure you. It may be you or your kids or your grand kids but it will come. See Venezuela, Cuba, Greece and Italy.


Well you see, Greece isn't the world reserve currency. So economics works on them. We don't have to worry about economics because our all knowing FED has defeated economics.

Or something like that.
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Helicopter Ben
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In reply to Oldag2020 • 9:59a, 6/19/21
Look man, I like that you're discussing this topic. Not enough people care about these issues and I think this is the single biggest problem we are facing today. Of course, it's all caused by too much government. Giving government control of the money supply is what allowed it to metastasize to the destructive monster it currently is.

But the problem is that "what you know, just aint so."

I'm going to stop beating around the bush and state it plainly. Keynesian thinking is WRONG.

Please be honest here. Have you read ANY opposing viewpoints from Austrian or supply-side economists? People like Hayek, Mises, or Rothbard?

If you read a few books or essays from any of those guys and still think the same way, I'll have to believe you're trolling.
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mazag08
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In reply to Helicopter Ben • 10:01a, 6/19/21
AG
Helicopter Ben said:
Look man, I like that you're discussing this topic. Not enough people care about these issues and I think this is the single biggest problem we are facing today. Of course, it's all caused by too much government. Giving government control of the money supply is what allowed it to metastasize to the destructive monster it currently is.

But the problem is that "what you know, just aint so."

I'm going to stop beating around the bush and state it plainly. Keynesian thinking is WRONG.

Please be honest here. Have you read ANY opposing viewpoints from Austrian or supply-side economists? People like Hayek, Mises, or Rothbard?

If you read a few books or essays from any of those guys and still think the same way, I'll have to believe you're trolling.


I tried to educate him on another thread. It's fruitless. His mind has been subversed, and like all who are religiously fanatical about backwards economics, you can tell him the sky is up and he won't believe you.
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Trucker 96
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10:05a, 6/19/21
The sky only appears to be up because the perpetual energy machine keeps it that way
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Dad-O-Lot
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10:08a, 6/19/21
AG
I think it could be argued that savings could grow long term GDP more than spending. If I recall correctly, a bank can loan $10 for every $1 they have on deposit. So a savings of $1 can generate $10 in capital for construction, equipment, etc...
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Gaw617
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10:15a, 6/19/21
That post wasn't even an original thought by the OP. It was copied and pasted from socialist think tank. If you don't understand the basics of finance like if you spend more than you bring in that is bad. I am praying for your family who entrusts you to give them financial security.
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Helicopter Ben
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In reply to mazag08 • 10:16a, 6/19/21
You're probably right. No amount of reason or evidence has worked on my MIL so I simply can't talk to her about econ or politics anymore. This meme seems to sum up this thread pretty well:


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DallasAg 94
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In reply to Oldag2020 • 10:25a, 6/19/21
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DallasAg 94
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In reply to kb2001 • 10:32a, 6/19/21
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BCG Disciple
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In reply to Cassius • 10:39a, 6/19/21
AG
I agree with that. The money simply sat on corporate balance sheets, increasing equity valuations. Should have said inflation in the traditional metric sense of the term (CPI, etc).
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Helicopter Ben
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In reply to DallasAg 94 • 10:42a, 6/19/21
DallasAg 94 said:

Gawd I hope he is in the Anthropology Dept because to think this came out of the Business ... or Economics Dept is downright frightening.
I hate to break it to you, but this stuff is coming out of the econ departments now. I was lucky enough to have a professor who taught both schools of thought. Most professors nowadays teach almost exclusively Keynesian and MMT.

As I said in a previous post, my MIL is an economics professor and she teaches almost exactly what the OP is saying. I even tried to get her to read just one book by an Austrian economist and she wouldn't finish the first chapter. I guess it really is like religious fanaticism. As soon as she read something she didn't like, she was done. Never mind how logical or well reasoned his arguments were.
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Krombopulos Michael
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In reply to Helicopter Ben • 10:44a, 6/19/21
Helicopter Ben said:
Look man, I like that you're discussing this topic. Not enough people care about these issues and I think this is the single biggest problem we are facing today. Of course, it's all caused by too much government. Giving government PRIVATE CENTRAL BANKS control of the money supply is what allowed it to metastasize to the destructive monster it currently is.

But the problem is that "what you know, just aint so."

I'm going to stop beating around the bush and state it plainly. Keynesian thinking is WRONG.

Please be honest here. Have you read ANY opposing viewpoints from Austrian or supply-side economists? People like Hayek, Mises, or Rothbard?

If you read a few books or essays from any of those guys and still think the same way, I'll have to believe you're trolling.
FIFY.....

I give OP credit, at least he's researching the topic and putting his thoughts out there. Granted he's completely wrong but at least he studying, unlike the majority of our population. Maybe he'll stumble into another camp down the line.


OP if you are listening, Please define Transitory. i.e. When will I be able to pay less than $12 for a Chicken Sandwich at my favorite local independently owned shop down the street. Last year I was paying $9.50.
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aunuwyn08
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10:48a, 6/19/21
AG
Here's the central problem with MMT as advocated by economists, it myopically assumes that the monetary and fiscal consequences of it are derived from and solely driven by the economy itself - they are not.

MMT advocates assume they've found a magical process to ignore inflation because they've eschewed modern political-economic circumstances. It's not that we can print infinite money with no repercussions because we're a reserve currency, it's because we've used outsourcing to the third world to "capture" our inflationary policy.

China has been arranging consumer goods production for us at an accelerated rate at a global market price which is independent of US fiscal and monetary policy. The PRC takes it one step further by not allowing Chinese firms to invest or move US dollars into other assets without their approval via capital controls.

This works fine for us as long as China wants to subsidize our consumption, but what happens as soon as they start to increase goods consumption for their own population instead of prioritizing exports? That's right, a global collapse in consumer goods supply occurs as artificially lowered demand is unleashed.

Consumer goods have shown no sign of inflation over the last 30 years because the third world has bankrolled our outsized consumption, and hidden our excess dollars within their own internal economies. In contrast, asset prices have surged in that period because the third world can neither create more US-based assets nor can it skim off extra dollars to produce these assets.
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PacoPicoPiedra
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In reply to aTmAg • 10:50a, 6/19/21
AG
aTmAg said:
Remember, keynesians have no clue what they are talking about.

This thread is a good example.

Supposed Keynesians only follow one-half of Keynes principles, for the government to borrow and deficit spend, which Keynes said should only happen during a down economy. Keynes other half was the government should focus on paying down debt when the economy is on an upswing. Nowadays, our government lives in a continual realm of deficit spending and our mandatory budget items growing exponentially won't allow us to ever climb out of that hole. Calling them Keynesians is a bit of a fallacy.
Conspiracies are the norm, not the exception.
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DallasAg 94
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In reply to BCG Disciple • 10:59a, 6/19/21
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