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I Don't Know If Joe Can Do It

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ondma

Platinum Member
Mar 18, 2018
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The inflation rate just released today was 5.39% for September. Slightly higher than the Aug rate actually.
Anybody that sees a downward trend here is dreaming: https://ycharts.com/indicators/us_inflation_rate
More than half of the increase came from food and shelter. Of course, we can avoid paying for those right? /s
 

fskimospy

Elite Member
Mar 10, 2006
73,398
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The inflation rate just released today was 5.39% for September. Slightly higher than the Aug rate actually.
Anybody that sees a downward trend here is dreaming: https://ycharts.com/indicators/us_inflation_rate
More than half of the increase came from food and shelter. Of course, we can avoid paying for those right? /s
You do realize there's a reason why core CPI is used and not headline CPI, right?

This is what always happens in the inflation debate. Despite inflation being disastrously low over the last 12 years or so people keep insisting it's way too high. Trust me, there's nothing I would like better than sustained ~3-4% inflation for the next few years. It's already coming down though and it will probably continue down, unfortunately.

It's one thing I wish the media would be better about because the average American doesn't realize that inflation is good for them.
 

Ajay

Diamond Member
Jan 8, 2001
9,506
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Okay, I, along with my good buddy Paul (j/k) must eat some crow:

Krugman-Furman-tweet.png

Actually, it doesn't appear that Nobel Laureates eat crow ;)
 

Ajay

Diamond Member
Jan 8, 2001
9,506
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Although the guy responding to Krugman is saying that he should never have used median CPI at all, not that he should use it now.
Okay, thanks. I'm going to have to mull that over a bit. Wish I'd had time to take a couple of Econ classes in college. That said, I really do not understand the panic over the current uptick in inflation after a decade + of very low levels. There has been a huge shock to the world wide economy and social fabric. There are natural consequences from that, and governments, which tend to be reactive by nature, can only do so much to reduce the rate of increase and decrease then time it takes to get back to historical averages. Large private corporations must also do their part, and Biden is giving them a swift kick in the ass to do just that. **

I do hope inflation doesn't crash back down too fast, mainly because I want employers to respond to the labor shortage with better wages and benefits, since our government can't seem to get that done (not for a lack of trying by the democrats).



** The EU is in the midst of a push to get companies off their butts and become part of the solution. Some of their labor shortages are due to the systematic neglect of recruitment and training of certain jobs that have become less desirable, like trucking and nursing. Both of these going back 10-20 years in some countries. One of the suggestions on their table - incentives and policies that increases wage increases in certain jobs critical normal operation of a nation-state; republican politicians would collectively faint over such an idea. Human and physical 'infrastructure' development, duh!
 

IronWing

No Lifer
Jul 20, 2001
62,642
15,988
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The average American is a net debtor, inflation reduces the real value of debt.
The flip side is that the responsible people (poke :p ) save their pennies and are getting screwed as inflation has been consistently higher than interest rates on savings.
 

fskimospy

Elite Member
Mar 10, 2006
73,398
25,186
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The flip side is that the responsible people (poke :p ) save their pennies and are getting screwed as inflation has been consistently higher than interest rates on savings.
A lot of responsible people have a fixed rate mortgage worth more than whatever they have in their savings account so it helps them too.
 

uclaLabrat

Diamond Member
Aug 2, 2007
4,758
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If you're saving your money (more than you need as a buffer for emergencies or other liquidity situations) by letting it sit in a savings account...WTF?

Not a financial guru by any stretch but doesn't it make sense to stash it anywhere else so it will accrue some interest?
 
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ondma

Platinum Member
Mar 18, 2018
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The average American is a net debtor, inflation reduces the real value of debt.
That is only part of the story though. If one's wages don't keep up with inflation, they they have less buying power, leading to even more borrowing, which leads to more debt, which leads to devoting more of his income to paying interest. Rinse and repeat, and you have a cycle you can never got out of.

So whether inflation is "good" or not is not so simple as Skimpy want to make it. It is highly dependent on one's situation. It also tends to hurt most those who are on the lower end of the economic scale. Yes, the value of one's debt may decrease, but one tends to keep adding debt also.
 

fskimospy

Elite Member
Mar 10, 2006
73,398
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That is only part of the story though. If one's wages don't keep up with inflation, they they have less buying power, leading to even more borrowing, which leads to more debt, which leads to devoting more of his income to paying interest. Rinse and repeat, and you have a cycle you can never got out of.
Wages do rise with inflation though. That's basically the primary mechanism for inflation! It's also why the Fed's constant opposing pressures are full employment and inflation. When you have full employment businesses have to compete for workers and wages rise, causing inflation.

So whether inflation is "good" or not is not so simple as Skimpy want to make it. It is highly dependent on one's situation. It also tends to hurt most those who are on the lower end of the economic scale. Yes, the value of one's debt may decrease, but one tends to keep adding debt also.
No it does not, people on the lower end are those it helps the most as they tend to be the most indebted.

To see why I'm right about this just think about who is constantly arguing for higher interest rates (and therefore lower inflation): rich people. This is not because they are so kind and generous to poor people and want to help them out.
 
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