The Inflation Thread

[AnBr]

robertreich.substack.com/p/truth-about-inflation

Yesterday, the Fed’s policy committee announced it would both end its bond-buying program and likely raise interest rates sooner than had been expected. “Inflation is more persistent and higher, and that the risk of it remaining higher for longer has grown,” Fed chair Jerome Powell explained. Translated: Powell and the Fed are about to slow the economy — even though we’re still at least 4 million jobs short of where we were before the pandemic. And even though, as a result, millions of American workers won’t get the raises they deserve.

I think that’s a big mistake. Powell’s medicine has nothing to do with the real reason for inflation: the increasing concentration of the American economy into the hands of a relative few corporate giants with the power to raise prices.

Capitalism dies without strong regulation.

[AnBr]

[AnBr]

@Nick Hanauer said:

Let’s cut through the trickle-down BS and get real: Higher wages don’t trigger inflation. Corporate greed does.

Journalist Matt Stoller estimates that 60% of the price increases that ordinary Americans are paying are going directly to corporate profits, not to compensate for global supply issues or compensate for higher-priced goods.

Don’t let anyone tell you workers are to blame for inflation. When we raise wages, consumers have more to spend, and our economy can grow from the middle out.

mattstoller.substack.com/p/corporate-profits-drive-60-of-inflation

[LFC]

Here's a bit of analysis that attempts to find out how much of what we've got it actual inflation and how much is corporate price gouging. Spoiler Alert: We're getting f***ed. The pandemic and resulting economic issues have been a boon to a number of American corporations.

[goldenvalley]

Hello Americans...inflation is not unique to this country.  It's a worldwide problem.  People fail to realize how interconnected the world is.

The grinding war in Ukraine, ongoing supply chain chokeholds, Covid-related lockdowns in China and dizzying rises in energy and food prices are battering economies all along the income ladder, saddling them with slower growth and surging inflation.

This suite of problems is “hammering growth,” David Malpass, president of the World Bank, said in a statement. “For many countries, recession will be hard to avoid.”

Global growth is expected to slow to 2.9 percent this year from 5.7 percent in 2021. The outlook, delivered in the bank’s latest Global Economic Prospects report, is not only grimmer than one produced six months ago, before war erupted in Ukraine, but also below the 3.6 percent forecast in April by the International Monetary Fund.

Growth is expected to remain muted in 2023. Growth for the 2020s is expected to fall below the average achieved in the previous decade, the report said.

[LFC]

Jun 7, 2022 15:15:55 GMT goldenvalley said:

Hello Americans...inflation is not unique to this country.  It's a worldwide problem.  People fail to realize how interconnected the world is.

Biden did it, you libtard.

[LFC]

The numbers for June just came out. Ouch!

Inflation hit 9.1 percent in June, the highest rate seen in the U.S. since November 1981 amid rocketing prices for fuel, rent, and groceries. The Consumer Price Index, which acts as a gauge of inflation, spiked 1.3 percent from May to June, while the core CPI—which excludes food and energy—was up 5.9 percent from the start of 2022 to June. The huge rise is greater than many economists had forecast, indicating that inflation is continuing a widespread reduction in purchasing power across America, though the index number for July is likely to show a fall as fuel prices decline. The Labor Department’s bleak report on Wednesday could also set the stage for another hike in interest rates from the Federal Reserve later this month.

Fuel prices were expected but if you look at the FRED graph on rents you can see that the slope of the increase became steeper around mid-2021. I really don't understand how the lower 50% of earners in this country can function anymore.

[Bact PhD]

Jul 13, 2022 14:55:41 GMT LFC said:

The numbers for June just came out. Ouch!

Inflation hit 9.1 percent in June, the highest rate seen in the U.S. since November 1981 amid rocketing prices for fuel, rent, and groceries. The Consumer Price Index, which acts as a gauge of inflation, spiked 1.3 percent from May to June, while the core CPI—which excludes food and energy—was up 5.9 percent from the start of 2022 to June. The huge rise is greater than many economists had forecast, indicating that inflation is continuing a widespread reduction in purchasing power across America, though the index number for July is likely to show a fall as fuel prices decline. The Labor Department’s bleak report on Wednesday could also set the stage for another hike in interest rates from the Federal Reserve later this month.

Fuel prices were expected but if you look at the FRED graph on rents you can see that the slope of the increase became steeper around mid-2021. I really don't understand how the lower 50% of earners in this country can function anymore.

They’re conditioned to bring in perpetual debt.

[goldenvalley]

Jul 13, 2022 19:25:21 GMT Bact PhD said:

Jul 13, 2022 14:55:41 GMT LFC said:

The numbers for June just came out. Ouch!

Fuel prices were expected but if you look at the FRED graph on rents you can see that the slope of the increase became steeper around mid-2021. I really don't understand how the lower 50% of earners in this country can function anymore.

They’re conditioned to bring in perpetual debt.

Massive credit card debt.  

[AnBr]

Rapid Money Supply Growth Does Not Cause Inflation

Neither do rapid growth in government debt, declining interest rates, or rapid Increases in a central bank’s balance sheet

Monetarist theory, which came to dominate economic thinking in the 1980s and the decades that followed, holds that rapid money supply growth is the cause of inflation. The theory, however, fails an actual test of the available evidence. In our review of 47 countries, generally from 1960 forward, we found that more often than not high inflation does not follow rapid money supply growth, and in contrast to this, high inflation has occurred frequently when it has not been preceded by rapid money supply growth.

The purpose of this paper is to present these findings and solicit feedback on our data, methods, and conclusions.

To analyze the issue, we developed a database of 47 countries that together constitute 91 percent of global GDP and looked at each episode of rapid money supply growth to see if it was followed by high inflation. In the majority of cases, it was not. In fact, the opposite was true—a large percentage of the cases of high inflation were not preceded by high money supply growth. These 47 countries all rank within the top 70 largest economies as measured by GDP and include each of the top 20 countries. If a country was not included, it was because we could not get a complete enough set of historical data on that country.

[LFC]

"Inflation."

Five major oil and gas companies are set to release their Q2 earnings reports on Thursday and Friday. The numbers are already astronomical: Shell announced Thursday it had made a jaw-dropping $11.5 billion in profit last quarter, smashing a record it set earlier this year. The industry is expected to log a record $50 billion profit overall, while oil giant ExxonMobil may also post its biggest quarterly profit to date on Friday. But this huge influx of cash, new labor numbers suggest, may not translate into providing more jobs in the U.S.

An analysis of Texas oil and gas employment numbers from the Institute for Energy Economics and Financial Analysis (IEEFA) shows that, despite a short-term burst of jobs over the past few months, the oil and gas industry in Texas, the nation’s biggest oil and gas producer, has been lagging behind overall job growth in the state. Jobs in the industry in Texas are still behind pre-pandemic numbers, despite an incredible financial windfall over the past few months.

“The industry was behind the curve on production, and now they’re trying to catch up,” said Trey Cowan, an analyst at IEEFA who comprised the Texas numbers from Bureau of Labor Statistics data. “Relative to prior cycles, it’s much less hiring, meaning they don’t need as many people to create production as they did five to six years ago.”

[LFC]

More details on "inflation."

As fossil fuel giants this week reported record profits for the second quarter, an analysis out Friday highlighted how eight oil companies have raked in nearly $52 billion over the past three months "while Americans continue to struggle at the pump."

The review by the watchdog group Accountable.US revealed that from April through June, Chevron, Equinor, ExxonMobil, Hess Corp, Phillips 66, Shell, and TechnipFMC "saw their profits skyrocket from the same time period last year, with income shooting up 235%."

The analysis also pointed out that leaders at Equinor, Halliburton, Hess Corp, and TechnipFMC have boasted "about excellent quarters while dismissing high prices for consumers."

Jordan Schreiber of Accountable.US called the companies' collective profit boost "eye-popping" but also unsurprising "after spending the past three months price gouging consumers by raising gas prices to unprecedentedly high levels."

"Make no mistake; these profits mark a large transfer of wealth from working- and middle-class people to wealthy oil executives and shareholders," she said. "While many consumers were feeling the heavy burden of a life necessity suddenly doubling in price, oil executives were keeping prices high to maximize their profits."

The Q2 profits of U.S. energy giants Chevron and Exxon—$11.62 billion and $17.85 billion, respectively—along with that of Europe's largest oil company, Shell—$11.47 billion—drew widespread criticism along with calls for action by lawmakers and President Joe Biden.

[LFC]

Inflation slipped a bit more.

insert quote here

I heard on the news that two big factors that still exist in inflation are the prices of food and rents. OK, maybe there's all sorts of reasons that food is more expensive but rents? Doesn't that mostly just mean that landlords have jacked up their prices? This is what it looks like out there if you're renting.

[LFC]

Another look at rents.

[goldenvalley]

I'm not sure that the rent increases are due to old-fashioned inflation so much as it is a reflection of Covid and post Covid demands for housing in exurban and other areas. In CA at least a lot of people fled the urban areas searching for larger houses to accommodate a better work from home environment. As house prices increased people couldn't afford them and then went towards rentals...both houses and apartments.

Food..is there a lag time between when gas prices decline and when the market adjusts to lower transportation costs? Plus drought is cutting productivity of fields, causing fallowing of land, and culling of herds.

[LFC]

Here is one of many rent charts I see where rents are inflating more quickly than income. Note that this is household income and the rate of women in the workplace increased since 1960. Mother Jones also has some interesting stuff showing that this appears to be true more recently though that data only goes through 2017.

[AnBr]

Do I hear the creaking of tumbrel wheels?

[AnBr]

[goldenvalley]

Sept 14, 2022 2:39:29 GMT AnBr said:

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I'm no economist but it looks to me like over the years the US has tried only interest rate increases...heaven forbid taxes get increased or antitrust measures are enforced.

[LFC]

Why is the U.S. trying to fight global inflation with domestic interest rate policy? It seems like a reasonable question. I'd love to read what Krugman has to say about it.

southpaw
@nycsouthpaw

The inflation we’ve been experiencing is a global economic phenomenon.

Jeanna Smialek
@jeannasmialek

"We have got to get inflation behind us. I wish there were a painless way to do that; There isn't." - Chair Powell

It’s the result, imho, of effects that are likely to fade of their own accord: the burst of demand occasioned by the easing of the pandemic and constraints on the ability to move goods worldwide, many of those constraints related to the pandemic and Russia’s war of choice.

I’m not persuaded of the wisdom of responding to those global inflationary pressures by using domestic monetary policy to hammer down domestic demand and potential cause an employment recession.

It seems to me it’d be far wiser to use the global inflation phenomenon as an opportunity to promote domestic manufacturing and transportation capacity.

[Bact PhD]

Sept 22, 2022 15:59:35 GMT LFC said:

Why is the U.S. trying to fight global inflation with domestic interest rate policy? It seems like a reasonable question. I'd love to read what Krugman has to say about it.

southpaw
@nycsouthpaw

The inflation we’ve been experiencing is a global economic phenomenon.


It’s the result, imho, of effects that are likely to fade of their own accord: the burst of demand occasioned by the easing of the pandemic and constraints on the ability to move goods worldwide, many of those constraints related to the pandemic and Russia’s war of choice.

I’m not persuaded of the wisdom of responding to those global inflationary pressures by using domestic monetary policy to hammer down domestic demand and potential cause an employment recession.

It seems to me it’d be far wiser to use the global inflation phenomenon as an opportunity to promote domestic manufacturing and transportation capacity.

B…b…but, it’s Biden’s inflation, isn’t it?!?

Ditto re curiosity on Krugman’s opinion. I’ll have to interrogate Dear Son a bit; his AP Microeconomics course uses Krugman’s text.

[LFC]

Krugman on inflation (Wayback machine link). He's kinda' optimistic but still believes in rate hikes. No explanation of global vs. domestic causes which is unfortunate.

Three important reports on inflation were released this week. On Monday the Federal Reserve Bank of New York released its latest survey on inflation expectations, which was very encouraging. On Wednesday the Bureau of Labor Statistics released its latest report on producer prices, which was fairly reassuring. But the report in between — Tuesday’s bad report on consumer prices — has gotten almost all the attention.

And look, I get it. After a benign consumer price report last month, some people — including, apparently, a number of investors — had begun to hope for a fairy-tale ending to the 2021-22 inflation surge. This month’s report pretty much dashed those hopes (which, as it happens, I haven’t shared for a long time).

It’s important, however, to understand what the report did and didn’t show.

If you still believed that we might be able to bring inflation down to an acceptable level without any pain — specifically, without a rise in the unemployment rate — Tuesday’s report made it even harder to sustain that belief than it already was. There will, alas, be pain. But the report gave little indication, one way or the other, of how much pain will be needed, or how long it will have to last.

[AnBr]

[goldenvalley]

Oct 3, 2022 1:25:56 GMT AnBr said:

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Well that makes too much sense...it'll never fly because our American oligarchs will be kind and will tinkle the profits down to the rest of us.

It the meantime gas price in California are truly skyrocketing.

[LFC]

One view that today's inflation is not the same as it was in the 70s.

The profiteering needs to be addressed but that won't happen with today's Republican Party. They'll protect obscene profits to the hilt and feed their sheeple base a big bowl of "FREEDUMB!"