It has long been a rule of thumb to have $1 million saved for a comfortable retirement; but, thanks to inflation, the youngest generation of workers likely will need three times as much. According to...
Again, they have raised prices before. Inflation didn’t just start yesterday.
Rapid inflation did start at the same time the money supply was increased.
We always had inflation, but it’s false equivalence to act like the 1-2% from before is the same that we’ve seen over the past two years.
You still haven’t actually explained the causal chain between the increase in money supply and inflation
If there’s more money circulating, there’s more businesses can ask for.
Whoever has the extra cash that’s been created can spend more now, and businesses will charge more to those who can pay, rather than keep their old prices.
That’s ECON101, more money chasing the same supply of goods = prices increasing. After all, someone has more money now, and the point of having money is to get what you want.
So they spend the new cash, paying marked up rates because they can afford to now. Businesses realize they can ask for more, and now someone is willing to pay more than just a 2% increase, where before customers weren’t willing/able.
nor have you provided any counter argument to my point which provides a clear and direct explanation of what’s happening.
I asked you why inflation suddenly spiked, if businesses/capital always had this power. You made the false equivalence of the previous low inflation to the current high inflation.
If grocery bills were going up 2% a year for decades, and then suddenly start going up more than 10% a year, what happened?
Do you think they weren’t greedy before? Do you think it’s a coincidence this inflation happened the same time the Fed suddenly pumped trillions into the money supply?
Ah yes econ101, taking a complex and interconnected system that we don’t fully understand, boiling it down to its simplest and most incorrect model.
This is a global issue, the fed pumping money shouldn’t have had a big an effect. My best guess would be a mix of covid money from many countries going to the rich increasing the wealth gap, gas and oil companies hiking prices because of Russia even though a lot of them have no link to Russian oil or gas and causing a knock on effect. You’ve also got a number of bubbles around the world such as housing and car loans, these are definitely caused by greed.
Ah yes econ101, taking a complex and interconnected system that we don’t fully understand, boiling it down to its simplest and most incorrect model.
Your issue with economics is that it says the ratio of currency to goods affects prices?
If prices didn’t have to go up, then increasing the money ey supply would somehow magically increase wealth because you could just use the printed money to get more goods.
Obviously printing more money doesn’t make more goods pop into
existence, so something else has to happen. That other thing is called inflation.
If prices didn’t go up, there would be shortages because some people would be walking around with more to spend. Then next the businesses would find they controlled a smaller % of currency, reducing their own buying power as other increased their prices.
This is a global issue, the fed pumping money shouldn’t have had a big an effect.
The Fed is the sole controller of the US money supply, and the US is the largest economy and the USD is held as a reserve currency for global trade.
My best guess would be a mix of covid money from many countries going to the rich increasing the wealth gap, gas and oil companies hiking prices because of Russia even though a lot of them have no link to Russian oil or gas and causing a knock on effect. You’ve also got a number of bubbles around the world such as housing and car loans, these are definitely caused by greed.
Greedy that always existed, but was enabled through recent events.
I agree with the Russian oil supplies being embargoed allowing greedy energy companies to charge more, but that is just one factor.
Money has no inherent value, it’s value comes from being accepted and how rare it is.
A simple formula is, if you doubled the money supply, each dollar would have half the spending power it did before.
Since money is just a paper that says you get to trade it for other things, the more circulating the higher prices will be.
My issue was with using econ101 as part of an argument, I’m sure you’ve heard of the saying about economics is that you spend most of the course learning why econ101 doesn’t actually work when applied to most real world scenarios.
Anyone with an economics background would agree that the money supply increasing will cause inflation if there isn’t a corresponding increase in the supply of goods/services.
How else could it work? People print money and somehow just buy more stuff consequence-free?
Money supply is a specific term and it will not always result in inflation. You’ve acknowledged that several times but still repeat it. It will depend how that increase in money supply is used, if at all.
If I got a trillion dollars printed and did nothing with it, no change in inflation. If I deposit it at banks, there would probably be some knock on effects on interest rates that make their way to the broader system.
If I go on a coordinated buying spree of oranges with the explicit goal of owning every last orange and orange producing land possible, inflation in oranges and substitute goods of oranges will occur. Easy conclusion.
You can argue that: When the capital owners get free money in bailouts, while workers get crumbs, there is an obvious disparity. Capitalists see less value in currency and will want more of it in exchange for their contributions (leeching) to society. So they raise prices because selling an orange for $1 doesn’t feel as good as before.
If workers got more money while capitalists got nothing, that disparity is reversed. Capitalists want to compete for a supply of cash that they didn’t have access to before. Prices will rise in inelastic markets because the opportunity to exploit presents itself, but in competitive markets there is a real drive to entice more purchasing. That’s not to say that prices will go down (they can!) But raising your prices on food because everyone got $1000 could mean missed sales if the price raise isn’t coordinated across the industry.
You saying that inflation is driven by money supply is not the direct reason for prices rising.
If a rich person gets money, what evidence do you have that they would spend it or invest it? It is not a factual assumption and depends on many factors, and not just in a pedantic way. If market conditions are sour, a rich person would avoid investing it for fear of losing it.
Capitalists are middle men who sell our labor + a product back to us at a higher price. If they don’t need cash right now, they will raise prices and sell fewer units at a higher rate to maximize the margin (on durable goods). If they do want cash, they will lower prices and trade margins for volume. Take oil as an example - if you can sell a barrel now for X or tomorrow for more, you would price the oil higher as long as opportunity cost < selling it lower now. How does other people having more money affect this?
Consider your labor and pretend you are fairly compensated right now. If the money supply increases, do you demand, or at least deserve, higher wages? If so, why?
Rapid inflation did start at the same time the money supply was increased.
There was a brief period when people got direct cash during the pandemic which businesses used as an excuse to hike up prices. However, once again, it was the choice of the business owners to raise the prices.
If there’s more money circulating, there’s more businesses can ask for.
Only if that money goes to the working people who can in turn spend it. If the money stays at the top then it does not result in increased spending power. Most of the money that was created did not end up in the hands of the people who are spending it day to day. Bulk of the money went to the oligarchs, you get that right?
Do you think they weren’t greedy before? Do you think it’s a coincidence this inflation happened the same time the Fed suddenly pumped trillions into the money supply?
I think they saw an opportunity to jack up prices. In fact, we see this happen any time there’s a disaster, no money printing is needed here. There’s even a term for this: disaster capitalism.
There was a brief period when people got direct cash during the pandemic which businesses used as an excuse to hike up prices. However, once again, it was the choice of the business owners to raise the prices.
The cash regular people got was a fraction given to the capital class through Fed stimulus and PPP.
All three of these together means there’s more money flowing. If businesses didn’t increase their nominal prices, they’d in effect be lowering the real prices because the old price is suddenly a much smaller share of the total currency.
Even if all businesses tried this, there would be supply shortages because the amount of spending power would be more than the goods being sold.
Only if that money goes to the working people who can in turn spend it.
No because the inputs for what regular people need (like labor, land, or raw materials) are also something the wealthy want. They’d like people to use these resources for their own use.
If the inputs are all going to the rich, the working class has to spend more to bid for these now.
Someone building affordable housing might follow the money and switch to building yacht interiors because the rich have more to spend now.
The worker has to pay more to get them to come back to working for the regular person.
Bulk of the money went to the oligarchs, you get that right?
When an oligarch can hire more people, and hoards raw materials, where do you think that comes from?
Everything extra they can buy now comes at the expense of the workers.
Workers get outbid for the labor of others, or land, because an oligarch is buying more.
I think they saw an opportunity to jack up prices.
And that opportunity was an increase to the amount of money circulating.
You still haven’t explained what your thesis here is exactly. If capitalists aren’t raising wages then people don’t have more spending power no matter how much money is printed. What you still haven’t established here is how there’s more money circulating in the economy when wages have remained stagnant. Nobody is arguing that the oligarchs aren’t benefiting from the QE, but it’s not a direct cause of inflation.
If capitalists aren’t raising wages then people don’t have more spending power no matter how much money is printed.
I’m not saying regular people have it, I’m saying the capitalists have more money to spend from the government.
You don’t just have to compete with the money the other members of the 99% have, you have to compete with the spending from capitalists who want land and labor to themselves.
If an oligarch gets a big cash infusion, and starts buying up land and hiring servants that land and those workers won’t be there for regular people. Regular people now have more competition when buying land and finding other workers to hire.
What you still haven’t established here is how there’s more money circulating in the economy when wages have remained stagnant.
The total money in circulation is calculated by the Fed, and that amount has gone up. The total dollars isn’t subjective, it’s a number that you can look up.
Infamously, that number spiked during the COVID crisis. But it was given mostly to oligarchs, who use that money to buy things.
Workers, and people selling land, and so on shifted from selling their time and resources to regular people, to serving oligarchs. They do this, because those oligarchs have more money now.
Nobody is arguing that the oligarchs aren’t benefiting from the QE, but it’s not a direct cause of inflation.
Let’s keep it really simple. There are 5 items for sale in a microeconomy, and $5 total circulating. An item sells for $1.
Then the money supply is inflated, and now $10 is circulating, but there’s still only 5 items for sale.
Would you expect that someone could take $10 and buy 10 items since the pricewas $1 each before? Of course not, because you can’t buy 10 if only 5 are for sale.
The only way the market can adapt is by increasing prices.
The real economy is much bigger, with more goods and cash, but the fundamental principle is the same. If there’s more money, with the same supply of goods, price have to increase. Printing money doesn’t magically let people buy more than exists.
Ok, but capitalists aren’t the ones primarily consuming basic goods they raise the prices on. We’re talking about consumer inflation here. An oligarch getting a big cash infusion and buying up land or hiring servers isn’t affecting the prices of consumer goods.
Workers, and people selling land, and so on shifted from selling their time and resources to regular people, to serving oligarchs. They do this, because those oligarchs have more money now.
That still doesn’t change the formula for inflation which is the relative cost of goods and services to salaries.
Then the money supply is inflated, and now $10 is circulating, but there’s still only 5 items for sale.
And who decides that it’s now circulating for $10? The business owner decides that, which was my original point all along!
Meanwhile, your example is too simplistic because there isn’t $10 circulating since economy isn’t homogeneous. People consuming regular goods who are affected by inflation didn’t get a chunk of the new money printed, so they have exact same spending power they did when there was $5 circulating.
If there’s more money, with the same supply of goods, price have to increase.
They don’t have to increase, people who own businesses make a conscious decision to increase them. You’re also conflating the amount of money in circulation with purchasing power here.
Printing money doesn’t magically let people buy more than exists.
If they buy up land, you need to pay more to get some of your own. Or you pay more to rent some of your own.
This doesn’t apply to vast majority of the population who don’t actually own any land.
If they hire workers who would otherwise be making and servicing consumer goods, it will be harder to get reliable goods. Fixing that will mean paying a premium to reattract workers.
Are you saying companies wouldn’t want to produce and sell more goods if there was demand for them?
No, they don’t. The Fed chooses how much money circulates.
More money in circulation does not magically make prices increase, people who own businesses choose on what they charge. Increase in money supply also doesn’t translate into decreased purchasing power all on its own.
Again, whoever gets the money and spends it will be using that money to computer for labor, land, and raw materials.
Again, the types of goods that oligarchs consume are not the same goods that regular people consume.
The fact that oligarchs buy different things doesn’t matter, they take up many forms of resources that would otherwise be allocated to the regular person.
That’s nonsensical, if you’re buying up all the oranges in town and I eat apples, the scarcity of oranges has no effect on me.
Purchasing power is directly tied to the money circulating.
No, it’s not.
If the money supply contracts there’s more competition for the remaining money. If it expands, each dollar is less important.
LMAO, financial economy isn’t some money pit that people dive into and grab as much as they can. Working people get money from their wages, and their wages don’t magically increase when the money supply is increased.
Rapid inflation did start at the same time the money supply was increased.
We always had inflation, but it’s false equivalence to act like the 1-2% from before is the same that we’ve seen over the past two years.
If there’s more money circulating, there’s more businesses can ask for.
Whoever has the extra cash that’s been created can spend more now, and businesses will charge more to those who can pay, rather than keep their old prices.
That’s ECON101, more money chasing the same supply of goods = prices increasing. After all, someone has more money now, and the point of having money is to get what you want.
So they spend the new cash, paying marked up rates because they can afford to now. Businesses realize they can ask for more, and now someone is willing to pay more than just a 2% increase, where before customers weren’t willing/able.
I asked you why inflation suddenly spiked, if businesses/capital always had this power. You made the false equivalence of the previous low inflation to the current high inflation.
If grocery bills were going up 2% a year for decades, and then suddenly start going up more than 10% a year, what happened?
Do you think they weren’t greedy before? Do you think it’s a coincidence this inflation happened the same time the Fed suddenly pumped trillions into the money supply?
Ah yes econ101, taking a complex and interconnected system that we don’t fully understand, boiling it down to its simplest and most incorrect model.
This is a global issue, the fed pumping money shouldn’t have had a big an effect. My best guess would be a mix of covid money from many countries going to the rich increasing the wealth gap, gas and oil companies hiking prices because of Russia even though a lot of them have no link to Russian oil or gas and causing a knock on effect. You’ve also got a number of bubbles around the world such as housing and car loans, these are definitely caused by greed.
Your issue with economics is that it says the ratio of currency to goods affects prices?
If prices didn’t have to go up, then increasing the money ey supply would somehow magically increase wealth because you could just use the printed money to get more goods.
Obviously printing more money doesn’t make more goods pop into
existence, so something else has to happen. That other thing is called inflation.
If prices didn’t go up, there would be shortages because some people would be walking around with more to spend. Then next the businesses would find they controlled a smaller % of currency, reducing their own buying power as other increased their prices.
The Fed is the sole controller of the US money supply, and the US is the largest economy and the USD is held as a reserve currency for global trade.
Greedy that always existed, but was enabled through recent events.
I agree with the Russian oil supplies being embargoed allowing greedy energy companies to charge more, but that is just one factor.
Money has no inherent value, it’s value comes from being accepted and how rare it is.
A simple formula is, if you doubled the money supply, each dollar would have half the spending power it did before.
Since money is just a paper that says you get to trade it for other things, the more circulating the higher prices will be.
My issue was with using econ101 as part of an argument, I’m sure you’ve heard of the saying about economics is that you spend most of the course learning why econ101 doesn’t actually work when applied to most real world scenarios.
Anyone with an economics background would agree that the money supply increasing will cause inflation if there isn’t a corresponding increase in the supply of goods/services.
How else could it work? People print money and somehow just buy more stuff consequence-free?
Money supply is a specific term and it will not always result in inflation. You’ve acknowledged that several times but still repeat it. It will depend how that increase in money supply is used, if at all.
If I got a trillion dollars printed and did nothing with it, no change in inflation. If I deposit it at banks, there would probably be some knock on effects on interest rates that make their way to the broader system.
If I go on a coordinated buying spree of oranges with the explicit goal of owning every last orange and orange producing land possible, inflation in oranges and substitute goods of oranges will occur. Easy conclusion.
You can argue that: When the capital owners get free money in bailouts, while workers get crumbs, there is an obvious disparity. Capitalists see less value in currency and will want more of it in exchange for their contributions (leeching) to society. So they raise prices because selling an orange for $1 doesn’t feel as good as before.
If workers got more money while capitalists got nothing, that disparity is reversed. Capitalists want to compete for a supply of cash that they didn’t have access to before. Prices will rise in inelastic markets because the opportunity to exploit presents itself, but in competitive markets there is a real drive to entice more purchasing. That’s not to say that prices will go down (they can!) But raising your prices on food because everyone got $1000 could mean missed sales if the price raise isn’t coordinated across the industry.
You saying that inflation is driven by money supply is not the direct reason for prices rising.
deleted by creator
If a rich person gets money, what evidence do you have that they would spend it or invest it? It is not a factual assumption and depends on many factors, and not just in a pedantic way. If market conditions are sour, a rich person would avoid investing it for fear of losing it.
Capitalists are middle men who sell our labor + a product back to us at a higher price. If they don’t need cash right now, they will raise prices and sell fewer units at a higher rate to maximize the margin (on durable goods). If they do want cash, they will lower prices and trade margins for volume. Take oil as an example - if you can sell a barrel now for X or tomorrow for more, you would price the oil higher as long as opportunity cost < selling it lower now. How does other people having more money affect this?
Consider your labor and pretend you are fairly compensated right now. If the money supply increases, do you demand, or at least deserve, higher wages? If so, why?
deleted by creator
There was a brief period when people got direct cash during the pandemic which businesses used as an excuse to hike up prices. However, once again, it was the choice of the business owners to raise the prices.
Only if that money goes to the working people who can in turn spend it. If the money stays at the top then it does not result in increased spending power. Most of the money that was created did not end up in the hands of the people who are spending it day to day. Bulk of the money went to the oligarchs, you get that right?
I think they saw an opportunity to jack up prices. In fact, we see this happen any time there’s a disaster, no money printing is needed here. There’s even a term for this: disaster capitalism.
The cash regular people got was a fraction given to the capital class through Fed stimulus and PPP.
All three of these together means there’s more money flowing. If businesses didn’t increase their nominal prices, they’d in effect be lowering the real prices because the old price is suddenly a much smaller share of the total currency.
Even if all businesses tried this, there would be supply shortages because the amount of spending power would be more than the goods being sold.
No because the inputs for what regular people need (like labor, land, or raw materials) are also something the wealthy want. They’d like people to use these resources for their own use.
If the inputs are all going to the rich, the working class has to spend more to bid for these now.
Someone building affordable housing might follow the money and switch to building yacht interiors because the rich have more to spend now.
The worker has to pay more to get them to come back to working for the regular person.
When an oligarch can hire more people, and hoards raw materials, where do you think that comes from?
Everything extra they can buy now comes at the expense of the workers.
Workers get outbid for the labor of others, or land, because an oligarch is buying more.
And that opportunity was an increase to the amount of money circulating.
You still haven’t explained what your thesis here is exactly. If capitalists aren’t raising wages then people don’t have more spending power no matter how much money is printed. What you still haven’t established here is how there’s more money circulating in the economy when wages have remained stagnant. Nobody is arguing that the oligarchs aren’t benefiting from the QE, but it’s not a direct cause of inflation.
I’m not saying regular people have it, I’m saying the capitalists have more money to spend from the government.
You don’t just have to compete with the money the other members of the 99% have, you have to compete with the spending from capitalists who want land and labor to themselves.
If an oligarch gets a big cash infusion, and starts buying up land and hiring servants that land and those workers won’t be there for regular people. Regular people now have more competition when buying land and finding other workers to hire.
The total money in circulation is calculated by the Fed, and that amount has gone up. The total dollars isn’t subjective, it’s a number that you can look up.
Infamously, that number spiked during the COVID crisis. But it was given mostly to oligarchs, who use that money to buy things.
Workers, and people selling land, and so on shifted from selling their time and resources to regular people, to serving oligarchs. They do this, because those oligarchs have more money now.
Let’s keep it really simple. There are 5 items for sale in a microeconomy, and $5 total circulating. An item sells for $1.
Then the money supply is inflated, and now $10 is circulating, but there’s still only 5 items for sale.
Would you expect that someone could take $10 and buy 10 items since the pricewas $1 each before? Of course not, because you can’t buy 10 if only 5 are for sale.
The only way the market can adapt is by increasing prices.
The real economy is much bigger, with more goods and cash, but the fundamental principle is the same. If there’s more money, with the same supply of goods, price have to increase. Printing money doesn’t magically let people buy more than exists.
Ok, but capitalists aren’t the ones primarily consuming basic goods they raise the prices on. We’re talking about consumer inflation here. An oligarch getting a big cash infusion and buying up land or hiring servers isn’t affecting the prices of consumer goods.
That still doesn’t change the formula for inflation which is the relative cost of goods and services to salaries.
And who decides that it’s now circulating for $10? The business owner decides that, which was my original point all along!
Meanwhile, your example is too simplistic because there isn’t $10 circulating since economy isn’t homogeneous. People consuming regular goods who are affected by inflation didn’t get a chunk of the new money printed, so they have exact same spending power they did when there was $5 circulating.
They don’t have to increase, people who own businesses make a conscious decision to increase them. You’re also conflating the amount of money in circulation with purchasing power here.
We’re in complete agreement here.
deleted by creator
This doesn’t apply to vast majority of the population who don’t actually own any land.
Are you saying companies wouldn’t want to produce and sell more goods if there was demand for them?
More money in circulation does not magically make prices increase, people who own businesses choose on what they charge. Increase in money supply also doesn’t translate into decreased purchasing power all on its own.
Again, the types of goods that oligarchs consume are not the same goods that regular people consume.
That’s nonsensical, if you’re buying up all the oranges in town and I eat apples, the scarcity of oranges has no effect on me.
No, it’s not.
LMAO, financial economy isn’t some money pit that people dive into and grab as much as they can. Working people get money from their wages, and their wages don’t magically increase when the money supply is increased.
deleted by creator