Efforts made by the US actually provide a new problem for inflation. - page 2.

Gozie51

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Quote from: DooMAD on January 28, 2022, 09:06:00 AM

Quote from: Gozie51 on January 28, 2022, 08:47:58 AM

I think most government that game in since the past 20 years have got to worry about inflation. And what can be the course of this rising inflation globally ? I think there is a relation between inflation, population and printing of more fiat.

I'm not sure how much of a factor the population is, but I'd imagine the biggest issue would be the "Snowball effect". The more the money becomes devalued, the larger the quantity governments need to print in order to provide economic stimulus, and consequentially the more it debases the currency. It's a vicious cycle. The problem generally escalates over time as larger and larger sums are printed. Eventually, it results in "hyperinflation", where the situation is effectively uncontrollable and the currency becomes all but worthless.

Oh really.

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I'm not sure how much of a factor the population is

But if you take a good look at your post you see you are yet subscribing that population is a major factor to inflation because that means change is occurring in the system other than what was known or used to before and requiring planning, printing of cash and change of status quo.

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Quote from: Ryu_Ar1 on January 23, 2022, 04:45:03 PM

It seems that Inflation still cannot be separated from the US news in the last few months.
Even though they are trying to fight inflation in various ways, it seems that the US central bank's actions to fight inflation will actually trigger a new debt crisis.
Debt payments by developing countries are already in a sizable phase as they have more than doubled since 2010 and will even increase further if the Fed is still trying to raise interest rates.

Is it really difficult now to avoid inflation?
Because it's like going forward will get in trouble, even backwards can't.

Source https://www.theguardian.com/business/2022/jan/23/fears-grow-that-us-action-on-inflation-will-trigger-debt-crisis

Unfortunately cheap borrowing by the masses is an extremely popular method for politicians to buy votes, even if it is just a continuation of the previous administrations policies. People like easy money and home buyers (heavily active voters) are ultra happy when they can get mortgages for a dirt cheap price. However at some point the party has to stop, because too much money is floating around and reckless spending gets too carried away. People stretch themselves to the limit, borrow far too much and come to the dawning realization that they have to pay it back. Those people stop spending as they pay down debt. In order to encourage responsible debt levels, the interest rate at the central bank is also raised, which ripples through the economy and sometimes pushes mortgage owners beyond what they can afford - this is the start of a recession. It's a very dangerous balancing act and small triggers can have big consequences.

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See inflation can never be avoided. We have to understand that it's a necessary evil but at the end of the day if the government is not able to take care of the rates of inflation then it would cause so much trouble for the people and the government itself. The economy will go down as well plus the government does have to worry about inflation right now.
Healthy rates of inflation is 1-2% but for US it's approximately 6%.
The labor shortages are getting so much worse as well. They have to understand that printing excessive money will make it so much worse. They are not able to meet the demand as well. Wonder what will happen to the government now.

DooMAD

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Quote from: Gozie51 on January 28, 2022, 08:47:58 AM

I think most government that game in since the past 20 years have got to worry about inflation. And what can be the course of this rising inflation globally ? I think there is a relation between inflation, population and printing of more fiat.

I'm not sure how much of a factor the population is, but I'd imagine the biggest issue would be the "Snowball effect". The more the money becomes devalued, the larger the quantity governments need to print in order to provide economic stimulus, and consequentially the more it debases the currency. It's a vicious cycle. The problem generally escalates over time as larger and larger sums are printed. Eventually, it results in "hyperinflation", where the situation is effectively uncontrollable and the currency becomes all but worthless.

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Quote from: DooMAD on January 23, 2022, 05:30:26 PM

Usually not with any great deal of success, but that's the theory, at least.

I think most government that game in since the past 20 years have got to worry about inflation. And what can be the course of this rising inflation globally ? I think there is a relation between inflation, population and printing of more fiat. The government rush in for printing more cash to take care of the growing population and this has ripple effect on the economy. The challenge is population growth and trying to control that will help take care of inflation.

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Quote from: hugeblack on January 28, 2022, 07:02:53 AM

COVID-19 pandemic has made the natural levels of inflation variable, and therefore monetary policies set by governments may fail to bring inflation under control and maintain levels according to expectations, for example, most countries are trying to maintain inflation between 2%-5%.

Now we have an energy crisis and I believe that the dollar is linked in one way or another to the price of a barrel of oil, which prices most things in our lives, and with the fluctuation of energy prices, political risks and others, it will become difficult to maintain low inflation levels and a price of 100 dollar per barrel of oil without high inflation more than 5%.

Therefore, I do not think that governments will succeed in keeping inflation rates under control during the next three years.

This is the problem that Biden will face all his presidency. He took over from a guy who distributed more than %50 of the giveaways to companies (check the covid relief packages, less than %50 went to individuals each time he did it) and that caused the dollar to be inflated. Now Biden will have to explain to people that he did not caused it, I mean sure maybe a part of it but he took over a nation that printed more than %20+ of debts amount in a single year, yes thats right, for the past 250 or so years, %20+ of the debt amount got printed in just one year. So of course Biden is responsible for some stuff but not all of it. He will be seen as the president who had bad inflation during his term. Quite similar to Obama taking over Bush 2008 crisis, it always happens, a republican president leaving a bad economy to be replaced bye a democrat.

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COVID-19 pandemic has made the natural levels of inflation variable, and therefore monetary policies set by governments may fail to bring inflation under control and maintain levels according to expectations, for example, most countries are trying to maintain inflation between 2%-5%.

Now we have an energy crisis and I believe that the dollar is linked in one way or another to the price of a barrel of oil, which prices most things in our lives, and with the fluctuation of energy prices, political risks and others, it will become difficult to maintain low inflation levels and a price of 100 dollar per barrel of oil without high inflation more than 5%.

Therefore, I do not think that governments will succeed in keeping inflation rates under control during the next three years.

Source --> https://talkmarkets.com/content/economics--politics/macroview-2021--a-disappointment-of-growth-and-disinflation?post=295732

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Quote from: paxmao on January 27, 2022, 02:27:24 PM

As other posters have said, it is not about avoiding inflation, is about getting it between a 1.5 and 2.2% that seems to be the consensus on what a good inflation is (too little detracts investment, too much makes the country uncompetitive).

As COVID came, the printing machine had to be activates, there is little else you can do during a crisis without basically paralysing the economy. There is naturally a price to pay: you eventually have to pull the plug and start paying the cost with job losses and slow growth.

Is that the only way that they could have gone about this problem of job losses because of the covid-19 pandemic, shouldn’t there be other ways that they could have gone about this? Like they kept printing too much money and making the currency to lose its value, and just like they don’t care, when everyone is complaining about it they kept pumping even much money.

Anyways, I wouldn’t worry much because I had my plans already and right from time I have always get myself ready for times like this by planning the ways I invest my money.

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This is an expected and natural result of the wrong decisions taken by the US government to address the problem of inflation. These wrong decisions have had a great negative impact on the global stock exchanges and markets, as they affected the same thing on the Crypto market. Inflation is inevitable for fiat because the wrong economic policies will inevitably end in ruins for the economy, perhaps The increase in the interest rate by the US Central Bank will lead to many negative effects in America and the world and may cause the exit of capital to other countries, and this will have very bad effects, although it may increase the strength of the dollar against other fiat. But in the end, in my opinion, inflation is inevitable.

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Quote from: DooMAD on January 23, 2022, 05:30:26 PM

I don't think you can "avoid" inflation in fiat. It's an integral part of debt-based money. Governments just try to keep inflation somewhat under control when they can, so that it doesn't rise too quickly. Usually not with any great deal of success, but that's the theory, at least.

You technically could if there was a finite supply of fiat. A currency based on the gold standard wouldn't have any inflation, granted the supply of gold was steady. Even without a gold standard, a fiat currency based on magic pixie dust could theoretically not have any inflation, as long as the government is unwilling to create more supply.

Government targets the inflation rate to be at 2 percent, so they'll make adjustments accordingly. The problems arise when you try to increase the money supply too rapidly, like the US does by having a debt balance sheet of trillions of dollars -- predictable result is an insane 7 percent inflation rate (compounded by COVID, of course).

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As other posters have said, it is not about avoiding inflation, is about getting it between a 1.5 and 2.2% that seems to be the consensus on what a good inflation is (too little detracts investment, too much makes the country uncompetitive).

As COVID came, the printing machine had to be activates, there is little else you can do during a crisis without basically paralysing the economy. There is naturally a price to pay: you eventually have to pull the plug and start paying the cost with job losses and slow growth.

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Quote from: Hydrogen on January 24, 2022, 07:54:09 PM

I was afraid of US inflation and debt back in 2012, when government accountability office (gao) comptroller David Walker did his nationwide tour publicizing it.

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Campaign for fiscal responsibility

In the fall of 2012, the Comeback America Initiative led a campaign called the "$10 Million a Minute" Bus Tour. The tour covered about 10,000 miles and stopped at universities, technical colleges, businesses, and more in over a dozen states. The tour's goal was to bring national attention to the economic and fiscal challenges that face our nation and various nonpartisan solutions that should be able to gain bipartisan support.

https://en.wikipedia.org/wiki/David_M._Walker_(U.S._Comptroller_General)#Campaign_for_fiscal_responsibility

It was impossible to get anyone to take these matters seriously back then. It was common for people to be offended if anyone said the national deficit was a legit issue or that social security could someday fail.

In many ways circumstances have remained the same. People still think inflation is something that can only happen in 3rd world countries. There isn't much incentive or will for things to change.

Politicians make their career promising stuff they know they cannot pay with just the taxes they collect and that will come instead from printing more money, if countries all over the world began to be responsible and cut down on their expenses then a great deal of things that people consider rights will have to be scaled down dramatically, and this is just political suicide so they will never do it, politicians just hope that the system does not crash when it is their turn to be on power so they are not the scapegoat used to take all the blame, and when those at the top and the bottom do not want to change an unsustainable system, the only way out is for the system to eventually crash.

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I was afraid of US inflation and debt back in 2012, when government accountability office (gao) comptroller David Walker did his nationwide tour publicizing it.

Quote

Campaign for fiscal responsibility

In the fall of 2012, the Comeback America Initiative led a campaign called the "$10 Million a Minute" Bus Tour. The tour covered about 10,000 miles and stopped at universities, technical colleges, businesses, and more in over a dozen states. The tour's goal was to bring national attention to the economic and fiscal challenges that face our nation and various nonpartisan solutions that should be able to gain bipartisan support.

https://en.wikipedia.org/wiki/David_M._Walker_(U.S._Comptroller_General)#Campaign_for_fiscal_responsibility

It was impossible to get anyone to take these matters seriously back then. It was common for people to be offended if anyone said the national deficit was a legit issue or that social security could someday fail.

In many ways circumstances have remained the same. People still think inflation is something that can only happen in 3rd world countries. There isn't much incentive or will for things to change.

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It's difficult to avoid inflation, but not difficult to avoid hyperinflation, just look at the GBP - centuries pass and it's still there. On the other end of the spectrum are African countries that can create a new currency, make it hyperinflate and make a new one all within 10 years or less.

Inflation is important because currency without it would be hoarded and this means less transactions and less taxes. You want just a bit of inflation so that it's not profitable for people to hold cash. You want them to use savings accounts, buy bonds and stocks, start businesses. If the inflation is too high people will keep spending like there's no tomorrow and will withdraw currency from all their bank accounts to get rid of it somehow like spend or exchange to foreign currency. They will also borrow money and spend/invest it because inflation higher than interest rates mean that it's just profitable to buy stuff now than later, especially when you'll have to give back less in terms of value. To stop this process governments artificially pump interest rates, but this puts people who are already paying interest in a tight spot. Basically the government doesn't want to get fucked so it fucks everybody else.

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Quote from: Ryu_Ar1 on January 23, 2022, 04:45:03 PM

It seems that Inflation still cannot be separated from the US news in the last few months.
Even though they are trying to fight inflation in various ways, it seems that the US central bank's actions to fight inflation will actually trigger a new debt crisis.
Debt payments by developing countries are already in a sizable phase as they have more than doubled since 2010 and will even increase further if the Fed is still trying to raise interest rates.

Is it really difficult now to avoid inflation?
Because it's like going forward will get in trouble, even backwards can't.

Source https://www.theguardian.com/business/2022/jan/23/fears-grow-that-us-action-on-inflation-will-trigger-debt-crisis

The problem is that other than burning money or burying it underground there is no way to stop the inflation coming from money that was already printed, after all sooner or later that money will begin to circulate as part of the real economy and people will have to suffer the consequences of this, so all of these news saying the US is doing something to combat inflation is just propaganda, as there is not much they can do about it other than not print as much money as they did during the first months of the pandemic.

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I wonder about the influence of the Federal reserve anti-inflation policy over the US national debt.
The increased interest rates should make the US national debt more expensive and the debt payment should become a bigger burden over the US government.However,there's no way for USA to get enough tax revenue to pay it's debt,so the money printing machine must keep working,in order to fill that 3.5 trillion budget deficit.
The good of part of inflation(at least in the eyes of the politicians) was the devaluation of debts.
Now,the politicians will have to make the choice between fighting inflation and getting into recession or keeping the high inflation(which is bad for the poor and the working class) and devaluation of the federal debt.This is a pretty difficult choice to make.

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Quote from: Ryu_Ar1 on January 23, 2022, 04:45:03 PM

Is it really difficult now to avoid inflation?

Inflation is unavoidable, just that it is more in some countries (underdeveloped and developing countries) than others (developed countries). There are period the country will not have option and want to protect their foreign reserves, the government of the country will not have option than to manipulate fiat in a way all prices of goods and services are all manipulated in the government favour and in favour of the economy.

Inflation is just now avoidable but their are means you can help yourself, you can buy bitcoin or other asset that will be a hedge against inflation and fiat's value declination.

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The only effective means to reduce inflation is to make "food" and "Services" cheaper..... so if you can reduce the input cost for the production of the food items that are used to determine the inflation basket, then the price of these items will be cheaper and the inflation will be lower. (The Consumer Price Index (CPI)

Now we know the government will manipulate that basket to reflect the inflation they want to boost their agenda. A lot of governments are also pressured to promote clean energy use by the consumers, and we know these methods to produce clean energy are more expensive, so your input cost will be higher and this will push up the price of goods and services. Roll Eyes

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Quote from: Ryu_Ar1 on January 23, 2022, 04:45:03 PM

It seems that Inflation still cannot be separated from the US news in the last few months.
Even though they are trying to fight inflation in various ways, it seems that the US central bank's actions to fight inflation will actually trigger a new debt crisis.
Debt payments by developing countries are already in a sizable phase as they have more than doubled since 2010 and will even increase further if the Fed is still trying to raise interest rates.

Is it really difficult now to avoid inflation?
Because it's like going forward will get in trouble, even backwards can't.

Source https://www.theguardian.com/business/2022/jan/23/fears-grow-that-us-action-on-inflation-will-trigger-debt-crisis

Inflation is unavoidable in the mainstream economy. But there arr various ways to handle inflation. When I say "Handle", it means controlling the inflation within a reasonable range.

Increasing interest rate is indeed a great way to handle inflation. Howevee, FED is very reluctant to do so as it has last increased the interest rate is late 2018. So it's the need of the hour. This way additional money will be sucked by the banks from the hand of the people and people will control their spending which means less money will circulate in the open market which will control the inflation. Let's see if FED increases the rate now!

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Every country has inflation, it's the nature of economics. It is just not very noticeable in the previous years but there is inflation every year.

Quote from: pinggoki on January 24, 2022, 12:10:16 AM

My theory is that they're pulling back their punches in fighting the inflation because they know that the elites who really control the country will still survive, they're trying to maximize their profit in a way to somehow make them more money, and they don't really worry about this problem because they've been to this kind of thing over the years so they don't worry too much about it.

That's probably just one why they couldn't stop printing to go brrr. But it's the cycle, when a country like India dives down to its lowest low, it's also bound to go up one day. We saw this happen in Germany where they also experience the dive of their economy that thier money becomes worthless. It's a cycle.

But a country could purposely bring thier money to worthless to depreciate the value of their debts to thier trading partners.

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