Inflation is always and everywhere a monetary phenomenon -- Milton Friedman - page 2.

Wind_FURY

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Quote from: DrBeer on November 16, 2021, 03:54:09 PM

What do you dislike about controlled low inflation? This forces people not to freeze assets, but either use them (buy goods / services), or invest ...

It’s actually high inflation that forces people to spend their money because, during periods of increasing inflation, the value of money goes down while the prices of goods and services go up.

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Quote from: odolvlobo on November 15, 2021, 02:04:21 PM

Companies can't find workers to fill the demand. Why not? Because the government paid everyone a bunch of money so they don't need to work. This is shown by the fact that the labor participation and unemployment rates are both low.

In our country it's not the case because the problem is unemployment and underemployment, lots of workers available but few companies only offers a job and that resulted to increase in poverty. We also have a grant from the government but it's never enough to sustain a healthy living, so the main reason is the inability of the government to improve the economy, and that is brought by policies that are pro-capitalist because they are benefiting from it.

A corrupt government would lead to economic struggle, and resulted to a high inflation.

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I quite like Milton Friedman's thinking, and not only that, but also how he explained his ideas.

This particular case of inflation is typical of a socialist politician: first he creates a problem, and when the problem is created he offers supposed solutions based on prohibiting and forcing as if he had nothing to do with the origin of the problem and instead he was going to offer the solution.

Biden has blasted Trump's energy policy, and when the price of energy goes up, he attributes it to external factors, as for example in the case of oil, which he blames on OPEC, as if the problem was not caused by him and as a solution to inflation he provides the infrastructure bill.

LMAO

What I don't understand is how there are millions of people who don't see that. Surely they think inflation is caused by supposed structural racism or sexism or something.

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Quote from: The Sceptical Chymist on November 16, 2021, 05:20:58 AM

It's damn hard right now to buy cat food at the grocery store in any quantity that my kitties like, so something's definitely wrong with moving product from manufacturer to store shelves.

I think even manufacturers are having a hard time procuring materials for production. The pandemic has contributed truly to an extent in disrupting the supply chain and free flow of materials from field to manufacturer's industry. Even some of the recent government policies in various countries have also threatened the availability of work force, and free flow of raw materials from country to country. As a result, reduced quantity in supply and increased price for commodity must set in.

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High inflation. High oil and transportation costs. Supply chain issues. Now is a great time to grow fruit trees in 5 gallon buckets.

A big tree is not necessary to grow fruit. It can be done in a smaller and more compact unit. To ease dependency and negative economic trends.

Its not a good time to rely on governments for assistance. Or to expect the state to save you. Best to take matters into your own hands anyway you can.

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Quote from: jrrsparkles on November 16, 2021, 02:37:23 AM

When they told us the truth to expect the truth from them about the current inflation rate is increasing?

Many Central government still reports the false number to keep the inflation rate low so they assume that people will appreciate the government for doing excellent work even in the pandemic situation.

The problem for them is that they are losing control of the narrative, why the governments insist so much and state over and over again the inflation is being caused by supply chain issues? Because the inflation is simply too high for the population to ignore.

So they need to create a scapegoat so people do not turn against the governments and blame them about what is happening, however even if they are successful now they have another problem, people are now taking precautions against a potential crisis and this means less consumer spending, which slows down the economy, and there is a renewed interest in investing in a store of value, benefiting bitcoin in the process.

cafucafucafu

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It's complete bullcrap whatever the transitory agenda that these policymakers are trying to pump out.

It's here to stay, and it is not by accident. Completely by design.

The fact that fiat does not have a supply cap means that this has to happen in the long run. It does not have intrinsic value and will go to zero.

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Quote from: DrBeer on November 16, 2021, 03:54:09 PM

What do you dislike about controlled low inflation? This forces people not to freeze assets, but either use them (buy goods / services), or invest ... That one thing or the other launches a very important process of "money movement" in the economy. And this is essentially a synonym for the blood flow in our body in our circulatory system. If it is slow, all processes freeze, our activity tends to 0, there is no strength, we become incapacitated. It is the same in the country's economy when money stops active circulation. And then gratitude, and inflation including

That's a pretty narrative, but I don't think any of it is correct.

My understanding is that an intentional low rate of inflation is like the tail on a kite. The shorter the tail, the more unstable the kite. But the longer the tail, the more it weighs the kite down.

Personally, I think inflation is more like opium. At low doses, it subdues a person, making them lethargic and unresponsive, but happy. At high doses, it kills the person. The real question is whether or not the opium actually helps.

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Quote from: odolvlobo on November 15, 2021, 02:04:21 PM

The truth is what was said by the famous and highly respected economist Milton Friedman said: "Inflation is always and everywhere a monetary phenomenon." The problem is not the supply chain. The problem is that the huge influx of money into the economy from central banks and governments has fueled a tremendous surge in demand.

Companies can't find workers to fill the demand. Why not? Because the government paid everyone a bunch of money so they don't need to work. This is shown by the fact that the labor participation and unemployment rates are both low.

The labor rate was low and the rate at which the government and the central bank kept pumping in money into the economy was high. From the start it was already being said that something like this was bound to happen: there is going to be an inflation and the rate of inflation is going to be high for sure.

We should be looking at the ways that the government would be able to fight and tackle inflation. And while looking at the ways that these can be done, we should understand that these means of tackling inflation can as well affect the people, take for example when the government tries to use wage and price controls in fighting inflation. So any means that we decide to use should not be too harsh on the people.

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Quote from: DrBeer on November 16, 2021, 03:54:09 PM

What do you dislike about controlled low inflation? This forces people not to freeze assets, but either use them (buy goods / services), or invest ... That one thing or the other launches a very important process of "money movement" in the economy. And this is essentially a synonym for the blood flow in our body in our circulatory system. If it is slow, all processes freeze, our activity tends to 0, there is no strength, we become incapacitated. It is the same in the country's economy when money stops active circulation. And then gratitude, and inflation including

What's wrong with the consumer deciding what to do with their funds and why would any consumer not use their purchasing power to purchase goods? I understand what deflation would do, but clearly there are hardly any countries in the world that can handle their inflation rate at a solid 2 percent without going over, so why bother having central banks involved? And even at 2 percent, imagine someone siphoning out a minimum of 2 percent out of your bank account every year in the best case scenario, with the most probable scenario 3+ percent in some off years, and 5+ percent in worst years.

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What do you dislike about controlled low inflation? This forces people not to freeze assets, but either use them (buy goods / services), or invest ... That one thing or the other launches a very important process of "money movement" in the economy. And this is essentially a synonym for the blood flow in our body in our circulatory system. If it is slow, all processes freeze, our activity tends to 0, there is no strength, we become incapacitated. It is the same in the country's economy when money stops active circulation. And then gratitude, and inflation including

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Well, this is one of the reasons it was recommended that government pay those who are working or solving problems so you don't have to pay those creating the scarcity/inflation or those who aren't working well enough to contribute to society.
Paying able-bodied people to do nothing is such a dumb idea. Those who practice that as leaders are not worthy to continue to lead

The Sceptical Chymist

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Quote from: odolvlobo on November 15, 2021, 02:04:21 PM

The problem is that the huge influx of money into the economy from central banks and governments has fueled a tremendous surge in demand.

That's the main problem, absolutely, but I do think those supply chain issues are playing a part in this--for whatever reason, be it that people aren't taking jobs in that supply chain or logistical issues or what have you. It's damn hard right now to buy cat food at the grocery store in any quantity that my kitties like, so something's definitely wrong with moving product from manufacturer to store shelves. Demand has probably been driven up as people have started to hoard everyday things (like the aforementioned cat food), which would obviously contribute to prices going up.

But as I said, I agree that the major culprit has been the government and their reckless fiscal policies. Joe Biden didn't start all of this in the US, nor was it one single politician or even one country. It's been an ongoing nightmare since at least 2008.

Quote from: odolvlobo on November 15, 2021, 02:04:21 PM

Companies can't find workers to fill the demand. Why not? Because the government paid everyone a bunch of money so they don't need to work. This is shown by the fact that the labor participation and unemployment rates are both low.

Yeah well, the music is going to stop abruptly (and probably soon) and after that, everyone will be scrambling for jobs. Better secure employment now before the job market dries up if you're currently unemployed.

Wind_FURY

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The Fed’s response to inflation.

1. The Fed will say there’s no inflation.

2. The Fed will say there might be some inflation, but it’s transitory.

3. The Fed will say there is inflation, and they will do something, but there might be nothing they can do.

4. The Fed will say, “it might be late”.

Mauser

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I fully agree with this statement. Inflation is being created by the government due to their monetary policies. Officially the inflation target is 2% in most countries, but I believe that the government's have a hidden target that is much higher. When it comes to inflation the politicians don't care about the little guy who loses all his purchasing power. Its all about the benefits of the indebted countries. With a higher inflation the government has to worry less about repaying their debt, because all newly issued debt will be more valuable. Also we shouldn't forget that the central banks are very reluctant to increase the interest rates. With rates near 0% it was just a matter of time to see inflation rates above 4%.

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There could be many causes why a government will print more money, we can look at the history itself which every country who had experienced the same thing even the Germany that is ever rich in the EU countries had been there. China which today has considerably has the biggest today had once been that low. But we keep the example of Zimbabwe because it's recent where the money filling up on top of the cartwheel is worth less than the cartwheel itself.

Inflation is a monetary phenomenon but the US situation is different. They know they can prevent it from happening but it's continuing to be done so. You really have to watch the news on both sides, the news from the US and the news from China because this cold war will be more brutal and the phase is slow.

You don't wanna go cold/trade war with some countries when you know they are your biggest trade partner because both of you will be affected especially when winter comes. But this health crisis makes it worse.

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The one single thing that has kickstarted inflation is the response by governments
around the world to the financial effects of COVID by printing money and continuing
to do so.

The average Joe and Jane dont understand this or the finer points of inflation so
governments can blame what they like but the vast majority are financially illiterate.

Because of COVID and the reopening of society there are now shortages in transportation,
goods, containers and staffing, these are also feeding the affects of inflation.

Here in Europe we also have an added issue in the form of BREXIT, this is also having its own
issues in the form of the above
transportation and goods shortages, for some EU countries more than others.

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When they told us the truth to expect the truth from them about the current inflation rate is increasing?

Many Central government still reports the false number to keep the inflation rate low so they assume that people will appreciate the government for doing excellent work even in the pandemic situation.

davis196

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If you read books about macroeconomics,you know that there are two types of inflation.
The first one is caused by the increasing money supply(the one you are writing about) and the second one is caused by increased production costs(oil and gas prices going up).The second type can lead to stagflation sometimes.The production cost inflation can be influenced or even caused by the money supply inflation.
Perhaps Milton Friedman is right.
The politicians/governments are addicted to inflation,because inflation decreases the value of all debts and increases the tax revenue.
I don't know about the supply chain issues in your country.There aren't any supply chain issues in my country.
Maybe this problem isn't necessarily linked to inflation and money supply.The closed borders and all the lockdowns in 2020 kinda destroyed some supply chains and those supply chains have to be rebuilt.

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Not just their policies but also due to the lack of control they had during the pandemic. The situation could have been handled in a better way but unfortunately now the prices of basic things are sky rocketing.

Inflation is healthy if you consider the small amounts every once in a while but when we are looking forth into the whole system, I think we are 10 years ahead which is negatively stressing the economic growth.

Blaming is just a green card to maybe get votes in the next elections. In few countries they tried to bribe with the huge stimulus check as well.

There are so many shopping complexes that are dying, the surge in the COVID cases are going to sky rocket in my country in approximately 2 weeks, which would have drastic impact on the whole situation as well. But as I have seen, people still love to go to the restaurants but government have changed some rules, now no one is allowed inside without a vaccine or a recent covid-19 negative PCR report which I do think is really interesting and might be working on some levels as well.

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