Why would Biden's stimulus cause inflation, but not Trump's?

There is a young female who got so rich she went from driving a Prius, to a Corvette she was offered $175,000 by GM who wanted to buy it back and she is now driving a Ferrari. All this in around 2 years of internet filming.

 

I praise successful entrepreneurship. It is a very American thing to do. Good for her.

 

Reality.

What is the issue with Monetary Inflation?

The currency.

Monetary Inflation occurs when there is too much money in the money supply. As some people say, there are too many dollars chasing to few goods. Another way of looking at it is that the dollar is worth less.

Precisely because the currency is at issue, the price of everything rises and everything means every thing, as in every single thing, as in every ****** single thing, as in every ****** single thing including the kitchen sink.

Put another way, their is nothing, as in no thing, as in absolutely no thing, that is not affected.

Name any good, service or resource. Monetary Inflation will cause the price to increase. In no instance will the price of any good, service or resource not rise (unless government levies a Price Freeze.)

That includes wages/salaries. If Monetary Inflation averages 15% per year for 10 years, then you will get an average pay raise of 15% for 9 years, because in the 10th year when Monetary Inflation subsides, your pay raise will be far less, so you get soaked.

How do you think Germans in the Wiemar Republic could afford to pay 15 Million Marks for a newspaper every day?

It's because they were getting paid 105 Million Marks/hour.

If you work 8 hours and make 840 Million Marks, you can afford to dole out 15 Million Marks for a newspaper.

Monetary Inflation affects everything, and that includes your electric rates, cable rates, cell phone rates, subscription service rates for Amazon, Hulu, Netflix, Roku, and Book-of-the-Month Club, gardening tools, seeds, all food items, all non-food items, all cosmetics, all personal hygiene products, all jewelry, all clothing, all services like pet-grooming and hair cuts and medical, dental, chiropractic, etc etc etc.

Everything.

Why? Because the value of the dollar is worth less which is not the same as the goods, services and resources increasing in price due to Supply/Demand issues or other reasons.

The dollar is worth less relative to what, exactly?

Not other currencies. That's a common mistake people make. The value of the US Dollar relative to other currencies is not even remotely relevant.

Then, relative to what?

Your GDP.

Having said that, GDP only works for other States and not the US. Why? How many other States have a currency that is the de facto international reserve currency and de facto international currency of trade?

So, you can't use the GDP published by the government alone. You have to take the GDP and factor in the GDP of global trade for goods and resources that are conducted in US Dollars.

About 13 years ago on another forum, I made a rough calculation of that. It took me almost 6 months to get the data and then about 6 minutes to plug it into a spreadsheet.

I said the global economy could tolerate $9 TRILLION to $13 TRILLION excess US Dollars before you entered a period of Monetary Inflation lasting 9-14 years and that the average annual rate of Monetary Inflation would be worse than the 1970s but not as bad as the post-WW I Era, so figure about 15% to 25% annually until it gets under control.

I said that would start around 2025, and I stand by that.

 

I am sure he will live.

 

I exist under the abilities of myself not because who is president.

 

Utterly ignoring the fact that Biden is, in essence, Obama's third term. Further failing to note that Democrat policies and those of Europe's ruling elites have been inexorably pushing us toward this denoument for decades.

 

Then explain why that same 47% saw their wages increase faster under Trump than did those higher up the economic ladder. And faster than they had in the last two decades

 

No. And Trump is not Bushes third term either. Literally nothing is the same between the end of Obama's term and the beginning of Biden's. they aren't even responding to the same economic or political challenges.

 

Inflations rates for June/July 2021

Italy 1.3%
Germany 3.8%
UK 2.0%
Norway 2.7%
US 5.8%

 

I'm a bit surprised with your confusion of the tax code. Corporate taxes are in the same numbered federal code as everyone else but that is where the similarity stops. The tax regulations and laws that apply to C-corporations are almost wholly different from individuals and most small businesses, starting with the most rudimentary: different forms (1040 vs. 1120, e.g.) and totally different tax rates. Trump's reduction of the corporate rate to 21% did absolutely nothing directly for the millions of entrepreneurs, LLCs, or subchapter S businesses. And this is the issue because the fairy tale meme that asserts Trump tax cuts benefited only the rich stems from a contrived nefarious use of the major tax rate reductions given to corporations which have absolutely nothing to do with "the rich."

 

Your government makes absolutely no attempt whatsoever to differentiate the four forms of Inflation.

Why? I have no freaking idea. I have asked many people, including 3 people who served as economic advisors for different Presidents. I had two professors, one an advisor for Nixon/Ford and the other for Clinton, and a colleague who was an advisor in the Reagan Administration, and none had an answer.

To me, that is totally irresponsible, especially since the Federal Reserve caused two recessions because it mistook Demand-pull Inflation for Monetary Inflation.

Demand-pull Inflation affects only the goods, services and resources with Supply/Demand issues. It has nothing to do with the value of the currency/money supply.

That's why you see Demand-pull Inflation so often in the energy and housing sectors of the economy, because they're fraught with Supply/Demand issues.

You can have Demand-pull Inflation, plus Monetary Inflation, and even with Wage Inflation, which you did in the late 1960s and early 1970s until Wage Inflation was under control.

Then the Federal Reserve crashed you economy for a second time (like it did in the early 1950s) because it confused Demand-pull Inflation with Monetary Inflation and then you really did have Monetary Inflation and everyone struggled with that, plus two more recessions until it was under control.

Sure, if you look at the graphs/charts it certainly looks like there's "Inflation." If we look at CPI-W from January 1990:

269.069 - 125.700 / 125.700 * 100 = 114%

I don't dispute that. I only dispute that 100% of that 114% is Monetary Inflation, because it isn't.

Only about 12% of that due to Monetary Inflation. The rest is Demand-pull and Cost-push Inflation, so it's more like:

12% Monetary Inflation + 16% Cost-push Inflation + 86% Demand-pull Inflation = 114% "Inflation" which is what your government reports instead of a break down of the actual causes of "Inflation."

A few people did suggest that there was the matter of time expended to flesh it out, and I would be willing to accept that if the case.

Your conclusion is wrong. Remember, you cannot use domestic GDP. You have to factor in that part of global commerce conducted in US Dollars to get your actual GDP.

Look at your graph again, specifically at that point where money velocity starts its continual decline.

That first point is where the Russian Ruble was allowed to be traded regionally for the first time since 1948 and the second is where the Russian Ruble began to be traded globally for the first time since 1948.

The Bank of International Settlements (BIS) was initially created to manage Germany's WW I reparations. Later, the US and Brits co-opted it and turned into an international clearinghouse for all global trade.

From 1948 to 1996, it was illegal to trade Russian Rubles, Romanian Lei, Hungarian Forints, Polish Zlots, Yugoslav Dinars, East Marks and the other East Bloc currencies on the global market. If you went to a bank in the US and said, hey I'm going to Budapest I need some Forints, they would tell you sorry, it's illegal.

So, the Soviets were forced to sell everything on the world market in US Dollars, because they were only allowed to buy things on the world market in US Dollars, since it was illegal to use Rubles.

If you understand that, some things that happened in the 1970s make sense. The Soviets relied heavily on oil exports to get the US Dollars they needed to buy the things they needed or didn't have, like cotton from Egypt, timber and rubber from Brasil or the Philippines, electronics from Korea or Japan or Taiwan or crops from Canada or other States. They could certainly traded in Rubles with other East Bloc States, but not the rest of the world.

When oil prices fell, the Soviets lost a huge chunk of their revenues. They had a planned economy and so each sector is allotted so many Millions of barrels of oil per year, like government, military, aviation, agriculture, mining, rail, public transportation, private transportation, and such.

So, the Soviets sold the oil earmarked for agriculture and private transportation and some other industries and sold it to get US Dollars.

That meant there was no oil to refine into diesel to power the tractors to harvest the wheat, or transport the wheat by truck or rail to processing facilities or transport it from the processing facilities to markets.

It was economically better to let their wheat rot in the fields and buy wheat from the US than to burn up that oil refining it. Carter ultimately approved the sale of wheat to the Soviets after a lot of trepidation.

After the Wall came down and the Evil Empire was no more, the global community pressured the US and Britain to allow those currencies to be traded globally.

Your chart shows Eastern Europe, Central, Southwestern and Southeastern Asia trading in Rubles, instead of US Dollars.

The next point you see a sharp decline is the introduction of the Euro. A lot of States no longer have to play the US game and they can buy and sell in Euros, instead of US Dollars.

China, Korea and Japan are working on a unified currency. My understanding is they're in the simulation phase, and no I don't mean a simulation running on somebody's laptop. Clinton gave China a Cray Super II and Japan has an IBM Big Blue. I'm pretty sure Korea has a Cray Super or Super II as well. That simulation is going to cover at least 100 years, and every possible event from wars to famine to climate, recession, depression, etc, that happen locally, regionally or globally, and they've probably added STUPID-19 into the mix, and how a central bank should/could respond to those events and what happens to the currency as a result of the actions taken by the central bank.

Once that unified currency becomes a reality, you'll see a really, really big drop in velocity.

You're right, but that won't happen for a while. Like I said, best guess is around 2025.

As to what might trigger it, I don't know. I'm inclined to believe it will be something external to the US that impacts the US, but not war or anything stupid like that.

 

Inflation rate/GDP growth:

Italy: 2.5%/2.7%
UK: 3.1%/5.5%
Germany: 4.1%/1.6%
Norway: 4.1%/1.1%

US: 5.4%/6.7%

Perhaps you would prefer to live in a country where inflation is high despite low growth....

 

Of course they aren't. Worse they have no intention of doing so. This is after all what the damn morons have been aiming at for decades. After all if you want to control everything what ever your justication then making everyone dependent on your largesse is step one. To that end economic choices and conditions must be sharply limited.

 

That's like asking why adding more wood makes the fire bigger.

 

OK. Most businesses are corporations. I would say virtually all of them. Certainly there are partnerships for various reasonss but most businesses need to be corporations. I have a hard time with the semantics of separating businesses from corporations.

 

People may not be going out but they are spending on line like never before. Hell door dash will pick up your groceries at the local grocery store and deliver them to you. In fact there is very little you can't get delivered to your house save ambiance. Hell half the country still believes there's another thousand or 2000 dollar stimulus check just over the horizon.

 

Yet Trump also moved to reduce such
Loop holes...

 

And it was Democrats created and continue to create most of those loopholes. Big government loves big business. The left hates the petit bourgeousie because they complicate their desperate need to control everything.

 

But, all corporations are not alike. For instance C-corporations file 1120 tax returns and have "corporate" rates, laws and regulations. LLCs (Limited Liability Corporation) and subchapter S "corporations", the large majority of businesses, file 1040s with schedule C and have individual rates, laws and regulations. For another instance C-corporations must apply to some state agency and get approval and authorization to form a Corporation corporation and have to operate under that state's corporate laws, statutes, and regulations. Individuals simply tell their government and the IRS that the are a LLC.

Partnerships are a separate entity of their own and have their own tax laws and regulations but operate more like individuals and LLCs in that the partners receive profits directly as individuals and must report those profits as individual income. C-corporate income belongs to the stock holders; the managers of the corporation do not have any claim on nor get any direct benefit from corporate income or corporate tax breaks.

 

While at the same time providing direct, salient and large benefits to low and middle income individuals, like better rates, a humongous standard deduction, and large increases in the child care tax credit.

 

Remind us what year the Trump tax cuts were implemented again?

 

End of 2018. Would not have impacted 2018 taxes.

 

We have gotten pretty far from the original point of explaining that Trump's tax cuts were business tax cuts not so much individual tax cuts. I'm not arguing against the minutia of the tax code. I understand those things. I think they fail to deal with the original premise. I used to argue with audiophiles about wire having acoustic properties and finally gave that up.

 

Apples and oranges. Nobody computes inflation rates the same way we do.

 

roughly 2018