Are you feeling Biden's inflation yet?

Discussion in 'Economics & Trade' started by kazenatsu, May 16, 2022.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Are you feeling Biden's inflation yet?
    There are many people suffering under it. The inflation is inflicting extra suffering than people would otherwise be experiencing. Not everyone in society has lots of money to easily be able to afford price increases.

    Democrats are in DENIAL that Democrat policies are to blame.
    If all this inflation really is just caused by temporary supply chain issues, as is claimed, then shouldn't we see prices begin to drop back down soon?
    China and India are beginning to buy oil from Russia, which should cause oil prices on the world market to drop back down.

    I suppose that will be the test, won't it? If prices drop back down to what they were, then we will know that the inflation was just caused by supply chain issues. If, on the other hand, they don't, if prices don't start falling back anywhere near what they were, then we will know for certain that this inflation was caused by an increase in the amount of money the government has printed.

    And why are there so many on the Left who pretend rising prices don't really matter, that all the focus should just be on raising worker wages? (I suppose the difference between Supply-side and Demand-side economics)
    You do realize that even if wages rise, that itself will contribute to higher inflation, and wages will have to rise again to compensate? (This will happen until they finally settle at some point, but by that time the inflation rate will have risen some more, even after the original cause. Unfortunately what we are seeing is the inflation rate continuing to increase faster than wages, so that cannot be the explanation for what is happening)

    The government seems to just want to print themselves more money to spend, because actually trying to increase taxes to pay for all this extra spending would be political suicide. Inflation is like an "invisible tax", harder to see what's actually going on.

    Inflation also makes the debt easier to pay down in the very near short-term, but much harder to pay down in the long-term when interest rates shoot up in response to worries about inflation. (Were interest rates to shoot back up to the historical average level of 5%, then 23% of the government's revenue would be consumed just paying interest payments to service the national debt) So once again the current government seems to be trying to kick the can down the road to the next government, refusing to take responsibility now and let them worry about it.
     
    Last edited: May 16, 2022
  2. Nightmare515

    Nightmare515 Ragin' Cajun Staff Member Past Donor

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    Am I "feeling" it? No not really. Do I notice it? Absolutely.

    Fortunately I earn enough money to where things like increased gas and food prices don't effect my day to day life. I'm not driving less because gas is more expensive but I do absolutely notice the fact that it costs me well over a hundred bucks to fill up my small 30 year old beater truck....And I do notice that my quarterly trips to Costco to stock up on food are resulting in a whole lot less food for a whole lot more money. I've lost tens of thousands from my investments and the housing market has made me not even think about buying anything any time soon until the market calms back down to non comically ridiculous levels.

    But I also fully understand that I am in a fortunate spot in life (due to massive amounts of hard work and sacrifice mind you). I can weather this storm and not really bat an eye besides noticing the massive amount of losses from my unrealized gains in various investments. For millions of other Americans the story is likely much different. I remember living through the $5+ gas prices of the mid 2000's well before I was financially stable and I know all too well how it feels to literally wonder if you have enough money to buy enough gas to get to work and then somehow figure out how to pay the light bill that month.
     
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  3. modernpaladin

    modernpaladin Well-Known Member Past Donor

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    Yes. I recently got a cost of living increase. And since I have a mortgage instead of rent, I actually get to keep more money. I'd say keep em comin, but I have a feeling owning a home and retiring early in a nation full of wage slaves isn't gonna be real nice...
     
  4. btthegreat

    btthegreat Well-Known Member

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    I am definitely noticing the squeeze. I am not blaming Biden, or Trump for it though, or any of the ebbs and flows of our economy. It takes more than a few years for the cumulative impact of an administration's policy to begin to impact the American economy and that impact is diluted by impacts of Congress, the Fed, each of 50 state govts, global governmental actors in Europe, China, Mexico, Canada, South and Central America, Africa, India etc.

    And then there are the impacts of private actors and their long term and short term decisions including the banking and investment interests, higher education institutions, manufacturing, energy, fossil fuel and transportation industries and then textile and agri-business, tech companies, medical, pharmaceutical, and hospital and long term care industry, as well as private health insurance, HMOs, and then there is the construction, trucking, tourism, restaurant and Hotel industry practices, and whatever trends we see in small businesses and finally there are the fickle and unpredictable consumers.

    Let's not forget the floods,droughts, fires, storms, diseases, pestilence, earthquakes, etc that not only impact us, our emigration patterns, and labor markets but everything from poultry, to honeybees, to livestock, to fruit orchids, to grain and produce, and fishing and crabbing and yes, the impact of invasive species on all of the above.

    Soo let's not seriously maintain that any President of this country is 'responsible' for any mega economic trend impacting the larger global economy either good or bad, especially when so much of this crap reflects what has happened in the last two decades, not the last two years and most of it, does not happen inside our borders, our airspace or our seas.
     
    Last edited: May 17, 2022
  5. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Okay, that is a fair argument. Even those who blame Democrats and Biden might be able to concede that has some partial truth.
    I think the Biden Administration definitely has to take some blame for this, but you are right, to some extent this has been an ongoing problem.

    I do wonder why though all this inflation is being seen now. I mean, it is foreseeably possible the government before Biden had some poor policy that contributed to the cause of the inflation, but why is it only being manifested now? Why the delay? What is the cause of that?

    The last part of your argument, I cannot agree with; that seems like a deflect. "each of 50 state govts, global governmental actors in Europe, China, Mexico, Canada, South and Central America, Africa, India", they are not going to have much of an effect on the inflation rate of the US dollar in the US.
     
    Last edited: May 17, 2022
  6. btthegreat

    btthegreat Well-Known Member

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    let me explain. If 'fiscal' responsibility and constraining consumer debt levels/bankruptcies, is an attribute of a healthy strong economy, then it's only so effective if the ONLY govt that sincerely works on making sure budgets are balanced, and businesses get paid for their products and services, and is the federal one in Washington, and other govts are succeeding to doing their share. If state, county and city govts are acting irresponsibly , that's going to impact on the ability of federal policy makers to make a difference. If fighting poverty or crime rates is important to stabilize a secure business enviroment for consumer confidence, and foreign govts are failing to provide that, then the foreign markets for our product are compromised.

    If other levels of our govt or other major economic markets are creating headwinds against our otherwise impactful economic policies, or even pursuing an entirely opposite set of policies (protectionist tariffs, when we are trying to open markets for example), that is going to really make the efforts of an administration relatively impotent.
     
    Last edited: May 17, 2022
  7. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I don't think local governments will have an effect on the inflation rate, since the Federal Reserve Bank is not buying their debt. To suppose that the local governments would have a pronounced effect on the inflation rate would suppose that they were all doing some type of thing at once.
    As I have already explained, the shutdown on businesses in response to the pandemic should have only had a temporary effect, if any. If that had been the cause, prices should have returned back down to normal eventually after that ended.
     
  8. btthegreat

    btthegreat Well-Known Member

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    you are seeing this too narrowly. Inflation creates pressure on wages to rise and fixed incomes and income based programs to respond with 'cost of living adjustments. That will include state minimum wage increases, hikes to social welfare checks, and pressure on govt employee unions to get better wage deals in negociations. it will also put pressure to pass bills to moderate rent increases, or put in price controls.

    As we have discovered, a rise in the covid cases in Shanghei, or China that arrives with a corresponding decline in the west coast here, still means there are bottlenecks to get products and food through to American ports because they are in lockdown, no matter how many of our theaters are open and maskless, which means higher prices for those products.It does not matter how much better our employees are at staying healthy and showing up for work, if Russian and Ukrainian trucks and ships and planes don't get filled with grain, because their workers are busy bombing and killing each other. Wheat prices globally still rise.

    These challenges exist in every administration, but they are not challenges they can do anything about.
     
    Last edited: May 17, 2022
  9. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Too bad for the next round of people who are going to try to borrow money to buy a house.
    The agreed upon interest rates will be much higher to take into account the bank's fear of inflation - the interest payments will be higher whether there actually ends up being more inflation or not.

    The people who already took out a loan benefit, while those who will need to borrow money in the future are screwed.
     
    Last edited: May 17, 2022
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  10. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    That does end up finally being true, but when government prints money to spend it, there is a lag time between money being worth less and people earning more. If that was not the case, the government wouldn't be able to take purchasing power out of the economy. Inflation will cause the people to suffer, but that suffering will not be permanent, unless of course the inflation continues.

    Right now that's exactly what we are seeing: inflation has risen faster than the increase in wage levels.

    You also forget that the reverse is also true: increasing wage levels create pressure on the inflation rate to rise. So the inflation will drag on a little bit, until finally wage levels and the inflation rate meet at some point of balance.
     
    Last edited: May 17, 2022
  11. DentalFloss

    DentalFloss Well-Known Member

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    I am. For 2 reasons. Well, 2 and 1/2.

    First, the ill-conceived "American Rescue Plan". 'Memba those $1,200 he sent pretty much everybody, all with $1.9 TRILLION in printed money? That's First.

    Second, his war on the US petroleum industry. Lest we all forget, on DAY ONE of his Presidency, he essentially sanctioned our own petroleum businesses with a series of insane EOs. Without even taking a single hour, much less a more appropriate amount of time to study his insane ideas to see if they were good or not. (Hint: They weren't, and never should have been enacted.)

    Now for the half item: The "bipartisan" Infrastructure Plan. More TRILLIONS in printed money spending on projects that the States should be paying for. I don't give a hoot if some bridge in PA is about to fall down, and I damn sure don't want to pay for it, considering I'll never even lay eyes on it.

    Then, of course, there's "Build Back Bankrupt", aka BBB. As bad as inflation is now, can you imagine if that $10+ TRILLION monstrosity to be paid for mostly with printed dollars would have caused?

    Trump may have some blame, too, as Biden wasn't the only one to spend TRILLIONS of printed money on "rescue plans", but at least when Trump did it the entire country was more or less shut down, and nobody, I mean NOBODY knew how long that was going to last, so in a way, that money was just replacing money that had been destroyed by the economic conditions caused by the c-word virus. No, not China, the other c-word, but China has a big share of blame to swallow, too.

    But that's the thing about relying on money created out of thin air... It works just fine. Until, all of a sudden, it doesn't. And Biden got caught on the wrong side of that line. It also doesn't bode very well for future deficit spending. But it may be a good time for some good old fashioned austerity for the US, considering we're still paying off the loans we took out to give cash to the very first Social Security recipients who never paid a dime into the system.
     
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  12. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Trump only did it to try to win reelection.

    The American voters are to blame. They were going to vote for the side that would throw out free money. Trump full well knew this, so he might as well have been the one to throw out the money. Everyone knows the Democrats would have spent even more.
    I say that Trump was pushed into doing it.
    Politically, he had to do it, whether he personally believed it was a good policy or not.
     
    Last edited: May 17, 2022
  13. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    If the US implements austerity, a large segment of the Left will blame that policy of austerity for causing the economic suffering (rather than the underlying reason why that austerity was needed in the first place).
     
  14. crank

    crank Well-Known Member

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    I've been 'noticing' it since December last year. But it's not Biden's, it's global.

    As for feeling it .. no. We've never left ourselves exposed to market price for survival. Never have, never would. A lifetime of plotting which things will go where, and adapting to alternatives ahead of that. Will meat become expensive? Learn to live without it. Will fuel be too costly? Buy a bicycle. Are fresh fruit and vegies likely to become a luxury? Grow your own. Is water going to be weaponised one day? Collect rainwater and live near a creek/river/stream. Is electricity going to be only for the rich? Install solar panels or wind turbine. Etc etc.
     
  15. crank

    crank Well-Known Member

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    Of course they will. That's what happens when you let lazy, emotional children make the decisions.
     
  16. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    The US inflation rate (5.1) is very much significantly higher than in Australia (3.5), China (0.85), or Japan (no inflation).

    In Sweden it was only 2.1 percent.
    In Thailand it was a little under 1 percent.
     
    Last edited: May 17, 2022
  17. crank

    crank Well-Known Member

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    No it isn't. Our Govt just lies harder than yours.

    All Western nations are experiencing this .. but different Govts give different figures according to their purposes.
     
  18. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    I don't disagree with you. My point just was that even the official inflation rate for the US (probably not accurate, understated, and higher in reality) is much higher than several other parts of the world.

    Isn't it interesting that several non-Western nations are not experiencing this so much?
    It's definitely not like Thailand or Japan has a "primitive" economy.

    In some other parts of the Third World, high rates of inflation have just continued on as they always have, without much change.
     
    Last edited: May 17, 2022
  19. crank

    crank Well-Known Member

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    If this is true (I haven't looked into the numbers), it's not in the least bit surprising. Our Govts went with complete dependence on a global Just-In-Time model, on the back of a highly dependent populace. The slighest breeze was going to topple that sh!t.

    Thais are far more resourceful individuals. Tough as boots, and not afraid of getting their hands dirty. There is also much less dependence on both Govt, and globalism. Japan is ever the mystery and enigma, but their potential to be the last humans in the universe will always be huge.
     
  20. Pro_Line_FL

    Pro_Line_FL Well-Known Member Donor

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    I am not feeling it much. I fill the tank once per month, and houses are paid off, plus my employer adjusted benefits to inflation.

    Salaries have already gone up, which is a big driver behind inflation, so it wouldn't make sense that all prices drop back to what it was 2 years ago. Pretty basic concept.

    Well, yes, we printed a MOUNTAIN of money in 2020 so this was predictable, and it WAS predicted in Aug 2020 Fed announcement.

    As for my overall situation, the value of our properties has gone up so much that we are considering retirement right now, well before planned.
     
    Last edited: May 19, 2022
  21. Zorro

    Zorro Well-Known Member

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    They have stopped now, but they were buying state and local bonds.

    Municipal Liquidity Facility
    "The Federal Reserve established the Municipal Liquidity Facility to help state and local governments better manage cash flow pressures in order to continue to serve households and businesses in their communities. The facility was designed to purchase up to $500 billion of short term notes directly from U.S. states (including the District of Columbia), U.S. counties with a population of at least 500,000 residents, and U.S. cities with a population of at least 250,000 residents. Eligible state-level issuers were able to use the proceeds to support additional counties and cities. In addition to the actions described above, the Federal Reserve will continue to closely monitor conditions in the primary and secondary markets for municipal securities and will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments."

    https://www.federalreserve.gov/funding-credit-liquidity-and-loan-facilities.htm
     
  22. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Sounds like a stupid feel-good initiative that does not really make much logical sense.

    Some idea a progressive would come up with.

    How about stop borrowing vast amounts of money for the federal level of government, which distorts the market and leaves little money left to lend to state and local governments?

    And maybe the Fed should not always be encouraging local governments to borrow money. It is often not a good thing.

    Progressives really think that people can borrow at zero percent interest rates and no one will have to pay for that. People have to pay for that in the form of inflation rates.
     
    Last edited: May 31, 2022
  23. cristiansoldier

    cristiansoldier Well-Known Member

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    There is no easy answer for that question because there is not a catch all reason for all of the inflation we are experiencing. Depending on the sector there are multiple causes. If you look at anything electronics related there are a number of causes that all came together. There was a chip shortage due to lower production during covid. Factories overseas lowered production of electronics using those chips due to covid. We threw a 25% plus import tariff of electronic parts from China, there are tremendous upward price pressure as companies world wide compete for limited supplies, there were increase shipping and supply cost in moving goods around the globe. Crypto currency miners were scoping up premium GPUs to mine crypto. Now consider everything that uses these electronics from new cars, corporate servers, medical equipment, factory machinery etc... When raise the cost of electronics and you raise the production cost for those goods and services that rely on those electronics. This is the multiplier effect that is extremely difficult for many to grasp.
     
    Last edited: May 31, 2022
  24. Zorro

    Zorro Well-Known Member

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    What I find interesting is people are acting like the Fed raising interest rates is why Biden's economic growth is faltering. The Fed has talked about raising rates, but the last time that inflation was this high the Fed was at over 19%. Today it's at 0.76%! It's only this month that it rounds to a non zero.

    [​IMG]
    And another thing, raising interest rates makes the bonds that they are trying to sell off their balance sheet, less valuable. The more they raise rates, the more they have to discount their balance sheet to unload the bonds and it's the taxpayers that take that loss. And look at how much they are holding:

    They have $9T and they have essentially sold none of it:

    [​IMG]

    That tiny roll off at the end, maybe they sold a little, but also these notes roll off on their own as they mature.

    They've essentially done next to nothing so far, yet we have one negative quarter in the can already.

    I bet that the Fed backs off far more quickly than they are letting on.
     
    Last edited: May 31, 2022
  25. Curious Always

    Curious Always Well-Known Member Donor

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    Notice, yes. Feeling, no.

    I used to make terrible decisions with my money. I learned from the experience and moved on, after five painful years in debt consolidation. I paid it all back. My husband was also a financial mess when we met 16 years ago. Together, we’ve made quality financial decisions, including saving way more than we thought we could afford. We can now roll with the punches.
     

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