Comment on When you want to be Meta, but you just a Beta
goldenballs@wolfballs.com 2 years agoIt's already happening. You could say it started last September, but you can find contributing events going back 100 years. Mainly its the Euro$ system since 1980.
iamtanmay@wolfballs.com 2 years ago
It feels that way, like they printed too much too fast, and now inflation is crazy.
goldenballs@wolfballs.com 2 years ago
Well there is another perspective... That in fact the only printing that took place was of bank reserves which don't enter the currency system, they are only used by banks. Euro$ are dollars that are outside the US, and not created by the Fed, and they comprise most of the dollars in circulation, and QE has no significant effect on them, but they are not normal dollars, more like large blocks of time-limited virtual cash. The idea of the Fed having any influence over the global dollar syatem is ludicrous. The Fed is largely irrelevant outside the US.
The only way the Fed can influence currency in circulation is when prime dealers extend credit to non-bank financial organisations like insurance and pension funds by exchanging securities (debt) for reserves with the central bank. So the only realistic way to see "moneyprinting" is to see those non-bank financial institutions (NBFI) buy equities, or bonds (they are sometimes required to). Money is only created by loans from commercial banks (including primary dealers). Inflation is only to do with increase if money supply in active circulation, not through bank reserves.
There is a sound case that the current price increases are not inflation in the the true sense of the word, but supply shock. The asset bubble in the stockmarket and housing is a result of obscenely low interest rates (real inflation being 2x or 3x cpi) resulting in severe negative real yield, excess demand not met by supply due to logistics problems due to lockdown effects, and some NBFI credit creation invested in equities to offset losses in purchasing power from declining bond yield.
They can't raise rates enough to fix this. They have to increase pay and conditions in the logistics sector to clear the backlog, which makes Trudeau's position economically untenable... Well, deranged actually. His fascist tendencies aside, gis economic stewardship of Canada is appalling, and it's hard to see how he can survive the impending storm. Some think there is a melt up happening this spring with the crash in August, but i think we're in mid-crash already, its just very slow. The larger forces are deflation, and a decline in economic activity as China crashes, Japan and the EU cannibalise their economies.
iamtanmay@wolfballs.com 2 years ago
Yes, I understood that, but I don't believe it.
My counterargument:
Covid supply chain issues started in 2020 in certain segments: lumber, construction material, semiconductors etc. But the sudden jump in price of everyday goods like meat, eggs, etc started later in 2021. Every product has a different supply chain. Across the board price increase would imply ALL supply chains are disrupted now, and not earlier in 2020. There is no evidence for this.
Stimulus checks & huge govt bills dumped money into the economy. American Rescue plan 1.9 Trillion, Infrastructure 1.2 Trillion since start of 2021, on top of the Trump stimulus of 2020 during lockdowns.
To attract workers, companies had to match stimulus checks. This increased low end wages, increasing salaries across the board, as those higher up also want a raise to match the increase.
Jump in wages means jump in labor costs ---> Price inflation from Subway to hairsalons. This is a classic Inflationary cycle, and the timing coincides with stimulus.
goldenballs@wolfballs.com 2 years ago
Taking your own argument, there are going to be niche-specific supply chains. So we know that strawberries won't be being flown into Scotland from Kenya, for example; nor will they be backed up in reefer ships off the coast of California.
What is common, is energy costs. Money is rather a proxy for energy. Oil price rises is an across the board price increase. We can say, LNG->Urea->Fertilizer->Food, over several months, but that same LNG rise goes into electricity generation, and oxygen for sterile food packing, as well as heating homes and cooking.
Stimulus/Furlough did have an impact, but it dissipates quickly. Data showed mass pay off of credit card debt, then a return to spending. Data also shows savings spent, prior to credit card debt returning. I don't know how much, if much at all of that recovery debt has actually been spent, and what on. They tried something similar in the EU, Japan has set course to maintain unsustainable rates, and the UK has basically changed course from the other reserve currency countries.
It seems that a lot of staff turnover was lowskilled service jobs. For high skilled, there is a dearth of suitably competent people that wage hikes can't fix. Wage hikes also cannot fix the port-lorry logistics bottleneck that well, if the real hold up is stupid restrictive policies.
I work offshore and in APAC. There's no shortage of work, but stupid policies and skills barriers to entry are creating the staff shortages. I see first hand the shipping logistics problems when crew changes can't happen, and ships can't sail. Its hilarious when politicians cite supply chain problems when they are the ones causing them with their stupid unscientific policies.
I am not going contend that supply chain is the only factor and that there is no moneyprinting, i think its a mix of these things, and the debate is over the level and impact of them. The collapse of China, Japan, EU, is certainly deflationary long-term. The burden of excessive debt creates stagflation, where asset-holders don't want to take a haircut, and workers face declining economic activity. As loans seize up, money ceases to be created or move, and the velocity of money is at a floor not seen since 1946. I think we have something more like stagflation conditions, rather than inflation.