President Biden criticized news coverage of the U.S. economy as he faces growing backlash from voters over his handling of inflation. In brief remarks Saturday before boarding the presidential heli…
Okay, let’s say infinite growth is impossible. That seems intuitive. If that’s true, where’s the ceiling? It sounds like you’re worried that we’re going to hit it and bounce off, so maybe we should be planning for this event. What would be the best things for us to do as a species to prepare for this potentially cataclysmic event?
Money is made up and stupid
You’re made up and stupid. 😂 Just kidding, money IS made up, but it certainly isn’t stupid. Money doesn’t have any inherent intelligence, obviously, but I think your implying that we are stupid to keep using it as a medium of exchange? What would be a better alternative? Going back to the barter system?
Idk, money definitely seems better than that. It allows for greater skill specialization and for the construction of more complex economic systems. I know that can seem scary because there’s so much going on to keep track of, but arguably most people participating in society prefer it this way.
Lol the people in this thread are piiiiiiiiiiiiissed. I’ve never seen factual, tame macroeconomics 101 get downvoted so hard like this.
Lemmings know a lot about operating systems, but by god do they make Raegan look like a triple PhD in economics.
“Deflation is bad” is somehow a hot take around here because it’s either “I want prices to be back at 2019 levels and I refuse to hear that the resulting crisis will be worse than the Great Depression” or “I want to intentionally crash the economy to starve half the population to death and implement my stalinist policies. not necessarily in that order”.
Or, deflation is bad isn’t economics 101. It certainly wasn’t when I took economics 101. What’s bad is deflationary death spirals. Those have certain causes though and aren’t just something that happens with mild deflation over a long term. We know this because Japan actually went though a long period of mild deflation. And they aren’t having a great depression.
For the record hyper inflationary death spirals are also possible. But nobody in finance wants to demonize inflation because that’s how they get paid. Fun fact, a fast way to get a hyper inflationary cycle is to print a shit ton of money and only give it to rich people. Then have a ton of credit build up and get it all called in at the same time. We aren’t quite there yet, but not for lack of trying!
I think that counts as economics 102. I’ll freely admit that I don’t have the necessary knowledge to debate you on this level.
What annoys me is that the typical level of economic discussion on lemmy is “they say inflation is back to normal and yet things are more expensive than they were in 2019. GOTCHA.”
Yeah that annoys me too. The biggest gap in understanding is that inflation is a measure of velocity. So you have one side expecting prices to fall and the other side expecting wages to magically beat the baked in cost of living increases from previous years after a few months.
One way to make it clear is to take the inflation of the median wage and compare it to core inflation. By that measure wages are down 139 points since 1974. Mild deflation while wages hold steady wouldn’t be an inappropriate way to fix that gap without printing more money or taking anything directly from the wealthy. (Something America is historically bad at.)
This is important to the modern economy because so much of our financial system is predicated on this principle.
For example, in the US, 30 year fixed rate mortgages are wildly popular, in no small part due to this idea. When one takes out one of these loans, the payments earlier in the loan might be rough. Over the years, due in part to inflation, personal income (generally) increases, but loan payments don’t. This makes it easier to pay down the loan over time. By the end of the 30 year loan period, typically the mortgage payment is a much smaller proportion of income. Conversely, if the economy experiences deflation, then it gets harder over time to pay off the loan.
Now expand this principle to institutional loans, government securities, etc and you’ll likely see why it is imperative to policymakers to avoid deflation.
That’s all true. But out doesn’t really become a problem for people unless wages deflate too. Which in this example we would be avoiding. And one of the ways to keep deflation mild would be for the government to keep making those loan payments as only it can.
Keep in mind we have the inverse problem right now. Inflation keeps increasing that starting cost and no matter how much many people save, they can’t get on that mortgage. They get 10 percent saved and then find out it’s actually 5 percent. Then they get the new ten percent saved and find out it’s 8 percent. By the time they actually get 10 percent saved they’re looking at paying a mortgage well into retirement unless they save more.
Closing the wage and inflation gap is healthier in the long run and we know it can be done without catastrophe. The way we’re currently headed is going to leave the base of our economic pyramid starving and in the streets. Which isn’t good for anyone.
Totally agree with the points you’re making. Policymakers don’t do nearly enough to support the economic base of the country. In the long run, that does have dire consequences.
Regarding housing prices, I think you already know this, but wanted to clarify that those are less of an inflation problem and more of a supply / demand problem. New housing supply collapsed after the 08 crisis and has been slow to recover since. Some have argued that once more of the boomers die off it will open up more supply, but I’m not fully convinced.
Unfortunately, I don’t see any quick fixes for the housing problems we’re facing. We need to advocate locally against NIMBYs and more broadly for programs to enhance access to housing, public transit, etc. We have lots of big problems but IMO public discourse gets bogged down arguing about semantics.
We’re in the middle of Boomers dying. (I need to visit my parents more) They’re 1946 to 1964. On demographic charts the die off period is quite evident around 60-80 years old. Which is the age group they’re in now.
We aren’t getting those houses because investment companies are buying them at +20 percent value sight unseen, and a bunch of other baby boomers did reverse mortgages to pay for their medical bills.
Which is all tied into the massive redistribution of wealth from the working class to the wealthy over the last 50 years.
Infinite substantive growth is impossible. Infinite monetary growth is possible. The entire point of fiat currency is to not limit it with physical items.
Infinite growth is impossible. Money is made up and stupid.
Okay, let’s say infinite growth is impossible. That seems intuitive. If that’s true, where’s the ceiling? It sounds like you’re worried that we’re going to hit it and bounce off, so maybe we should be planning for this event. What would be the best things for us to do as a species to prepare for this potentially cataclysmic event?
You’re made up and stupid. 😂 Just kidding, money IS made up, but it certainly isn’t stupid. Money doesn’t have any inherent intelligence, obviously, but I think your implying that we are stupid to keep using it as a medium of exchange? What would be a better alternative? Going back to the barter system?
Idk, money definitely seems better than that. It allows for greater skill specialization and for the construction of more complex economic systems. I know that can seem scary because there’s so much going on to keep track of, but arguably most people participating in society prefer it this way.
Lol the people in this thread are piiiiiiiiiiiiissed. I’ve never seen factual, tame macroeconomics 101 get downvoted so hard like this.
Lemmings know a lot about operating systems, but by god do they make Raegan look like a triple PhD in economics.
“Deflation is bad” is somehow a hot take around here because it’s either “I want prices to be back at 2019 levels and I refuse to hear that the resulting crisis will be worse than the Great Depression” or “I want to intentionally crash the economy to starve half the population to death and implement my stalinist policies. not necessarily in that order”.
Or, deflation is bad isn’t economics 101. It certainly wasn’t when I took economics 101. What’s bad is deflationary death spirals. Those have certain causes though and aren’t just something that happens with mild deflation over a long term. We know this because Japan actually went though a long period of mild deflation. And they aren’t having a great depression.
For the record hyper inflationary death spirals are also possible. But nobody in finance wants to demonize inflation because that’s how they get paid. Fun fact, a fast way to get a hyper inflationary cycle is to print a shit ton of money and only give it to rich people. Then have a ton of credit build up and get it all called in at the same time. We aren’t quite there yet, but not for lack of trying!
I think that counts as economics 102. I’ll freely admit that I don’t have the necessary knowledge to debate you on this level.
What annoys me is that the typical level of economic discussion on lemmy is “they say inflation is back to normal and yet things are more expensive than they were in 2019. GOTCHA.”
Yeah that annoys me too. The biggest gap in understanding is that inflation is a measure of velocity. So you have one side expecting prices to fall and the other side expecting wages to magically beat the baked in cost of living increases from previous years after a few months.
One way to make it clear is to take the inflation of the median wage and compare it to core inflation. By that measure wages are down 139 points since 1974. Mild deflation while wages hold steady wouldn’t be an inappropriate way to fix that gap without printing more money or taking anything directly from the wealthy. (Something America is historically bad at.)
You were confidently casting aspersions earlier.
Yeah, IMO, the biggest thing to remember about inflation is that interest rates (the cost of borrowing) factors a certain level of inflation into the calculation. If you haven’t taken an interest in finance, this piece isn’t always obvious.
This is important to the modern economy because so much of our financial system is predicated on this principle.
For example, in the US, 30 year fixed rate mortgages are wildly popular, in no small part due to this idea. When one takes out one of these loans, the payments earlier in the loan might be rough. Over the years, due in part to inflation, personal income (generally) increases, but loan payments don’t. This makes it easier to pay down the loan over time. By the end of the 30 year loan period, typically the mortgage payment is a much smaller proportion of income. Conversely, if the economy experiences deflation, then it gets harder over time to pay off the loan.
Now expand this principle to institutional loans, government securities, etc and you’ll likely see why it is imperative to policymakers to avoid deflation.
That’s all true. But out doesn’t really become a problem for people unless wages deflate too. Which in this example we would be avoiding. And one of the ways to keep deflation mild would be for the government to keep making those loan payments as only it can.
Keep in mind we have the inverse problem right now. Inflation keeps increasing that starting cost and no matter how much many people save, they can’t get on that mortgage. They get 10 percent saved and then find out it’s actually 5 percent. Then they get the new ten percent saved and find out it’s 8 percent. By the time they actually get 10 percent saved they’re looking at paying a mortgage well into retirement unless they save more.
Closing the wage and inflation gap is healthier in the long run and we know it can be done without catastrophe. The way we’re currently headed is going to leave the base of our economic pyramid starving and in the streets. Which isn’t good for anyone.
Totally agree with the points you’re making. Policymakers don’t do nearly enough to support the economic base of the country. In the long run, that does have dire consequences.
Regarding housing prices, I think you already know this, but wanted to clarify that those are less of an inflation problem and more of a supply / demand problem. New housing supply collapsed after the 08 crisis and has been slow to recover since. Some have argued that once more of the boomers die off it will open up more supply, but I’m not fully convinced.
Unfortunately, I don’t see any quick fixes for the housing problems we’re facing. We need to advocate locally against NIMBYs and more broadly for programs to enhance access to housing, public transit, etc. We have lots of big problems but IMO public discourse gets bogged down arguing about semantics.
We’re in the middle of Boomers dying. (I need to visit my parents more) They’re 1946 to 1964. On demographic charts the die off period is quite evident around 60-80 years old. Which is the age group they’re in now.
We aren’t getting those houses because investment companies are buying them at +20 percent value sight unseen, and a bunch of other baby boomers did reverse mortgages to pay for their medical bills.
Which is all tied into the massive redistribution of wealth from the working class to the wealthy over the last 50 years.
Infinite substantive growth is impossible. Infinite monetary growth is possible. The entire point of fiat currency is to not limit it with physical items.