MicrostockGroup Sponsors


Author Topic: where is inflation headed?  (Read 5949 times)

0 Members and 1 Guest are viewing this topic.

« on: March 01, 2022, 15:39 »
+1
US inflation will likely drop below 5% by the end of the year, EU even lower.

this cycle is different since it's so covid related - as we return to normal, accrued savings are causing a rise demand vs supply for goods.  plus, the US Fed will be raising interest rates over the next few months

the big unknown is how Russia's invasion will affect oil prices worldwide, and food prices in less developed countries (Ukraine & Russia are large exporters of wheat, corn (19%)& sunflower oil (80%))
https://www.nytimes.com/2022/03/01/opinion/what-the-war-in-ukraine-means-for-the-worlds-food-supply.html

Only 1 percent of all corn grown in this country is eaten by humans. The rest is No. 2 yellow field corn, which is indigestible to humans and used in animal feed, food supplements and ethanol. but the use of ethanol for gasoline means edible corn is not grown, which could help with worldwide food shortages.


SVH

« Reply #1 on: March 01, 2022, 15:53 »
+1
US inflation will likely drop below 5% by the end of the year, EU even lower.

this cycle is different since it's so covid related - as we return to normal, accrued savings are causing a rise demand vs supply for goods.  plus, the US Fed will be raising interest rates over the next few months

the big unknown is how Russia's invasion will affect oil prices worldwide, and food prices in less developed countries (Ukraine & Russia are large exporters of wheat, corn (19%)& sunflower oil (80%))
https://www.nytimes.com/2022/03/01/opinion/what-the-war-in-ukraine-means-for-the-worlds-food-supply.html

Only 1 percent of all corn grown in this country is eaten by humans. The rest is No. 2 yellow field corn, which is indigestible to humans and used in animal feed, food supplements and ethanol. but the use of ethanol for gasoline means edible corn is not grown, which could help with worldwide food shortages.
Inflation will rise dramatically, at least in Europe, because of energy prices. And certainly when Putin is fed up with european sanctions and will turn of the gas tap. These higher energy prices will effect other products because manufacturers use energy to produce their products. And that's besides the stoppage of products coming from Russia and Ukraine leading to scarcety.

Probably most European governments will welcome the inflation because they have taken on an incredible amount of debt, as well as the ECB, because of the expenses of the corona measures and the loss of tax income by it. So evaporation of debt which otherwise would take generations to repay might be very welcome, if they have also refinanced with low interest rates, by now, for the mid term.

So I don't know where you get your forecasts from regarding inflation but I'm pretty sure it will sore way above that. The US might have a smaller problem because they are not so exposed to both problems.

« Reply #2 on: March 01, 2022, 17:18 »
+1
I would make the difference between inflation and the normal price rises, caused by high demand or resource scarcity.

When the oil price is rising because of high demand during an economic boom, that's not inflation. When the oil price is rising because of scarcity (e.g. less Russian oil), that's not inflation.
Even when the prices are rising more globally, because of workforce scarcity (e.g. during the pandemic), that's just normal fluctuation, not inflation.

Inflation happens when the governments are running out of money, and they have to cover their costs and commitments through one form or another of "money printing".
Inflation takes time to manifest itself. It takes time for the "new" money to be passed from the national bank to commercial banks, then to big companies, then to smaller companies and employees, and ultimately to prices. And maybe only after that to those who rely on inflation-adjusted incomes.

The higher an organization is in this inflation chain, the more it benefits, because they get their hands on the "new" money before the prices had time to catch up with the money surplus.

In the USA, both the Trump and Biden administrations "printed" money like there was no end. Trump even more than Biden (so far). So what we see now is the consequence of that governmental spending spree, e.g. "real" inflation, on top of normal higher prices driven by scarcity of specific products and productive workforce.

We may recover from the "normal" component, but the money surplus is here to stay.
« Last Edit: March 01, 2022, 17:29 by Zero Talent »

« Reply #3 on: March 02, 2022, 06:25 »
+4
This not true at all. Inflation is the decline of the purchasing power of a currency for any reason and is measured most often by the increase of an average price level of a basket of selected goods. Thats all it is. It's cause is another matter.

« Reply #4 on: March 02, 2022, 06:26 »
+1
I would make the difference between inflation and the normal price rises, caused by high demand or resource scarcity.

When the oil price is rising because of high demand during an economic boom, that's not inflation. When the oil price is rising because of scarcity (e.g. less Russian oil), that's not inflation.
Even when the prices are rising more globally, because of workforce scarcity (e.g. during the pandemic), that's just normal fluctuation, not inflation.

Inflation happens when the governments are running out of money, and they have to cover their costs and commitments through one form or another of "money printing".
Inflation takes time to manifest itself. It takes time for the "new" money to be passed from the national bank to commercial banks, then to big companies, then to smaller companies and employees, and ultimately to prices. And maybe only after that to those who rely on inflation-adjusted incomes.

The higher an organization is in this inflation chain, the more it benefits, because they get their hands on the "new" money before the prices had time to catch up with the money surplus.

In the USA, both the Trump and Biden administrations "printed" money like there was no end. Trump even more than Biden (so far). So what we see now is the consequence of that governmental spending spree, e.g. "real" inflation, on top of normal higher prices driven by scarcity of specific products and productive workforce.

We may recover from the "normal" component, but the money surplus is here to stay.
Sorry this is what I was replying to

« Reply #5 on: March 02, 2022, 08:11 »
+2
This not true at all. Inflation is the decline of the purchasing power of a currency for any reason and is measured most often by the increase of an average price level of a basket of selected goods. Thats all it is. It's cause is another matter.
Yes, you are right with one observation. Many who are commenting on inflation do not realise that inflation is referring to a sustained increase in the general price level (as distinct from normal fluctuations).

As I said, the labor shortage caused by the pandemic is temporary and we will recover from it. That's not inflation.
The surge of the oil price caused by the scarcity of Russian oil is temporary, therefore not inflation. Likewise, the price increase for rooms in beach resort hotels during the summer is temporary, therefore not inflation.

The economists' consensus is that inflation is caused by "the growth in the money supply, alongside increased velocity of money".
Besides, many have also "inflated" its meaning by using terms like "oil price inflation", "house price inflation", etc instead of just "price increase".
« Last Edit: March 02, 2022, 09:44 by Zero Talent »

« Reply #6 on: March 02, 2022, 08:43 »
+1
?

thijsdegraaf

« Reply #7 on: March 02, 2022, 13:56 »
+2
This not true at all. Inflation is the decline of the purchasing power of a currency for any reason and is measured most often by the increase of an average price level of a basket of selected goods. Thats all it is. It's cause is another matter.
Yes, you are right with one observation. Many who are commenting on inflation do not realise that inflation is referring to a sustained increase in the general price level (as distinct from normal fluctuations).

As I said, the labor shortage caused by the pandemic is temporary and we will recover from it. That's not inflation.
The surge of the oil price caused by the scarcity of Russian oil is temporary, therefore not inflation. Likewise, the price increase for rooms in beach resort hotels during the summer is temporary, therefore not inflation.

The economists' consensus is that inflation is caused by "the growth in the money supply, alongside increased velocity of money".
Besides, many have also "inflated" its meaning by using terms like "oil price inflation", "house price inflation", etc instead of just "price increase".

The reason doesn't matter. A country's inflation is tracked and reported. Even if that is, for example, 1%.
Inflation can also arise if a country borrows too much. See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Before burglars stole my old coins, I had old German banknotes of over a million marks.

A country would rather have a small inflation than a deflation. High inflation not, of course.
« Last Edit: March 02, 2022, 14:04 by thijsdegraaf »

« Reply #8 on: March 02, 2022, 14:09 »
0
The reason doesn't matter. A country's inflation is tracked and reported. Even if that is, for example, 1%.
Inflation can also arise if a country borrows too much. See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Before burglars stole my old coins, I had old German banknotes of over a million marks.

A country would rather have a small inflation than a deflation. High inflation not, of course.

Yes Thijs, borrowing followed by printing money to pay the debt.
This is also mentioned in the article you quoted:
The debt problem was exacerbated by printing money without any economic resources to back it

Printing money (all kinds) and the inflation it generates, is a hidden form of taxation.

So the reason doesn't matter, because there is no other reason. Everything else is just supply-demand fluctuation.
The two factors may overlap, like these days, but the total price increase is not only caused by inflation. Only a part (an important one) is.

But politicians like to blame someone else for the additional hidden tax required to pay their excessive expenses.
« Last Edit: March 02, 2022, 14:28 by Zero Talent »

thijsdegraaf

« Reply #9 on: March 02, 2022, 14:41 »
+2
The reason doesn't matter. A country's inflation is tracked and reported. Even if that is, for example, 1%.
Inflation can also arise if a country borrows too much. See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Before burglars stole my old coins, I had old German banknotes of over a million marks.

A country would rather have a small inflation than a deflation. High inflation not, of course.

Yes Thijs, borrowing followed by printing money to pay the debt.
This is also mentioned in the article you quoted:
The debt problem was exacerbated by printing money without any economic resources to back it

Printing money (all kinds) and the inflation it generates, is a hidden form of taxation.

So the reason doesn't matter, because there is no other reason. Everything else is just supply-demand fluctuation.
The two factors may overlap, like these days, but the total price increase is not only caused by inflation. Only a part (an important one) is.

But politicians like to blame someone else for the additional hidden tax required to pay their excessive expenses.

Inflation is inflation whatever the cause. Hot is hot. it could be because of the sun, but also because I ran really hard.  ;D
I know that these two causes are close to each other.
Our house prices are rising way too fast. One reason is that too little has been built. Another cause is that rich people, foreign companies buy them up to rent out, driving prices up even further. There are still a few causes. But it also causes inflation to us.

« Reply #10 on: March 02, 2022, 15:06 »
0
The reason doesn't matter. A country's inflation is tracked and reported. Even if that is, for example, 1%.
Inflation can also arise if a country borrows too much. See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Before burglars stole my old coins, I had old German banknotes of over a million marks.

A country would rather have a small inflation than a deflation. High inflation not, of course.

Yes Thijs, borrowing followed by printing money to pay the debt.
This is also mentioned in the article you quoted:
The debt problem was exacerbated by printing money without any economic resources to back it

Printing money (all kinds) and the inflation it generates, is a hidden form of taxation.

So the reason doesn't matter, because there is no other reason. Everything else is just supply-demand fluctuation.
The two factors may overlap, like these days, but the total price increase is not only caused by inflation. Only a part (an important one) is.

But politicians like to blame someone else for the additional hidden tax required to pay their excessive expenses.

Inflation is inflation whatever the cause. Hot is hot. it could be because of the sun, but also because I ran really hard.  ;D
I know that these two causes are close to each other.
Our house prices are rising way too fast. One reason is that too little has been built. Another cause is that rich people, foreign companies buy them up to rent out, driving prices up even further. There are still a few causes. But it also causes inflation to us.

No really, Thijs. Inflation is not the same as price rise.
As mentioned before, only a global and sustained price rise is inflation.
When the price is rising during the summer on your beach hotel, that's because of supply-demand, not inflation.
So that price is hot, but it's not inflation hot. It will fall back during the cold winter.
It's not a sustained price rise.

And yes, the home prices are going up because of the billions of stimulus checks thrown to the market in 2020 and 2021.
That's the perfect example of inflationary "money printing".

If the home prices are rising because of shortages, that's not inflation, because the money needed to pay a higher price for a home, must be taken from something else. So the global prices are not going up if the money mass remains constant on the market.
« Last Edit: March 02, 2022, 15:31 by Zero Talent »

thijsdegraaf

« Reply #11 on: March 02, 2022, 15:18 »
+2
The reason doesn't matter. A country's inflation is tracked and reported. Even if that is, for example, 1%.
Inflation can also arise if a country borrows too much. See https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Before burglars stole my old coins, I had old German banknotes of over a million marks.

A country would rather have a small inflation than a deflation. High inflation not, of course.

Yes Thijs, borrowing followed by printing money to pay the debt.
This is also mentioned in the article you quoted:
The debt problem was exacerbated by printing money without any economic resources to back it

Printing money (all kinds) and the inflation it generates, is a hidden form of taxation.

So the reason doesn't matter, because there is no other reason. Everything else is just supply-demand fluctuation.
The two factors may overlap, like these days, but the total price increase is not only caused by inflation. Only a part (an important one) is.

But politicians like to blame someone else for the additional hidden tax required to pay their excessive expenses.

Inflation is inflation whatever the cause. Hot is hot. it could be because of the sun, but also because I ran really hard.  ;D
I know that these two causes are close to each other.
Our house prices are rising way too fast. One reason is that too little has been built. Another cause is that rich people, foreign companies buy them up to rent out, driving prices up even further. There are still a few causes. But it also causes inflation to us.

No really, Thijs. Inflation is not the same as price rise.
As mentioned before, only a global and sustained price rise is inflation.
When the price is rising during the summer on your beach hotel, that's because of supply-demand, not inflation.
So that price is hot, but it's not inflation hot. It will fall back during the cold winter.
It's not a sustained price rise.

And yes, the home prices are going up because of the billions of stimulus checks thrown to the market in 2020 and 2021.
That's the perfect example of inflationary "money printing".

If the home prices are rising because of shortages, that's not inflation, because the money needed to pay a higher price for a home, must be taken from something else. So the global prices are not going up if the money mass remains constant on the market.

I bought my first house fifty years ago for 40 thousand guilders is 20 thousand euros. I am now buying a shed for that.  ;)

« Reply #12 on: March 02, 2022, 15:20 »
0

I bought my first house fifty years ago for 40 thousand guilders is 20 thousand euros. I am now buying a shed for that.  ;)
I know. That's because there was a lot of money "printing" business going on, during all those 50 years.

thijsdegraaf

« Reply #13 on: March 02, 2022, 15:22 »
+1

I bought my first house fifty years ago for 40 thousand guilders is 20 thousand euros. I am now buying a shed for that.  ;)
I know. That's because there was a lot of money "printing" business going on, during all those 50 years.

 ;D

« Reply #14 on: March 02, 2022, 15:38 »
+1
.
« Last Edit: March 02, 2022, 22:54 by Zero Talent »

« Reply #15 on: March 03, 2022, 01:35 »
0
 ::)

« Reply #16 on: March 03, 2022, 03:28 »
+1
How we even have a discussion of economics or fiscal policy when we not prepared to grasp the foundational definitions. A basic introductory course in economics covers this stuff. 

When analysing causes for inflation what are (all subcategories for inflation, not separate things by the way) Cost-Push Inflation, Demand-Pull Inflation, Fiscal Policy Inflation.

When calculating inflation rate as measured by the CPI or PPI how is inflation caused by "money printing" disentangled from other causes prior to the rate being published. Spoiler, it isnt, that is all done post hoc via analysis of the figures for inflation.

I was going to say it's a fallacy of the single cause, but its not even that. You are actually labelling a possible or partial cause as the effect, so a category error maybe?

« Reply #17 on: March 03, 2022, 05:14 »
+2
I couldn't resist getting in on this discussion, and I just want to say that from my background in accounting and economics, I agree more with Zero's definition or rather his 'distinctions'.

Without getting into the complexities too much, I quickly found an article that sums up the differences between price increases and inflation:

https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2008-economic-commentaries/ec-20080601-rising-relative-prices-or-inflation-why-knowing-the-difference-matters.aspx

Note these paragraphs:

Quote
"Inflation Is a Misused Word

Inflation is one of the most misused words in economics. As economist Michael Bryan carefully explained a few years back, the word originally described currency and money, not prices. It referred to a rise in the amount of paper currency in circulation relative to the precious metal (or money) that backed it. Later, the term referred to the amount of money in circulation relative to the amount actually needed for trade. Today, however, people typically use the word to refer a rise in some set of prices or even in a single price, with no necessary connection to money at all. So now we have countless types of inflation: oil-price inflation, healthcare inflation, wage inflation. The unfortunate outcome of this evolution is that the public no longer distinguishes between two very different types of price pressure.

Strictly speaking, inflation refers only to a drop in the purchasing power of money that results when a central bank creates more money than its public wants to hold. Inflation manifests itself as a rise in all prices and wagesnot just some subset of prices. People, of course, use money to conduct their day-to-day transactions, and their demand for money generally expands as the economy grows. If the publics demand for money grows at, say, 3 percent per year, but the central bank creates money at 5 percent per year, then all prices and wages will eventually rise at 2 percent per year. Prices will keep climbing as long as the disparity between the supply and demand for money continues."


The subject of economics in itself is a very complex subject, and it can be debated until the cows come home.

But just quoting some quick google references, ie "Inflation is the decline of the purchasing power of a currency for any reason and is measured most often by the increase of an average price level of a basket of selected goods." by JustaPhotographer, is not really enough to fully understand the subject. (yes, I saw that one too. :) )

Whether this is important or not to the whole discussion, I don't know, but I thought I would just throw it into the ring, so to speak.

 
« Last Edit: March 03, 2022, 05:18 by Annie »

« Reply #18 on: March 03, 2022, 06:06 »
0
Honestly I think you had to dig pretty hard to find that definition and even that article explains the term is no longer commonly used in what it claims is its original definition. That includes by financial institutions, economists and certainly by the public at large.

Rather than digging around for 14 year old articles heres how the Bank of England defines it:

https://www.bankofengland.co.uk/knowledgebank/what-is-inflation

And the US Government:

https://www.dol.gov/general/topic/statistics/inflation

https://www.federalreserve.gov/faqs/economy_14419.htm

« Reply #19 on: March 03, 2022, 06:51 »
+1
I have to somewhat apologise. I have spent a while reading up on the history of the world inflation and it does seem that in the mid-nineteenth and at the turn of the twentieth century it was primarily used in the way you define it. I wasnt aware of that history.

I was going on what I had been taught at the end of the twentieth century and the way I have always seen it discussed in recent decades (Will Increasing Money Supply Cause Inflation, Will Growth in Government Debt Cause Inflation etc.) which sounds nonsensical when you start from the older definition.


« Reply #20 on: March 03, 2022, 07:01 »
+1
I guess my degree is out of date then. (lol - just kidding) And no, its not from Cleveland, its from RMIT in Australia. So maybe thats the problem ???  ;) (just kidding again)

But I remember having to write a short thesis on the differences between Price Increases and Inflation. And there's a lot more to it than those short sentences we see everywhere, and on those sites you linked. And more in line with what Zero was saying.

I really don't think its a historical thing, either. The differences are still relevant today.  But as I said, we could debate this for ever. Economics is pretty much a theoretical subject anyway.

Anyway, I'm going to bed. I'm tired and its been a long day for me. I'll leave it up to the rest of you guys to work it out.  :)
« Last Edit: March 03, 2022, 07:08 by Annie »

« Reply #21 on: March 03, 2022, 07:12 »
0
Fair enough. I read the OP as being concerned about price increases but maybe they meant they were concerned about money supply? Anyway, good night.

« Reply #22 on: March 03, 2022, 08:01 »
+1
Fair enough. I read the OP as being concerned about price increases but maybe they meant they were concerned about money supply? Anyway, good night.

No, the OP was concerned about total price increases.

And yes, an important cause is the artificial abundance of money (i.e. inflation).

Anyway, I'm afraid that it's unfair to be happy with the money falling from the skies as stimulus checks, and then be unhappy when the natural market forces are taking all back (and more), through inflation. Because it happens all the time.

Remember, excessive money printing is a hidden tax.
Politicians like the take credit for the checks, but not for their consequences.
In other words,  "After me, comes the flood".
One president even put his signature on them, and now, together with his party, they are exclusively blaming his successor (who is also guilty of the same, but to a lesser extent, so far) for the predictable effect of his "generosity".

« Last Edit: March 03, 2022, 10:49 by Zero Talent »

Uncle Pete

  • Great Place by a Great Lake - My Home Port
« Reply #23 on: March 03, 2022, 12:16 »
+1
I will use the theory that a picture is worth 1,000 words (maybe more in inflationary times?)



A 100-trillion-dollar Zim note is worth 40 U.S. cents. But on the bright side, I could work Microstock and be a Trillionaire in Zimbabwe? As it is, I'm only a Millionaire.

That's inflation.

« Reply #24 on: March 03, 2022, 13:19 »
+2
I guess inflation at eurozone will be 2 digit at the end of 2022 - so 10% or more. Cant imagine its going under 5%.
Everything ist getting more expensive and everything is harder to get. Prices for used cars are rising because there are not enough new cars. My aunt bought a used car 2 years ago and now she is getting more money for her car than she paid 2 years ago. Food ist getting more expensive month after month. There is no end in ricing prices.


 

Related Topics

  Subject / Started by Replies Last post
DT Headed South

Started by tab62 « 1 2 3  All » General Stock Discussion

58 Replies
12184 Views
Last post May 22, 2012, 13:35
by digitalexpressionimages
5 Replies
1953 Views
Last post January 02, 2013, 23:44
by gillian vann
17 Replies
2683 Views
Last post August 03, 2018, 06:24
by DavidK
8 Replies
1435 Views
Last post March 02, 2022, 04:12
by Brasilnut
25 Replies
1939 Views
Last post July 29, 2022, 18:42
by cascoly

Sponsors

Mega Bundle of 5,900+ Professional Lightroom Presets

Microstock Poll Results

Sponsors

3100 Posing Cards Bundle