Author Topic: Predictions and thoughts on the Biden Presidency  (Read 63782 times)

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #300 on: January 28, 2021, 10:18:56 PM »
Quote
Trickle Down economics don't apply to the scenario of a $15 minimum wage unless you somehow made it a global minimum wage. All a $15 minimum does is price low skill/low experience/"high risk" workers out of the work force, because their jobs become that much more likely to be off-shored to a part of the world where they'll happily work for $15 a day.

Why aren't we seeing that play out within the states? Companies and people are not fleeing from Arizona ($12/hr) to Alabma ($7.25/hr). Plus, there are still plenty of small businesses in Seattle that have managed to survive. Then there's the question, if Mom & Pop family owned businesses can't be as efficient as corporations that enjoy economies of scale and massive borrowing power, should they continue to exist? Let's wring our hands because some restaurant owner that can't handle food cost, invest in efficient equipment, or negotiate as effectively with suppliers and landlords, why should I shed a tear for them?

TheDeamon

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Re: Predictions and thoughts on the Biden Presidency
« Reply #301 on: January 28, 2021, 10:20:27 PM »
Obviously there are a myriad of complications, including the fact that not everyone is making minimum wage, that raw materials may be imported from somewhere not affected by wage hikes, etc. There are also a variety of responses including deployment of technology - depending on the sector. One can respond by reducing quality potentially, lowering COGS. Scaling back advertisement, promotional pricing, on and on. All is moot, McConnell and the Republicans in the Senate ain't putting that one through, they would infuriate much of their base.

This is the other side of the equation. You make labor expensive enough, but the labor need still exists in a price/supply inflexible market (because a law is stipulating price) and the result will be you make automation and mechanization a more cost competitive option. Sure, people may enjoy that legally mandated wage hike for a brief period of time, but once the robots are able to assume the role, they're going to go from having enjoyed a larger paycheck to "enjoying" having no pay check at all.

Assuming they weren't working in a job that could off-shore easily, or for an employer that decided their financial interests were best served by shutting down the business entirely.

TheDeamon

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Re: Predictions and thoughts on the Biden Presidency
« Reply #302 on: January 28, 2021, 10:44:21 PM »
Quote
Trickle Down economics don't apply to the scenario of a $15 minimum wage unless you somehow made it a global minimum wage. All a $15 minimum does is price low skill/low experience/"high risk" workers out of the work force, because their jobs become that much more likely to be off-shored to a part of the world where they'll happily work for $15 a day.

Why aren't we seeing that play out within the states? Companies and people are not fleeing from Arizona ($12/hr) to Alabma ($7.25/hr). Plus, there are still plenty of small businesses in Seattle that have managed to survive. Then there's the question, if Mom & Pop family owned businesses can't be as efficient as corporations that enjoy economies of scale and massive borrowing power, should they continue to exist? Let's wring our hands because some restaurant owner that can't handle food cost, invest in efficient equipment, or negotiate as effectively with suppliers and landlords, why should I shed a tear for them?

Because if economics was that simple, we'd have figured it out a long time ago.

Arizona has a lot of capital present in the state and a lot of population present as well(a lot it due to "northern" retirees and/or California transplants). That helps Arizona remain competitive with Alabama on certain things, while Alabama is competitive with Arizona on other things. There is a lot of "fuzzy variables" to go around. A lot of comes down to "sunk costs" in the location operations already are, and the cost of relocating and the predicted time for a ROI on making such a move. And when it comes to the retired people, the minimum wage in the area doesn't impact them beyond spending habits as a consequence of the cost of goods and services. They're there for the (winter) climate by and large.

As to other operations, sometimes opting for a little more mechanization/automation can cover the difference more easily than pulling up stakes and moving wholesale.

But if we're talking Phone Support for example, beware. For example, during my time doing phone support for DirecTV, I didn't actually work for DirecTV, I worked for a third party company who in turn had a contract to offer those services to DirecTV. (They also provided phone services for a lot of other major companies)

Those support contracts come up for renewal from time to time, and DirecTV has no "investment" in the call center I worked for(and to my knowledge, they're doing phone support for a health-services company these days). If they decide a call center in Mumbai offers "better value" for their company when the contract renewal is due to come up. Well, they're going to switch to Mumbai. The third party operator can then try to find someone else that is willing to pay for continued operation of that call center, or shut down the operation and declare bankruptcy if needed.

Now if we were talking about a mining operation and/or affiliated support services, obviously there are other limitations in play. You'd need to have a replacement mining site available to you, so on and so forth, and those options are likely to be limited especially if you are looking for new operations.

Other times it is something of a chicken-and-the-egg problem, where you need a workforce with a particular skill set, and obviously the place where you are already has that skill set or you wouldn't be there. They may now be more expensive than the market will bear due to a legislative action, but you don't really have a good option for relocation choices. So you either look at automation to bring labor costs down, or you simply vacate that market.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #303 on: January 28, 2021, 11:23:40 PM »
It is not that complicated to understand why all minimum wage jobs won't be offshored with a minimum wage hike. Just think about it: all the businesses that did so would vanish, along with the economy. In other words, outsourcing all jobs that are paid minimum wage would guarantee the destruction of their own company. After all, they can import goods until the cows come home, but they are mostly selling them (especially the goods made in China) to the general public. Eliminate their income source and where's your profit then? So even on a first glance the risk that all jobs go overseas if the minimum wage increases is zero. The argument that the amount of jobs available would decrease is the more plausible fear, I think, but as I mentioned above I think this also tends to be a minimal concern when businesses have already minimized to the maximal degree how many people they hire. At a certain point the employment level of a company becomes inelastic; go lower and you simply can't operate. And I'm guessing most businesses are already there, as has been the trend for years.

Regarding the slim margin small businesses may find at risk with a payroll increase, I would question why they are not seeing a commensurate increase in sales that goes along with the general public having more disposable income as a result of their higher pay scale. Could it be that all the new income going to minimum wage workers is going to Amazon instead of to them? But in that case they were doomed anyhow, and this is just hastening that situation. I don't like it, but in that scenario in particular I have to unusually side with TheDrake in saying that this is the general tide at work, not the new law that is responsible.

But if that is indeed the case, wouldn't that apply equally to all economic pronouncements? Like "minimum wage will destroy the economy" or "lower taxes are always good"?

To whatever extent an economist is sure of something is the extent to which I doubt the claim. I think there are obviously some things we can rely on. For instance trial and error seems to show pretty clearly that altering the prime rate has a somewhat predictable effect on bank lending and consumer borrowing. This is not some arcane theory, but a mechanically demonstrated phenomenon. Now if an economist was going to insist that lowering the prime rate would definitely fix a problem, now we are getting into astrology, because that would imply they know for certain what is causing a trough, which surely they could not know with authority. But on the other hand in the case of a trough, I think an economist suggesting to at least try lowering the prime rate would certainly be making a reasonable suggestion with some chance of success.

I hope I understood your question? Generally I think general pronouncements are going to be problematic, because the fact is that the aggregate effects in the economy are really just that: a series of discrete events all happening at once. Generalizing a massive and complex system into "X happens because of Y" is about as silly as saying that a person is feeling unwell because he must have a bug; or worse, because his humors are out of balance. Needless to say, we know that all sorts of minutiae in both body and mind can cause 'distemper'. You could feel vaguely unwell, due to a conglomeration of actually unrelated circumstances, including anxiety about something you've consciously forgotten about, that time you pulled a muscle and since then slightly favor one thigh (thereby causing an imbalance in your lower back and now causing a pinching in your neck), the fact that you wronged someone back when you were 8 years old, and the fact that you haven't exercised enough recently and when you did your brow was tense. And just toss in that your diet has thrown your gut microbiome out of whack, and you have a malady soup that no doctor, osteopath, or psychiatrist is equipped to untangle for you with a general statement about wellness. And now imagine that the economy is made up of millions of people like this, and that the functioning of the economy is as much a function of their state of mind as it is of fluid dynamics, flow theory, etc etc etc. So that is in a nutshell what I think about pithy pronouncements about economics.

Again, it's not that we cannot say anything, but economists usually say too much. I really enjoy economics, so this is not some diatribe against the study of it.

Take a small analogy in political science: it's oft taken for granted that democracy is the best option for governance in our day and age. But in order to ascertain what effect a particular democratic system will have, it's not enough to draw a schema on paper and say it should be like this and that it ought to work pretty good. It will also involve who will be participating in it; what these people are like; what happened in their history; what current establishments are in place and how they will function in it; what a person could do in that system, aside from what they are supposed to do; and many other factors. Some general statement about its function would really be meaningless without these details.
« Last Edit: January 28, 2021, 11:26:30 PM by Fenring »

TheDeamon

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Re: Predictions and thoughts on the Biden Presidency
« Reply #304 on: January 29, 2021, 03:57:52 AM »
It is not that complicated to understand why all minimum wage jobs won't be offshored with a minimum wage hike. Just think about it: all the businesses that did so would vanish, along with the economy. In other words, outsourcing all jobs that are paid minimum wage would guarantee the destruction of their own company. After all, they can import goods until the cows come home, but they are mostly selling them (especially the goods made in China) to the general public. Eliminate their income source and where's your profit then? So even on a first glance the risk that all jobs go overseas if the minimum wage increases is zero. The argument that the amount of jobs available would decrease is the more plausible fear, I think, but as I mentioned above I think this also tends to be a minimal concern when businesses have already minimized to the maximal degree how many people they hire. At a certain point the employment level of a company becomes inelastic; go lower and you simply can't operate. And I'm guessing most businesses are already there, as has been the trend for years.

Not all minimum wage jobs can be outsourced because not all minimum wage jobs lend themselves well to outsourcing/offshoring to other locations.

A Barrista in India doesn't help brew coffee for the Facebook employee in San Francisco.
Likewise, a Janitor in Indonesia doesn't help with cleaning the Alphabet headquarters in Silicon Valley.

Now Alphabet could install a bunch of Roomba's and cut back on their janitorial staff as they don't need to pay someone to vacuum their floors nightly. But there are things the Roomba cannot handle, and other tasks that require a human for now. Although Boston Dynamics, among others, is working on that; they certainly seem to have a robot that probably wouldn't take much training to have go from cubical to cubical and empty the trash cans periodically. Their "problem" would likely be the outlier conditions that people working there would generate for the trash collectors. Although given "Spot" (which wouldn't make a good trash collector) would currently set you back a minimum of $74,500 right now, I think the janitors are safe for a few more years.
source:
https://shop.bostondynamics.com/spot?cclcl=en_US&pid=aDl6g000000XdpZCAS

The list goes on and on however.

The guy cooking burgers at McDonald's is another example of someone who couldn't be offshored, you need the cooked burger where the customer is, not 2,000 miles away.

But now at $15 and hour, that guy is now likely to be in a lot more danger as you don't need something as advanced as Spot to do his job. Assuming a store open from 6AM to 10PM and $15/hour for a cook to just do burgers, (and you'd have taxes, insurance, and other things to cover too) that's $240 per day at the $15/hour price point. Multiply that across 365 days and you get $87,600/year. But the reality is, you buy "BurgerBot" once at $90,000 and then probably sign on to a "maintenance contract" that'd maybe run you about $30K/year and come with periodic upgrades and service. So in the first 2 years you're out $150,000... Except the humans it replaced would have cost you at least $175,000. Score $25 grand in extra pocket money for the McDonald's Franchise owner by the end of year 2, everything else after that is almost pure profit(less the service fee).

All because you just priced that job position into a price point that Spot became price competitive with the unskilled human.

Granted that's a problem that is coming sooner rather than later anyway, not increasing the minimum wage at this point might only buy the burger guy an extra "handful" of years at that job. But at least he is employed in the meantime. And the reality is, one McDonald's goes down that route, it wouldn't just be one guy in the kitchen getting cut.
« Last Edit: January 29, 2021, 04:00:55 AM by TheDeamon »

DJQuag

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Re: Predictions and thoughts on the Biden Presidency
« Reply #305 on: January 29, 2021, 08:58:54 AM »
This paranoia about innovation replacing jobs with robots only exists in a mindset that declares that people must work.

As technology advances we'll get closer and closer to the point of Star Trek post scarcity. If robots can actually do almost everything, there'll be no reason for anyone to work except in areas they're passionate about. Art. Community involvement. Continued innovation.

If technology advances and more and more jobs become replaced, the base economic model itself will have to change. The only other option will be a world with the .001 percent robot owners facing down the billions of starving and jobless people.

Universal base income. It's the future.

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #306 on: January 29, 2021, 09:23:49 AM »
For robotic replacement - manual labor at 15$ an hour is only slightly more likely to be replaced than 7.50$ an hour.  It changes the 'when' by a slight amount but not the if.

Lets use spot above - 75,000 dollars at volumes of 1000 a year say.

A 75000 one time robot with 10 year useful life is 7500 a year.  Say annual maintenance of 2500 for 10000 a year.

An employee costs

7.50 * 8 * 52 = 21,840

but a robot can work 3 shifts and weekends

so it replaces 3+ workers.  Also there are other employee costs.  So well say that 7.50 employee is really 30000 a year.

so 90000 a year for human labor vs 10000 a year for robot.

Of course spot is low volume - at a million robots a year it might cost 2000$.

At 2000$ it replaces labor that costs less than .50$ a day.

It is only because humans are so flexible and robots are hard to train and narrow capability.  The ease of training and flexibilty is increasing extremely rapidly due to AI advancements .  Human labor for the vast majority of jobs will be uncompetitive in the near future.

cherrypoptart

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Re: Predictions and thoughts on the Biden Presidency
« Reply #307 on: May 15, 2021, 12:13:57 AM »
Seriati

"executive orders...   He's already announced he's going to reenter the Paris Treaty, still without Senate approval, that he's going to re-institute the illegal DACA program, and several other "Day 1," initiatives - none of which involve any legislative agenda."

Speaking of executive orders:

https://www.yahoo.com/news/biden-cancels-trumps-planned-garden-202803078.html

So Biden cancels a bunch of Trump executive orders. I've got no problem with that. Just wanting to reiterate the fact, unless anyone can refute it, that DACA was the only executive order in history and for that matter in the future, that could not simply be canceled by the next President. There's just something very fishy about that.


cherrypoptart

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Re: Predictions and thoughts on the Biden Presidency
« Reply #308 on: June 18, 2021, 09:12:28 PM »
More of the usual "meet the new boss same as the old boss."

https://news.yahoo.com/former-obama-ethics-chief-says-205138291.html

"Former Obama-era Office of Government Ethics chief Walter Shaub called the Biden administration’s hiring of multiple relatives of senior staffers a disgraceful repudiation to the mission of restoring ethics in government.

“I’m sorry, I know some folks don’t like hearing any criticism of him. But this royally sucks. I’m disgusted. A lot of us worked hard to tee him up to restore ethics to government and believed the promises. This is a a real '**** you’ to us—and government ethics,” Shaub wrote on Twitter."

Joe Biden is as corrupt as they come. Always has been. He is a career politician so saying he is corrupt is redundant. The only surprise is that a Democrat has the integrity to call him on it and the mainstream media had the courage to put it on the front page of the internet. But other than that, expect nothing, especially consequences for his lies or change in the routine.





cherrypoptart

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Re: Predictions and thoughts on the Biden Presidency
« Reply #309 on: November 22, 2021, 12:27:51 AM »
Well it looks like if anyone predicted massive inflation for the Biden Presidency they were right on the money.

I did like one line by the media trying to carry water here:

https://news.yahoo.com/instagram-star-alexis-ren-says-110000294.html

"Ren went on to say that "the economy is collapsing" and that the dollar was getting less valuable. (This isn't quite true. In fact, since May, the dollar has gained nearly 6% against the British pound and nearly 7% against the euro.)"

Well I don't know about the economy collapsing but bringing up the exchange rate of the dollar as an argument against its declining value seems to miss the point. It doesn't matter how many euros and pounds you get for the dollar as most Americans aren't buying those. They are buying food and gas, shelter and sometimes vehicles.

fizz

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Re: Predictions and thoughts on the Biden Presidency
« Reply #310 on: November 22, 2021, 04:40:41 AM »
You know that's a worldwide phenomenon, right?

cherrypoptart

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Re: Predictions and thoughts on the Biden Presidency
« Reply #311 on: November 22, 2021, 09:36:40 AM »
I don't doubt it but we seem to be doing worse than most in the G20.

https://tradingeconomics.com/country-list/inflation-rate


It says here we're at a 6.2% inflation rate. Like so much else with this administration the first step to fixing a problem is admitting that there is a problem and that's just something these people refuse to ever do when the reality is that Houston, we have a problem.

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #312 on: November 22, 2021, 10:30:11 AM »
Inflation is a highly complex issue, hard to tackle comprehensively. Here's just one big driver:

Quote
Consider that roughly a third of the May inflation increase was due to soaring used car prices, which are up nearly 30 percent in the past year. It’s a classic story of supply and demand. There has been heavy demand for used cars as people didn’t want to fly or take public transportation. Meanwhile, there’s little supply largely because rental car companies purchased far fewer cars in 2020, so they aren’t selling many now on the used car market.

What would you like the federal government to do about that?

msquared

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Re: Predictions and thoughts on the Biden Presidency
« Reply #313 on: November 22, 2021, 10:45:49 AM »
Pump more oil. Dig more coal.  That solves all of our problems.

cherrypoptart

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Re: Predictions and thoughts on the Biden Presidency
« Reply #314 on: November 22, 2021, 11:07:36 AM »
You can see arguments on both sides about money printing and quantitative easing driving inflation but the danger with the used cars is to take one little detail about inflation and see that there is nothing we can do about that and so give up on the many other things we may be doing to drive inflation higher like our loose fiscal policy. I see the idea that running the money printing machines nonstop doesn't necessarily have to drive up inflation and I can appreciate that. There may be some cases in which it doesn't, but that doesn't mean it applies all the time or to us right now.

NobleHunter

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Re: Predictions and thoughts on the Biden Presidency
« Reply #315 on: November 22, 2021, 11:44:20 AM »
If we're lucky, next year will see supply chain issues sort themselves out as that famous free market problem solving swings into action. That should free up enough production capacity to absorb what ever excess cash isn't being sucked into the financial and housing markets. Then inflation goes back to normal.

If we aren't lucky, this year's problems will be a foretaste of much bigger problems next year. Then inflation may not be much of a problem because we'll run out of products to buy.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #316 on: November 22, 2021, 11:57:50 AM »
If we aren't lucky, this year's problems will be a foretaste of much bigger problems next year. Then inflation may not be much of a problem because we'll run out of products to buy.

Not quite: inflation happens when money is in over-supply, or when products/resources are in under-supply. Actually, there's a third reason (system-wide price-fixing upward price spiral), but let's leave off that for now.

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #317 on: November 22, 2021, 01:22:04 PM »
You can see arguments on both sides about money printing and quantitative easing driving inflation but the danger with the used cars is to take one little detail about inflation and see that there is nothing we can do about that and so give up on the many other things we may be doing to drive inflation higher like our loose fiscal policy. I see the idea that running the money printing machines nonstop doesn't necessarily have to drive up inflation and I can appreciate that. There may be some cases in which it doesn't, but that doesn't mean it applies all the time or to us right now.

Thanks for that, cherry, acknowledging as I did that this is a very complex issue. Since it is hard to know everything with certainty, people just default to their gut feelings. Policy A must be bad because it feels wrong. Increasing the money supply absolutely CAN drive inflation, we've seen that unequivocally in failed nations. Borrowing money can do this. So can cutting taxes, and I'll bet everyone here knows which philosophies resonate based on politics. Low interest rates can also do this, most notably in driving housing demand I believe. Higher mortgage rates would reduce willingness to sell or to buy.

It seems to me that if inflation is broadly experienced, then it is easier to make the case for money supply, because unless it is earmarked (infrastucture bill makes broadband more expensive, for instance)

The major lever used by all industrialized nations is to raise interest rates. There is a broad political coalition that is terrified about using it to curb inflation, because of the impact on economic growth.

To understand our choices, we have to look at some broad policy tradeoffs. Unfortunately, most of the electorate isn't interested in nuances. To them, economy bad, president bad. Every single president in the past 50 years has had more impact on their approval from economic circumstance than any other factor that I know.

So to me, I want someone to show me a correlation even if it is only to a part of the problem so I can understand the magnitude of the impact. Then make a tradeoff between something like, say, expanding broadband access that has social value in equality of opportunity, economic advantage in making more consumers able to connect with producers, but could also make components used more expensive due to inflated demand.

Here's the Republican talking points.

Interestingly they do a full case study on housing costs, a major driver. They do a decent job of linking to evidence, except, when they cite "government-induced higher income and savings" that just appears to be on faith.

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #318 on: November 22, 2021, 01:37:39 PM »
We know what causes inflation,

absolute scarcity.

You can print all of the money you want as long as absolute scarcity doesn't increase.  You can cut the money supply as much as you want and it won't reduce inflation if absolute scarcity exists.

The current inflation is due to a few issues

1) car manufacturers cut most of their chip orders assuming COVID-19 would cut demand, the US told certain Chinese companies they would be banned from buying US chips, a lot of natural disasters, power outgages, and fires hit chip foundaries; and there was a massive surge in demand for chips due to COVID-19 (computers from online schools and work from home; consumer electronics for home entertainement, etc.) - so huge surge in demand, massive reduction in supply.  So car manufactuers have had to cut production because they can't get chips.

So you see inflation in car prices and electronics.

2) Mills cut their production assuming COVID-19 would cut demand, everyone decided that COVID-19 would be the perfect time for home renovations

So again significant housing price inflation because of a massive surge in demand with a simultaneous supply cut

3) Trump negotiated a drastic cut in oil supply by OPEC and Russia; massive surge in oil demand as high vaccination rates return economy to normal

This is largely due to bizarre blunder by Trump.  Biden is trying to reverse Trump's blunder and to increase domestic production, but there is little incentive for OPEC to increase supply and domestic production is a very small percentage of global production.


Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #319 on: November 22, 2021, 02:21:14 PM »
We know what causes inflation,

absolute scarcity.

You can print all of the money you want as long as absolute scarcity doesn't increase.  You can cut the money supply as much as you want and it won't reduce inflation if absolute scarcity exists.

No, both of these propositions cannot possibly be true. Increasing the money supply even by a modest amount (forgetting about rampant printing) will result in a correction in market prices; it actually has to, it's just physics. With a greater availability of capital in the market, sellers are able to achieve a market price at minimum a little higher, because more people can afford it. Now how this plays out depends on where the printed money goes (directly to people in the form of a check, or as extra lending space offered to banks). So different sectors would see a different result, depending. Some commodities might not necessarily see inflation (like bread prices), while others definitely would. It depends on how flexible the market pricing is and how quickly it follows customer liquidity.

In the other case, where you cut the money supply, it would have far more immediately and drastic effects. Cut it too much and literally the entire economy would collapse, since it's a debt-based economy. Destroy the debt and you destroy the basis for credit, and thus goes down the tubes the entire business model of the U.S., i.e. debt financing based on current interest rates. What exactly would happen in this case would depend on how much you contract the money supply. What's interesting is that it might end up being surprising whether a cut in the money supply results in some cases in deflation, and in other cases in rampant inflation. Losing trust in the currency, for instance, would create an inflation, whereas a somewhat stable buyer's market could tolerate some amount of deflation (even though this would likely entail government bailouts to corporations).

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #320 on: November 22, 2021, 03:09:27 PM »
It seems not as clear cut as that. Big Macs don't cost significantly more in California than they do in Fresno, but houses sure do. Giving people in Fresno a bunch more money isn't going to make bread cost more there.

Even in simple microeconomics, the price a consumer is willing to pay for a good or service doesn't necessarily go up just because they got a raise and have more money.

It is generally also true that you can raise prices on inelastic goods like oil or electricity and have very little impact on the overall amount bought or sold.

For me personally, the big question is whether the money put in circulation is impacting critical prices for necessities. Even if I stipulate that prices of some goods rise with government stimulus checks (whether it was GWBs windfall payment, or Trumps, or Bidens bailout), there's a question of whether they are goods that matter. If the extra money in certain people's hands raise the price of aftermarket concert tickets or sports memorabilia, it matters very little to me.

CPI data

What do we see here? Energy popped, I don't have much to add to LR's take on that. Used cars up 26%, I gave the reason for that. Who is left? Food, 5%. Shelter, 3.5%. Food inflation averaged 3.3% over the past hundred or so years, so its slightly elevated for sure. I tend to suspect that food cost could easily be driven by energy and transportation inputs to that end price. Similar with apparel.

It is worth noting within the category of food, it is meat that jumped. Not bread. So a bunch of vegetarians gave that up because they got some stimulus checks and could afford meat? Or something a little less tongue in cheek?

Now we know that there some impact. Consider the limit if subsidy S approaches one million dollars. Anything with scarce supply and widespread utility might easily jump. Just like people who gobble up black friday deals and then parcel them out over ebay. Even if they have no use for such goods in the long term, speculation could be driven by having hyperbolic amounts of cash. It is a much harder case to make that argument about one of the lightning rods for conservatives - expanded child tax credits. That goes for $160 billion per year, which adds how much to inflation do you think? People at the lowest income levels aren't suddenly going to get in a bidding war with the rest of society becauase they got an extra $6k per year. I'll easily concede the likelihood that it has a non-zero impact on inflation. I just don't think it is that big of a deal.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #321 on: November 22, 2021, 03:15:23 PM »
It seems not as clear cut as that. Big Macs don't cost significantly more in California than they do in Fresno, but houses sure do. Giving people in Fresno a bunch more money isn't going to make bread cost more there.

Yes, it's very complicated, too much to even conclusively know all the results. I wasn't saying I could name all the things that would happen if you increase or decrease the money supply, just that there's no way it has no effect at all on inflation. The actual results sector by sector might well be chaotic and splintered, but something would happen. And btw it needn't be an immediate result; there could be significant lag before capital flow starts to spiral into systematic price movement. By then you'd blame it on something else...

One of the main objections right-wingers have to UBI is the potential inflation issue, and I don't think this is a trivial objection. I don't agree with them that it would nullify the UBI in net effect, but it might alter the relative prices to an extent in certain sectors. And to say that quantitative easing has no connection at all to inflation...that sort of sounds like a fringe theory to me.

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #322 on: November 22, 2021, 03:24:27 PM »
We know what causes inflation,

absolute scarcity.

You can print all of the money you want as long as absolute scarcity doesn't increase.  You can cut the money supply as much as you want and it won't reduce inflation if absolute scarcity exists.

No, both of these propositions cannot possibly be true. Increasing the money supply even by a modest amount (forgetting about rampant printing) will result in a correction in market prices; it actually has to, it's just physics.

Nope, only if there are supply constraints.  If you have unemployed labor, underutilized factory capacity, etc.  Then it actually causes deflation - the increased demand reduces per piece costs (the more volume the cheaper all stages from resource harvesting, to shipping, to manufacturing, to distribution) - almost all industries have high fixed costs (your land, manufacturing plant, administrative building, design, etc. vary little for low and high volume) so if you can increase volume prices can readily drop.  It also encourages more people to compete in the market creating downward price pressure.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #323 on: November 22, 2021, 03:26:52 PM »
A good exercise might be to ask why you think there is inflation at all. Like, why does it exist? I don't mean some prices go up, some go down, over time. I mean why all go up.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #324 on: November 22, 2021, 03:40:33 PM »
I'll just add this bonus question: supply is higher than ever before in many areas, logistics and transportation worlds better than even 20 years ago, production capabilities and automation way up, offshoring at 'completion' stage in terms of goods being produced for slave wages, and a huge consumption market where no one saves. So how do you explain costs going up and (more often than not) product quality going down? Speak to any company and they'll tell you their costs go up and up on anything at all, and they have to either raise prices or else cut corners on product (usually switching to a cheaper distributor with a worse product). You see it in anything ranging from electronics to food items. So how can this be? It cannot be the case that all natural resources in the world have become scarce simultaneously. But all prices steadily go up each year.

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #325 on: November 22, 2021, 04:36:39 PM »
I've never understood why the President exclusively gets the hammer over the economy though. Sure, he's got to sign stuff into law. But I don't think I can recall someone in Congress ever getting hammered over the economy. It seems exclusively the domain of the executive, President, Governor, or Mayor.

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #326 on: November 22, 2021, 05:15:43 PM »
We have inflation in the US for

1) Housing - housing in 'good neighborhoods' has extreme absolute scarcity, and population growth means there will be steady inflationary housing pressure in those places with population growth
2) Medical Care - absolute scarcity and consumption - as people live longer and are less likely to die of diseases which kill them rapidly, they have drastically greater chronic disease burden, but the supply of physicians has only modestly increased.  Since medicine is life saving (consumers don't really have an option of not consuming) enormous monopoly rents can be extracted.
3) Education - absolute scarcity and change in colleges - colleges historically viewed their mandate first as education; now many view profit maximization. 'good schools' have absolute scarcity - so many schools have dramatically increased prices to what the market will bear.  Universities have a monopoly in mandatory accreditation for many professions, so there is again absolute scarcity.  We also have drastic reduction of per capita funding to colleges and universities.  Many universities and colleges were 'land grant' based, most new ones are not, so they don't have the funds from the land grants and have a floor on pricing - and those with land grants will increase prices to match.

Oil prices vary drastically and that drives most of the rest of inflation - these are driven by oligopoly price manipulation resulting in absolute scarcity.
« Last Edit: November 22, 2021, 05:17:52 PM by LetterRip »

wmLambert

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Re: Predictions and thoughts on the Biden Presidency
« Reply #327 on: November 22, 2021, 09:45:54 PM »
As I've explained several times, the economics of free enterprise from entrepreneurs is far more successful that anything government can do. If you think qualitative easing makes sense, please explain why a successful Venezuela became so miserable.

Capitalism is a pejorative term pushed by the KGB (as confirmed by their internal records released during Perestroika and Glasnost). Use the corrct term. Our system is Free Enterprise or Free Market. Capitalism is accepted by ninnies.

Grant

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Re: Predictions and thoughts on the Biden Presidency
« Reply #328 on: November 23, 2021, 07:15:47 PM »
I had no clue that the reason I have to now pay $7/lb for bacon is because of the scarcity of computer chips for cars.  I feel so educated now.  Enlightened even.  Like I was in that cave Plato was talking about and somebody finally explained to me that the shadows on the back wall were demons and not shadows from a fire.   

OK.  I'm gonna have to call bull*censored* on all of y'all. Don't come to this party unless you *censored*ers are bringing receipts.  I want sources.  I want the complete CV of the author.  I want to know what their favorite song is and whether they prefer ST to SW.  I want to know if they voted for McKinley or Bryan. 

The first person who uses Facebook as a source, gets banned for life.

The first person who uses Paul Krugman as a source gets a finger cut off, ala Yakuza style.  The second person just gets executed. 

The first person who uses Ted Cruz or Rush Limbaugh as a source is consigned to hell. 

If you use Marx or Lenin as a source, I'm only going to laugh. 

Oh yeah, if you use some nameless moron journalists that writes for the Washington Post or the Grey Hooker, I want to know where THEY got their info from.  Because we all know they're not smart enough to have original thoughts. 

You've all gotten lazy.  This isn't Twitter.  This isn't Facebook.  This isn't Yahoo forums.  This isn't Reddit.  This....Is....Ornery.  Some of you geniuses have been doing this for 20 YEARS!  Act like it! 
« Last Edit: November 23, 2021, 07:18:43 PM by Grant »

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #329 on: November 23, 2021, 07:46:08 PM »
Different things have different causes,  many are pandemic associated, others are not, I've provided references in the past for the housing and car stuff.

Here is the chip shortage and automakers,

Quote
One of the most hopeful signs of recovery from the pandemic slowdown was the global surge in consumer appetite for new cars. But that momentum was brought to a screeching halt by a crippling semiconductor shortage—one that left auto manufacturers slowing or even stopping production as they scrambled to secure enough chips to build vehicles.

The unexpected spike in demand wasn’t the only factor in the shortage: A series of unpredictable disasters also tangled the semiconductor supply chain. A freak cold snap in Texas in February shut down factories at top chipmakers. Drought in Taiwan around the same time threatened to dry up the island’s semiconductor supplies (since chipmaking requires pools of water to wash away industrial chemicals). Then, in March, a fire tore through a factory at Japan’s Renesas—a key chip supplier for the industry.

https://fortune.com/2021/08/02/toyota-cars-chip-shortage-semiconductors/
https://fortune.com/2021/09/24/mercedes-volkswagen-frustrated-carmakers-upend-industry-chip-shortage-suppliers/

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So in March 2020, the global pandemic prompted automakers, suppliers and car dealerships to close down. The economy went into a recession.

The automakers, who have experienced previous recessions, quickly canceled orders for parts with computer chips, thinking auto sales would nosedive, said Michelle Krebs, executive analyst for Autotrader.

Sales of new cars did plummet initially, but quickly rebounded with pent-up demand and 0% financing offers. Also, dealers figured out how to sell vehicles online, offering home pickup and delivery.

"Automakers and suppliers that use chips contacted their chipmakers and put back their orders," Krebs said. "By then, chip capacity was consumed by other businesses — phones, computers, video games — as people worked and schooled at home."

https://www.freep.com/story/money/cars/2021/06/15/car-chip-shortage-2021/7688773002/

And wood and housing,

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As Fortune has previously explained, this historic lumber shortage was spurred by a perfect storm of factors set off during the pandemic. When COVID-19 broke out in spring 2020, sawmills cut production and unloaded inventory in fears of a looming housing crash. The crash didn’t happen—instead, the opposite occurred. Americans rushed to Home Depot and Lowe’s to buy up materials for do-it-yourself projects, while recession-induced interest rates helped spur a housing boom. That boom, which was exacerbated by a large cohort of millennials starting to hit their peak homebuying years, dried up housing inventory and sent buyers in search of new construction. Home improvements and construction require a lot of lumber, and mills couldn’t keep up.

https://fortune.com/2021/06/10/lumber-prices-2021-chart-price-of-lumber-production-wood-supply-costs-update-june/

Bacon is because Swine Fever wiped out much of China's herds of pigs, and thus they are importing pork to eat and they are replenishing their swine  herds, and because of US herd illnesses,

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“The recent strength here in the U.S. hog industry has more to do with our own herd losses due to slightly more cases of porcine reproductive and respiratory syndrome (PRRS) here – especially in Minnesota and Iowa over the winter, some apparent herd liquidation and stronger product markets,” says Christine McCracken, Rabobank executive director, animal protein.

https://www.porkbusiness.com/news/industry/china-just-part-demand-story-sparking-surge-pork-prices
https://www.abc.net.au/news/2021-03-04/african-swine-fever-second-wave-hits-pigs-in-china/13208048
https://fortune.com/2019/08/22/china-trade-pig-ebola-bacon-prices/
https://www.cnn.com/2019/04/20/investing/bacon-more-expensive-china/index.html
\

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #330 on: November 23, 2021, 07:48:59 PM »
I had no clue that the reason I have to now pay $7/lb for bacon is because of the scarcity of computer chips for cars.  I feel so educated now.

I was considering how to answer LR, and this sort of sums it up (although I was going to avoid being snarky, no offense dude).

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K.  I'm gonna have to call bull*censored* on all of y'all. Don't come to this party unless you *censored*ers are bringing receipts.  I want sources.

Ok, so although LR's conception of the source of inflation essentially goes against all major economic theory I know of (i.e. rejecting the idea that inflation is related to fiscal policy, which is a basic premise the Fed board has always operated on), I'm actually sort of supportive of that (in principle) since the 'elite' economists routinely show themselves to be numbskulls. Or more like, fakers, who say all of this stuff that's either untestable or else non-falsifiable. So while I'm all for diving in to find, shall we say, more correct interpretations, it results in a lack of stable footing in the field we can trust. So it will kind of inevitably devolve into "nah ah" since there's no one we really can source who should be a discussion-ender. I wish there was.

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The first person who uses Paul Krugman as a source gets a finger cut off, ala Yakuza style.

Seconded. That guy's analyses always irritate me. I think he's just a political hit man, frankly.

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You've all gotten lazy.  This isn't Twitter.  This isn't Facebook.  This isn't Yahoo forums.  This isn't Reddit.  This....Is....Ornery.  Some of you geniuses have been doing this for 20 YEARS!  Act like it!

Oh I'll concede this one. I was never huge on hunting down internet links. I think I recall from way back Tom Davidson had a policy that he would never provide links for anything, and I sympathized with that. We've seen how conclusive those discussions always end up...

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #331 on: November 23, 2021, 07:49:24 PM »
Oil prices,

Trump threatened Saudi Arabia to convince them to cut the oil supply,

Quote
As the United States pressed Saudi Arabia to end its oil price war with Russia, President Donald Trump gave Saudi leaders an ultimatum.

In an April 2 phone call, Trump told Saudi Crown Prince Mohammed bin Salman that unless the Organization of the Petroleum Exporting Countries (OPEC) started cutting oil production, he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the kingdom, four sources familiar with the matter told Reuters.

The threat to upend a 75-year strategic alliance, which has not been previously reported, was central to the U.S. pressure campaign that led to a landmark global deal to slash oil supply as demand collapsed in the coronavirus pandemic - scoring a diplomatic victory for the White House.

Trump delivered the message to the crown prince 10 days before the announcement of production cuts. The kingdom’s de facto leader was so taken aback by the threat that he ordered his aides out of the room so he could continue the discussion in private, according to a U.S. source who was briefed on the discussion by senior administration officials.

https://www.reuters.com/article/us-global-oil-trump-saudi-specialreport/special-report-trump-told-saudi-cut-oil-supply-or-lose-u-s-military-support-sources-idUSKBN22C1V4

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #332 on: November 24, 2021, 11:59:53 AM »
Man I only wish Saudis had pressed it and ended our support for their terrible regime. It remains a great stain how we prop them up. All the people weeping about the fall of Afghanstan missed the plot that SA isn't far off from the Taliban.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #333 on: November 24, 2021, 12:54:06 PM »
Man I only wish Saudis had pressed it and ended our support for their terrible regime. It remains a great stain how we prop them up. All the people weeping about the fall of Afghanstan missed the plot that SA isn't far off from the Taliban.

I think you have to consider the realpolitik here. The Saudis were essentially in competition with Russia to supply oil to Europe, and there has been quite a long contest over potential oil pipeline routes to see which could get oil across the expanse more competitively. This is part of why Syria has always been so much in dispute (no, it's not about religion). So knowing down Saudi Arabia means giving Russia a leg up; it's sort of inevitable.

A paranoid person might think that Trump made this move in order to give Putin an advantage. I think (assume Trump had a reason at all) that it's more likely that knocking down an international competitor would help American oil producers to keep their prices up. That's just a guess on my part, though.

NobleHunter

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Re: Predictions and thoughts on the Biden Presidency
« Reply #334 on: November 24, 2021, 01:13:53 PM »
I think the safe assumption is that Trump was supporting domestic producers (though Alberta says thanks). I'm not sure if it was good policy though. On the one hand, high gas prices suck for almost everyone; on the other hand, they encourage the adoption of electric vehicles and other green technologies. I don't know where the balance is.

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #335 on: November 24, 2021, 02:19:52 PM »
Ooh I'm more than well aware of why we support brutal regimes and even create them. Doesn't mean I think it's a good idea.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #336 on: November 24, 2021, 02:21:40 PM »
Ooh I'm more than well aware of why we support brutal regimes and even create them. Doesn't mean I think it's a good idea.

Yeah but the argument has always been it's not as easy as just 'don't work with Saudi Arabia.' For instance if you were for a stone cold fact that Russia would 'win out' in the oil race to Europe over the Saudis if the U.S. just left well enough alone, would you be ok with that? I think even many ordinary people would prefer to stop 'the worst country' even if it meant working with the 2nd worst country. And obviously power brokers want to control everything.

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #337 on: November 24, 2021, 02:25:25 PM »
I believe in a free marketplace, and I see that as a false dichotomy anyway. Let Russia get as rich as Saudi. So what. We barely even lift a finger when they invade entire countries, but we gotta worry about them selling oil?

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #338 on: November 24, 2021, 02:29:38 PM »
I believe in a free marketplace, and I see that as a false dichotomy anyway. Let Russia get as rich as Saudi. So what. We barely even lift a finger when they invade entire countries, but we gotta worry about them selling oil?

Well let me give you a different, and less obvious example. During the Cold War, the issue wasn't "let X get as rich as Y", the issue was letting Russia get as rich as the U.S., and to control more countries. And the result of the USSR winning the race in that context would have not been a free marketplace, it would have been the subjugation of humanity. I have a lot of cynicism about the Cold War and what both sides were doing, but I personally do not doubt that the USSR would have put humanity under its heel if given the chance (it's just that the U.S. was often doing stuff that was not much better). So if your goal is the development of a free marketplace, would it not be logical to oppose nations dedicated to eliminating the free marketplace? Or put a different way, if you let free market principles run unattended, and this leads to the elimination of the free market due to the 'winners' not wanting to play that game, then the free market principle ends up being an evolutionary dead end, i.e. a "bad idea" in the most pragmatic sense of the term.

Grant

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Re: Predictions and thoughts on the Biden Presidency
« Reply #339 on: November 24, 2021, 02:34:18 PM »
I was considering how to answer LR, and this sort of sums it up (although I was going to avoid being snarky, no offense dude).

Not offended, because I'm not snarky.  I am delightfully cheeky and irreverent. 

Quote
Oh I'll concede this one. I was never huge on hunting down internet links. I think I recall from way back Tom Davidson had a policy that he would never provide links for anything, and I sympathized with that. We've seen how conclusive those discussions always end up...

I had no idea that you considered ole'Tom to be a role model for your rhetorical style.  Whilst standing tall as a great amongst the Patri in terms of sheer volume of logorrhea here, I am hopeful that he finally broke free of the monkey and is now happy at home watching re-runs of TYT.  But by all means, subscribe to his style of "I don't owe you anything" argumentation, and don't ask yourself every day what you are actually doing here and what you hope to accomplish.  Because in terms of persuasion and debate, I'm unsure if anyone really was sold on the concept of Chase Manhattan being behind the curtain, based solely on your personal gravitas and integrity.

It's true that you might not actually ever convince anybody with a list of references a mile long, or win the Rex Copeland Award, but you might actually end of convincing somebody who is on the sidelines and help people understand where you are actually getting your information, so they are not tempted to believe that you receive your information directly from Sauron via palantir like some people on here.  And it will make you look less sloppy.  Like dressing nicely for a funeral.   


TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #340 on: November 24, 2021, 02:54:16 PM »
Quote
Speak to any company and they'll tell you their costs go up and up on anything at all, and they have to either raise prices or else cut corners on product (usually switching to a cheaper distributor with a worse product). You see it in anything ranging from electronics to food items. So how can this be? It cannot be the case that all natural resources in the world have become scarce simultaneously. But all prices steadily go up each year.

Oversimplifying, couldn't this just mean that population growth means ever increasing demand? Primarily as it relates to real estate. They ain't makin more land, as they say. Same thing mostly with fuel, but that market is heavily manipulated as well. Food? yep, same thing. Production lags, resulting in price rises.

A little research clued me in to a piece of history that I did not know about.

Quote
During the period between 1873 and 1879, prices dropped by nearly three percent every year, yet real national product growth was at almost seven percent during the same time period. However, despite this economic growth and the rise of real wages, historians have called this period "The Long Depression" because of the presence of deflation.

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #341 on: November 24, 2021, 03:26:50 PM »
Oversimplifying, couldn't this just mean that population growth means ever increasing demand?

That's just it, any short answer (or actually any answer really!) is going to be a simplification. Some simplifications are pretty good, like Newton's equation for gravitation, since it works damn well on the macro scale. It's incomplete, but still gives good prediction power. Other versions of simplification just mean they're plain wrong and nearly useless, such as with economic theories. I'm sure it would be foolish to argue that supply issues have nothing to do with inflating prices. But LR's proposition was that inflation can entirely be ascribed to that, which is contrary to every economic theory out there.

For real estate it's partly population growth, probably more so foreign investment, and also a good chunk of it just the enriching of the world in general and alleviation of poverty. More people who are above poverty line means more people looking to buy a home, even with population levels constant. Immigrations also skews things a lot, because if the immigration law favors people with money or good employability, it means you're importing money and therefore (a) increasing the money supply available to that sector, and (b) importing people who will specifically compete hard in the housing market. I'm sure I'm not listing all the variables affecting it.

For areas like food, electronics, and really good requiring elements not in scarce supply (in other words things not containing uranium, gold, platinum, metals used for microchips, etc) it's just a question of mining resources and manpower in the nations where the mining is happening. An economy of scale should actually lower prices, since if the mining company receives orders for 5,000 tons or ore, it should actually be more economical for them per ton to receive an order for 10,000 tons. As long as there is enough ore in the world that shouldn't raise prices. Also the increased productivity from new technologies - which may cause some unemployment and therefore hurt a different area of the economic sphere - should further reduce the cost of processing ore rapidly. The logistics improvements and so forth even more so. All of this should cause deflation, not inflation. The only reason inflation would be caused is if things like iron, nickel, and other common metals were harder to mine than they are; and if commodities like wheat, corn, and milk were having trouble keeping up with the market. But the reverse is true, where they are in oversupply and in fact sometimes require government intervention to prevent price deflation.

So it is WAY more involved than just saying rising prices (like, for the last 100 years) are just due to scarce supply. There's been inflation ever since the industrial age really kicked in fully, and I very much doubt much of anything was scarce back then to cause prices to rise constantly.

Quote
A little research clued me in to a piece of history that I did not know about.

Quote
During the period between 1873 and 1879, prices dropped by nearly three percent every year, yet real national product growth was at almost seven percent during the same time period. However, despite this economic growth and the rise of real wages, historians have called this period "The Long Depression" because of the presence of deflation.

There were a series of deflations, and also runs on the bank, in the late 1800's. We are familiar with the Great Depression, but there were some pretty severe depressions through the 1800's as well. One of the original arguments in favor of the creation of a central bank in the U.S. was precisely these price fluctuations, as well as the inconsistent availability of funds and credit for seasonal business. So farmers were getting hit in two ways: one, that they needed a huge influx of capital for planting season, which wouldn't see a return until harvest time, and two, that due to both competition and improving technology, production was easier and easier and there some deflations in the market, driving them out of business. This is actually the natural result of a sector becoming more developed; prices go down and production capability goes up, with people becoming unemployed in the process as machines take their jobs. But this result is also untenable for farmers, because the food supply chain needs farming industry to be solid, and not for farmers to randomly go under all the time, undercut by new business that itself will go under soon enough. A race to the bottom is a loser's game for everyone involved, even the purchaser (in the long run). So you can bet that in the case of American farming, if prices were steadily going up at the turn of the century in order to prop up the industry, it would due to manipulations rather than the free market at work. And actually that's ok by me: a society needs to actually be run to an extent, it won't just run itself.

rightleft22

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Re: Predictions and thoughts on the Biden Presidency
« Reply #342 on: November 24, 2021, 03:26:55 PM »
Quote
if you let free market principles run unattended, and this leads to the elimination of the free market due to the 'winners' not wanting to play that game, then the free market principle ends up being an evolutionary dead end, i.e. a "bad idea" in the most pragmatic sense of the term.

That is interesting

The word Free is used so freely without taking the time to really understand what is meant or intended when the word is used. How a exercise of freedom can so easily lead to the loss of freedom.

Quote
Real freedom is not about having no limitations; rather it is about finding liberation within—and also through—limitation.
Real freedom does not mind limitations and in fact is not limited by them. - Robert Augustus

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #343 on: November 24, 2021, 03:31:42 PM »
I had no idea that you considered ole'Tom to be a role model for your rhetorical style.

Well I wouln't go that far...just a trip down memory lane. But I would say that everyone here over the years has influenced me to some extent.

Quote
But by all means, subscribe to his style of "I don't owe you anything" argumentation, and don't ask yourself every day what you are actually doing here and what you hope to accomplish.

Well there's a question of how much time I want to spend doing annoying tasks, but I don't think the 'firehose of links' method is persuasive. An occasional link now and then, I'm good with that, as I'm sure you've seen. I just don't think 'link warfare' is actually going to change that many minds; the threads on Obamacare and other issues like that seem like good examples where you can find a link for anything. I think most people are persuaded more by ideas than by a bunch of data, for better or worse. It's actually not so bad, data can lead to wrong conclusions, but if you at least work on your ability to formulate ideas clearly and to think logically, this is a much better starting point in approaching data.

Grant

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Re: Predictions and thoughts on the Biden Presidency
« Reply #344 on: November 24, 2021, 04:35:27 PM »
Congratulations, LR, for bringing the receipts. 

Starting at the top, Eamon Barrett is a graduate of Leeds University in 2015 with a degree in Chinese and International Relations.  He specializes in translating articles published in Hong Kong for Fortune.  He states that the chip shortage will cost automakers 4% in sales this year, though doesn't make any connection from the lower supply to higher new car prices.  Much can be extrapolated, but it's not being said by poor Eamon from High Wycombe. 

Christiaan Hetzner ia a graduate of Georgetown University, with a degree in Foreign Service, International Affairs.  An interesting chap, he was an election monitor in Bosnia and Kosovo for three years.  He is an experienced automotive correspondent working in Germany for Fortune.  He draws the direct relation between higher prices for cars and chip shortages.  Note these are for new cars, not older cars, which with a lessening in new cars should probably also see some demand pickup.  But it's all rather superficial.  I don't know how much cars have gone up and I don't know how much supply is effecting demand etc.  It's more of an investment story, right up Fortune's alley, than it is an economics story. 

Jaime LaReau is an even more experienced reporter in the automotive industry.  She graduated with a BA in Journalism from Michigan State in 1991.  Go Spartans.  She's even more detailed in discussing how new car prices have risen and how used car sales have also risen, but there is a significant lack of macro economic view from the article.  Like, why did demand for new and used cars not drop during the pandemic and during the recovery?  She talks about zero percent financing and home car delivery, but that doesn't really explain the demand does it?  It's a business article, not an economics article. 

Lance Lambert actually has a BA in Economics and Journalism, from the great University of Cincinnati.  He's also something of a data journalist.  He confirms what you wrote earlier about the prices of lumber, but still doesn't answer the question about how demand jumped in 2020.  There is some talk about running to Home Depot for do it yourself projects and millennials hitting homebuying years, but that doesn't explain where all the money come from while sawmills thought there was going to be a housing crash.  In the midst of a recession, where did the money come from for millions to start home improvement projects or put down payments on new homes?  It seems to remain a mystery for Fortune, which is a business and investment magazine, not an economics magazine. 

I'm not going to delve deep on the bacon bit.  Suffice to say that the pattern is clear yet I generally cannot see sales of bacon really changing much in America.  But one thing to note is that the price of bacon is apparently being driven by investors in pork futures.  Like any commodity, the link between price and actual supply and demand is warped by investor perception.  The author, Jennifer Shrike, also points to booming stock market profits needing to be reinvested somewhere, so why not pork?  Jennifer happens to be a graduate of Kansas State University with a BA in Agriculture Journalism, Communications, and Animal Science.  Was also a member of Gamma Sigma Delta, the honor society of agriculture. 

God bless Reuters and Timothy Gardner.  He as a BA in Anthropology from Franklin and Marshall College, an MA in Print Journalism from New York University, and a BS in International Environmental Studies from Rutgers.  This one full of anonymous sources.  Also from April of 2020 and there is no clear line between then and now.  It's been a year and a half.  Certainly with a different POTUS in the white house, Russia and OPEC should have been able to ramp up production by now if they wanted.  This is primarily a political story, with everyone's favorite devil, L'Orange, at the center of it. 


For my response, I would like to give a Mr. Steven Rattner.  Mr. Rattner has a degree in Economics from Brown.  He is the Chairman and CEO of Willett Advisors, which handles Michael Bloomberg's charity money.  He writes for the Grey Hooker and is the economic analyst for Morning Joe.  He was a counselor to the secretary of the Treasury during the Obama administration.  Mr. Rattner seems to believe that the Biden penchant for shoveling money into the economy seems to have played a part in rising inflation, and is joined by former Treasury secretary Larry Summers and "others". 

https://www.nytimes.com/2021/11/16/opinion/biden-inflation-spending-manchin.html

In an oped for the Grey Hooker, Mr. Ratter seems to believe the Rescue America Plan of the Biden Administration has much to blame for the fact that Americans have 2.3 trillion dollars in their bank accounts.  I've personally been getting an extra $800 in tax credits every month (thank you Uncle Joe), which I have been spending on hookers and blow (thank you Uncle Joe).  This is on top of the ten thousand  dollars Mr. Catgrabber threw at me.  All of this despite the fact that I never lost my job, and in fact made more money than ever last year due to my connections with the health care industry and COVID being a massive industry.  Multiply this across millions of Americans and I guess that demand probably is going up. 

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The original sin was the $1.9 trillion American Rescue Plan, passed in March. The bill — almost completely unfunded — sought to counter the effects of the Covid pandemic by focusing on demand-side stimulus rather than on investment. That has contributed materially to today’s inflation levels.

Doesn't really seem to shine a bunch of hope that BuildBackBetter is going to help inflation either.  Being largely unfunded as well. 

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The responsibility for easing inflationary pressures also lies with the Biden administration. To its credit, it is scrambling to address the supply shortages, doing things like unclogging ports. But other ideas, such as releasing oil from the Strategic Petroleum Reserve, amount to distracting symbolic moves that are unlikely to have a significant effect on inflation.

The White House needs to inject some real fiscal discipline into its thinking. Given the importance of Mr. Biden’s spending initiatives, the right move would be to add significant revenue sources. Yes, that means tax increases. We can’t get back money badly spent. But we can build this economic plan back better.

https://www.nytimes.com/2021/03/05/opinion/fed-inflation-markets.html

Lawrence Summers is the Charles W Eliot Professor and President Emeritus at Harvard.  He has a PhD in economics from Harvard.  He was Secretary of the Treasury for Bill Clinton, and served as the Chief Economist at the World Bank (illuminati member) and was the President of Harvard for five years. 

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First, while there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply. Stimulus measures of the magnitude contemplated are steps into the unknown. For credibility, they need to be accompanied by clear statements that the consequences will be monitored closely and, if necessary, there will be the capacity and will to adjust policy quickly.

https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/


I truly respect the good sources and excellent reporting by experienced automotive and agricultural reporters.  I don't know about the clowns at Reuters.  But they were talking about prices, not exactly inflation, or how demand rose while supply dropped off.  I will see your journalists and raise you two economists, both who worked for democratic administrations. 


Grant

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Re: Predictions and thoughts on the Biden Presidency
« Reply #345 on: November 24, 2021, 04:40:46 PM »
Well there's a question of how much time I want to spend doing annoying tasks, but I don't think the 'firehose of links' method is persuasive. An occasional link now and then, I'm good with that, as I'm sure you've seen. I just don't think 'link warfare' is actually going to change that many minds; the threads on Obamacare and other issues like that seem like good examples where you can find a link for anything. I think most people are persuaded more by ideas than by a bunch of data, for better or worse. It's actually not so bad, data can lead to wrong conclusions, but if you at least work on your ability to formulate ideas clearly and to think logically, this is a much better starting point in approaching data.

I get it.  But at least say where you are getting your info from.  Not every thread needs a flood of links.  It depends on the subject.  Law and ethics and politics, not so much because they're soft science or liberal arts.  But economics should be different.  Same thing with most hard science.  I'd rather have a flood of links than individuals randomly pulling crap out their fourth point of contact. 

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #346 on: November 24, 2021, 05:11:21 PM »
I get it.  But at least say where you are getting your info from.  Not every thread needs a flood of links.  It depends on the subject.  Law and ethics and politics, not so much because they're soft science or liberal arts.  But economics should be different.  Same thing with most hard science.  I'd rather have a flood of links than individuals randomly pulling crap out their fourth point of contact.

In that case I will try to offer up some sacrificial victims I mean links for you to comment on next time.

Grant

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Re: Predictions and thoughts on the Biden Presidency
« Reply #347 on: November 24, 2021, 05:16:47 PM »
In that case I will try to offer up some sacrificial victims I mean links for you to comment on next time.

Like I said, links are not always necessary, depending on the claim being made.  Sometimes all you need to say is "I heard this on 60 minutes". 

Fenring

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Re: Predictions and thoughts on the Biden Presidency
« Reply #348 on: November 24, 2021, 05:25:25 PM »
I truly respect the good sources and excellent reporting by experienced automotive and agricultural reporters.  I don't know about the clowns at Reuters.  But they were talking about prices, not exactly inflation, or how demand rose while supply dropped off.  I will see your journalists and raise you two economists, both who worked for democratic administrations.

What makes the claim even more confounding is that companies don't just change their prices due to increased demand (despite the ridiculous teachings in econ 101). They're just happy to do more business. In fact the more modern business model is in fact low price high volume, which is opposite to the idea that increased demand causes prices to go up. Now LR's claim is that decreased supply (i.e. increased scarcity) causes the price to go up, but this is just an inverted way of saying the demand is up, since scarcity is only proportional to the amount of shortage based on a level of demand. Zero of a resource is not a shortage, for example, if there is zero demand. I'm not as surprised as you may be, Grant, that demand is up for certain things involving hobbies or home work due to the pandemic removing other options, but I am surprised that an increase in demand for certain types of things would make the price go up. Order twice as much bread to stock the supermarket, and the bread company is not going to raise their prices just to gouge the public. That could only work in a captive market, which this is not. And yet bread prices go up over time, despite the supply of wheat being essentially infinite. And for other markets why would the price go up, unless someone in the supply chain has decided to gouge the market? Now in the case of some rare resources where there is an actually finite supply per time, one would have to bid up to win the right to get it, I suppose. I can personally tell you, though, that in all my dealings with Asian factories they have never ever raised prices as a result of greatly increased demand; the only thing they do is to move back deadlines so that the queue to have orders completely takes longer to clear. Metals, on the other hand, is a different story. Gold, for instance, has been surging for a few years. But this is really an exceptional resource since its value historically is precisely due to its relatively fixed quantity in the market. But if someone is raising prices due to supply shortage only, it would have to be on the mining-manufacturing side, right? The very recent phenomenon of demand outstripping retail ability to fill orders is essentially unprecedented and don't speak to this history of inflation. So who is it, the mining companies? It has to be someone, if it's based in resources. Retailers wouldn't do it, they hate having to report increased prices to customers.

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #349 on: November 24, 2021, 06:16:39 PM »
Retailers do a lot of price adjustment. Typically this is through promotions. Stuff like BOGO or coupons. Increased demand means they can reduce or curtail those methods, or reduce the discounts. With Amazon, they can do it in real time and even selectively. They are testing their optimal amount of profit - not margin and not volume but the combination of the two. Did I hear you say something about semiconductors? It is true that Western Digital and Intel are not going to raise their prices immediately on flash memory - they can't because of their contracts. But secondary markets can and will. And new customers are less likely to get discounts.

Many retailers do indeed use a cost based formula, and if they run out of sofas or chairs or appliances they don't start charging more. Despite the fact that they have ample discounts based on MSRP. I think they do this for simplicity, rather than trying to gauge the demand for each item. But clearance accomplishes lower effective prices for goods in low demand.

Now I don't imagine that stores will always react to demand. Partly this is for image and loyalty. Imagine if costco started charging $75 for toilet roll. On the other hand, if you don't give a crap, you might see a convenience store charge $20 for a bottle of water during a natural disaster.

Water is one of the most ubiquitous raw materials on the planet. Or so it would seem, but it is getting more scarce all the time. You know what you need to grow wheat? Water. To grow any food? Water. You can now buy water futures on the commodities exchanges. There is almost nothing that isn't getting more scarce, and the next liter, kilogram, meter of a material is almost always more expensive than the previous one, which eventually ripples through to end pricing.

I know I'm not explaining things you don't already know, Fenring, just adding some perspective.