Inflation 101

It's definable as any good or set of goods (or services). You can say the price of oil is inflated or you can say the price of all foods is inflated. You can obviously say that the price of poker coaching is inflated.

¡Cuidado con los gatos!

Yup despite governments cpi « bias » numbers , true sustain inflation is when u see the currency going down , purchasing power going down , not just some prices on cpi numbers .

House went up
Stock went up
CPI went up
services went up
Wages went up (nominally of course)
Gold went up
wtf didn’t went up ?

The rent is too damn high.

I just felt like that was worth stating. What will Trump do for the rentors!?

Again, inflation simply describes an increase in price (and/or decrease in purchasing power). The scope is variable. You can make the scope as wide or narrow as you'd like. You could even simply say that JoJo's poker coaching price is inflated, That is a perfectly valid use of the term.

I'll just describe it as unbroadcastable.

Blaming the president for high rent is stupid. Unless the president is a democrat. Giving the president credit for low rent is stupid. Unless the president is a republican. Love, bahbah.

So we figured out inflation. What’s next on the agenda tonight? Perhaps Supply and Demand of creamed corn?

Frozen concentrated orange juice.

Why did Trump stare at the orange juice box for 30 minutes?

he thought he was practicing his speech in the mirror

1st grade called, they want their joke back.

lulz

Currencies don’t “go down”. You’re wrong.

Inflation is where nothing changes but the price goes up

That’s it.

ho boy...
if u dont understand how prices going up means the value of your currency is going down i dont know what to tell you.
its simple division u learn in elementary school.

Regarding inflation consumers are seeing. I think it's corporate price gouging that they realized they could get away with during the pandemic. At that time there were supply issues so prices went bonkers, but never corrected. Why would companies charge less?

Anecdotally, sparkling water prices have jumped about 50% in the past couple months at all grocers locally. From about $3-3.50/12 to $5-5.50/12.

Low fed rates meant cheap money meant companies could charge extra for the same goods, and that’s what made inflation so high.

Companies wanted more profit so they changed their prices.

That’s it.

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Labor may be more expensive in some locales as well. There have been reports of all sorts of collusion and price gouging since covid times.

I’ve never suggested only dems can force rent (or the price of anything) up or only repubs can make thing cheaper. What I have said is that if you want to see inflation the best recipe is increasing the money supply by 3x its normal rate (with 6% a year being normal) for two years, throw out a **** load of money in the economy & slow down the economy. I think reasonable minds can agree that dems tried to give as much money as repubs would go along with post Covid and tried to shut down the economy as much as they could for as long as they could post Covid. So dems deserve a lions share of the blame for recent inflation.

Lolwat, the problem with your theory is that you are assuming people (who run companies) either weren’t greedy pre-Covid or they were greedy but became more greedy post-Covid.

Greed is human nature and people in general always want to maximize their happiness/ money. Let’s also remember that the major reason we saw supply issues post Covid was because governments shut down economies. So it wasn’t that people became more greedy after Covid that forced prices up it was govt intervention in the economy that created the environment for higher inflation.

This is an excellent example of simplistic, first level thinking.

If low interest rates caused inflation why did we see normal inflation for years when interest rates were near 0% for so long (before Covid)?

Your graph starts in 2014 so if we take that as a starting point then inflation averaged below 2% a year between 2014 and 2020. It was never above 2.3% a year in any of those pre-COVID years.

Yeah, it was such a dumb post I didn’t even know where to start so I gave it the Montrealcorp-treatment. I’m glad someone else called it out though.

Not sure why but that can be easily researched. I imagine it is because we were recovering from a recession for so long so companies didn’t raise prices because they feared it would lower demand

Once the Quantative easing is in full affect, companies know that demand has become mostly inelastic to price changes, so companies increased their prices and increased their profits

QE and stimmy has now stopped so demand to price elasticity has returned, prices are too high so demand goes down so companies must lower prices in response which is why you see fast food places offering deals now

What I wanted to correct you on is that low interest rates do not cause inflation

Companies charging more causes inflation.

Companies charge more as a result of it being more profitable to do so.

If the fed pumps money into the economy then companies know that price increases won’t affect demand that much so they raise the prices of their products

You can say that QE/ stimmy leads to inflation as a result of companies increasing their prices but it is not a direct connection

Thank you for the compliment. I agree that when teaching people it is important to start with the basics.

@bahbah

You need to understand what elasticity of demand is. It’s a thing that changes and companies use that to determine their prices

Do you know what elasticity of demand is? Can you explain it using your own words?