Capitol Hill Blue Forums Political Issues Finance, the economy & Economics What is inflation, anyway?

Thinking about this recently (again), I am forming the notion that inflation is caused by people wanting to “make” money without doing anything. Honestly, who doesn’t want that if you can get it? Speculation, playing the stock markets, windfalls, inheritance, lottery tickets, getting a higher price due to increased demand… if some extra cash floats along, I”ll take it.

But it all contributes to inflation, right? Inflation is like the truly uncaring animal we call Capitalism balancing the books inexorably (though a buttload of externalized costs still keep accruing, awaiting the day they demand payment - in case I’m being too vague, I’m referring to things like climate change and human overpopulation).

What to do about it? Probably ride the nasty but exciting waves until we crash on the rocks.

I thought inflation was too many people wanting/able to afford the same thing and that thing becomes highly demanded and there is not enough of that thing to go around for everybody. Therefore that thing goes to the person willing to pay the highest for that thing.

Or hunker down in my cave 'til the storm is over. I'm hoping it'll peak this year and usher in another hefty Social Security COLA, then ebb somewhat and ease economic pressure on Dems heading into 2024.


It's the same dog. Or at least they're chained to the same stake. And that they haven't killed each other is proof enough that they are friends.

I am not convinced that our inflation isn't really just a different name for our dollar becoming worth less and less due to the incredible creation of American dollars when the administration was trying to deal with the pandemic with, literally, trillions of new dollars.

Now throw in the incredible greed of the oil companies!

this is another of them "in the fullness of time" things.

Think about who benefits from inflation, and who it hurts: It is wonderful for folks with fixed-rate mortgages! Over the last 50 years I have benefitted greatly from inflation, because I buy real estate and I always get fixed-rate mortgages. So I pay for that last half of the property at a discount. Sometimes a huge discount.

It hurts people on fixed-rate incomes, but actually Social Security and most pensions are not fixed-rate. They have COLAs and dividends. So the fixed-rate people are mainly those with bonds. They keep clipping those bond coupons, but every year they are worth less. You can have a tax-free 5% muni, but as soon as inflation rises by 5% over when you bought it your investment is making nothing. Same for keeping cash or dollar-based investments.

I would argue that real estate and energy are the actual basis of wealth in the world today. Currencies fluctuate. My evidence for that is gas prices are tracking real estate prices and rent fairly closely. Income streams from other sectors are struggling to catch up right now. So we see things like shortages of truck drivers, and other unfilled positions. Simple solution employers: Increase pay to attract labor!

Doesn't almost everyone have fixed rates these days? Since rates are near zero anyway there's no need for them to fluctuate.

If that's the case then inflation is helping almost everyone!

They should quit their whining and buy some real estate.

I would argue that you may have hit on something that's truly brilliant.
I would like to bounce it off a buddy who happens to write about energy for a living.
I'm betting he would agree.
Credit given, of course.

Double that because prior TO the pandemic Donald Trump and the Republicans ramrodded trillions of dollars (two trillion) to the wealthiest Americans as well. We HAD to funnel a couple trillion to the economy because of the pandemic. We did NOT have to funnel another two trillion to the handful of Americans who own and control almost 80 percent of the wealth already.

But we did, and it counts as much as the pandemic lifeboat because it weighs about the same on dry land.

What they did with that tax deal didn't help and increased the debt. The other thing is different. That one created new money which is a VERY dangerous thing to do! Both, in the end, effect the nation's finances. Oh, one other thing, we are helping the Ukraine to the tune of billions of dollars every month. That too is part of the deal. If we keep doing this stuff, then eventually things will collapse and we will be in serious trouble on any number of different fronts.

My own thought is that gov will start to turn off the money spigot and start saving us from this kind of mess. Interest rates, right now, are going up. If they go up higher than 10/12 percent I hope everybody has a nice hole in the ground to hide in. Its also time to start watching the money markets as, I suspect, pretty soon you can put your money there are get 10% easy. There is a growing fear that we just might be getting ourselves in a very serious mess. Here is something on it:
https://www.cnn.com/2022/04/03/investing/stocks-week-ahead/index.html

I also suspect its really time to start breaking up the huge tech companies. Doing that will really help overall.

Quite right, Comrade!

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