Here it comes. Cost of running money printer too hard.
Most people in the western world aren't likely to buy more food, just because they have more money.
Not saying, we won't see inflation, who knows, but I doubt we'll see it in household items.
No, the problem is that there isn't enough food in the first place. The rising price rewards farmers who produce additional food. You just need to run a stimulus program for farmers so that they can expand and mechanize their farms to increase yields.
I wish people would look at physical reality first and then look where physical reality takes the market rather than looking at the market and ignoring what physical reality looks like.
That's the issue here: not only is stuff you need getting more expensive because of the expanding money supply but the new money is being used directly to cause it rather than helping the individuals that need help.
If you have more money and you use it to buy more food, that's not inflation.
Inflation is when you have more money and you use it to buy the same amount of food. Give people more money, and you will see the price of everything rise without seeing the amount of stuff they buy go up.
In the specific case of COVID in the UK, people have been given money to replace the money they would have earned. The people don't have extra money. The system hasn't changed except for the fact that the money is coming from the government instead of the their employer.
Care to elaborate, because *if* there is going to be a fallout from these massive stimulus packages, it certainly doesn't feel predictable to me.
Indeed, we all like to think doomsday scenario, and covid-19 have trained our brains to think the unlikely is likely.. but it's not even obvious there is going to be a fallout from all this stimulus.
They mention US inflation down below:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Money printing isn’t the only or even the main driver of inflation. Increased demands for goods during lockdown has put upward pressure on shipping costs, which is reflected in food prices.
See here what happened to the correlation between productivity and labour income after this https://wtfhappenedin1971.com/
The graph uses average hourly wages which does not include overtime, bonuses, shift premiums, and employer benefits. It also doesn't account for all workers.
https://files.stlouisfed.org/files/htdocs/publications/es/07...
total compensation tracks pretty well.
If I misinterpreted your comment (I think we agree), I welcome your explanation of why purchasing power stays the same when efficiency increases since 1971.
i would expect that purchasing power remains consistent for people doing the same work.
It's true that capital gains is captured by those who own the capital - but those who do own such capital had to take capital risk to obtain such gains.
Labour income (aka, wage income) increased if the labour changed to be more efficient without said use of capital - for example, programmers' income is very high. But for someone whose labour output hasn't changed from the 70's, is it expected that their purchasing power somehow increases (compared to someone else's)?
I still see graphs as these https://wtfhappenedin1971home.files.wordpress.com/2020/06/im... as clearly saying labour compensation correlated with advances in technology until 1971, when there was a dramatic shift, and that this is also the time when supply of $ was put in the hands of central bankers rather than any real and external asset.
>Frank Martin, bought the restaurant from Philippe Mathieu in 1927, and then the coffee was priced at a nickel.