Rising food costs. Rising housing costs. Rising unemployment and stagnating wages.
Another crash coming in the next couple of years?
Another crash coming in the next couple of years?
The article mentions that US food prices are inflating at a much more pedestrian 3%:
> 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.
I highly recommend taking 30 minutes to watch it, the person speaking is a well regarded economist.
You mean Ray Dalio? Wikipedia says he's a hedge fund manager and has a MBA, but no economics degree.
Sure all feels like inflation to me.
"Overall, CoStar data show the largest rent increases have come in higher-end properties, where average rent for a vacant unit in the Inland Empire has grown 9.3% over the last year, compared with the previous four-year average of 3.8%.
In older, more rundown properties where lower-income households are likely to live, rent is up 3.4%, compared with the previous four-year average of 4.9%."
1. https://www.latimes.com/business/real-estate/story/2019-12-2...
2. https://www.latimes.com/business/story/2020-11-23/rent-falli...
Each vector corresponding to a delta of price and time in a generalized location for a specific good.
Something like the CPI cannot be a hard science as it refuses to acknowledge that each and every person will experience inflation based on the inflationary vectors of goods and services multiplied by a persons relative use of said goods and services.
Every person experiences a unique inflation rate, and to try and average that in something as wholly simplistic as a basket of goods is pure chicanery aimed at making this topic intractable.
A proper measure of inflation should start from the individual level and reason from there.
So if on average 1 loaf of bread is bought by a US consumer and a loaf of bread's rate of inflation is increasing(or even decreasing) by %x, and that's %y of the average consumer's expenditure, then that should contribute %x*%y of the overall inflation rate experienced by the average American consumer.
Clearly this is a complex line of reasoning, but it should be the basis of thought on measuring inflation. Yet, housing and medical expenditure are not even considered in CPI. CPI is a terrible measure that I believe was designed to obfuscate.
Again, inflation means an increase in the general price level. An increase in the price of bread is not inflation, because the price of bread is not the price level. It can be used as a data point to try to estimate a change in the price level, but by itself it doesn't tell us anything about the inflation rate (unless of course bread is the only good being produced in the economy).
[0] https://www.bls.gov/cpi/tables/relative-importance/2020.htm
It is political. The method in which inflation is created benefits bankers via interest. Further, higher inflation widens the divide between the asset class and the rest of us.
However, the mainline (I would say propaganda) is that `...they know better than you` where `they` are unelected technocrats.
We printed our way out of a pandemic recession, so who knows what other nuclear options will be used to avoid near-term recessions.
Capitalist economies have a short boom bust cycle and a long one. Short ones cause recessions every 10-20 years. Long ones cause depressions every 100~ years.
It was clearly stated that Covid (if nothing else) could easily cause a recession, with other factors played in as well then it could easily trigger a depression.
https://www.thoughtco.com/difference-between-a-recession-and...
As soon as countries adopted fiat money, that one cycle mostly disappeared and even its timing became much more variable. But there are a lot of confounding factors, so this isn't the smoking gun it appears at first.
There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity.
Market competition is good. Interest and usury are destructive dangerous practices.
> At times, many nations from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change). [1]
So we see how the Church changed its opinion over time. They weaseled their way out of the prohibition, and today they don't say anything. Separation of Church and State also made it easier to engage in these sorts of practices.
On a side note: I have seen some good analysis/speculation/theorizing done about how interest/loaning would work in a world without government-regulation. Have a look, there may be some redemption in those concepts for you if you divorce them from government meddling (which I would posit, causes a huge chunk of all the evils we blame on capitalism).
The superior model is investments, similar to how VCs invest in companies in exchange for equity. Loans are to be relegated to charity only. If we apply all this, loans will become close to non-existent. We have seen this successfully work because interest is prohibited in Islam, yet it was able to flourish especially in the Islamic Golden Age to push the boundaries of knowledge and science and exploration, during a time where Europe was in the dark ages.
That sounds like a government problem--not a capitalism problem. Though I do agree that this is the heart of the fiat issue.
Economics is complicated. Pointing to one lever and saying "I understand the whole machine" is lazy. I call it 'playing dot to dot'. If you just draw lines between any dots you please, you can make the picture look like anything you want.
But there is a real picture there, it has lots of dots, and its worth understanding. Pontificating on the internet is not showing real understanding.
I'm not claiming to understand the whole machine, however, we know for certain there are rotten practices that make the machine unstable and also much more difficult to understand. Interest and usury are at the core, along with other things that are prohibited by Islam (e.g. selling things that you don't own and several more).
Once those are removed, the system will become much more stable, fair, and better off for everyone.
If anything, they got better since the introduction of Keynesianism, not worse.
It's inherent to capitalism. Don't try to delude yourself.
(It doesn't have to be "pure". "Simple harmonic motion" is the result of when the negative second derivative fully characterizes a system. There are, of course, plenty of systems that aren't as simple, and things get complicated... but where ever you get a significant negative second derivative you've got a system that is going to exhibit some sort of cyclic behavior, even the the cycles vary wildly in size, duration, how fractal the value behaves on smaller time scales, etc.)
In fact, historically, they haven't.
This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices.
And this loop is the unique and defining feature of capitalism. It didn't exist before capitalism, and in experiments like those of the Soviet Union, it didn't exist either, because there were no capital markets at all.
What you're describing is a behaviour of capital markets, but due to a lack of perspective it's described as a behaviour of economies in general - and it isn't.
Basically every time varying system, no matter how complex, can be thought of as a system of differential equations. Human systems of production -- any such system -- is a time varying system, and as such, probably has some cyclic behavior, instability, etc. somewhere inside.
I gave examples of economic systems that do not.
(Also, as you read my message here, recall my claim isn't that communisms has cycles and capitalism doesn't, but everything does because there is no way to build an economic system that doesn't have -d^2/dt^2 terms showing up somewhere in it.)
The economy of the USSR, in aggregate, literally only ever suffered two recessions - one in 1963 due to political instability (which was a very minor fall in GDP), and one at the beginning of WW2. The collapse of the USSR itself was a purely political issue - the USSR maintained growth right up until its dissolution.
I understand your point, but it is a case of diagnosing a second-order effect but not taking into account it's actual impact. Outside of capitalism, there were not really any economic systems that had such gigantic vorticity that they would spontaneously enter disastrous depressions.
Those cycles that you diagnosed, for example, eventually ended up by either a worker lying to stop the cascade, or someone at the planning office realizing the issue. They never snowballed into a Great Depression, because that simply could not happen. The reason the behaviour of unrestrained vorticity is possible in capitalism is because of capital markets. Without capital markets, or an equivalent, the behaviour you are diagnosing is inevitably dampened.
Think about it like a PID loop - there is a -d^2/dt^2 term in it, the D-loop term. But because of the I-term and the P-term, if you tune it correctly, general error always goes down over a full wavelength. Capital markets allow the D-term to overpower the loop.