The Ultimate Guide to Inflation
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Normally, an increase in money supply would cause consumer goods to increase in price, since more people are able to buy them and there is a limit on how much of any particular physical good is available.
This isn't the case, however, for digital goods. If there are suddenly 100 million new people who want to buy a Netflix subscription, it isn't like we are going to see the price of a Netflix subscription go up because there isn't enough Netflix to go around. The marginal cost for a new subscriber is practically zero, so there should be no price increase caused by a shortage.
It would be easy to see that inflation would be essentially zero if ALL goods people wanted to buy were digital ones... no amount of demand can eat up the supply, since supply is practically infinite.
Of course, in the real world, some goods are digital and some are physical. If you gave everyone $5000, some of that would go to Netflix subscriptions, which wouldn't effect consumer prices, and some would go to buying TVs to play Netflix on, which WOULD cause inflation.
I am curious how much of our current "low inflation even with an increasing money supply" is caused by our increasing spending on non-exclusionary goods.
Yeah, I don't think that that argument works at all. The price does not increase due to "shortage", it increases due to an increase in consumers' willingness to pay. Going by the Netflix example, if Netflix realizes that not too many people will cancel their subscriptions if they were to increase the price by, say, 1 dollar, they would certainly increase the price.
Consumers' WTP is the reason why digital goods are priced differently in different markets. Many digital goods are sold for much cheaper in India compared to developed countries because the Indian market is much more price sensitive. For instance, Netflix costs only about half as much in India as it does in America.
If the doubled subscribers requires doubling the number of Netflix OpenConnect CDN boxes, that would mean current capex, and while the additional revenue might eventually pay for it, there might need to be borrowing costs to get the equipment sooner rather than later. Also, right now is a tricky time to get lots more hardware, so a 2021 node might cost more than a 2020 node, even if they have the same capacity.
All that said, without looking at their investor reports, I suspect they have some margin and cash on hand to make things work and mostly profit. They probably also have a target for spare CDN node capacity, because there's some pretty high variability of peak load on new releases and ISP install lead time can be super long. Also, they do a lot of efficiency work to make sure they can push as much traffic as possible from their nodes.
Every digital value chain ends up on something physical.
That’s an odd way to say India is way poorer, and there’s no way the avg Indian can afford to pay a US price for Netflix. People being price sensitive is only an additive effect on top of that.
(India => any developing country)
The average Indian earns less than 4 dollars a day. The average Indian still buys their shampoo in little 5ml sachets that cost 2cents because they can't afford the full bottle even though buying the full bottle would be cheaper in the long run. So, the average Indian definitely can't afford to pay the Indian price for Netflix either.
The average Indian is not the target market of Netflix or of any Internet business. All the talk of India being a market of a billion users is nonsense. Only the top 5 percent, maybe 10, of people in India have the disposable income for them to be a potential target customer for most businesses. For all intents and purposes, India is a market of ~50-100 million customers.
When I say that the Indian market is much more price sensitive, I am talking about this group of people, not the average Indian. The reason Netflix is priced half of what it is in the US is because this group of people are willing to pay that much for Netflix. The average Indian is simply not a relevant concern.
Now, if the oligopoly within video services (or anywhere else) would conspire to raise prices together - that'd be a different story. We've seen this in other digital goods. The Apple and Google anti-poaching agreements come to mind.
Speaking for myself, I have bought the subscription of at least four video services in India.
With Netflix, a million people can sign up immediately, supply adjusts instantly and economy of scale is locked in earlier.
For digital goods you also have huge companies investing for the future. Your local hardware store need to continue to make a profit, whereas Amazon can absorb or push back on cost pressures for much longer.
I agree with OP that this must put upwards pressure on inflation of physical goods even if it’s a medium term thing.
Of course there is chipageddon now, nothing is without physical. The point is the IP and customer service are the major cost drivers, not the property, the assembly line and the workers.
One more thing is also true: you can scale up/down really fast these days and for a fact at least this won't change your price as even your scale-down risks/impacts are much lower.
Not if the increase in money supply goes from the banks to the already wealthy (as cheap loans), which don't use the extra money to consume, but to invest, buy land, and fund small-competition-crushing rent-seeking endeavours.
Then the money supply increases, consumer goods remain more or less the same price, but some stuff like rent goes up.
In that case the lenders were the ones who were the problem, and the borrowers were indeed using the money as disposable income (well, at least, to buy a home and other consumer goods on credit).
Whereas today the money goes from the printers to the rich people - not the common folk.
Like Lehman Brothers
Not much? Based on the CPI weights given by the BLS[1] at least 82.238% of the CPI is from non digital goods. This is based on summing up the top level categories which are definitely not digital, ie. Food and beverages, Housing, Apparel, Transportation, Medical care. If you drill down into the remaining categories (Education and communication, Recreation, Other goods and services) and eliminate non-digital goods from there you can probably get that percentage even higher.
[1] https://www.bls.gov/cpi/tables/relative-importance/2020.htm
This isn't actually true, though it's a widespread belief (quite a number of pundits kept making incorrect predictions after the global financial crisis).
Where the logic goes wrong is that an increase in money supply doesn't automatically translate into higher disposable incomes. (And higher disposable incomes don't automatically translate to higher effective demand, though in practice they usually do if you the increase in income isn't extremely unequally distributed.)
I wonder how much of that is true in our modern economy. Between our incredible latent productive capacity and the sizable chunk of our economy that consists of non-rivalrous goods, I wonder how much of the increased demand we could absorb without causing inflation to rise substantially. For example, how much would food prices go up if poor people had more money? We can produce a lot of food, and the demand for additional food is not limitless. Some of that money would go towards digital goods like Netflix and video games and other digital goods, which are non-rivalrous.
Of course it would have an effect on inflation, but I am just wondering how much.
Proclamations of certainty around UBI are common, but the only intellectually honest position is that we simply do not have enough empirical data to tell with a useful level of confidence how a UBI would affect inflation.
Also, I believe that the only way to collect that empirical data is to implement a UBI at a sufficiently large scale and see what happens.
How is your family's net worth percentage change looking compared to Bezos? How is your salary percentage change looking compared to that?
Sorry for laboring your point. It should be labored. Repetatedly & with emphasis.
https://en.wikipedia.org/wiki/Post-scarcity_economy#:~:text=....
The fact that we can now afford ever more borderline useless apps, clothes and electronic gadgets doesn’t help much
There are multiple cities in England where population has decreased but house prices increased. During lockdown 700k people left London, but house prices kept going up.
Prices will go down.
Think about life in the USA 70 years ago:
Do we think that much fewer than 34% of 20-to-30-year-olds lived in multigenerational households? The average square-footage of new homes more than doubled between 1970 and 2015.
Certainly people spend far more on healthcare, education, and transportation now than then. But aren't those goods and services that were simply not available at all to a large fraction of the populace? 10% rather than 30% of people went to college. Most conditions for which people seek medical treatment now probably went untreated.
So many people in 1950 eked out their existences living in a multigenerational house with a single bathroom and no car. Never traveling out of state or experiencing middle-class city culture. Walking a mile to work or performing farm labor more than 8 hours a day. The world is very different today, but it's not at all clear to me that living a comparable lifestyle is not an option for most people today.
The American dream is a challenge for people now. If we advance to where it's no longer a challenge because the pieces of that are plentiful and cheap and is given to everyone by virtue of existing, then we need a higher challenge because we've essentially "solved survival on Earth" and must now expand. IMO it's way better than just becoming an economy that focuses on producing luxuries or inventing new financial gadgets.
I'll believe the Post Scarcity Economy only when I see it.
>Post-scarcity does not mean that scarcity has been eliminated for all goods and services, but that all people can easily have their basic survival needs met along with some significant proportion of their desires for goods and services
Like, yes, we are depleting the Earth of its resources, leading to scarcity, but then that will end because the Earth will be out of resources, therefore we are post-scarcity and everything is free or nearly so? No sense whatsoever.
I think I can guess what the paper is about, that technology is going to develop that will save us from exhausting resources, but we're already inching pretty damn close to various tipping points that will lead to some really terrible things happening with various ecosystems and things are going to have to get a whole lot worse (and a lot of people are going to die) before we even can attempt to go back to some sort of eventual equilibrium. And tech is nowhere close enough to saving us from a good chunk of it.
So yeah, I guess there could be a 'Post-Scarcity World', but only for the fraction of life that will survive to see it (maybe none of that life being human at the rate things are going).
Post scarcity perhaps exists in some richest parts of selected countries (California? Hamburg?), but even in those places it is often just an illusion. Roads still have potholes and there are homeless on streets. Schools still struggle with supplies. There are also people who work, but whose work does not allow them to get a real place to live, or health services. Then there are other things that are difficult to measure: for example overworking, or drug addiction, which perhaps dont mean scarcity of goods, but seem to be connected with scarcity of services or scarcity of quality of life.
People from the rich countries consume more natural resources than the few billion in developing, or third world countries. What happens now is already completely unsustainable and causes multiple problems: global warming, loss of natural habitats, dying species...
There are billions of people in Africa or India, who dont consume even 10% of the resources that an average American consumes - but they sure as hell would prefer to get to that level.
I imagine that it is easy to make comments about post scarcity when you live in some mega-rich bubble in California, but this is not true even for USA, not to mention the rest of the world.
People in poor countries dont have cars YET and they sure want to drive those big trucks that drink a lot of fuel per mile. But where will this fuel come from? And where does the CO2 go?
And in my opinion inflation is a result of incompetence, of planned policy by central banks to make the rich richer, while the rest to gets poorer. As much as I dont like bitcoin (multiple reasons, economical, unsustainable in real use..), it is right with one thing: the supply is known in advance and finite. We currently live in a time where money is printed out of thin air to save the too-big-to-fail banks and to pump the stockmarket prices, so rich dont lose anything. All of this at the expense of the middle class. The poor already dont have anything. And the middle class is shrinking: from one side those are the only ones who pay taxes, from other, those are the only ones who dont have real tools to defend against inflation.
I mean, of course you will write that one can gamble on the stockmarket, but weren't saving accounts supposed to be the thing for those who are risk averse? I mean, if someone from middle class gambles and loses you will write that it is their own fault. If they dont gamble - and put money on a savings account (so lose money) - also their own fault.
Currently the central banks create inflation higher than interest on saving accounts, what in my opinion is a very big problem. Since the central banks entered the cycle of bailing out bubbles, more and more money will be created: new and new bubbles will have to be bailed out.. and as I said, at expense of the middle class. Who just get screwed by inflation.
You got this backwards. The central bank is planning to make the poor richer, but as a result of incompetence inflation never hit the 2% target. If the central bank did nothing things could be even worse than they already are.
We live in neofeudalism.
This article is written like a personal reflection, personal essay, or argumentative essay that states a Wikipedia editor's personal feelings or presents an original argument about a topic. Please help improve it by rewriting it in an encyclopedic style. (January 2021)"An unforeseen black swan of a decade.
Computers and other electronics are cheaper than ever on a real and absolute basis despite increased demand and increased money supply
Today’s top-end iPhone probably would have cost upwards of $10,000 in 2015, if it were even possible to manufacture.
As an aside, someone did a back-of-the-envelope calculation and found that the equivalent computing power of a 2014 iPhone would have cost $32 million in 1991: https://www.aei.org/technology-and-innovation/how-much-would...
So in one sense, yes, tech has gotten cheaper, but in another sense there's a limit to how much deflation can really be stated because you can't say someone buying a new iPhone in 2020 is saving $9000 relative to what they would have spent five years prior. They wouldn't have spent it.
There's also a recent inflationary trend in tech, in that old computers actually slow down due to the growing CPU/memory demands of software and web apps to deliver more or less equivalent value to what they used to.
There’s a lot of accounting and financial engineering and temporal shifting going on under the hood but ultimately you are paying for real things.
The marginal cost per additional subscriber is basically bandwidth, which is pennies.
This extra cash poured into the salaries of the footballers in the top division, salary’s doubling every 4 or so years for a sustained period.
The money didn’t trickle down to lower divisions or youth training or on site staff.
Our inner world is richer, and we consume non-decreasing goods. But everything is tied to something in the physical world, even if it's the hardware and energy running it.
Digital goods do nothing to support human life - food, water, housing. Sure you can buy things online, but you can buy those things at brick and mortar stores. In turn, gas prices will rise to the point where delivery services become unviable.
Inflation touches the entire chain whether the product is digital or otherwise.
To build a modern CPU takes a factory and supply chain that costs multiple billions of dollars. It is a piece of cutting edge technology, sitting at the pinnacle of human engineering achievement. No matter how you rich you get individually, it's not actually possible to through individual effort to buy a CPU which is substantially better then the same thing any consumer can buy.
...so as a result, we sell them to everyone for less then cost of a few weeks groceries.
But yeah, I am just curious how that math all works out on a macro scale.
Netflix pays some % of their monthly subscription fee for servers. The amount really doesn't matter, and they can add the entire planet as subscribers before running out of servers so the supply is infinite for all practical purposes.
Digital goods aren’t priced at marginal cost. By your logic not only an increase in money supply would have no effect on the price of digital goods, but the price of digital goods should be 0 before and after the increase.
Good point but you have to think that if there’s lot of demand for Netflix which means Netflix has lot of hit shows. Say their hit percentage is 10% (which is very high). Which means they have to make more and more shows to provide that number of hits to sustain so much demand. Which means more expenses, which puts pressure on them to increase the price of subscription. Which also means actors, story writers etc can charge more (as they are only a finite number of good actors etc)
That's a fixed overhead, because the hit shows costs the same if there is 10 million subscribers, or 100 million subscribers. Netflix doesn't not need to have 10x the number of hit shows to serve 10x the number of subscribers!
For example, if Netflix is able to get 10,000,000 new subscribers. It receives $100,000,000.
It can now spend $50,000,000 on new infrastructure, which will make the price rise.
Netflix can also hire for $50,000,000, which creates jobs that otherwise wouldn't exist. Those new employees, working for that new currency will spend their salaries, rising the prices.
So no, this will not increase inflation. The goods produced matches the money spent, so demand and supply continue to match up.
Inflation would occur if production ceases, but demand continues to remain the same (or higher).
Whatever the way you see it, that 100 million of buying power should not exist and eventually ends up lifting the prices of normal goods just with the economic activity it generates.
But the thing is, there hasn't been that much money printed by the FEDs or the US gov't. The stimulus cheques are not money printing, but money borrowing - a major difference. Borrowed money needs to be paid back, and so there may be temporary inflation caused by said stimulus, but it's clawed back in the future when the stimulus' effect has worked!
When you have a surge of users and you got more servers in aws, EC2 prices increase for the on-demand instances , aws buys more servers , the more customers it gets , which means more metal excavation , more semiconductors , more minerals , more trucks to move these things , more fuel to move the trucks , it goes on and on.
Also money gets turned into profit , which is then paid to employees , executives , founders.
Who then go on to pay into other items that are non digital (houses , cars , premium cereals lol), which then do cause inflation.
Until all goods are digital , every digital product still indirectly causes inflation using its non digital items , because all of em are transactions between humans.
And all goods can never be digital , because you still need non digital items to run the digital goods on.
So inflation continues.
This is true in a vacuum. With a bigger customer base a company will need to invest more in support. Also, in the case of Netflix, they need to invest more in sourcing content to cater to the now increasingly varied demands of their customers or else they'll lose them to competition who might also be offering their products at the same rate.
> Cantillion wrote:
> “The river, which runs and winds about in its bed, will not flow with double the speed when the amount of water is doubled.”
> Inflation is not simply an average rise in prices. Prices do not rise proportionally or simultaneously. This results in arbitrary benefit to some who have not created any economic value and detriment to others who have not destroyed anything of economic value by destroying savings for example. This is the Cantillion effect.
No, it would go up because they would make more profits with fewer subscribers and a higher margin.
Fixed costs stay the same no matter the subscriber count, this would allow Netflix to lower the price, while maintaining the same profits. In reality, they would likely keep the price the same and increase their margins without charging more.
The standard formula for profit is (units sold * price per unit) - (fixed costs + marginal costs * units sold).... Netflix, like every other company, wants to maximize that profit.
For most non-digital companies, the marginal cost is significant, and follows a u-shaped curve... at first, marginal costs decrease as you sell more units, since you can get intermediate goods for cheaper prices as you buy in bulk. At a certain point, however, the marginal price starts increasing again as you start to hit various bottlenecks and intermediate goods start becoming more expensive as you consume all the easy to produce supply. In other words, you can't scale linearly.
Digital goods have a much flatter uptick on that marginal cost graph, and I am very curious what that means at the macro economic level.
That's like totally wrong. Goods provide some value to the customer, and that determines what they are willing to pay for it. If I wake up a millionaire tomorrow, that doesn't mean I am suddenly willing to spend $500 the same haircut that was $50 yesterday.
Very often customers will pay twice as much or more for the same or equivalent good that delivers the same value, you're local grocery store will show some examples. People will often pay 5x more for brand name items over white label ones. Stores will very regularly discount some items to take advantage of price discrimination, people not paying attention to specials are effectively paying twice as much for the exact same items. If you go to a different grocery store in a wealthier/poorer area you'll see the exact same items at different price points. These are all ways companies will maximize profits because people willingly pay more for the same items.
I’m not a millionaire but I’m certainly well off, and I just happily overpaid for lumber for a project. At prices that three years ago would have made me cancel the project. Not because I couldn’t afford it but because the perceived value wasn’t worth the price.
My mom wants to nix Comcast, and it's not that easy.
People would get their salary and run to the supermarket and buy everything they needed for the month, because if they waited a single day the prices would have changed. A lot of people internalized that habit and still do that nowadays (not in the sense of running to the supermarket, but buying a lot for the whole month).
This was before barcodes, and every item had a price label on it. Supermarkets had people employed full time just to be remarking the items. I remember running to pick up an item on one end of a shelf while the employee was remarking the items coming from the other end, so you could buy the item at yesterday's price.
I lived through 6 currency changes. Usually when prices started being in the scale of millions, the government would announce that in a very short period (sometimes that being next week), there was a new currency with a new name and 1000 OLD = 1 NEW. Until the government could replace all existing bills, the old bills would be accepted as if they were the new bills (at 1/1000 of the face value, of course). Old bills passing through the banking system would be stamped with the name of the new currency and the new value before being put back into circulation.
Contracts like rentals were all indexed: there was a clause saying the price would be corrected every month using the official index that tracked the inflation. Or were pegged to the dollar. This by itself fed into the positive feedback loop that was perpetuating the hyperinflation.
The government tried some bizarre measures to tame inflation. Often they would try freezing all prices, but that was never sustainable for long. The craziest one was probably in 1990 when the government simply froze 80% of everybody's money in the bank for 18 months to reduce the amount of money in the economy. This was a total disaster and even caused many suicides.
In 1994 hyperinflation was finally tamed when the current currency, Real, was introduced. It was the culmination of an ingenious plan that actually worked.
Feel free to ask me more, if you're interested.
I’d love to hear more about why the real was successful. Wikipedia makes it sound like it was just luck that Brazil had positive trade balance in the years following its introduction.
Here is a text version: https://www.npr.org/transcripts/788003778
I think the problem was that Brazil got into a positive feedback loop, and we had what Wikipedia calls "inertial inflation" [1]. We got this going for so long that everybody internalized the inflation, and expected it, and behaved as it was a foregone conclusion that there was going to be inflation next month. So it became a self-fulfilling prophecy.
I see the plan ("Plano Real" [2]) to break it as a social engineering hack. They realized, after so many failed attempts, that in order to succeed you had to change people's minds and make them see the price of goods/services/contracts as stable, which would also change their habits and expectations. Remember there was a generation of people, including myself, who lived their entire lives under high inflation so they didn't know anything else.
So what the government did was to create an index, called URV ("unidade real the valor" = "real value unit"), and mandated that all salaries/prices/contracts/etc. should be indexed against this particular index (and not any other index, or the dollar). Everything should be advertised in URVs. The government would publish, every day, the "price" of 1 URV in what it was the currency back then (cruzeiros reais). So when money actually changed hands, you would pay in cruzeiros reais the quoted amount of URVs using that day's URV price. The URV was roughly tracking the USD, which gave confidence to everybody that the index was "fair" and not losing value.
This went on for a year. And it actually worked: everybody started thinking in URVs instead of cruzeiros reais. All prices became stable in URVs. And then in 1994 they introduced a new currency, the real, where 1 real = price of 1 URV. And inflation suddenly dropped from ~50% a month to ~2% a month. Still high but a miracle to us compared to how it was before. (Eventually it dropped to less than 10% a year.)
So they basically "de-indexed" the economy (and people's minds), killing the positive feedback loop and the hyper-inflation. This was such a life-changer for Brazilians that the economy minister during Plano Real, Fernando Henrique Cardoso (the public face of this plan, even though he wasn't the author), ended up being the next president.
There are a few articles that may be a good summary as well: [3][4]
[1] https://en.wikipedia.org/wiki/Inertial_inflation
[2] https://en.wikipedia.org/wiki/Plano_Real
[3] https://www.npr.org/sections/money/2010/10/04/130329523/how-...
This blew up in 1999 with the depletion of internal USD reserves.
But the moment you had money in hand, you had to spend it as soon as possible or soon it would be worth nothing.
What was the plan?
College, transportation and housing are all pretty high overall, but the healthcare share is just stunning. If we were looking at dramatically better outcomes or services, fine. Unfortunately, doctors get to see patients for less and less time, billing is going up and you don’t really see anything in return. Most other developed nations put a stop to this a long time ago…
>Cass calls this calculation the Cost-of-Thriving Index. It measures the median male annual salary against four major household expenditures:
> • Housing, defined as the annual rent for a three-bedroom house in the 40th percentile of the local housing market.
> • Health care, defined as the annual premium on a typical family health insurance policy.
> • Transportation, defined as the average cost of owning and operating a car driven 15,000 miles per year.
> • Education, defined as the average cost of tuition, fees, and room and board at a four-year public college.
Why is education being overweight by a factor of several times? The other items are the annual cost of expenses that you incur annually. But education is only incurred 4 years out of the 80 years you're alive. Giving them the same weight as the other items is ridiculously misleading.
quoting from paper:
Basket Component: One Semester of Public College
Source: The COTI uses the federal National Center for Education Statistics estimate for total tuition, fees, room, and board at a four-year public institution. 67
Rationale: Two children pursuing four-year degrees would require a combined 16 semesters of college, so a household preparing for those costs would need to save roughly one semester’s worth of cost per year before the children reached college age. (While the savings might ideally earn a positive return in the interim, that return would need to be quite strong just to keep pace with the rate of increase in tuition over the same period.)
The one-semester estimate may overstate costs in some respects—for instance, a family would likely have 20 or more years between the birth of a first child and the college graduation of a second. And in practice, many children do not ultimately attend college (though a small and, it seems likely in recent decades, declining share has chosen from a young age not to consider that path). But it also understates costs by considering only public college costs; private college costs are more than twice as high.68 Note also that the cost of public college tuition already incorporates the substantial public subsidy provided by the state government.
> What is education being overweight by a factor of several times? The other items are the annual cost of expenses that you incur every year. But education is only incurred 4 years out of the 80 years you're alive. Giving them the same weight as the other items is ridiculously misleading.
That is strange. Education is also an oddly priced expenditure because the nameplate tuition is not the price paid by most students. It would be a lot better to use the the net price, which is much lower, but is harder to collect.
In the Roman Empire, people lived 30 years and died. Most were illiterate. As a society develops, and has more excess resources, allocating more and more of those resources on keeping people alive, healthy, and educated seems reasonable.
What's missing from the charts is quality. We spend a lot on healthcare, but we also now have multi-million-dollar MRIs machines and similar magic.
Germans must do without those fancy MRI machines after all... oh wait they have those two. So what’s the catch? Maybe they have fewer people covered? No, not that either:
> Despite spending less per capita, Germany still manages to cover 100% of its population. In the United States, about 8.8% of the population remains uninsured, which equates to about 28 million people. Even more people are underinsured.
What they have less off is overhead. They do have a shortage of doctors, but not due to costs of becoming one - education is either free or nearly free (especially by US standards).
> Tuition loans of over $200,000 are not uncommon for students in the US after graduating from medical schools, which are often private institutions. In Germany, however, the vast majority of medical universities are tax-funded and, for this reason, free of tuition. Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5617919/
So we probably have more than enough money in the system already to treat every single one of US citizen, maintain great care and not close local hospitals, but we are too busy allowing profits and helping doctors pay back mega education loans.
People in Roman empire lived until 90 just like us. For example Seneca de Elder was 92 when he died.
The reason why "life expectance" was 30 years was because child deaths, since that number is just an average.
If you have 2 people living in a country, one is 100, and the other is 0, and the child dies, life expectancy is 50.
not too bad.
Do you factor in:
- Famines?
- Wars?
- Being killed by bandits?
- Are you talking about the city of Rome? Italy? Gaul?
- Just rich people, or do you include folks like slaves?
- Etc.
If you're going to accuse me of giving bad information, you'll need to provide better information. And from there, you need to count on dubious records. I took my number from Crash Course history (the unit on the middle ages), but it meets what I'd previously read across multiple credible sources.
The difference was that a random cut could turn into an infection and kill you. Hannibal lost vision in one eye due to an infection. Prior to antibiotics, you never knew if an infection would:
- Pass;
- Disable you; or
- Kill you
Same thing for a lot of other medical issues, as well as non-medical ones (such as a famine, bandits, or a random army passing through).
hmm I wonder if there might be a connection there... as other nation implement price controls a larger part of the R&D and the costs associated with that are born by the US
Further Medicare / medicaid price controls to keep the cost of the entitlement program from going bankrupt has transferred the cost to patients not on those programs
Third leg of this stool is standard of care, American patients have a high exception for standard of care then in "most other developed" nations where waiting months for a specialist is accepted as normal, or having ward style hospital rooms is normal as well. Where the US we expect must faster treatment times, and semiprivate rooms normally with no more than 2 people to a room, though 4 to a room has become more popular in some regions. This increases costs
Hospitals complain that Medicare and Medicaid underpay, but it's a modest amount, not something that explains the very high costs for other patients: https://www.aha.org/fact-sheets/2020-01-07-fact-sheet-underp...
Also in the Hospital context there are other factors that drive up the costs. Keep in mind that about 70-80% of all US Hospitals are non-profit
Which are these developed nations? Because to give my annecdotal perspective it isn't the case in Belgium or others that i know of (With minor exceptions like recently where orthodontists couldn't handle anyone but the most urgent due to covid measures and now have a backlog of patients.)
>and semiprivate rooms normally with no more than 2 people to a room, though 4 to a room has become more popular in some regions.
Every bedroom in every hospital i've been to has been double or single though i have no experience on that front in surrounding countries. Most are double with the single ones being for special cases or people willing to dish out or with great insurance.
If you are a white-collar worker you'll usually have a private health insurance so that you won't have to wait in line for public care.
1. Is that it is just out of control in the US, but there are also some valid reasons, like,
2. Aging population. As people get older, they need more medical care, so an aging population will have higher average healthcare spend than a young population.
3. Advances in healthcare tech. We can treat more things, so there are more things to receive healthcare services for. And we can also treat things for longer, at great expense. Something along the line of: 10 years ago you could live with disease A for 10 years at a cost X. Now you can live for 20 years at cost X^2.
The more likely issue are lack of competition and high cost of entry (regulatory and educational). Regulatory you can’t really loosen, as that’s a direct protection for patients. Educational costs for doctors we can absolutely fix.
The lack of competition probably cannot be fixed with the normal “market” approaches because you are not dealing with a rational consumer behavior - when people are sick they are anything but rational. This is where something like a public option health care plan could come in with a strong negotiating position. Unfortunately, there is a good chance politics would prevent that from negotiating as well…
I assume you have data for this? Something more than the flawed infant mortality rate that is often cited but is a very poor judge of a health system in reality?
Something like 5 year cancer survival rates. Time a person waits on Specialist Wait List, the time it takes a person to get a replacement Hip, MIR, or Heart Stent. All of which I believe the US is very high or at the top of those statistics
If you only let half of your population on the list in the first place, I don't think it's overly shocking that metrics across the board would appear better.
I'd be interested to know the percentage of people in each country that require hip replacements, MIR's or Heart Stents but have no effective chance at even seeking out the preliminary care that would lead to them.
Even the most aggressive numbers on uninsured in the use put it about 15% to 20% of the population, no where near the 50% you are claiming in your comment
There was a time in my 20's where I did not have insurance, I still had (and got) care when I needed it. Sure it was expensive but I was never denied services.
Yes you can find stories of people that do not have access to care, and we should do what we can to eliminate those edge cases where there are clearly gaps in the system but paint these edge cases as the rule is just disingenuous at best
That was an example, simplified so as to make the impact more obvious. Take any country on the planet, and look at their healthcare figures - now exclude the poorest 50% of people from accessing the medical system in those countries. Bet the numbers look better now.
> There was a time in my 20's where I did not have insurance, I still had (and got) care when I needed it. Sure it was expensive but I was never denied services.
I'm not sure how relevant personal anecdotes are when you're talking about the healthcare of an entire population. But hey - good work mate.
Edit: Took me a bit but I tracked down the article that my recollections are based on: https://news.ycombinator.com/item?id=21737795
I disagree, we have a free society, and one of my concerns about a government run health care system is that it would allow encroachments upon that freedom. I do not need or want a parent via the government. I neither need nor want the government passing laws to control what food I eat, how much food I eat, or what health choices I make
The questions comes down at that point to if you desire a collectivist authoritarian government, one that "the greater good" (which is subjectively defined) always over rules the individuals rights, or do you want individualism and individual rights to reign supreme over the collective
I support individualism
Approximately none of your screed had anything whatsofuckingever to do with reality.
200 to 300 thousand travel to the US for healthcare every year. That's with population of ~30 million. Extremely common.
Which begs the question, why do they travel to the terrible USA, when wonderful social care in Canada is so amazing on paper, with wait lists measured in years?
As a Canadian however, it would not surprise me if most of the people traveling were upper class people trying to bypass the waiting lists.
You have to understand that this is inevitable as long as our systems don't have the same level of fairness and people are allowed to "choose" their system. Of course privileged people will choose the system that they can benefit from most, whereas unprivileged people cannot afford to choose.
This is not to say that our Canadian healthcare systems are perfect (far from it), but rather that some of them attempt to promote fairness (in service quality and rapidity), thereby negating the greater privilege of wealth relative to less fair systems such as yours.
This practice of healthcare tourism does of course take some pressure off the system for unprivileged people, so it's hard to say it's all bad on the whole. But don't expect the situation to change regardless, as we are also ruled by the wealthy, and they do so like to have freedom of choice.
By the way, the position on the waiting list is often adjusted according to the urgency of one's situation, so people who travel to reduce waiting time would not have been in critical condition on average, not to mention they may simply be traveling to get services that are legislated differently in Canada (as I believe cosmetic surgery can be, depending on the province).
This is only technically true, and ignores the fact that many medical procedures that are done when something is not critical means making a full and complete recovery with no life long effects but delaying the treatment while sitting on a wait list until the issue becomes "critical" means the problem may only be able to be partially rectified and the person may suffer from life long effects due to the delay in treatment
At the end of the day government run health systems control costs by limiting the supply and ignoring the demand. This creates an untenable system that can never be "fair" to anyone.
If you aren't familiar with her work and thinking I think a good introduction interview is: https://www.youtube.com/watch?v=f_JmGLMjIOk&t=35s
Fun fact: She is an electrical / industrial engineer by trade, not an economist.
An Economic Analysis of Ethereum - https://news.ycombinator.com/item?id=25811356 - Jan 2021 (111 comments)
The Fraying of the US Global Currency Reserve System - https://news.ycombinator.com/item?id=25558573 - Dec 2020 (17 comments)
The fraying of the U.S. global currency reserve system - https://news.ycombinator.com/item?id=25407583 - Dec 2020 (344 comments)
Banks, QE, and Money-Printing - https://news.ycombinator.com/item?id=24978567 - Nov 2020 (235 comments)
Why This Is Unlike the Great Depression - https://news.ycombinator.com/item?id=22890151 - April 2020 (2 comments)
How to Win a Currency War - https://news.ycombinator.com/item?id=22837518 - April 2020 (60 comments)
The Global Dollar Short Squeeze - https://news.ycombinator.com/item?id=22828991 - April 2020 (211 comments)
Many of the poor cannot even be in debt because they have no access to the financial system. Those that do, mostly have access to payday lending. It's laughable to hold the opinion that inflation will do anything for someone who owes 10% on top by next month. For the middle class, it's one step up -- credit cards, still laughable to think that a 2% inflation will help out someone with a 15% APR revolving line of credit.
The place where it starts to help is when you have large capital loans on fixed interest like home ownership. But her graphs in the next section relating inflation to wealth gap capture the 1% vs the rest, which is not necessarily a mechanistically informative figure of merit... I'd like to see it where the wealth gap when you draw the line closer to something like the low-interest loan accessibility gap.
Inflation hurts people who don't have access to debt and who are more dependent on cash and on fixed incomes. This is exactly what Lyn claims here:
> There are, however, some groups in lower income brackets that do poorly in inflationary environments. If someone doesn’t have a lot of money and lives on a fixed income in retirement, they have a lot of vulnerability to inflation. Those sorts of folks should consider owning inflation hedges to protect their lifestyle, if they expect that high levels of inflation have a reasonable probability of occurring.
"lower classes also have more debt which gets partially inflated away in inflationary environments, and..."
Also the wealthy benefit greatly from debt-based financial instruments (corporate bonds for the companies they run, leveraged trading, forex, options) even if they aren't in debt personally.
If an economist was writing about computer science, everybody on HN would dismiss it.
I have a bachelor’s degree in electrical engineering and a master’s degree in engineering management, with a focus on engineering economics and financial modeling. I oversee the finances and day-to-day operations of an engineering facility.
I’ve been performing investment research for over fifteen years in various public and private capacities.
So it is a mixture of education and practical experience. Whether that lends weight to her output is up to the reader.
The fact that she's not an economist.
I should look up the judges to get a feel for their predilections
I wanted to see S&P 12,000 for a moment
Just make the argument and see.
Google Scholar has all of that court’s cases online in plain text.
This, and we haven’t even discussed the amazing tech in food production that is getting better daily. (Satellites telling tractors in iowa what to do based on hyper spectral drone flyovers).
I remember our family taking a few years monthly payments to get me encyclopedias, and now we have wiki.
Asset prices rise as people flee from cash, so those with assets see their wealth outpace those without assets.
Inflationary economies based on debt are inherently levered relative to underlying assets, thus are prone to collapse and require more bailouts.
General price inflation hurts those at the bottom of the economic ladder, since it makes their cost of living rise and prevents them from saving to accumulate capital.
"But wages rise to keep track of inflation."
No, they don't: https://wtfhappenedin1971.com/
Patently false statement. The us has had decadal deflationary periods of its history during which it made great technological strides
Endless bailouts paid for by population can't possibly be a sound long-term solution. Maybe it's better to just let it collapse.
I wonder how difficult it would be to build a "Subjective Inflation" measure that was useful. Based on category consumption by income quintile you can figure out rough price inflation experienced. With the understanding that happiness is mostly about keeping up with the Joneses you can just assume away the hedonic quality boost and call it "subjective inflation".
The point from the inflation link about not being to eat ipads is critical. Increased resources are definitely nice, but the happiness derived from them is zero-sum, and at the end of the day they're taking more of my income.
This, coupled with the stagnation of median wages, means that:
We're not getting any happier as a cohort, and
The things we consume cost a bigger chunk of our earnings every year
Buckle up. There's going to be a lot of people who feel like their quality of life is crashing.
But this is an effect that only appears in real, i.e. inflation-adjusted, wages?
The simplest explanation of accounting change can be found here: https://www.collaborativefund.com/blog/the-fed-isnt-printing...
But the St Louis fed also publishes a disclaimer at the bottom of their graph about it: https://fred.stlouisfed.org/series/M2
Also throwing this in the air: debt might not actually increase productivity unless it's explicitly only used for productive purposes. Even then it seems dubious. The whole argument of using debt to build a business smells funny.
Right now if you look, people who have access to cheap debt, are buying assets with it. A lesser version of this has been probably going on for decades.
Alternatives? Break up big banks that are too big to fail. Build up many small, local banks that actually give a shit about their surrounding community.
I think this conflates generally running at a loss with debt, but there is also positive investment.
E.g. Many property developers run on ever increasing debt as they grow, and many of these business do really well. They are using debt to create something of value, sell it and then replay debt.
But if a company is using debt (or equity) to keep growing with overly hopeful future profitability plans, then yeah this is not good.
Both use debt, one is totally normal and common. The other 'smells funny', so I feel it more about the value creation the debt is used for to build the business than the actual debt.
The only thing I would try to add that she left off was just the Fed's power[0] over this entire topic. It's mentioned slightly with interest rates dropping, but they play such a pivotal role, together with the yield curve, that it needs to be mentioned.
The Fed has the power to have a yield curve inversion, which drops the amount of broad money available, which creates a recession, which has people lose their jobs, which depresses CPI inflation. Once the loss of jobs occur, they drop interest rates back to where they were and along we go for another cycle.
You're also messing something up. Cycles are not caused by the Fed. They are caused by the cyclical way humans use debt. It's primarily rooted in psychology. People get into debt in times of high consumer confidence and once consumer confidence goes down it becomes obvious that some of these people shouldn't have gotten into debt in the first place and are no longer able to pay their debts back. The Fed drops interest rates so that it becomes easier to pay off bad debt instead of going bankrupt, which increases consumer confidence again.
One problem is that paying a bad debt over a long time frame is still a drag on the economy. It keeps accumulating and the debt burden gets worse over time as more people spend money on debt servicing than consumption, which drags incomes down, which makes the debt problem worse.
In practice, it keeps working so they keep doing it.
https://en.m.wikipedia.org/wiki/Austrian_business_cycle_theo...
The article doesn't talk specifically about gold, but I believe it should. From this chart, you can see that gold started an upward trend in price pre-pandemic that peaked in August of last year, and has since declined noticeably:
https://www.tradingview.com/symbols/XAUUSD/
Gold is supposed to be the canary in the coal mine for inflation. The slightest whiff of inflation is supposed to send the price soaring, usually led by gold mining stocks.
This hasn't happened. As the price of copper, lumber, other base commodities, houses, used cars, and possibly even labor, has surged, gold has barely budged.
What does gold's lackluster performance so far say about the future direction of inflation?
That's the question people worried about (hyper)inflation should be asking themselves.
Many in the gold market claim that the price is being manipulated by central banks, by the paper derivatives market, an other forces.
But it's very hard to believe that literally every other commodity is flying to the moon while gold is stuck in the basement due to "manipulation."
Something isn't adding up here.
Whether it is a good time to buy gold now really depends entirely on what happens with the 10 year treasury rate. With that being said, the movement of the 10 year and gold are slow, so it isn't that hard to exit a position in gold.
Treasury rates are less than 2%. Prior to 2019 they have never in history been lower[1], except for one month during 2016.
I don't think the market is worried in any way about the ability of the US to service a 2% rate.
[1] https://www.macrotrends.net/2016/10-year-treasury-bond-rate-...
They are dramatically lower than historical averages. Claiming that makes it hard to service seems counter intuitive!
some of the gold bugs who would've pushed up the price of gold has switched over to bitcoin (and other cryptos).
That's why gold hasn't risen dramatically. Crypto is absorbing the inflation.
1) https://www.npr.org/sections/money/2015/12/02/458222801/epis.... A great Planet Money episode about how Brazil combatted hyperinflation by just replacing their currency.
2. https://slate.com/business/1998/08/baby-sitting-the-economy..... A Paul Krugman Slate article about a 1978 journal article that uses the example of a babysitting coop to illustrate the way that the monetary supply can have ramifications on the real economy.
3. And the Money Kept Rolling In (and Out) https://www.amazon.com/dp/1586483811/ref=cm_sw_r_cp_api_glt_.... A much longer read, but this is book about the economic crisis in Argentina is one of my favorite economics books, and also teaches you a lot about the international monetary system as well.
And stopping printing money and balancing the budget. Also a lot of legal interventions to stop some habits, and even a constitution change.
The Real was a complex and multifaceted project.
IMHO, it is a large signal that CPI fails to accurately describe consumer inflation for a large segment of the population.
Wouldn't you say then that the CPI was correct not to adjust too far to account for it?
And if you think housing right now has increased a lot and the CPI isn't taking that into account, perhaps that says something about what is to come....
My point was it missed the largest housing cost rise in multiple generations, despite housing being ~1/3 of the CPI. That it then also missed the downward correction is just more evidence that the CPI is uncorrelated to housing costs.
If the debt were far lower and more manageable, inflation wouldn't be as necessary a goal as a mechanism to try and reduce its actual value over time.
As this article discusses a bit, inflation is a great way to rob the middle and lower class of value in a way that the upper class is more able to avoid (though not completely) especially due to lack of wage growth at lower levels.
Or perhaps stated in a different context, the target inflation goal might be very different with a much smaller debt.
Now that the US (and many other economies) are addicted to near 0 interest rates, and with all the increased spending (regardless if anyone thinks the spending is "good" or "bad"), I have difficulty seeing how we can dig out of what appears to me as a bit of a hole even with the potential productivity gains the current spending is supposed to spur.
Raise interest rates at this time, and everyone takes a big hit especially as the US is spending a ton more so that's not really an option anytime soon. Keep them low and the only solution to the next economic downturn is to again spend our way out, only furthering the need to keep interest rates close to 0 (making this a bit of a vicious cycle).
No one knows where this ends (I certainly don't and I think any economist who says otherwise is lying whether they know it or not) but the rising cost of the majority of goods that people spend on (health, education, homes and rent) scares me quite a bit as a young adult looking at the next 20 years as I think about wanting to establish my life despite my own luck in having a high paying career in software engineering.
I feel like nationwide statistics are not very useful once the gap between certain regions gets so wide.
Being a debtor is good when inflation hits, and having an asset that has historically outpaced inflation is doubly good. I believe this is a part of why home prices are rising, people know its going to be a lucrative investment over the coming years, and the downside is minimal at low rates.
> John Williams’ Shadow Stats, for example, calculates that annual price inflation has been around 5-10% for the past decade if it was calculated as it used to be. Interestingly, he has not raised his subscription price for his data at all since at least 2008.
Of course, it's bit of an unfair jab because he might be growing his subscriber base, or isn't getting paying customers but doesn't care.
My dads carefully planned retirement was ruined because he never imagined how expensive it would get.
I pay 1400 a month for a family. Still doesn’t cover a lot.
Unless you have a cushy government job with those benefits or a high paying white collar job, those years are the most likely for you to lose income due to age, health reasons, etc and any new job you get probably won’t have any benefits, or decent ones.
I do not know what the ACA subsidies are for people, but the ~$17k annual out of pocket maximum is what kills you. A single heart attack or stroke at the end of the year will cost you $34k (assuming you need healthcare in two calendar years today, who knows how much 2 decades in the future).
Plus, of course, surprise bills from out of network providers.
https://www.bls.gov/cpi/factsheets/medical-care.htm
Since I am a health economist, I can tell you that it is subject to many of the same problems other goods face: prices increase and this is generally observable (though much harder in healthcare than other areas!), while quality improves all the time but measuring quality is quite hard, perhaps also harder than in other classes of goods.
> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
It's not like we're the only economy suffering. We might be doing the best of the whole lot.
It seems to me like a failure to accept that adjacent markets sharing a currency can have different rates of inflation is a large part of why people are so damned bad at understanding and measuring inflation. The article is a good example, every metric and estimate proposed assumes that there is a single inflation rate for the currency. But if you instead thought of it as one good being trades in multiple different market places, then its obvious that there could be differences in price between these markets which traders could exploit. Critically, unless they did so and doing so was a near perfect market, there would effectively be multiple different prices for the commodity and the textbook use of inflation would be such a shitty model as to be near useless. If you instead asked, how many ingots of currencium would I need to buy a bag of other goods, it would be obvious that this would also require a statement of in market A. I doubt the reason this arbitrage opportunity is entirely missed, but it could be that its unusually hard to exploit. However, I suspect it is partly because even among financially literate people, a currency has one rate of inflation is a common idea.
That said, the single market model where currency has a common price provides shitty predictions. For instance, the strongest counter argument against the apparently obvious statement. SNP500 has not increased more in value in 2020 than 2019, its mostly just inflation, is: No metric of inflation say it has been anywhere near 40% in 2020.
However, if we view this as two different markets, A(capital), B(consumer) where the inflation is different for each. Then any metric which is designed to predict inflation assuming its the same in both would by necessity underestimate one and overestimate the other.
The counterargument would be that if this was the case an efficient market would eliminate the arbitrate opportunity. But thats barely true in the most ideal cases, and its easy enough to come up with such arbitrate opportunities.
For instance, we know that historically, whenever there is inflation, stocks respond quickly, but salaries generally lag behind. This is damned near proof of the multi market model on its own, but a model with more parameters always fits the data better. A sufficient, but not necessary proof would be the existence of insurance contracts for and against inflation in another market priced in the same currency. In short, is there a reason that salary futures aren't a thing?
[1] https://en.wikipedia.org/wiki/International_Fisher_effect
Assuming that inflation has enough amplitude deltas from one region to the next (I doubt that's the case), there is still a great lack of velocity.
The biggest news is that Fed changes its inflation targeting goal. It's now average inflation targeting 2.0%. This means that Fed allows inflation run above 2.0% for some time until average matches the goal.
Isn't this statement misleading? I know Jeff Bezos personally doesn't hold any debts but Amazon does. So, if inflation happens, it will indirectly benifit bezos. Hence, Inflation is good for everyone ( Both poor and rich).... Am I missing something?
Government printing money nonstop. Material shortages (real and manufactured). Demands for increased wages.
It's going to be a bad time to be on fixed income.
Rich people are rich because they invest when they can instead of spending. Poor people spend because they think that's what rich people do and they want to feel rich. Expecting rich people to suddenly behave like poor people makes no sense.
These wealthy people would invest the money, likely by buying up other businesses that didn't get the handout.
Cryptocurrencies are better since they have geometric decay built into the algorithm to make them deflationary by default.
We can make well-informed guesses, but until there are boots on the ground of the Moon, Mars, and the asteroid belt, we can't know for sure.
In-sample annual probability of Weimar is well under 0.5% so it is still a tricky topic to reason about even if you have a bigger sample.
That is an unprecedented hockey stick.
Velocity of M2 Money Stock/Population https://fred.stlouisfed.org/graph/fredgraph.png?g=DPfD
Saying that velocity is falling when supply isn't interesting or relevant. The question is whether supply is growing in excess of demand (as ever).
Also, you are wrong about prices not increasing "in reaction to possible buyers". If we lived in the fabulous world of rational expectations and flexible prices moving instantly but we don't. Understanding why this isn't the case, ironically, is why we use monetary policy/inflation targeting.
If prices would always increase when money stock increases, velocity of money would not change.
not Population/Velocity of M2 Money Stock like you did.
A hockey stick requires far more than just a 30% lift in an anomalous year.
Parent to that tweet is arguing we have not seen those effects despite past federal reserve action and so there is no worry.
The wider context to this conversation is that some people [who?] believe federal reserve policy is flawed and supported by systemic bias in the reporting of economic indicators like GDP.
This graph also completely ignores that the US dollar is the de facto reserve currency of the world, so dividing dollars by US population is fairly meaningless in 2021.
Anyway, here's a cash crop chart for corn that has more than doubled in price since last year. Once the cost of making finished products with these crops increase, you can be sure that shop prices will also reflect it. Some of these charts are even growing exponentially.
^1: https://www.barchart.com/futures/quotes/ZCY00/interactive-ch...
2008 the Fed printed $2 trillion asset cash(M0) and used it to buy bad debt off the banks books, and put the debt in a runoff fund. No discernible impact on M2. (well, it stopped it imploding).
2020 Fed prints ~$4 trillion of liability deposits, and hands it out to all and sundry to pay their rents, and support the stock market.
M2 goes vertical. Which it has never done for the US in the last 100 odd years. So this time it will actually be different.
“Print” is a misnomer, as only the US Mint prints paper currency and mints metal coins which is a very tiny sliver of the M0 money supply.
So to rephrase what actually happens: “in 2008, the Federal Reserve decided to buy a notional amount of $2 trillion in bonds and debt securities, every time it bought some it created the same amount of new US dollars at the time of transaction which becomes owned by the seller. Increasing the money supply upon payment.”
Its primary mechanism for controlling the money supply and people’s behavior is by purchasing a predetermined amount and category of assets from people. Unless authorized by Congress to do something specific.
Congress does not usually touch the Federal Reserve Act, as the whole point of the Federal Reserve system was to remove politics from management of the money supply. But they obviously can and always could alter the Federal Reserve’s charter and in 2020 they let the Federal Reserve give money directly to individuals in some of the stimulus programs.
So saying the M2 is high relative to population means that we have been "printing money" (increasing the USD money supply) at a high rate relative to population.
> There are, however, some groups in lower income brackets that do poorly in inflationary environments. If someone doesn’t have a lot of money and lives on a fixed income in retirement, they have a lot of vulnerability to inflation. Those sorts of folks should consider owning inflation hedges to protect their lifestyle, if they expect that high levels of inflation have a reasonable probability of occurring.
If you think someone in a low tax bracket on fixed income has the spare money to invest in anything, you're not understanding the words "low income" or "fixed."
> Capital had political control from the late 1800s through the 1920s. Labor had political control from the 1930s through the 1970s. Capital again had political control from the 1980s through the 2010s. I’m not sure what’s next but signs are increasingly pointing towards labor regaining some influence, and it’s a topic I continue to monitor.
What?
The low fixed income often comes from investment. For example, you save money in 401k, then as you near retirement, you shift investments into safer instruments ie. bonds. The result is exactly low fixed income and vulnerability to inflation.
> Nearly half of families have no retirement account savings at all.
https://www.nytimes.com/2021/01/26/upshot/stocks-pandemic-in...
> Families grouped by percentiles of net worth:
> Bottom 50: 50% of Families | 1% of Equities | 0% of Stock
I'm not sure why you think the poor have investment portfolios. They don't.
I never said or implied anything of the sort. I recommend reading carefully what I actually said, and then addressing that instead.
The whole appeal of someone like Alden is that she isn't playing for either team, shes just trying to step back and analyze. And it is a much more useful an interesting perspective on the world than turning every single discussion into team sports politics.
The fact that the parent is one of the more upvoted comments I've ever written seems to indicate that I'm not alone.
A final point is that her publicly listed example portfolio performance seems to indicate the she has an exceptionally solid grasp on reality.
When is the last time you read a serious financial analysis that divided up 150 years of world history in such a way? Or tried to relate it to investment?
> The fact that the parent is one of the more upvoted comments I've ever written seems to indicate that I'm not alone.
Does that mean you're correct?
> A final point is that her publicly listed example portfolio performance seems to indicate the she has an exceptionally solid grasp on reality.
I read through her website, and it's pretty much the same thing you'll get on other pitch sites ultimately selling a newsletter. It's not bad advice in general, but wealth managers and other investors don't post example portfolios. They post their track record with real money.
Ray Dalio, the founder of the world's biggest hedge fund does primarily this in his public communication.
Anyway suit yourself, the whole point of it not being team politics is that it really doesn't matter at all if people disagree. I factor her advice heavily in my own portfolio and it has benefitted me. If you think she's wrong ignore her. And I guess complain loudly that other people find it useful.
The post-WWII-but-pre-1970 economic world - the world of “embedded liberalism” - was a pleasant place. There were corporations, but they didn't do anything garish like compete with each other. Executive pay was taxed so heavily that nobody had much incentive to try to increase their profit margin; workforces were so heavily unionized that companies were nervous about any changes that might upset employees. As long as companies followed the script, the government embraced and protected them. Starting a new business was considered some bizarre act of alchemy, like discovering a new form of matter; normal people worked for the same giant company their whole life and got a nice gold watch as a reward when they retired. The government wasn't exactly socialist per se, but it kept starting and expanding programs like Medicare and Medicaid and Social Security, and every night you went to sleep knowing there would be probably be another uncontroversial, mostly-successful government welfare program tomorrow.