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Comment by arguru | Hacker News Reader

Estonian here, the situation is getting quite bad indeed, particularly when it comes to petrol/energy prices, which of course has the domino effect of driving up other goods and services in the mid to long term.

However, in true Estonian fashion, a lot of people (probably majority) might complain within their familily/friend circle, but will mostly just suffer through it. In fact, 10 years ago, two local comedian-actors wrote a song [0], that describes our history and overall state of mind quite accurately I think :) The video has English subtitles as well.

[0] https://www.youtube.com/watch?v=aADjmpAHEYE

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I've personally experienced inflation of greater magnitude -- in a developing country in the 1980's.

It affected behavior in ways that in hindsight were very counter-productive to economic stability: Every adult person and every business simultaneously tried to spend less, earn more, and hoard more -- which is impossible in the aggregate, because every expense by one person or business is income for another person or business. No matter what anyone did, the currency would lose value week after week, month after month. And everyone felt... powerless, unable to do anything about it.

John Maynard Keynes wrote what I think is the most insightful description of what living with high inflation is like: "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."[a]

[a] The Economic Consequences of the Peace (1919), by John Maynard Keynes.

Spending less and saving is exactly the opposite of what is typical in a high inflation society.

As I wrote, that's what everyone tries to do (e.g., businesses lay off employees, try to raise prices, and hoard inventory), but in the aggregate it's impossible for everyone simultaneously to cut spending, increase earnings, and hoard more stuff as the currency loses value. The sum of all individual decisions, which may seem rational to each person or business, add up to aggregate behavior that in hindsight proves counter-productive to economic stability.

As Keynes put it, "the process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Speaking from personal experience, I think he was spot-on.

Nope, most individual consumers and businesses spend more when inflation is unexpectedly high.

They try to reign in spending, but end up spending more (in nominal, but not necessarily real, terms).

Please don't misinterpret what I wrote!

I'm not misinterpreting what you wrote. they will not try to reign in spending because holding more money becomes less valuable

> No matter what anyone did, the currency would lose value week after week, month after month.

Cannot one convert their money to dollars or gold and start getting profit from inflation?

UPD: I forgot that in such cases governments usually impose large tax on currency conversion. Obviously you can't outsmart the government.

If everyone sells their currency to but dollars, the currency loses even more value faster compared to dollars, so currency controls are put in place, like Argentina did for a while:

https://en.wikipedia.org/wiki/Argentine_currency_controls_(2...

What do you mean "for a while", Argentina has currency controls TODAY.

https://www.bloomberg.com/news/articles/2021-11-25/argentina...

It used to have currency controls. It still does, but it used to too.

Very insightful. Thank you.

Same, but hyperinflation. Some people could take credits, bought houses or whole towns and repaid them with pennies.

> However, in true Estonian fashion, a lot of people (probably majority) might complain within their familily/friend circle, but will mostly just suffer through it.

I think this is a generally post-soviet thing.

Eh, this is the attitude in most of Western Europe as well

I mean it's not like we have much of a choice. It's the result of decades of progress, economic development and home comforts as a result of an okayish relationship with Russia and their natural resources, which "suddenly" collapsed (it wasn't actually that sudden).

Agreed; Ireland is very similar

Yeah, same in Austria. Energy prices on my provider are going up by 90%, many food items are up 50%+ since the start of the year, and outside of some grumbling in private conversations I've not heard much complaining.

> outside of some grumbling in private conversations I've not heard much complaining.

I mean, where else would you hear about it? Are you expecting random strangers on the street to just angrily scream at you about increasing energy prices and inflation?

Imho one of the biggest giveaways was when German supermarkets started mentioning "inflation" in their discount prospects, first saw that like 2 months ago.

Yeah, that's something people sometimes do in the form of protests. But I think almost everyone realizes that there's no easy way out this time.

there were huge protests against vaccines and mask mandates not too long ago (not making a moral judgment here, just saying people are definitely not afraid to voice their opinions loudly in public on some issues)

It may be similar in Germany. Populists from conservative-right parties have made this their new topic and some people are responding to it, but over all the reception isn't very strong.

Western European here, I will for sure complain outside my family/friend circle ;)

Not that we have it bad here, compared to others, of course.

My French friends/coworkers like to joke that it is the French pastime to complain. It really is a cultural difference, so much so that sometimes I need to explain to American colleagues that Marie/Marc/etc. isn’t particularly upset, it’s just normal for them to complain, and it also can be really healthy. It’s sort of how many engineers (good QA?!) are contrarian by nature.

hopefully someone says “no we’re not!” to prove my point.

I am french and it is true. When I come back from visiting my family in France I even complain about my compatriots habit of complaining about everything!

Can confirm for Germany. We complain about too much complaining as well.

In Italy the attitude is so prevalent (not entirely without reasons) that we have a pithy expression to satirize it: "Piove, governo ladro" (It’s raining, thieving government!)

Read somewhere that a litre of milk in northern Europe costs around a kW/h in energy to produce. Whatever the exact number, it should open your eyes to the importance of energy prices on all other prices. It's not "just" transports.

There's one perspective that all value added in the economy is the result of energy input. De-industrialization and off shoring of heavy industry has allowed G7 countries to decrease energy/GDP ratio, but the total amount of energy consumed increases, only decreasing slightly during a recession.

Money = energy (while credit being a promise on future energy).

Cheap energy is how we've created our society. The (huge) problem we're facing is that our economy is based on the (incorrect) assessment that we will have an ever-increasing supply of energy. Barring some miracle invention/discovery (like fission, or a cheap way to produce hydrogen) it's rather the opposite, at least in terms of EROEI.

The difference between the monetary economy and the real economy is becoming increasingly difficult to ignore.

*fusion obv.

> Cheap energy is how we've created our society.

Agree.

> The (huge) problem we're facing is that our economy is based on the (incorrect) assessment that we will have an ever-increasing supply of energy.

I'd add to that: the problem isn't so much that energy sources are currently running out. We've still got decades of fossil fuels left over to run the existing economy.

This makes the problem even harder to solve. We do have the energy. It sits right there, tempting states to grant permission to use it. But states ought to refrain from using it because the ecosphere/climate is in danger.

States globally switching to renewable energy would be much easier than it is (almost effortless), if we were truly running out of fossil energy.

As things are, states that undertake the enormous effort to make the transition to renewables, are at an economic disadvantage, at least in the short-term.

Thus the one big challenge is the political one, of setting up an international treaty that somehow turns this economic disadvantage into incentives for the transition.

>Estonian here, the situation is getting quite bad indeed, particularly when it comes to petrol/energy prices, which of course has the domino effect of driving up other goods and services in the mid to long term.

People always focus on the price of gas in America, since it's a large expense and they commute a lot, but no one seems to talk about the effect it has on the prices of anything shipped in a vehicle that uses petrol.

Then again, some Americans do things like fill up across the border and freak out when between CAD sometimes having a 25 percent difference and them using pricing in liters not gallons, they paid many multiples of what they intended than much less fuel than they thought they got, despite having clear information on pricing, volume, and approximate currency value.

(It might be a 25 percent difference, but if you looked on your phone or in a currency shop, the difference for currency traders versus the public was only a few percent, it didn't jump around by double digits in a single day, and often if the difference was small people just would take the same amount as CAD in USD to be polite, when they could rightfully tell you pay in CAD, or get out of my shop, I'm not your friend you weird little Pennsylvanian.)

Fact check! Gas in Alberta is $1.92/L. There are 3.78L/G(some argue 4l/G)

$1.92*3.78 = $7.26/G

Or $5.79USD/Gallon.

Alberta is the cheapest province for gas. Other provinces are more.

Yeah, but you've got to get there. :P

if we’re playing this game, gas in Dubai is ~$1/l, and in China it’s ~$1.4/l

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