Hacker News Reader

Comment by bioemerl | Hacker News Reader

Recently that has been true, but in the long term the trend has gone towards real wages rising.

And we really should be expecting real wages to drop at the moment, that's a sign our economy is doing a good job at reflecting what's going on in the world. I'd be more concerned if they were all going up despite all these issues because it would mean we are at disconnected from reality and that normally comes with a crash after a couple of years

There are a few graphs from the US Fed that show it pretty well. Wages got very static after 2008 and started heading back up once we left the Great recession stagnation era.

Then we have the drop from recent events such as the war with Russia, covid in China causing lockdowns, supply chain issues.

More than likely as things recover it'll start taking up again

View on HN

Yes, it's good real wages are declining given the inflationary backdrop.

But politicians fighting inflation with higher wages and stimulus checks, as well as the chorus of idiots cheering them on, repeating the same mistakes as the 70s, is quite mindblowing.

How far do consumer sentiment and approval ratings have to drop for people to wake up to basic economic realities?

They didn't have the internet in the 70s, by the way.

How much money do you think $600 actually is?

People have been going on and on as though $600 was too much inflationary pressure.

You get that that is less then 1 months rent, right?

It was over $4T in stimulus, and extended far beyond individual stimulus checks.

Which doesn't even include forbearances that add a few T more in consumer spending power, or artificially low interest rates driven by the Fed

Here's your inflation: https://fred.stlouisfed.org/series/RSXFS

https://fred.stlouisfed.org/series/PI

Maybe you can clue some of the others into it. Not like we have the internet and easily observable datapoints that makes it quite obvious huh.

Instead have to hear the inane idiocy of economically illiterate people promoting policy that does the opposite of what they want to achieve

If you include GDP next to those two graphs, then the story is quite different: retail spending is following the increase in GDP, and pay is lagging it: https://i.imgur.com/4VtMsBW.png

The stimulus bumps are quite visible, but subsequent data is right in line.

GDP is just a measure of total dollars spent in the economy. So of course if you print money and hand it to people, GDP goes up (nominally)

But personal income does not, which as noted is already observably a visible spike (from adjacent) in the graph you cited. So where is the driven increase in retail spending coming from since it observably is not being delivered from the government to citizens.

It does via inflation which is why it's rising faster than the pre-covid trend

You have so far failed to point to any metric such explains the inflation, which is what you claimed linking to those metrics did.

So apparently taking about personal income was just happenstance, since you pretty obviously were trying to say "it's rising wages that are doing it" and then have been backpedaling everytime I press you to explain why.

So we face successfully established there's inflation, and you've made no argument as to why we should think it's fiscal policy related rather than supply chain - you know, that big thing which has been stressed and suffering shortages repeatedly the last 2.5 years.

I have explained it, but your bias clouds your judgment, sorry.

Supply of effectively every good is higher than prepandemic. Demand is even higher. Retail sales have exploded vastly above trend due to fiscal injections. This is NOT a supply side issue, this is consumers mass buying which leads to shortages. If it were a supply side issue, you'd see big hits to corporate earnings, instead they became massively inflated due to excess consumer spending.

Personal income is rising much faster than sustainable for 2% inflation. Are you aware that money is nominal? People getting paid more means nothing if prices rise faster than they're getting paid. There's zero inherent value to a dollar.

Inflation is a product of supply and demand, not just one or the other. When there's an imbalance, prices rise to a new equilibrium point.

Go on, cheer for higher nominal wages as consumer sentiment sits at all time lows and real wages are deteriorating faster than any time in history

"Grain and gas and oil" all suddenly effected by an unprecedented and unexpected war, and disruptions in Asian manufacturing due to a historic pandemic situation, pent-up demand from lockdowns on a global scale, and your response is "nah, definitely not supply issues. No one would exploit a crunch to make even more money..."

> Supply of effectively every good is higher than prepandemic.

How can you possibly claim this? Where have you been for the last year? Energy embargos, dramatic slow downs in trade with China, excruciating shortages of basic/fundamental electrical components.

I have to assume that you have ignored all evidence that doesn't support your narrative. The trouble is this inflation would have happened with or without individual stimulus moneys.

It doesn’t really matter. It’s more money chasing the exact same number of resources as existed before hand. The very definition of inflation.

It’s just bread and circuses.

Again, it's less then 1 month's rent. Really think about what you're suggesting here.

It wasn’t $600 though:

$1,200 per adult in April 2020, $500 per child.

$600 per adult in December 2020/January 2021, same per child

$1,400 per adult in March 2021, same per child.

A fully qualified two adult, two child household received $11,400. For a median income of 2x $31k, that’s 9% of the household’s per annum income. If you both had a job during covid, as most people did, it’s pure inflation.

This is just garbage. The demand for stimulus was in reaction to the increase in most expenses due to supply chain shortages induced by COVID and lockdowns, and the continuing hike in prices has been due to the follow up war. The record profits - not revenue but profits - the big companies have posted over this time period prove it.

Inflation is measured via a basket of goods measure, and corporations have freely taken all those basics and gone "welp must be circumstance" while posting those profits.

Prices surged before any stimulus was handed out.

So take away some money from the 0.01% to compensate. Since that select group of people holds 20% of the total wealth in the US, there's plenty of wiggle room.

This idea just shows the confusion most people have between resources and money.

No matter how much you take away from those 0.01% of people, it’s not going to do much to fight the inflation of the goods that people are worried about the inflation of.

Let’s take food for example. Perhaps the 0.01% might consume 10x more food than regular people at most (factoring in waste). Even if the 0.01% were to be taxed to the point where they can eat nothing, it’s not going to create very much more supply of food for everyone else.

Then there is fuel. The ultra rich probably do consume a lot more of it when you factor in things like jet flights and such. But even if it’s 100x more, it’s not really freeing up so much to actually affect the market for it.

Now what taxing those guys might do is reduce the price of the goods that they do in fact consume more of. Things like housing where the rich will own a lot in order to generate revenue.

And indeed these productive assets were inflated significantly due to the loose monetary policy regime that we have been living in for some time.

But these are not the resources that most are concerned about with regard to cost of living at the moment. That’s food, fuel, etc.

Your claim is that the high price of housing is not one of the pressures on working class people???

unless those housing is all owned by those 0.1%, how does taking away the wealth of say Bezos reduce the rent of working class people?

> It’s more money chasing the exact same number of resources as existed before hand

Because of supply chain issues, it's more money chasing fewer resources. I think people focus too much on the money supply and not enough on supply chain shortages. IMO, the bump in stimulus money given would not have caused this level of inflation without also the decline in supply to go along with it.

How do you define “too much inflationary pressure”? Timing is important and the timing was not great - though obviously there wasn’t much choice.

It was:

600 a week for people on unemployment on top of normal unemployment.

1400 of stimulus checks to a large percentage of Americans.

PPP loans given to business that large weren't paid back

Lots of little stuff that funded stresses institutions.

Stimulus isn't too blame at all for the inflation we are facing, supply chain limits and war are also responsible.

However, to say stimulus was "just 600 dollars" is crazy misrepresentative and totally ignores that the American stimulus package was literally the most robust and impactful examples of stimulus in the world.

Reply on news.ycombinator.com