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Comment by tiahura | Hacker News Reader

Seeing as initially, inflation was primarily driven by Covid-related supply chain issues, which itself would have been 'transitory', I think it was quite reasonable to call the resulting inflation 'transitory' as well. Crucially, inflation is in part also a social phenomenon, as far as I understand it: if I expect prices to rise, I have to try and price that in, resulting in rising prices. Therefore, the initial attempt of keeping people's inflation expectations in check might have done us all a favor, because it could have worked out.

The situation changed when a war broke out in Europe at the end of February, and I don't think it's fair to hold Yellen et al accountable for not taking that into account beforehand.

While I do believe supply chain issues had a lot to do with triggering, I cannot look past the invention of 1.5 trillion dollars that were injected into the economy, nor can I look past the hit to labor resulting from government policies around covid . The use of "temporary" or "transitory" was political damage control, the tail wagging the dog.

I view your comment as more of the kind of spin that we're seeing in the media right now; conveniently ignoring larger and more obvious sources of trouble, in order to deflect and downplay the seriousness of the situation.

But you DO look past the purpose of that injection of money, which was to protect jobs/economy. Whether it could have been implemented is one thing to be debated; to assume/pretend it had absolutely no positive effect, and that we would have been off than we are currently without it, seems disingenuous.

To the argument within my comment, the purpose of the money is of no consequence. It is merely fact that the money was injected. The moral consequences or beneficiary of that money don't have bearing on the fact that the money was injected, and would have negative long-term effect.

Right, and not injecting the money would have a negative long-term effect. I'm saying while it's difficult to be sure, it's at least reasonable to conclude that we traded a short term disaster for smaller long-term pain.

Maybe you disagree, but I don't get why people are acting like this is sinister.

Why are your kind so desperate to spin this situation into anything remotely positive? Is it buyer's remorse? Tribalism? Desperation?

We're in deep shit. A lot of people saw it coming, a lot of people ignored the warnings. A lot of people tried to spin this like it was no big deal "nothing to see here, all is well." It doesn't matter if this is a damned-if-you-do-damned-if-you-dont - we're in the shit now, and that's all that matters.

it would seem that you are basing aspects of argument on feelings, perceived individual benefit, and speculation. That's not a debate I'm interested in engaging in. I prefer to look at the facts as they are at present.

But how can you argue that we're living in a world that's worse than if we hadn't done the stimulus when you haven't lived in that world?

I'm not and have not argued that. That's where I believe you may be leading with emotion.

As an aside it's pretty bad form to accuse the person you're talking to be emotional. It's implies that your argument is logical and correct, and the other person's is incorrectly clouded.

Can you clarify what your argument about the stimulus is then?

As an aside it's pretty bad form to continue to try and draw a person into an argument they've repeatedly stated they're not attempting to make nor have interest in joining. Stop trying to make fetch happen.

I have no argument for, against, nor interest in engaging in the shaving of a yak that is bald. You're in a debate with a single participant.

I'm not trying to "draw" you into an argument, I'm responding to my best faith interpretations of your posts. That is not considered bad form. That you refuse to clarify and call me emotional is.

Does your explanation for inflation have zero impact from general social sentiment? i.e. - Purely due to the levers of monetary and labour policies?

If so, what is the explanation for inflation occurring in countries all over the globe, even those without monetary injections or business closures?

If not, and there is some level of impact from individuals thinking "it feels like there's about to be inflation, so I'm going to act like there's inflation now", wouldn't there be a net benefit to that kind of messaging?

Do you have evidence she was lying versus being wrong? A number of notable economists thought inflation was transitory. It’s hard to predict things like the effect the war in Ukraine would have and the effect the shipping industry doing its thing would have.

The lying is the present attempt to tell us we’re not in a recession.

And her failure to appreciate the scale of the price inflation problem was not just a case of being “wrong.” She was unable to see the worst inflation in 40 years when it was standing right in front of her.

She’s a miserable failure.

You're changing your story now though. You now have new information that wasn't available at the time of the transitory comment. Information that would all but guarantee large inflation problems.

I believe they had numbers on how much money was injected into the economy from the money printer, they had numbers around how many people had exited the workforce and available jobs versus filled. These folks are supposed to be analytical, intelligent, skilled statisticians. Instead, we're getting politically-minded loosely-defined-economists that are ignoring the breadth of information in favor of a cozy narrative.

If it was caused by money injection into the U.S. economy then how do you explain inflation being a worldwide phenomenon? Quite a few experts believe a year ago that inflation was a result of imbalance in supply chains due to lockdowns. New information arises and a reevaluation of old ideas occurs. No evidence of lying as far as I can see.

But what if you're wrong? What if the monetary effects you think are important are not? What if the reason prices rise is due to a war, energy crisis, shipping crisis, and lockdowns in the largest manufacturing base in the world? Which, ya know, would definitely cause prices to rise?

Seems to me like you're just saying you're right and they're stupid without acknowledging the state of things

I think it is pretty clear. Wrong once, Wrong twice, and then now misleading.

In January of 2007 President Bush said the economy was doing fine. Much later in the year the NBER said that the recession began in January. Was Bush lying or did he lack foresight? Determining when a recession began usually happens after the fact because of how “recession” is defined.

>her failure to appreciate the scale of the price inflation problem was not just a case of being “wrong.”

If ever there were a case of 20:20 hindsight, that's one of them.

Every day for a year, every single business leader in every single industry, has been on CNBC warning about inflation.

The only ones who didn’t get it are in the present administration.

Not so much.

https://www.nytimes.com/2021/07/17/business/dealbook/inflati...

Austen Goolsbee? He was part of the Biden campaign and not a CEO. He seems like a good guy, but he’s a hack.

Most of the executives quoted said inflation was an issue, but that they thought they would be able to raise prices to match (ie we’re going to do our part to make it persistent).

Edit: A very important article. Basically the academic center-left consensus was 100% wrong, and everyone else was right.

The academic center-left consensus like the CEO of Citi?

>“Will inflation be transitory? There are many reasons that the peaks we’ll see at the moment will be. But what’s the longer-term trend? That, I think, everyone will be keenly watching. We think the jury is out.” — Jane Fraser, chief executive of Citigroup

Goolsbee is a world renowned economist with tenure at one of if not the most hawkish monetary institutions in the world. You don’t know what you’re talking about.

He’s on Squawk Box weekly spinning away. I’m perfectly familiar with him going back to the Obama years.

His role, in public at least, is to try to spin the D econ failure of the day in the way Wall Street might barely find plausible. Again, seems like a good and sharp person, but not an unbiased observer, and certainly not a CEO dealing with inflation issues in their business.

The NBER defines when a recession starts. That's how it's always worked.

You can disagree with how that is done, sure, but that's meaningless to the discussion.

Officially, we aren't in one.

Claiming otherwise is like me saying you are guilty of a crime before you are found guilty of a crime.

NBER tells us when the recession started only after months of being in a recession. Unless you can travel to the future, you have no way of knowing if we are officially in a recession now.

They lied when they blamed inflation on Putin's invasion, only one week into the invasion. At best Putin's invasion explained 5% of that number at that early stage, given the lead-lag in the CPI number and the predominant causal factors being supply chain issues from COVID and recent monetary and fiscal stimulus.

I’m not an economist. A number of respected economists believed a year ago that inflation was mostly supply chain issues and was transient. Now, with new information, opinions are changing. I believe the monetary stimulus mostly occurred the first year of the pandemic but maybe it’s continuing. I don’t know. Since inflation is a global phenomenon it seems reasonable to conclude that fiscal stimulus in the U.S. is not the cause.

I believe the statements regarding the Ukraine war were that it was going to increase inflation and not that the current level of inflation was due to the war. The statements I recall were of the form, “due to the war inflation will be exacerbated.”

The statement from Psaki in an early press conference was that the invasion explained the observed CPI number. She wasn't referring to inflation that was yet to come. She knowingly lied, probably rationalizing it as spin or a half-truth.

I remember when Palin ran for Vice President she had a day of interviews for local media types from various parts of the country. She did a number of consecutive interviews and in one made a dumb mistake conflating North Korea with South Korea. She was ridiculed by people for not knowing the difference. Now, I believe Palin is profoundly dumb and ignorant but she didn’t deserve to be attacked for making a mistake during a full day of interviews.

You mention one statement from the Press Secretary ascribe to it malice. Do you know she lied rather than was misinformed? Assume she is lying. Does this mean the whole administration lied? The discussion at hand is about Yellen (and by extension economists at NBER and other agencies). One statement by the Press Secretary is evidence of a lie by these people? I don’t think so.

It’s believable that Yellen and Biden and Pskai did lie because in politics you try to sway public perception and opinion. I don’t believe NBER has lied and to blame inflation on fiscal stimulus that largely occurred two years ago seems outright bad thinking. Especially to then blame the current administration for it. Inflation is going on all over the world. It’s not Biden’s fault. There’s a collection of reasons and mechanisms at play and Biden can only do so much.

It wasn't one statement. This was early in the invasion so I was glued to the press conferences. It was deliberate messaging delivered more than once. If there's transcripts you could grep search for inflation.

  "I don’t believe NBER has lied and to blame inflation on fiscal stimulus that largely occurred two years ago seems outright bad thinking. Especially to then blame the current administration for it. Inflation is going on all over the world. It’s not Biden’s fault. There’s a collection of reasons and mechanisms at play and Biden can only do so much."

I'm not sure what you think you're arguing against. Never said that it's one hundred percent down to fiscal policy from two years ago (although both loose fiscal and monetary policy of Trump and Biden are undeniably a non-trivial part of it -- money supply and inflation are inextricably linked). I also wasn't saying it was mostly Biden's fault.

that is basically everyone in politics at this point. i cant think of a single, competent bureaucrat in the past 6+ years

Steve Mnuchin

They tried to kick the can down the road like the previous administrations. Just it doesn't work anymore.

To be fair, there is very little point in saying we are headed towards recession.

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