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Comment by seydor | Hacker News Reader

> It is the most concerted effort to slow down growth and employment in the interests of monetary stability that we have seen since the 1980s.

I see it as a war of generations. The boomers/genXers are eager to preserve their wealth and are once again dumping on young people. The 70s was a period of high inflation, it was also, according to piketty a period of high income equality for the world over. The central banks are going beyond what is mandated by them. If I were young, i would not take that deal.

https://www.newyorker.com/news/john-cassidy/pikettys-inequal...

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You know high inflation makes it worse to be poor right? Especially core inflation.

Everything is bad for the poor though. Rising rates fixes inflation, but reduces employment. As it turns out, unemployment is bad for the poor.

Lowering rates improves employment, but comes with inflation risks. As it turns out, the poor also hate inflation.

Screwed if you do, screwed if you don't. Dual mandate says that the Fed aims for as good employment as possible, while also aiming at a targeted 2% to 3% inflation rate.

> Especially core inflation.

EDIT: My understanding is that core-inflation isn't about "good or bad for people", its about "good or bad for statisticians". Food/Oil prices move too quickly and are therefore bad measurements. Too noisy. If food prices go up or down 10%, is it because the economy is bad? Or is it because of a terrible storm that wiped out a chunk of crops somewhere?

Ignoring food means we ignore these volatility / storm / disease issues. Oil is similar. A war started in Europe, and lo-and-behold, oil prices went crazy, both upwards and downwards. There's no amount of economic policy you can do to predict a war.

I'm referring to core inflation because it shows upward trend across all prices, which means people without much disposable income will feel the pinch everywhere. High inflation also erodes savings, making it hard to get out of poverty, particularly the generational type.

Unemployment is obviously a problem, but the labor market is super tight right now. There's room to fight inflation without a big dip in employment.

> I'm referring to core inflation because it shows upward trend across all prices

Hmm. I think you're mistaken. "CPI" is across all prices. "Core-CPI" is across most prices (ignores energy and food).

Turns out that poor people use electricity and eat food, at least in America. Upon first glance, it would seem that "CPI" is a better measurement. The issue, as I stated earlier, is that energy/food prices swing wildly in ways completely unrelated to economics. (Look: war in Ukraine... Food prices and Oil prices in peril. Its not "unimportant", its just unpredictable and unrelated to greater economic issues)

We ignore energy/food not because they're "unimportant", but because they're too volatile to draw conclusions from. Even without wars, there's famine, hurricanes, storms, disease, swarms, locusts, etc. etc. which wreck food/energy prices. Even with a perfectly balanced economy in a peaceful world, Mother Nature would still wreck us in an unpredictable fashion.

> We ignore energy/food not because they're "unimportant", but because they're too volatile to draw conclusions from

Yes, that's exactly what I'm referring to. I mean that looking at the core number gives a better picture of the trend.

> EDIT: My understanding is that core-inflation isn't about "good or bad for people", its about "good or bad for statisticians".

Bad for making decisions. If there's too much noise in a signal you can't steer the ship. If you do try to take action on noisy data, there's a big chance that you'll over- or understeer, especially when effects are slow to be seen.

>There's no amount of economic policy you can do to predict a war.

You can't predict a war, but you can secure your supplies of basic commodities against it, preferably by producing them domestically.

US production of energy (coal, natural gas, and even petroleum) is almost entirely domestic.

The entirety of this year's fluctuations isn't because "we don't have oil/energy", but because global oil/energy prices were changing. In fact, USA exports more energy than we import.

So the higher price of energy is "good" for the US economy, as our companies obtain higher profits. Nonetheless, it still means higher prices at the gas pump and other inflationary measures.

--------

Just having a domestic base of energy didn't do jack diddly squat for oil prices. Oil prices will rise and fall with geopolitical reasons.

Now USA has a domestic energy source, which gives us a leg up compared to say, Germany, who was relying upon natural gas from a country to their East. But this has to do with supply of energy more so than price.

Energy prices are also floating upon the weather. La Nina this year will give us a mild winter, meaning Europe won't need as much natural gas... which counter-acts the war somewhat. We're lucky that Mother Nature smiles upon us this year...

Inflation isn't inherently bad for the poor. If you have debts and inflation is above the (fixed) interest rate on your debts, you're coming out ahead.

The downside of inflation is wages and cost of living adjustments often don't keep pace with inflation because government statistics are rigged to understate the real rate of inflation and many things aren't even indexed to inflation. For example, the minimum wage has been $7.15 an hour in the US for about 15 years. Wage growth not keeping pace with inflation is, as far as inflation hawks are concerned, a feature not a bug as it increases public support for inflation hawk policies.

Gen Xers are mostly still 30 years from retirement. This is the work of the ownership class who are seeing their profits nibbled away by employees who want to be paid a fair wage for their labor and aren't afraid to change jobs because millennials and gen Z aren't going to "go the extra mile" without being compensated for it.

There are millennials who are less than 25 years from retirement age.

It's why I said "mostly."

Because most of them are going to work well into their 70s.

And now Gen X are included in the anti-boomer rhetoric. Great.

As a tail-end UK Gen Xer, while I have some wealth I have built from working for over 20 years, I missed out on houses costing 2-3x your income just as much as the younger generations did. I'm not sitting on a million dollar property that I paid 10c for in 1972, largely because I wasn't born then...

Welcome the the club, mate. I'm a tail-end boomer (born 1963), and missed out on most of that gravy train boomers had. Apparently we are all selfish right-wing assholes.

Boomer hate is stupid. The enemy are the elites, corporations and billionaires.

> Boomer hate is stupid. The enemy are the elites, corporations and billionaires.

Hate of any generation - especially an individual member of a generation based on their membership in it - is stupid.

However, the critique against Boomers by younger generations is not about you as an individual, but is about largely Boomer-backed policies that pull up the the ladder of affordability behind them for housing and education.

That doesn't mean every Boomer is to blame, or that the wealthy among younger generations don't often advocate the same positions as Boomers. But as a cohort, Boomers' voting patterns at both a national and local level have tended to exacerbate the specific problems of housing and education unaffordability.

I do find the Boomer hate to be absolutely incoherent, but not new. Ultimately, the biggest factor is your economic class. If you're a boomer, but you're poor, you will live just as poorly as someone who's a poor Gen Z. If you're black and poor, you have far more in common on a day-to-day basis with a white poor person than with a black millionaire/billionaire.

It's different in different countries. A common thread is that they own the real estate

Just move in with boomer parents and wait for the inheritance.

Boomers / GenX can simply buy TIPS / I-Bonds if they're worried about inflation though.

Honestly, given how much they're invested into the stock market, raising interest rates will hurt their 401k / retirement accounts the most. Its not like the stock market or bond-market likes it when rates go up.

The job of an investor is to navigate these waters as the tides of the economy rise and fall. If you're in the wrong spot at the wrong time, you can lose everything. Alternatively, you keep your wealth spread out in a large basket of different goods: Stocks, Bonds (including I-bonds/TIPS), Cash, Real Estate, and hope for the best.

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