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Comment by simonh | Hacker News Reader

Hope you don't mind me re-posting this from another comment of mine, but since you specifically raise the UK it's actually more relevant here. In the UK it doesn't look like gouging is the issue:

https://www.grocerygazette.co.uk/2023/01/31/food-companies-p...

Honestly you're right that inflation can benefit the well off, but I don't buy the conspiracy theory angle. "The Establishment" has been holding inflation rates at historically unprecedented lows for the last generation. It's been the number 1 priority for central banks since the early 90s. The last time the UK inflation rate was above 4% was over 20 years ago.

https://www.macrotrends.net/countries/GBR/united-kingdom/inf...

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>It's (inflation) been the number 1 priority for central banks since the early 90s.

I might believe this if M2 hadn't increased 4x since 2000 https://fred.stlouisfed.org/series/M2SL

The money supply gets brought up in every single discussion around inflation on this forum, and it’s obviously relevant.

However inflation!= growth in the money supply. A lot of the reasoning behind that growth was because inflation was persistently below the 2% target for the entire period up until 2021. That’s two decades of stubbornly low inflation, despite the feds best efforts in juicing the money supply.

It’s maddening how common it is for this forum to treat the issue as so simplistic and formulaic as though policymakers are somehow dunces compared to software engineers.

What is consistently lost in the M2 supply talking point is the demand aspect of currency.

One of the reasons why the M2 supply increasing wouldn't directly correlate to inflation has to do with global demand to hold the asset in reserve.

So the argument I don't think is bad, just misguided in the sense that once the global demand for currency reserve is saturated the party is over for increase in supply with out a very direct affect on inflation.

It is absolutely relevant, and I’d be fine with the discussion of if included your level of nuance.

However it usually is a more simplistic conversation that glosses over the challenges of actually making policy at the fed.

It's called the Cantillon Effect. And there usually is a delay from implementation to experienced effect. After 2020 the money printing was excessive, and it almost immediately lead to unprecedented growth in the stock market. Now, however, the delayed effect of that party is leading to unprecedented growth in food and energy prices, which affects the lives of everyone.

Correct, however parent comment wasn’t referring solely to 2020, they explicitly went back to 2000. Hence why I spoke to the whole period in my comment.

The GP specifically mentioned bread prices too, and for that surely supply due to the war is also a factor. Food supply limitations, shipping being threatened near Iran, trading partners being asked to pick sides. This is all very similar to the picture Zeihan depicts in his stuff. Unnerving.

What has that have to do with inflation in the UK?

Most developed countries have a similar picture. This is a UK-specific chart. https://tradingeconomics.com/united-kingdom/money-supply-m2

That chart shows a net increase in M2 of about 5% for the UK, rather than multiples - the Y axis doesn't start at zero, which might be misleading at first glance.

I may be missing something, but the page I posted has very similar numbers to those referenced for the StLouis Fed. You have to click on "25 years" to have a comparison with year 2000.

The post you replied to referenced the St. Louis Fed chart saying 4x M2 growth from 2000 to now. The page I referenced shows the same 4x M2 growth for the UK: from 750k at 2000 to 3000k at 2023 (values in GBP Millions). Virtually identical.

So you're saying just because this is an entirely different economy, country, currency, money supply growth rate, central bank and interest rate regimen, that this means the elites aren't conspiring to do the thing they hate more than anything else, the thing that causes them to intentionally decrease jobs and employment to prevent?

Why doesn’t 4% count as weaponized? That’s higher than typical annual raises, not to mention non workers

IIRC deflation and inflation are equally as bad. If 'inflation' rates are negative, the economy grinds to a halt. Having an inflation rate of ~2% is widely considered to be beneficially for everyone, since it's in a 'goldilocks' zone, it creates stability.

Inflation of 4% sure isn't as good as 2%, but generally speaking the inflation rate in the UK appears to hover around 2-3% during "stable" periods. https://www.macrotrends.net/countries/GBR/united-kingdom/inf...

With lack of fundamentals in economics this is very counterintuitive. Japan is a good example of the negative consequences of zero or negative inflation.

https://asia.nikkei.com/Economy/After-20-years-Japan-still-s...

Curious that there's been so little financial stability in this supposedly stabilised ideal system.

Stability is a feature of industrial processes. Natural processes are all over the place. Also, there are external shocks that you can't control (e.g. oil producers raising prices in the 70s, Russia invading Ukraine, etc.).

Compare pre and post 1945. The 1800s had a depression every banking cycle, now we just get recessions. Bank failures no longer take down your life savings. The king of England doesn't sometimes surreptitiously start putting copper in the gold coins to fund wars any more (e.g. inflation). GP's chart is pretty impressive, actually. Aside from the 70s oil shock, inflation is pretty constant, especially in the last couple decades.

But then again inflation benefits people with debt. 4% annual inflation means their real debt load is 3.8% lower. Low inflation is basically a subsidy to creditors.

It’s not been 4%, it’s been below that. Mostly less than half that actually. And I was wrong, it’s been that way for over 30 years, not 20.

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