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Comment by dpflan | Hacker News Reader

I mean, wasn't there an "Inflation Reduction Act" passed ~1 year ago...seems pretty correlated? and no mention in the article?

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The Inflation Reduction Act was a massive piece of legislation. I'm curious which pieces would have this short-term (< 1 year) deflationary impact.

My gut says that the Fed interest rates and natural cooling of the demand curve post-Covid-lockdown is more impactful. But I would love to learn more.

I too would like to know, not entirely discount it like some are.

Ha, please don't take the names of Acts of Congress as truthful assertions. Spending, any spending increases inflation. One can ague some types of spending are necessary, but the names of Acts are often misnomers.

“Immediate spending for dubious potential lower inflation in the future, probably, we hope, act” doesn’t have the same ring to it.

Side note, congress should be banned from adding biased names or acryonyms to bills. Just explain it. If the acronym spells something cute, try again.

Names of bills should be given by a GPT that reads the bill and the CBO analysis of the bill.

The inflation reduction act reduces forward-looking government spending (which is why it was able to be passed via reconciliation) so this is incorrect.

As a matter of fact, you could probably take the inverse of the names and they’d be more truthful.

A massive spending bill to fight inflation nonsense. Increasing taxes would have helped. Stopping the student loan pause would have helped. Injecting more money into the economy? Not so much.

The factory building and infrastructure spending passed over the last two years is one of the reasons why the labor market has remained steady despite a higher federal funds rate.

What’re you saying is the precise implication here?

Keynesianism has a lot of juice left in it and the IRA, CHIPS, and infrastructure bills are creating a manufacturing boom. There are more manufacturing jobs now than there were before the pandemic.

Yes. Are you saying that because there is demand for manufacturing jobs, wages for such jobs are higher, and that inflation should remain higher but unexpectedly is not?

Increased interest rates are decreasing inflation by reducing economic activity but it's being countered by increased spending in green and semiconductor sectors. It nets out to a positive.

Thank you for clarifying. Agreed. In the end it’s all a game of routing dollars around. It must be a crazy max flow problem.

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