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Comment by apwell23 | Hacker News Reader

There is so much excess money floating in the economy at the moment. Its insane.

People emboldened by market and housing gains have to been spending ridiculous amounts of money like there is no tomorrow. Layoffs have been limited to tech.

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Controlling inflation will hopefully be the main discussion around the next election, I am tired of watching the political theater around small side-issues and then paying $8 for milk and $6 for peanut butter. Why is our labor becoming worth less in real goods? Why is life expectancy decreasing? Can politicians address issues that affect every single person every day?

I make good money in tech but it still feels like more than 4k/mo (in California) is what you need just to cover rent and basics (car, internet, phone, groceries, etc.). I have no idea how people working minimum wage jobs are surviving.

So you want deflation?

Some deflation, at least in basic commodities and energy, would probably be a long-term net positive for the US economy.

Of course. Everyone does.

The Japanese, who actually had it, didn't seem to think it was so great.

not true: https://foreignpolicy.com/2024/01/15/japan-economy-inflation...

The article says that negative real wage growth is what's making people unhappy, not inflation; much of it is spent discussing that deflation is actually a problem.

> Controlling inflation will hopefully be the main discussion around the next election

You're conflating inflation with market gouging. Why would your local grocery store drop the price of milk? What's the incentive? You probably haven't stopped buying milk, I bet none of your neighbors have stopped buying milk. In most of the country you have at most 2 grocery chains that are probably mega-chains, and they have no incentive to compete with each other.

What you're seeing at this point isn't inflation, it's market gouging and unless you're onboard with the government either breaking up these oligopoly's or setting market prices, nobody running for office is going to be able to "fix it".

https://www.forbes.com/sites/errolschweizer/2021/03/18/anti-...

A "free market" cannot function without competition and we've spent the last 50+ years allowing and encouraging market consolidation. The results are as expected

We were not supposed to have the market consolidation that we've had. The FTC has been asleep at the wheel, probably because it's members are investing in companies that they are hoping to be bought out by Kraft, Nestle, Pepsi, etc...

The definition of inflation is "a general increase in prices"; it doesn't matter why that's happening. Do you think that stores weren't trying to sell products for the highest-possible price previously?

Price-gouging is not what we're seeing here - there's no supply constraint. What we're seeing is just the market price.

> there's no supply constraint

Where else are most Americans going to get milk than their local grocery store monopolies or duopolies?

A supply constraint means there's an inability to bring sufficient new stocks of the product to the market. Think: N95 masks during Covid, or gasoline in the run-up to a hurricane.

Selling toilet paper for $15 a roll when shelves are empty is price-gouging, selling eggs for 5% more than last year isn't.

>What we're seeing is just the market price.

There is no market price when there is no competition. You cannot have a free market without competition.

That might be more true in some markets, but grocery stores are competitive, low margin businesses. There are lots of farms, too, and food comes from all over the world.

As we saw during the pandemic and with the start of the war in Ukraine, price increases often come after major supply disruptions or sudden increases in demand. Markets often don’t do well at adjusting after big surprises. There can be multi-year lags.

You're not wrong, but what you're describing is referred to as "seller-side inflation" or "excuseflation."

Article from a year ago: https://www.bloomberg.com/news/articles/2023-03-09/how-excus...

> A "free market" cannot function without competition and we've spent the last 50+ years allowing and encouraging market consolidation.

Perhaps the worst market for consolidation is political parties, neither of which seem serious about any form of antitrust enforcement.

Life expectancy decreasing seems to have an obvious answer. We just had a pandemic.

Given the amount of polarization, it seems like very few voters will switch sides based on economics. Maybe it will affect turnout, though?

US life expectancy is going up again. [1] The pandemic is over and drug overdoses leveled off.

[1] https://www.politico.com/news/2024/03/21/cdc-us-life-expecta...

> Why is our labor becoming worth less in real goods?

I don't think this has been true in general for a while, although it was true 2021-2022[0].

It may of course be true for you, I don't know your income!

[0] https://www.statista.com/statistics/1351276/wage-growth-vs-i...

Wish this "so much excess money" was evenly distributed

Or, in inflationary times, people are spending their money today because it will be worth less tomorrow.

People refinanced their mortgages at 2.5% in 2022. Suddenly their monthly payments fell significantly and they have more money to spend every month

Yup. Larger properties round here are going for £50-150k above last sale price (last sales being 4-6 years). It's madness.

In areas of Canada (Toronto and Vancouver vicinities), housing prices were increasing at $80k per MONTH. To only have your house increase by 50-150k over 4-6 years would be better than even the podunk unincorporated villages hours from any economic centre.

Appreciate the context. But the figures I quoted are huge sums for the average working person round here (we're closer to a "podunk village" than e.g. Toronto + Vancouver metro areas), as I'm sure $80k/month is to Canadians. They represent real problems for most people who live here. They can't be dismissed because a large metro area in Canada has seen even higher inflated prices

> People emboldened by market and housing gains have to been spending ridiculous amounts of money like there is no tomorrow

what are you basing this claim on? the fact that airbnb bookings are up for a rare celestial event?

here is where all of my ridiculous amounts of money is going towards: $6/gal gas in california, ever-increasing property taxes, ever-increasing insurance premiums, $399 "surgery" charges at an ENT simply because they looked up my nose for half a second, insanely expensive annual car registration charges, etc.

Seriously. For all we know, these are relatively local people who had to settle for this cheap "vacation" instead of a more expensive/longer trip further away...

Relatively few people own stocks & home ownership has tapered off & isn't back to its pre pandemic highs... Maybe these things show the people that were doing well are still doing well, but we knew that already.

> Relatively few people own stocks

61% of Americans, says Gallup [1]. Not sure if this includes those indirectly owning stocks, through pension funds.

[1] https://news.gallup.com/poll/266807/percentage-americans-own...

> Layoffs have been limited to tech

And in all honesty, good. Tech Bros (myself included) needed to be cut to size. There was a lot of hubris by my peers in the 2010s.

. Tech Bros are infact rarely let go first because of their chummy relationship with managmemnt.

I know a lot of my colleagues on Visas and families here were laidoff and ppl on visas live with this constant layoff anxiety.

I love the lack of sympathy for tech workers across North America or perhaps even globally, when tech hub salaries still don’t allow tech workers to even have a middle class lifestyle. Very few people I know get paid enough to buy a starter home within 2 or 3 hours of where they work. I get paid more than my non tech peers yet still functionally have less spending power than a 25 year old from 30 years ago, despite being a fair bit older than 25

US middle class cleaved into two groups post pandemic: homeowners at 2% interest rates and everyone else.

Its the new middleclass have and have nots. You have it pretty good right now if you are a homeowner.

This is short sighted.

People have been saying similar about the cars purchased in 2021 because they sell for well above asking. As 36-month leases start coming due the prices of those cars is normalizing back to where it should be.

All of the boomers that refuse to downsize and plan to die in their homes are going to do the same with the housing market, but in a more spectacular fashion that causes the market to crash.

On the boomer front, it's hard to say because it'll play out over 20 years, and there's a genuine supply shortage. There's also a chance a lot of their kids take the house over and sell something less desirable.

In theory, those homes should start going down in value once people start selling because you can buy less home for a $2,000 per month mortgage payment. The market's weird right now because a lot of people with low interest rates can't afford to sell and buy something comparable.

I agree: but given that, it's hard to imagine what would bend the market towards selling.

Depending on the region of the country, a lot of people with low interest rates might be handcuffed by skyrocketing insurance from finding buyers

The US middle class has always been divided into homeowners and non-homeowners.

Yup. Homeowners in the first world need to start to feel some serious tax pain, which should go directly to building as much housing as fast as humanly possible. And screw crying about home devaluation. You making a handy profit when you switch houses in a decade does not trump the basic need for people to have housing.

> I get paid more than my non tech peers yet still functionally have less spending power than a 25 year old from 30 years ago

This seems like some non-generic case specific to your situation and not representative of the average experience.

The median income in 1994 for over-25-year-olds (men only!) was $25,465 [0], women was less than half of that. Let's go with the figure for men for the sake of discussion.

$25,465 in 1994 is the buying power of $55k today [1]. $55k is the 56th percentile [2], so right where we'd expect it to be.

---

1994: median home price $142,200 [3], interest rate 30-year fixed: 8.38% [4]

Principal balance $113,760 @ 8.38%, payment (P&I): $865, or 3.4% of annual income

---

2024: median home price $384,500 [5], interest rate 30-year fixed: 7% [6]

Principal balance $307,600 @ 7%, payment (P&I): $2,046, 3.7% of annual income

---

Opinion incoming: I think there are 2 things that make 'today' seem more expensive than 'back then': implacable consumerism, and the natural change of places over time (ie, gentrification & co).

w/r/t consumerism, the load on both 'necessary' and discretionary spending has increased big-time - people were not generally paying for broadband, smartphones, gaming consoles, home espresso machines, soundbars, portable speakers, media players, printers/copiers/scanners, I could go on forever. Look around you and count how many things straight-up didn't exist in 1994 (or were reserved for the ultrawealthy or for business). We could do without them today, but it would feel really bad, as if we're not participating in society or making use of its advancement.

w/r/t gentrification, many places today are more desirable than they used to be, and their increase in price is a function of demand rather than of inflation, so it feels like the economics of living got away from people who weren't already bought in. But it's not that "everything" got so much more expensive, it's that, for example, Akron OH used to be more expensive than San Jose (!!) because farming was the center of industry. Now the world changed and what used to be a pretty rural town full of fruit trees is the most expensive metro in the country. It's not because "houses got more expensive" per se, it's that the world changed.

[0] https://nces.ed.gov/programs/digest/d96/d96t376.asp

[1] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=25%2C465&year1...

[2] https://dqydj.com/income-percentile-calculator/

[3] https://www.huduser.gov/periodicals/ushmc/winter2001/histdat...

[4] https://www.mpamag.com/us/mortgage-industry/guides/historica....

[5] https://www.bankrate.com/real-estate/existing-home-sales/

[6] https://www.bankrate.com/mortgages/mortgage-interest-rates-f...

Where does the farming come in for Akron - because everything had rubber tires?

San Jose.

San Jose was a farming town until the 1980s.

Most of SJ's neighborhoods (eg. Alviso, Lick, etc) were actually small farm towns that merged into the City of San Jose in the 70s.

That's why SJ feels kind of bland - it's a very new city, sort of like Phoenix, Dallas, and much of Los Angeles.

I'm Canadian for what it's worth. My mother who had a GED was able to purchase a house by my age. I can't purchase a house anywhere in southern Ontario at the moment. This fact is echoed across the majority of the country. My brother had to move to northern Alberta to be able to afford a house that had enough capacity for his family. And that naturally also changed the availability of social and job options

I dunno what qualifies as south ON, but I see 144 houses for sale from $50-300 CAD south of Huntsville.

Your point however is (less charitably) put as "I can't purchase a house where I want the house to be, with the specs that I want", which is different than not being able to afford any house anywhere.

My parents also purchased a house with modest income when I was young. But it had fraying electrical (knob & tube!), peeling paint, 1 bathroom, no A/C, a wood-burning fireplace for heat, and was 45 minutes from where they had rented/liked to live. The place had its charms, they put sweat equity into it for many years, and I think of it fondly - but it was still a huge compromise, and by today's strict lending standards was probably not even able to be financed based on hazards alone. I am sure they would have preferred to purchase a house with bay windows overlooking the ocean like they had been renting, but they could afford something that was inland and needed a lot of work. I do not think they were unique in this way - I wager a lot of 'my parents bought a house in the 80s, dad was an artisanal pencil sharpener and mom was a ferret breeder' stories are actually more like this one.

My point is, I am by default unconvinced when an otherwise seemingly successful person says they can't afford to buy, even in an expensive place like Toronto or SF. As far as I can tell it just means they haven't lowered their standards enough yet. I have compromised on every home I've bought; in fact I entered the market a lot later than I should have because as a first-timer I wasn't ready to compromise enough. That probably cost me half a mill in appreciation over the years.

Huntsville is a 2 and a half hour commute to my in person job, limiting me to only remote work(there’s not exactly a booming tech economy in Huntsville). I would have to commute 5 hours a day to live in Huntsville.

I had family members who bought in “mixed income” neighborhoods in Toronto where you’d have broken piping, excessive mold in the attic, and meth heads ringing your doorbell at 2am to see if anyone’s home so they could break in. That 2 bedroom bungalow is selling for around 850k.

On top of all this houses even in Huntsville regularly close for between 50-200k over asking depending on location and the insanity of the buyer

No offense but based on this conversation I get the impression that you don’t really have enough context to comment on at the very least cost of housing in Canada.

I literally meant south of huntsville as in, draw an E-W line on the map at huntsville, and look everywhere south that's still within ontario.

2.5 hour commute sucks and wouldn't be long-term sustainable, but if it's what you'd have to do to get into housing it's something to consider. I know; that was my commute when I bought my first place in the bay area. I did it long enough to build equity & sweat equity, then used the profit to buy closer to work.

> I love the lack of sympathy for tech workers across North America or perhaps even globally, when tech hub salaries still don’t allow tech workers to even have a middle class lifestyle

Do you have empathy for IBs, PEs, and other members of High Finance? The difference in TC between High Finance and the equivalent roles in Tech are not that significant.

Goldman Sach's IB Analysts starting salaries at the SF office were $90k with minimal bonuses in 2020. These same people could have worked at Google or Microsoft (and most of them legitimately had that option)

The overlap between Big Finance and Big Tech is massive, just like the overlap between random engineer and random corpdev drone in Dallas or KC.

>Goldman Sach's IB Analysts starting salaries at the SF office were $90k with minimal bonuses in 2020. These same people could have worked at Google or Microsoft (and most of them legitimately had that option)

When I graduated from Columbia in 1999, I interviewed and got offers at various tech startups, but entry-level jobs on the "PM track" for those without a CS/engineering degree didn't formally exist at the likes of Microsoft or Yahoo as far as I know. I had a technical background, but was almost entirely self-taught, and had no interest in writing code for money anyway. <https://news.ycombinator.com/item?id=36027171>

Of my offers I chose Goldman, where I worked with tech companies. Thank goodness for that; I got to participate in the dotcom bubble without being directly swept up in its popping, and saw the Valley immediately post-bubble collapse. <https://news.ycombinator.com/item?id=34726735>

My GS starting salary was 40K. During that first year, because of the dotcom bubble, Goldman raised the salary to $55/65/75K for first/second/third-year analysts, and my end-of-year bonus in 2000 was close to 100% of salary. Then the full effect of the recession/market crash hit and the 2001 bonus was, well, much smaller.

> the 2001 bonus was, well, much smaller

Exactly!

The bonus plays a massive role in Analyst compensation, and during 2020-present, the bonus was slashed severely due to a lack of late stage dealflow.

The work hours at GS and JPM were still as crappy as before, but the bonuses were trash when factoring stock and bonus compensation their peers were getting.

A bunch of my mentees made the switch to PM, SWE, VC analyst, or Founding explicitly because of that.

I have empathy for anyone who is trying to make ends meet, whatever that means. Why wouldn't I have empathy for those people?

Absolutely, all for working class solidarity.

With that said, I think most people recognize that there are some jobs where the goal is to make maximal money first, morals second. Like, oil executives for example I think most people would agree don't have the benefit of the doubt that they were just trying to make an honest living.

Its a sliding scale, and for some people I think 'tech bros' end up on the greedy / immoral side. I know that for me at least, anytime I'm outside of a tech hub, the response to saying that I'm a software developer is often 'oh . . .'

In my short lifetime computer nerds have gone from losers worth making fun of, to rockstars making gobs of cash, to villains ruining whatever place they live or hobby they take up. Pretty wild.

I just like programming computers.

me too

A word in support of this I've also seen a pretty stunning lack of empathy from tech workers who unquestionably have it better than almost any other working class (non-owner/shareholder) groups.

I'm not saying that its great that tech workers are being laid off, but I get the schadenfreude other would have after a decade of being told that the solution to their problems is to "skill up" and learn to code.

The real problem is of course the system that prioritizes wealth flowing from workers to owners and we should all be aligned in this.

The GP paints with a very broad brush. Probably the vast majority of tech workers know there's a problem but don't know how to solve it.

Oh I agree, but for a lot of people techies are part of the problem itself. Gentrification is real, and the companies themselves are not seen as helpful either. And when techies do donate, they're often to pie in the sky stuff like AI alignment , or the giant long now clock , that comes off as out of touch at best.

I know for a fact that there's plenty of kind empathetic tech workers but I'm sure there are kind lawyers too and they don't have a lovely broad strokes reputation either

^^^ this.

Most of the "tech bros" and "SaaS sisters" I know came from working class means. They might make six figures, but still can't afford a home.

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