I’m sure I’m not the only one who is looking for ways to cut back on costs , including by buying less. I’ve even been able to save money by switching cell carriers and life insurance companies, but my auto insurance went up . We’ll get a break on our property taxes if that passes , but I’m sure my homeowners insurance will go up. Fuel prices are pretty variable so I don’t get too excited about temporary drops. Next winter could be different. Thanks for another great analysis.
You are the best source of facts of the economy. Thank you for linking to my story. I'm glad that you found my facts accurate.
Biden's celebration for getting inflation down to 3% is not showing in the polls because we all have to deal with this continued, double digit increased cost of living. I learned from your article that we are looking for deflation of these high prices, and that it's possible!
The facts are the facts. What you brought forward that corporate media once again managed to overlook is that "disinflation" and "lowered inflation" are merely four dollar terms for "things get more expensive less quickly".
The catch-22 of deflation is that, regardless of prior inflation, price reductions are always a disincentive to supply. Particularly in manufactures, there is a certain need to incur cost before realizing sales. When prices are falling those marginal costs exceed the (shrinking) marginal revenue. When this happens the supplier will simply avoid supplying, as it is better financially to simply avoid both the cost and the revenue.
As we have seen in Japan and are likely to see in China, when deflation takes hold in an economy it can persist for years. In the US, the deflation of the Great Depression endured until the macro stimulus of WW2, a period of nearly a decade. The hyperinflation of the late 70s and early 80s ameliorated in about half that time and did not require the macro stimulus of a war.
As consumers, we always want lower prices. As workers (and thus suppliers of labor), we always want higher prices (wages).
Left to itself, the market would naturally resolve these divergent desires into a dynamic equilibrium. Unfortunately, the Fed and the whole of the government refuse to just leave things alone, and are constantly pushing the economy from one disequilibrium to another. The Fed used quantitative easing to produce inflation, and now is attempting to use quantitative tightening to produce deflation. As Japan showed, and as our own experience now confirms, the Fed's intrusions push both the inflation and eventually the deflation farther than would naturally be the case, with economically destructive effects.
Amazing, how we are supposed to be excited about 3% now after a steady rise over the past couple of years. Numbers are just numbers, I go by what I pay every month for products and services and I can say unequivocally that I pay a lot more than I did two years ago and a year ago for that matter. I have bought our groceries for years and what we buy does not change much on a month to month basis. However I can easily say what I used to pay around $250 a month for now is more like $350 a month. So they can stick their 3% number where the sun don't shine!!!
Thank you, your title was my reaction to the Yahoo article. “Yet this improvement does not alter the reality that we have significantly higher prices today than just three years ago. It does not alter the reality that we are paying more for food, on average. It does not spare us the purchasing power squeeze that arises when rising prices outpace rising wages.” And yet with the President’s Tweet of Good News, it seems cognitive dissonance also has not changed in the past 3+ years.
Exactly. Inflation at 3% is a good thing, but it doesn't change the price increases of the past two years nor does it eliminate the danger of structural deflation leading to a lost decade.
We are going to be dealing with the distortions from the government's and the Fed's appalling incompetence for years to come.
I’m sure I’m not the only one who is looking for ways to cut back on costs , including by buying less. I’ve even been able to save money by switching cell carriers and life insurance companies, but my auto insurance went up . We’ll get a break on our property taxes if that passes , but I’m sure my homeowners insurance will go up. Fuel prices are pretty variable so I don’t get too excited about temporary drops. Next winter could be different. Thanks for another great analysis.
There is no doubt but that you are far from the only one working harder to make the buck go farther.
There is also no doubt but that what the Fed and the Government are doing about inflation ain't accomplishing a damn thing.
You are the best source of facts of the economy. Thank you for linking to my story. I'm glad that you found my facts accurate.
Biden's celebration for getting inflation down to 3% is not showing in the polls because we all have to deal with this continued, double digit increased cost of living. I learned from your article that we are looking for deflation of these high prices, and that it's possible!
Thank you for the high praise!
The facts are the facts. What you brought forward that corporate media once again managed to overlook is that "disinflation" and "lowered inflation" are merely four dollar terms for "things get more expensive less quickly".
The catch-22 of deflation is that, regardless of prior inflation, price reductions are always a disincentive to supply. Particularly in manufactures, there is a certain need to incur cost before realizing sales. When prices are falling those marginal costs exceed the (shrinking) marginal revenue. When this happens the supplier will simply avoid supplying, as it is better financially to simply avoid both the cost and the revenue.
As we have seen in Japan and are likely to see in China, when deflation takes hold in an economy it can persist for years. In the US, the deflation of the Great Depression endured until the macro stimulus of WW2, a period of nearly a decade. The hyperinflation of the late 70s and early 80s ameliorated in about half that time and did not require the macro stimulus of a war.
As consumers, we always want lower prices. As workers (and thus suppliers of labor), we always want higher prices (wages).
Left to itself, the market would naturally resolve these divergent desires into a dynamic equilibrium. Unfortunately, the Fed and the whole of the government refuse to just leave things alone, and are constantly pushing the economy from one disequilibrium to another. The Fed used quantitative easing to produce inflation, and now is attempting to use quantitative tightening to produce deflation. As Japan showed, and as our own experience now confirms, the Fed's intrusions push both the inflation and eventually the deflation farther than would naturally be the case, with economically destructive effects.
Amazing, how we are supposed to be excited about 3% now after a steady rise over the past couple of years. Numbers are just numbers, I go by what I pay every month for products and services and I can say unequivocally that I pay a lot more than I did two years ago and a year ago for that matter. I have bought our groceries for years and what we buy does not change much on a month to month basis. However I can easily say what I used to pay around $250 a month for now is more like $350 a month. So they can stick their 3% number where the sun don't shine!!!
Linking as usual @https://nothingnewunderthesun2016.com/
Thank you, your title was my reaction to the Yahoo article. “Yet this improvement does not alter the reality that we have significantly higher prices today than just three years ago. It does not alter the reality that we are paying more for food, on average. It does not spare us the purchasing power squeeze that arises when rising prices outpace rising wages.” And yet with the President’s Tweet of Good News, it seems cognitive dissonance also has not changed in the past 3+ years.
Exactly. Inflation at 3% is a good thing, but it doesn't change the price increases of the past two years nor does it eliminate the danger of structural deflation leading to a lost decade.
We are going to be dealing with the distortions from the government's and the Fed's appalling incompetence for years to come.