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Amishman

(5,523 posts)
Tue Jun 15, 2021, 10:57 AM Jun 2021

Consumer Price Index hits record YoY increase, 6.6%

https://www.cnn.com/2021/06/15/economy/producer-price-inflation-may/index.html

Not good. Joe needs to sit on the Fed and get them to start taking action to put the brakes on this. CPI is a lagging indicator, and spot data (commodity prices, real estate prices, etc) suggest this isn't slowing down.

Betting employers still think they're going to pat the employees on the head and tell them 2.5% is a good raise...
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roamer65

(36,729 posts)
1. Economic growth should be priority over inflation right now.
Tue Jun 15, 2021, 11:01 AM
Jun 2021

Interest rate hikes will plunge us back into recession.

Amishman

(5,523 posts)
2. normally I would agree, but there is significant risk with the expansion of the money supply
Tue Jun 15, 2021, 11:17 AM
Jun 2021

Even before covid, there was a steady increase in the US money supply. This failed to have an inflationary impact as the velocity of money was steadily dropping. In other words; twice as much money changing hands half as often functions the same as half as much money changing hands twice as fast.



The problem is that once inflationary expectations sink in, people will not want to hold onto US dollars as they will be (correctly) viewed as a steadily depreciating asset. This change in behavior will increase the velocity of money, which combined with the increased money supply, could easily rapidly increase the rate of inflation.

 

Hoyt

(54,770 posts)
3. Hopefully, serious inflation will not occur. But if it does like 1970s, those on Social Security and
Tue Jun 15, 2021, 11:26 AM
Jun 2021

low wage workers will be the ones hurt the most. It was brutal.

And, inflation was pretty much the main reason Prez Carter was not reelected, with some Iranian shenanigans and lies from Reagan.

Don't think we are at a panic point, but it's not to be ignored.

hunter

(38,203 posts)
4. You fix this by increasing taxes on the people who have most of the money.
Tue Jun 15, 2021, 11:37 AM
Jun 2021

The people who own two-thirds of everything.

It's not a difficult problem.

People who are merely surviving day-to-day, never quite knowing how they'll pay for food, medicine, and secure shelter, are not the problem.

hunter

(38,203 posts)
8. People who are merely surviving buy only necessities.
Tue Jun 15, 2021, 01:06 PM
Jun 2021

They are not responsible for rising prices.

Macroeconomics is pretty simple. A government pushes money into the economy for the common good, and vacuums money out of the economy by progressive taxation for the same reason.

The goal is to maximize the number of people working to make the world a better place and minimize the environmental impacts of that work.

Alas, most of us suffer work that is not making the world a better place. Rather we are making very wealthy people wealthier and powerful people more powerful.


Amishman

(5,523 posts)
6. That misses out on one of the other major criticisms of CPI, it doesn't include housing
Tue Jun 15, 2021, 11:57 AM
Jun 2021

There are some very good points raised in your article, especially about feb vs april/may 2020 as a baseline, but it misses out that CPI does not include housing.

Home prices are skyrocketing, which I expect to spill over into rental prices once the covid related disruptions end for rental property prices. Given the current housing shortage and difficulty building new housing right now, that is very unlikely to change.

roamer65

(36,729 posts)
10. Inflation will also start to constrict consumption.
Tue Jun 15, 2021, 01:23 PM
Jun 2021

That is exactly what this planet needs right now for its long term survival.

lagomorph777

(30,613 posts)
11. Comparing a sudden recovery to a sudden crash, we can't use normal standards.
Tue Jun 15, 2021, 01:23 PM
Jun 2021

The cause of both events is, of course, the pandemic. I don't think the rapid recovery is a cause for worry at this point; the driver won't go on forever. We're just getting back to normal levels of human activity.

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