The endless preoccupation of the US news industry with inflation is truly spectacular. They will simply take any opportunity, no matter how trivial, to hoist the red flag of high inflation right around the corner.
I'm not even saying the stuff in this particular piece is wrong. Rather, it's ancient. It's a bunch of trends that inflation hawks have been warning about for years. And who knows? Maybe they're finally right. But the article exhumes all these dusty warnings for no particular reason, as near as I can tell, aside from the fact that it provides yet another excuse to blather on about inflation, inflation, inflation.
Wouldn't it be great if our news media calmed down about inflation and instead decided to scare everyone constantly about the possibility of high unemployment? Or stagnant blue-collar wages? That would be a service.
I guess inflation is like practical fusion power: it's always just around the corner.
Inflation was very real during the '70s and '80s. Those of us who are old enough to remember that still control most of the levers of economic power, and worry about it happening again.
The best predictor of inflation is the spread between TIPS bonds and regular Treasury Bonds.
Currently a 10 year TIPS pays -0.973% and a 10 year Bond pays 1.36% so inflation over the next 10 years is expected to be about 2.33%.
Nothing is as accurate a predictor of inflation.
+1
And the stock market is....still going up???
Probably some degree of irrational exuberance--either no fear of inflation or everyone playing chicken.
Of course, as baby boomers take out money....
We all got through that inflation of the 70s and 80s very nicely. So why the big worry?
600,000 died of COVID, at least half as a result of Donald Trump's venality and incompetence. How many people died as a result of inflation?
We did not get through the 70s and 80s nicely. People lost 50% of their cash assets.
The big worry with inflation is, unlike other economic problems that can be addressed with government programs, *there is no way to make whole* those who have had their cash asset decline in value.
Many people like Kevin can be relaxed about inflation because they hold real assets (e.g. their home). Those assets "keep up" with inflation. Paper money does not.
I bring this up because 5% of households don't have a bank account. They deal exclusively with cash. They also tend to be poor. They deserve protection from inflation - which can be achieved in part by erroring on the side of inflation concern, at the price of slightly diminished economic growth. I support that trade-off.
50 percent of their cash assets?? Bullshit. Only if people are stuffing cash for years in pillowcases.
No way did the inflation of those years cause significant economic hardship. Growth more than made up for it. It was deflations and financials crises that caused hardships.
That would be a stupid guess. Unlike fusion power, real inflation has existed, has developed, has impacted real world economies.
Inflation does arrive.
In this case it is likely alarmist due to the life-experience bias of the editors of news organisations - those from 50 on up in age who experience late 1970s to early 1980s stagflation shock globally (and as well have a memory of particularly although not solely Lefty denialism about inflation).
Although again by the fundamentals it is unlikely that an inflationary acceleration will presently occur, it is not unlikely that Lefty denialism of inflation is playing a late 1960s type role in opening a breach.
On the other hand Central Banks are rather better at inflation monitoring and vanishingly unlikely (unless Lefty MMT ever takes hold amongst them) to commit the same errors of the early 1970s
It ain't Lefties who keep opening up giant budget deficits every time they take power in the United States.
... says the stupid, lazy "progressive" who doesn't know the difference between fiscal and monetary policy, but is well-equipped to tell everyone the difference between Lenin and Trotsky. LOL
Central Banks created an economy overly dependent on Oil and encouraged the Saudis to reduce production?
I'm getting a little nervous myself I admit. 3.8% over year is still fine but close to caution.
Wise position. High enough to watch carefully and not dismiss out of hand, but low enough not to panic and react to as of yet.
3.8% over which year? Yeah, Ima dismiss that out of hand.
What did that one feller say? Oh yeah:
"I'm sure you believe everything you're saying. But what I'm saying is that if you believe something different, you wouldn't be sitting where you're sitting."
Noam Chomsky
'Wouldn't it be great if our news media calmed down about inflation and instead decided to scare everyone constantly about the possibility of high unemployment? Or stagnant blue-collar wages? ...'
... or Global Warming, or COVID, or unending mass shootings and gun violence, or actual real threats??
+1
The media (except maybe Fox News) has not exactly ignored Covid
Please try taking my guns, "progressive." Better yet, send Beto. LOL
Patrick Crusius did nothing wrong!
It's a bunch of trends that inflation hawks have been warning about for years.
And at times over the years, there have been periods of inflation! OMG, they're right! INFLATION MONSTER COMING TO EET US IN OUR BEDS!!
(1) Stopped clock.
(2) "Inflation hawks" are panicky rentiers. The real value of their assets is eroded by inflation; therefore, for them, inflation is everywhere and always bad.
(3) The rentier class is vastly overrepresented in and by the major media.
Rentier class, what bollocks Leftist cant is that? Overrepresnted? Journos are hardly a profile for "rentier class."
What is overrepresented in media are innumerates unable to do basic maths or understand time series statistics very well, AND also happen at the decision making levels to be from the age cohorts that experienced as teens to adults the 1970s early 1980s stagflation.
Those, too.
Journalists aren't. The people that own major news media are,. They decide what gets published.
"Journos" at "decision making levels," what comfortably overstuffed Tory fantasy is that?
In the US, large-scale editorial decisions are not made by "journos"; they are made by executive-level editors, producers and publishers. The motivations and outlooks of those people, like many, are strongly affected by their upbringings and social milieu -- in a word, their "class." And those upbringings and milieus are heavily populated by -- and hence overrepresent the view of -- those who make their livings from their assets rather than their labor -- what economists call "rentiers."
Well, of course (2) and (3)! Here's the Randy Waldman quote I like to trot out whenever the subject of those damfool rentiers is brought up:
And of course, Krugman has written on this not once but many times. Submitted for your approval or at least your analysis:
https://www.nytimes.com/2011/06/10/opinion/10krugman.html
https://krugman.blogs.nytimes.com/2014/01/22/the-euthanasia-of-the-rentier/
Addendum: This is going to be something of a test for a) the blockquote tag, and b) including two links instead of one.
I think it's really about keeping wages low. You gotta threaten workers with starvation or lack of health care in order to keep them motivated to generate high profits.
"The real value of their assets is eroded by inflation"
You've got to be kidding. Rentiers have non-cash assets which are what people rush into when inflation starts to heat up.
And many non-cash assets also lose real value. They may lose less than cash -- which very few people actually hold a lot of -- but they still erode in real terms, especially in a classic wage-price spiral. And they are not necessarily liquid, which means they can be stuck holding an eroding asset for some time.
The ones who really get hurt, and who deserve help because they have no recourse, are people on fixed incomes like pensions, or who hold assets with fixed benefits like annuities, many of whom are older. But they are not the class of people overrepresented by the media.
How many corners are there?
A calm news media is… unprofitable.
But no worries. The news media can endless beat the anti vac story to death.
“We are steadfastly committed to keeping politics out of the effort to get every American vaccinated so that we can save lives and help our economy further recover,” White House spokesperson Kevin Munoz said. “When we see deliberate efforts to spread misinformation, we view that as an impediment to the country's public health and will not shy away from calling that out.”
The pushback is a change of tone and approach from earlier this year, when the White House often chose to ignore its most vocal conservative critics out of a desire not to elevate them. It is a tacit acknowledgment that the July 4 goal of 70 percent vaccination nationwide was overly optimistic, if not naive.”
Politico called them naive for setting a goal. The nerve of those silly democrats. What are they thinking? Good grief.
https://www.politico.com/news/2021/07/12/biden-covid-vaccination-campaign-499278
Naive. Let that sink in for a bit.
And this would never be a problem if those darn gays had just stayed in the closet and the blacks had stayed in their place. Those culture warriors ruined everything!
Don't forget the uppity wimmin getting out of the house and into the workplace, always talking about being equal to men.
I did not think a 70% goal was overly optimistic or naive at the time and still do not think so now.
Just because a prediction did not come true does not mean it was not the right prediction based on the facts at the time. Criticizing on that basis is done by both sides and I hate it either way.
And one thing that changed after the goal was first set is that cases and deaths just at first came down much faster then most of even the most optimistic predictors thought it would , say maybe through may or so.
And people reacted to that. Contrary to what many want to claim, many vaccine resistors are on the fence and trying to make a logical decision, but they just have more concern of vaccine risks than you do. So for some, looking at the first few period of early spring, it looked like cases were so low that we had reached herd immunity based on natural immunity and those who got the vaccine without them. So that leaned them to thinking that the covid risk was low enough that not worth getting the vaccine. And, if they were young enough based on the looking good times of may, they might have been right.
If case counts had gone down much slower which most people thought at the time biden set the goal/prediction of 70%, I bet we would have got to 70% or much closer.
I might blame the administration a bit for how they put it though. A goal should be somewhat optimistic and should feel satisfied if end up fairly close ( and where we are is not that much lower). A prediction is something you expect to get to. The discussion of it was sort of in between and inconsistent. Should have stayed just with goal concept.
And I have been somewhat surprised in talking to some vaccine resistors that the more recent small uptick in cases which is worrying re trend but not really so much at current level, has not yet penetrated at all. They were not even aware of it. Many felt it was over in early spring when things were looking good and just put it out of their mind.
If cases continue to climb more eventually they will become aware of this ( or maybe if you or I tell them?) And that will push some to finally get vaccinated.
I still have hope that if cases keep going up, vaccinations will pick up some too. And seeing signs of that.
Note I am in Los Angeles and the trends I am relating are more extreme here. A month and a half ago, our cases were getting down to close to 100 a day, which is not much of a worry in a county of 10 million. And positivity was .3%. We were about the best in the nation.
Now we are at around a 1000 a day and positivity over 2%. Still not near as bad as some places but we were so low before.
Very frustrating. We got killed in winter and should have very high natural immunity and out vaccination rate is better then average. And although we reopened, there are more here being still cautious and wearing masks etc. Than most places.
So how can our current r be so high? Makes no sense.
I don’t blame them for bad messaging or whatever. It’s a simple goal and a simple explanation. It’s impossible to craft a message for the the toddlers throwing temper tantrums. Did they imagine that 40% or more of the US population was this nuts? Maybe not, but now we know. I don’t think that’s a failure of imagination. It’s just kind of sad and, perhaps, tragic. We can’t save people who don’t want to be saved. And so I’ll just wave goodbye. I have some family who,I hear, won’t get the vaccine. I’m sure they will be fine. And if not… I’m not going to cry for them at their funerals or send them a get well card if they recover. I’m guessing they already had if and just figure they don’t need the vaccine.
Drum bang for the bucks as it were. Inflation, as others here have pointed-out, has existed in rather "unpleasant" form in living memory, and more to the point, affected virtually everyone at the time. Those who are presently employed are still the large percentage in number, probably not actually employed in a "blue collar" job and likely (rightfully or not) believe (in broad handwaving terms) that those things besides inflation aren't likely to happen to them.
And, all the focus on inflation is perhaps why/how it has been kept so much at bay for so long. And, like a Weeping Angel, comes at you only when you aren't looking at it.
1981 was 40 years ago. It was closer to WWII than to us now.
dear jesus
Ha. We have disagreed on many things the last few days but had the same reaction. This sort of time comparison both makes me feel so old and depressed me as it seems our progress on many fronts is just slower than it used to be.
Consider 1969 we first landed on the moon. That was 52 years ago and now we have a pretty defunct space program. 52 years before 1969 was 1917 and world war 1 was going on and man was just really starting to fly. 52 years we go from byplanes to the moon and next 52 what?
I was 10 years old but remember the moon landing vividly. And then I surely expected that we would have a moon base that you could vacation to by now if not Mars.
> now we have a pretty defunct space program
Cost to orbit is far lower than it used to be. Patience.
I've been thinking about exactly that kind of thing a lot lately as I'm going to broach sixty this year. My first time.
I had an aunt die a couple years ago who was 103. She went from biplanes to cell phones. No older person I've ever met has ever said the past was a better place.
I feel I have unnecessarily fallen into an aggressive and snippy tone in our other thread, and I hope you simply ignore it. It's reflexive with me, and I have worked to suppress it, sometimes less perfectly.
And how many runs of high unemployment have there been since then? There was just one last year.
A very honest question for you Kevin and others - and in a sense myself...
After COVID, Trump, yada yada, I really started limiting my news sources. I basically read NPR and a very tailored Apple News - and Kevin. But, I don't see all the worry about inflation... or about much of the stuff you write about on this blog. At what point is it just plain healthy to restrict news and at what point is it burying your head in the sand? (even though ostriches don't bury their head in the sad except to build nests).
Its entirely reasonable to limit viewing of so called news. Those of us who work for a living can avoid it. I happen to be on vacation this week. Listen to music!
There is news. There is social media commentary on the news. And there is mental health. You cannot consume lots of A and B if you want to maintain C.
I grew up believing it's important to be well-informed. But one thing I've learned is that news media and social media are not designed to keep the public well-informed. They are designed to scare the bejesus out of people. Maximizing public fear is the algorithm that drives media, just as maximizing paper clips is the algorithm that drives certain proverbial AI.
Keeping the public aware of real threats would be a useful function for media, but they do a lousy job of it. Time and again, the news lacks context and any sense of proportion. They constantly hype minor or imaginary threats (Hillary's emails, Saddam's WMD, inflation) while normalizing and minimizing real threats (the Trump/GOP threat to democracy, climate change, etc.).
The ups and downs of the daily news cycle are like the ups and downs of the stock market. They take us for a ride on an emotional roller-coaster. They exhaust us and don't lead us to better outcomes.
A few years ago Fidelity surveyed investor accounts to determine what behavior led to the best returns. What they found was surprising. The top-performing accounts were ones that the owners never logged into or made any changes. The most active accounts did the worst.
Unlike investing, playing close attention has virtually no impact on anyone's ability to influence the news. But I do think pulling back from the always-on news media does help keep a better perspective, which is often missing in day-to-day coverage. It's better for keeping one's sanity too.
I've decided to avoid media outlets that repeatedly lie. I don't read either the Wall Street Journal, nor the Weekly World News.
I think the Weekly World News might have spontaneously combusted at some point.
What would happen if they had been around for QAnon?
Would they have hired newsboys to shout at people by the checkout counter instead of just leaving it casually lying there?
Now that's a jobs program the Republicans can get behind!
Batboy would replace JFK Jr. as El Jefe's VP in restoration theory.
Gun violence is another hype that will be dead by 2022. You can see it coming down and in another year, gone.
On Kevin's inflation point , I am more concerned than he is but do agree to early to panic.
And just obvious that no economists, left wing right wing or middle, have really figured out how inflation is caused well enough to predict to a good degree of inaccuracy. Nobody 's models have worked very well so nobody knows for sure.
But does seem to me that part of it is velocity of money and that plays a huge role.
And the problem there is it snowballs. For x amount of hard money supply that is multiplied by velocity ( how quickly it circulates) . When inflation is low, people are willing to hold on to low interest money market accounts and even cash.
But then once it gets high enough to be scary, people want to spend it before it loses value so velocity increases and then that increases money supply which increases inflation which increases velocity etc. A vicious cycle which then can only be stopped by a real shock and recession like early 80s..
I am not really that scared if we have 5% inflation for a while staying that way. Annoying but not devastating. What concerns me if the trend just accelerates and can only be stopped by a brutal recession or if no political will, we end up with hyper inflation.
And unreasonable hype for inflation ( or even reasonable hype) can cause higher expectations and increase velocity and cause the inflation.
The news stories kevin is complaining about can actually help to cause that inflation.
https://fred.stlouisfed.org/series/M2V
Um, yeah, velocity didn't rise much just before the early 80's. And it was much higher during the mid to late 90s when inflation was much lower. Thanks for playing though.
It did rise in the 70s significantly. Does not look like as much because you contrast with the bigger rise in the 90s and huge decline later. But it was still an issue then . And note that it did start back down in early 80s for a while when inflation started to get under control.
And in the 70s and 80s, velocity changes were limited more because we did not have all of the financial instruments we have today giving flexibility. Also would say back then the public and economy did not react as quickly. With the internet and quick news cycle that is different today.
In the 90s the velocity rise had much more to changes in financial instruments and access allowing people more scope for not having money sir around. For example, the growing ubitiquitness of credit cards meant more grew used to keeping little cash on hand.
And in 90s we did have the budget and base money supply more in control so did not her pubished for that velocity increase. Remember we even had a balanced budget one year hard as that is to believe today.
In more recent years we have been having deficits out of control but been saved because velocity dropped so much and way more than anyone thought. There are some reasons why it might have dropped some but I have heard no good explanation why so far.
And when it goes that far down, that leaves more room to go way back up if things change.
> once it gets high enough to be scary, people want to spend it before it loses value so velocity increases and then that increases money supply which increases inflation which increases velocity etc. A vicious cycle …
But what is ‘high enough’, and how long must it persist before it is ‘scary’? Episodes of hyperinflation are so rare, and human behavior so complexly determined, that I strongly doubt that there is a fixed tipping-point value.
Hell if I know and what concerns me is that appears nobody really understands what is driving this.
Which is concerning itself. If we had a better idea as to what is too far, then the policy makers would have a better idea when they have to slow down ( assuming the political will even if they knew disaster was looming). With no clear idea, we can go too far way before we know we are doing so.
Or not. I think most back in the 80s and 90s, if they knew how big our deficits would be in Bush II years, would have thought that was trouble. But not really. And even bigger in Obama years and still no sustained inflation. So now even more and current deficits just seem insane. But can we really count on velocity going even lower to accept that?
The "progressive" stupidity runs thick here. Kids, you're your own best parody. And Kev? You're an idiot, but fun. LOL.
Errr, if you say so.
> our news media
ROFL. It's the Wall Street Journal! That's about the same as calling Weekly World News "our news media". They're supposed to publish that kind of useless cruft. That's what they do! Find something useful to read.