It’s not just the GOP on this one though, the MSM will often mention how much of a problem inflation is, but not give the important context that the US has fared much better than most countries in what has been an international problem, and that inflation is now at basically target levels.
It all adds to this perception that people have that the economy is in crisis when in fact it’s in rude health. Economists around the world have been amazed by America’s recent performance. Countries that are already wealthy just don’t grow this fast.
Are you really denying that the GOP have made inflation a primary talking point?
According to them, Bidenomics has been “disastrous” and since they can’t point to GDP, jobs, the stock market etc as being evidence of this, all that is left is to talk about inflation; with gas prices that double with each retelling and $90 turkeys.
Did I deny it? Nope! Simply asked you for the specific lie.
Are YOU denying that maybe it helps to be specific when trying to make a point or do you think on this Board just spouting anti-Republican vitriol is sufficient for the QED?
If we fully understood it, ISTM that it would be fully under our control. I strongly suspect that human psychology is a big, big part of this and other difficult economic factors – and that just can’t be predicted consistently.
Economics, and economists, are as value-laden as other social sciences, despite claims of being “scientific” and “objective.” So the answer to “what really causes inflation” varies greatly and has more to do with the answerer’s values than with data. That is also true of their policy recommendations. Ultimately, the answer is about values, and thus politics, competing interests, and struggles between different sides with different aims.
The importation of New World gold into Spain coincided with a corrosive inflation that has come to be known as the “price revolution.” Although prices had dropped steadily during the 1400s, after 1500 they began to rise dramatically — 300 percent by 1600, according to economist Earl Hamilton, who wrote a well-known book on the phenomenon. The reasons for this are complex, but it seems clear that at least in part it was a matter of a sharply increasing amount of money (in the form of silver and gold) chasing a relatively fixed output of goods and services, thus bidding up the price.
And the Central Bank doesn’t have any money: If they buy stuff, they create money out of thin air.
(that is not something nefarious – that is where money is supposed to come from – I only take exception to the quantity)
The grammar of these questions is slightly odd, but the situation with OPEC is simply that, of course, it remains in OPEC’s best interest for oil to sell at the highest price possible.
What has changed in recent decades is:
Some non-OPEC countries such as the US now have access to vast reserves due to new extraction technologies
Many countries are trying to transition away from oil and gas-hungry vehicles because of climate change
So there is a balance for OPEC to strike. The price needs to be competitive with other oil-producers, and not give more impetus to transition away from oil. But of course they still want to maximize profit. These are the long-term considerations on top of smaller shocks like conflicts and covid.
For a long time it seemed the money on Wallstreet* stayed on Wallstreet, then suddenly the money “leaked” to real estate – raising housing prices outrageously – shortly therafter the war in Ukraine blew up oil prices and then suddenly everthing was 10% more expensive.
to be clear: when quantiative easing was inflating stock prices we all benefitted (for a certain value of “we all”).
It was not decades, it started 15 years ago in 2008. And I, for one, was astonished that it took so long to hit the “real” economy through inflation. Strong and powerful forces were at play, mostly highly indebted states who really needed – and still need! – the lowest possible interest rates (darn! we even reached negative rates at one point! Can you imagine what that means? I still can’t get my head around that) just to be able to pay interests on the debt (nobody talks about repaying the debt, ever), and still increasing the deficit and the debt yearly. The yield on two-year US government bonds was 0.25 per cent for a long time, while the yield on five-year government bonds was 0.5 per cent. Around half of the US national debt, 17 trillion dollars, will mature in the next 36 months. If interest rates remain higher for a longer period of time, this would mean that the USA would have to refinance these debts at, say, five per cent higher yields - just to pick a nice round figure. That would increase the yearly interest expense on the national debt by a further 850 billion dollars. This could easily cause a severe recession: either the governement will have to raise its income (taxes! In the USA? good luck with that!) or lower its spending (yeah, austerity really worked last time, and everybody loved it). The US government has budget deficits that already account for a significant proportion of gross domestic product, currently six per cent. And the economy is supposed to be booming! These deficits were made possible by a long phase of zero interest rate policy. Now those deficits have finally caused inflation, it seems.
And those are the numbers for the mighty USA. Can you imagine what it is like in Italy or Greece?
It really is a wonder it took so long. Now it is going to hurt.
If I remember the economic books when the government does not have money and they print money like crazy like in Germany in WW1 and WW2 you get hyperinflation.
I believe some countries in Africa had hyperinflation when they started printing money like crazy.
If goods were exchanged among them at parity then the economy would function indefinitely without the addition of extra $$. It is only when you introduce profit that it becomes inflationary. Many things can effect inflation but the only one that is intrinsic is profit. Friedman’s island example does not fit his argument,
Also I believe some thing happen to Argentina and Venezuela and they had inflation. May be the government in Argentina and Venezuela were printing money like crazy.
If I’m not mistaken the German example was in part a deliberate move by the government to get out of hopeless debt by devaluing the marks the debts were owed in. I.E., pay off your creditors in toilet paper.
If you were referring to Zimbabwe, in that example the government was simply naïve and irresponsible enough to think that printing notes would create wealth out of thin air like a magic lamp.
Those where the examples that inspired creating Central Banks (like the Fed in the USA).
Central banks can still create too much money and cause inflation.
Managing the supply of money is a complicated, tricky endeavour. More about keeping confidence and faith than adhering to mathematical or economic rules.