Home Forums Hunting & Shooting Hunter's Campfire Inflation?

IIRC, he stated he attended through 8th grade only.

The irony is that current Economic Thinking discounts the "too much money chasing too little goods" theory. Theories like "new monetary theory" have been floated, but they do a pretty poor job explaining the Covidiocy inflation. In the Pre- era, inflation was limited because there was an unlimited reservoir of overseas labor ready to send another hammer to Home Depot the second one was sold.

My take is that inflation will take off when there is a limiting factor to production in the economy. In the '70's, that limiting factor was oil. During the Covidiocy, it was production (shut downs of factories and service establishments).

Today, for the first time in a long time, the limiting factor is labor. A combination of the Boomer generation retiring and re-shoring production has driven the labor supply down and the labor demand up. Presto, labor limitations are causing production limitations. Added are the birth rate bomb in China (and earlier, Japan). As a result of the labor shortage, restaurants are limiting hours, truck dealerships take 10 days before they can diagnose a truck, and P&G figures they can pass along their DEI driven increase in labor costs...... And we have inflation.

Next fun economic topic to discuss: what's the optimal level of inflation? (Hint: it's NOT 2%).

Yes, the gold standard enforced spending discipline on the part of our government, because there had, at least, to be a substantial gold basis to the money in circulation, or no one would trust it. That system only broke down when a combination of perpetual foreign wars and the institution of socialist policies at home (Johnson's Great Society) forced our government to print far more dollars than it had gold to back it.

When other nations started catching on to this state of affairs, they figured the gold they had a right to by having accumulated US Dollars wasn't actually backed by gold, and started demanding their gold instead of the dollars.

This acted like a run on a bank, and Nixon pulled the rug out from under the entire gold standard, in order to keep our economic system from collapsing entirely, by simply defaulting on our obligation to back the dollars in circulation with gold.

For the first time, starting in 1971, the entire world found itself on a completely fiat system of currency, and we've seen the consequences as shown by your chart.

"Too much money chasing too few goods."

And plumbers can charge $200 an hour.

I have seen some of the really high priced electricians start to complain they don’t have enough work. They gouged the [bleep] out of people during and after COVID and now nobody will use them. I also can get a contractor in a few days compared to a few weeks or a month.

Makes sense.

I'm starting to see that with contractors that don't realize how precarious their situation is right now. Bragging on how expensive the houses they built are per square foot, rather than trying to manage costs and schedules. There's a backlash building, and it may get quite interesting on how it's going to play out. People in general have a hard time adjusting wages / prices down. Many will go out of the business claiming "hard times" rather than deal with bad habits created in boom times.

Seeing that exact same mentality play out in trucking.

Today's entry level kids can start at 15 to $20 an hour. That is enough for them to buy about 4 gallons of gas here in SE Oregon. As a kid fresh out of the service in 1970, I started at $1.25 an hour working in row crop fields. That was just enough for me to buy 4 gallons of fuel at about 30 cents a gallon.

Look at powder: As a kid, 3 or 4 bucks would get me lb. Now 60 or $70 (3 or 4 hours of labor) will get one a pound.

Similarly, my kid recently left Montana where I think minimum wage is about $10.30 for a move to Portland, Or where it's $16.00. Rent in Montana was about $500 a month and around $1200 in Portland. Being Portland, I think he took a step back.

The virus handouts put more money into circulation, so everyone was comfortable elevating their prices. Haven't noticed anyone lowering them at all.

Lots more $$$ around, but has anyone actually moved ahead?

That Campbell's soup graph is spot on.

I don’t mean to belabor the subject but most of post are all about the results, not the cause of inflation. Inflation is NOT greedy labor demanding higher wages, or greedy buisness demanding high prices for their products, or the inflated stock market, it’s pure and simple the devaluation of the dollar through inflating (printing more money) of the currency in circulation . One last comment, that I would think we can all agree on , Woodrow Wilson ‘s creation of the federal reserve system was the biggest Ponzi scheme ever foisted on the American people, including the graduated incometax. The tax, through legislation can be changed , control of our money’s value through the federal reserve(which by the way neither federal or reserve) has never changed, or for that matter the federal reserve has never even been fully audited. Incidently every congressional session bills have been drafted to audit the fed, they have never come up for a vote of the full house or senate, imagine that, who do you suppose is in control and what do they fear. How in hell could any sane society put private bankers in control of its nations currencies , that power was intended , by our founders , be held by congress, the people, through their elected representatives, and its value was to br tied to a standard value, originally gold. Those reserves are, were , store at Fort Knox, and low and behold Ft Knox , to my knowledge hasn’t been inventoried in decades. Image that!!!

money supply × velocity of money = price level × real GDP

Understand this equation and it's pretty simple.

When the pandemic started hitting, velocity of money dropped like a rock. The Fed increased the money supply to counteract that. Aggregate consumer demand was also falling so government spent more to counteract that. It actually worked pretty well, considering. (Yeah I know about government spending, the problem with Keynesian economics is that when the government never cuts back spending just keeps adding to it.)

But as I like to say, todays solutions are the seeds of tomorrows problems.

As we came out of the pandemic the velocity of money jumped up will all that money the Fed created still out there. Supply chain issues hamstrung Aggregate supply so GDP couldn't keep up, so since the equation requires both sided equal out, prices went up sharply... Inflation!

The Fed is cutting back on the money supply and the supply side of things is working itself out. Inflation has moderated to about 3.5%. Still too high but much better than it was.

Supply and Demand. It’s that simple. Inflation isn’t just a US problem, it’s a global problem. The problem with blaming it on the Federal Government printing money is the Fed has been printing money for years. and especially during the Great Recession. Why didn’t we have massive inflation then? It’s like saying cutting taxes always stimulates the economy because people have more money in their pocket. You can print all the money you want, but people have to spend that money to have inflation increase even a little bit. Current inflation has been caused by one single thing, a decrease in supply without an equal decrease in demand. Then, when Covid restrictions were lifted, there was a massive increase in demand without a massive increase in supply. Thus, inflation. Remember, China was shut down a LOT longer than us, and where do we get all that cheap chit Americans love so much? Yep, China! Once supply ramped back up, guess what happened to inflation? It started dropping relatively quickly. The Fed raised interest rates to help lower demand, but most economists say that did very little to actually lower demand. Now the issue is oil. The US is producing record amounts of oil, but European country’s are no longer counting on Russian oil, and OPEC+ countries just agreed to voluntarily continue their oil cuts, to keep oil prices inflated. Since the US doesn’t have a National Oil company, and all US oil is produced by corporations, US oil prices are set by the market. Right now, that’s what’s holding inflation over 3%, and not the US printing money.

World inflation began in earnest when the US cut its last ties to gold in 1971. The further we distance our currency from gold and silver (specie money), the worse inflation becomes, because doing so loosens the discipline specie-based money exerts over governments with regard to deficit spending.

The reason our money being inflated causes worldwide inflation is that we have been the world's reserve currency since the end of WWII (Bretton Woods). That currency was backed by gold till 1971, and when we defaulted on that obligation, we cut our currency's last ties to specie money.

The reason there has been a very large lag in the effects of inflation on prices in the US is that, due to being the world's reserve currency, we were always able to dilute the effects of inflation worldwide (i.e., export our inflation). Eventually, however, you can no longer kick that can down the road, and it catches up with one. We see the result of this today.

Loss of Reserve Currency status is certainly accelerating the effects of deficit spending, ie inflation. Debt is Wealth. That is the message drilled into every MBA numbskull. CPA, town manager and taxpayer. Interest can be deducted. Buying with cash is dumb. When savings rates are so low and prices are rapidly rising, paying off today’s purchases with less valuable dollars makes sense. At some point though a $30,000 pickup just isn’t worth $80,000. That’s inflation.

Best comment in the thread so far.

You have taken in to Account that the Largeness of the Government as it has Expanded The Welfare State has made it less likely People will join the Workforce..

Most of the Labor Gains have been from Illegals not the Indigenous Slugs


Voluminous Government Spending via the Federal Reserve Policies is what causes Inflation..

Incidently the federal reserve does not print the money. , the dept of treasury does, the amount there of mandated indirectly by the federal reserve and deficit spending of congress. I believe if the congress would truly balance the budget, eliminate the federal reserve and go back on a gold standard, allow the free market to determine interest rates , inflation would largely disappear

Of course, but they wouldn't be able to send billions to Ukraine and Israel that way, because they'd actually have to convince the American people to accept massive tax increases to pay for it.

The OP is just another old fugk similar to wabitard, asks a question, for attention being an octogenarian. Fails to ever return to the thread to engage responses.

Yep hawk_eye. That’s the idea. I forgot to
Mention congress will have to get the budget balanced through responsible spending, not raising taxes. And hopefully the people will wake up and demand responsible conduct of their representatives.