The Majority Report's take on what's really been causing inflation

[Hardkill]

Conservatives and centrists say that inflation has primarily been caused by persistent overheating of the economy, while liberals and progressives say that the economy is primarily caused by the supply chain crisis and corporate profiteering. 

Is one side more right than the other or are both sides correct?

Edited January 10, 2023 by Hardkill

[Leo Gura]

Leftists and Sam in particular have a blindspot on this issue.

The government has definitely been printing too much money over the last few years. It's not the only factor, but it is an important factor. The Fed did way too much quantitative easing. The whole economy overheated. There was way too much free capital and hype to the point where people were spending money like drunk sailors on leave.

Of course supply chain played a part but that is excusable because we have little control over that and it's temporary. We should control the printing of money better. It's not a good thing.

Edited January 10, 2023 by Leo Gura

[Hardkill]

13 hours ago, Leo Gura said:

Leftists and Sam in particular have a blindspot on this issue.

The government has definitely been printing too much money over the last few years. It's not the only factor, but it is an important factor. The Fed did way too much quantitative easing. The whole economy overheated. There was way too much free capital and hype to the point where people were spending money like drunk sailors on leave.

Of course supply chain played a part but that is excusable because we have little control over that and it's temporary. We should control the printing of money better. It's not a good thing.

Yeah, that’s what almost all of the economists have been saying lately. Top Economists including Larry Summers, Jason Furman, Jeremy Siegel, Mohammed El-Erian, Ken Rogoff, and some others like them urged the Fed back in 2021 to start raising interest rates and quantitative tightening then. Professor Siegel says the Fed should’ve started their whole tightening process around Spring 2021. Even Nobel laureate economist Paul Krugman and Secretary Yellen, who is also a top center-left economist, both admitted last year that they were wrong with the assessment they made in 2021 about the inflation issue being completely transitory. They now believe that it’s both the economy having been both overheated by the government and having been negatively affected by the supply chain issues over the past couple years. It's also because of the bad luck we got with the whole War in Ukraine.

Btw, some of those above mentioned economists and others like them also said that the $1.9 trillion ARP stimulus that the Biden admin and the Democrats in Congress passed in March 2021 was too much. Do you agree with that?

What’s your take on corporate profiteering and price gouging contributing to inflation?

Edited January 10, 2023 by Hardkill

[Leo Gura]

1 hour ago, Hardkill said:

Btw, some of those above mentioned economists and others like them also said that the $1.9 trillion ARP stimulus that the Biden admin and the Democrats in Congress passed in March 2021 was too much. Do you agree with that?

It's hard for me to say. I don't have enough knowledge of how that stuff works.

Quote

What’s your take on corporate profiteering and price gouging contributing to inflation?

Also hard to say. There seems to be some of it, but I doubt it was a core cause. That's just more like them tightening their belts in a tough economy or being opportunistic.

The problem with inflation is that once the cycle begins it starts to spiral upward out of control as everyone freaks out and starts raising prices to stay ahead. I wouldn't necessarily blame individual companies for this except in some rare cases. I see it more as a general dynamic of the whole economy. It's sort of like in a Mexican standoff, when one guy starts shooting, they all start shooting as fast as they can and everyone ends up dead. The key there is to ensure the first shot is never fired. Which the government can do by not overprinting money.

Edited January 10, 2023 by Leo Gura

[Hardkill]

1 hour ago, Leo Gura said:

It's hard for me to say. I don't have enough knowledge of how that stuff works.

Oh....Well, a lot of economists say it was too much and some others say that it wasn't. I guess we'll just have to wait and see if the economists ever come to enough of a clear consensus on whether or not the stimulus package did contribute to excess inflation. Though, I am inclined to believe that $1.9 trillion was too much, and that the ARP should've instead been about $1 trillion to $1.5 trillion.

 

1 hour ago, Leo Gura said:

Also hard to say. There seems to be some of it, but I doubt it was a core cause. That's just more like them tightening their belts in a tough economy or being opportunistic.

Yeah, that's pretty much what I believe.

 

1 hour ago, Leo Gura said:

The problem with inflation is that once the cycle begins it starts to spiral upward out of control as everyone freaks out and starts raising prices to stay ahead. I wouldn't necessarily blame individual companies for this except in some rare cases. I see it more as a general dynamic of the whole economy. It's sort of like in a Mexican standoff, when one guy starts shooting, they all start shooting as fast as they can and everyone ends up dead. The key there is to ensure the first shot is never fired. Which the government can do by not overprinting money.

True. 

Fortunately, inflation expectations are still well anchored.

Overprinting and having interest rates too low for too long makes inflation worse.