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I don't see much inflation at the grocery store, if anything it's gone down since Aldi, lidl and other discount grocery stores have been taking over.
That is Demand-pull Inflation, not Monetary Inflation.
The Federal Reserve is powerless to control Demand-pull Inflation. There's nothing the Federal Reserve can do about it.
The same is true when prices rise due to Wage Inflation. The Federal Reserve is impotent.
Quote:
Originally Posted by EDS_
Well.............not to point fingers but the EQ (economics quotient) around here is very low.
1. The piece isn't propaganda.
2. The piece is actually nicely executed as the author touches on several points regarding inflation and expectations that most people are clueless about re: the tie in between inflationary expectations and measured inflation over time and the bit about real incomes rising etc.
3. The picture of food is entirely appropriate as food accounts for ~15% share of "all items" measured in both CPI-U and CPI-W.
The picture of food is not appropriate.
Food is highly subjected to Demand-pull Inflation, which the Federal Reserve cannot stop.
While the Federal Reserve is powerless, Congress is not and Congress actually caused Demand-pull Inflation through very bad policy choices.
Corn is a good example. The markets for corn included feed, seed, farmer's markets and groceries, canneries for canned corn, cream of corn, succotash, mills for corn starch, corn flour and corn meal, pressing for light and dark corn syrup, and distillation for alcoholic beverages.
The Demand for Corn from those markets was always fairly static. The Supply of Corn did fluctuate mildly, between bumper harvests and poor harvests from time-to-time, but overall was fairly static.
Now enter American's asinine desire for non-alcoholic beverages and an increased obsession with pets.
You're now diverting corn from all those market to two new markets to produce high fructose corn syrup for non-alcoholic beverages and corn meal and corn flour for dog and cat food.
Since the Supply of Corn is fairly static, food prices rise, since many foods, especially processed and ready-to-eat foods contain corn by-products.
Then, Congress in a manner most Soviet dictated that corn is to be used for ethanol, in spite of the fact that sugar beets produce 714 gallons of ethanol per acre, while corn only yields 354 gallons per acre.
A more intelligent Congress would have dictated the use of sugar beets, and perhaps provided for low-interest loans to farmers to claim some of the 100s of Millions of acres of fallow farmland in the US and put that land in use again to grow sugar beets for ethanol.
Because you diverted Millions of bushels of corn from those markets to the new ethanol market, and because Demand remained constant, food prices rose.
As any moron -- except the idiot author -- can see, the Federal Reserve and its policies have nothing to do with that.
When Bovine Spongiform Encephalopathy was an issue, several Million head of cattle had to be slaughtered. That temporarily caused an increase in the price of beef and beef-products, but it was only temporary.
The Federal Reserve had nothing to do with that, either.
As everyone except the dumbest morons know, Monetary Inflation causes the price of everything to rise.
Everything means every thing as in every singe thing.
If you don't understand the meaning of "everything" then look around the room you're in now and count the number of items in the room.
Don't forget to count door hinges, door knobs, doors, door frames, light fixtures, light bulbs, light switches, electrical outlets, the covers for light switches, the covers for electrical outlets, carpeting, tiling, linoleum, curtains, curtain rods, windows, window frames, tools, furniture, clothing, medicine, medical care, insurance of all kinds, wages and salaries, utility costs, subscription costs, food, personal hygiene products, shower curtains, rugs, printers, laptops, notebooks, desktops, cell-phones, TVs, musical instruments, printer ink, books, kitchen utensils, pots and pans, paper, pencils, pens, paperclips, chalk, crayons, magic markers, clocks, microwaves,...
That's what "everything" means. If the price of everything is not rising, then you do not have Monetary Inflation and the Federal Reserve is powerless to do anything
The same is true when prices rise due to Wage Inflation. The Federal Reserve is impotent.
Paul Volcker disagrees with you. The Fed killed a wage price spiral that peaked at annual 9% pay increases in the early 1980's by drastically reducing money supply and regulating bank reserves. This jacked up interest rates to 18% and induced a bad recession. You can't ask for or expect a 9% pay raise when you've been laid off. Volcker showed that the Fed can take a sledgehammer to the entire economy if they want.
Paul Volcker disagrees with you. The Fed killed a wage price spiral that peaked at annual 9% pay increases in the early 1980's by drastically reducing money supply and regulating bank reserves. This jacked up interest rates to 18% and induced a bad recession. You can't ask for or expect a 9% pay raise when you've been laid off. Volcker showed that the Fed can take a sledgehammer to the entire economy if they want.
You and I don't agree often but your points above are right on noting the Volcker FFR high was 20%....the prime rate broached 21.5% in late 1980.
It comes at great cost and pain but The Fed. can kill inflation if it must.
That is Demand-pull Inflation, not Monetary Inflation.
The Federal Reserve is powerless to control Demand-pull Inflation. There's nothing the Federal Reserve can do about it.
The same is true when prices rise due to Wage Inflation. The Federal Reserve is impotent.
The picture of food is not appropriate.
Food is highly subjected to Demand-pull Inflation, which the Federal Reserve cannot stop.
While the Federal Reserve is powerless, Congress is not and Congress actually caused Demand-pull Inflation through very bad policy choices.
Corn is a good example. The markets for corn included feed, seed, farmer's markets and groceries, canneries for canned corn, cream of corn, succotash, mills for corn starch, corn flour and corn meal, pressing for light and dark corn syrup, and distillation for alcoholic beverages.
The Demand for Corn from those markets was always fairly static. The Supply of Corn did fluctuate mildly, between bumper harvests and poor harvests from time-to-time, but overall was fairly static.
Now enter American's asinine desire for non-alcoholic beverages and an increased obsession with pets.
You're now diverting corn from all those market to two new markets to produce high fructose corn syrup for non-alcoholic beverages and corn meal and corn flour for dog and cat food.
Since the Supply of Corn is fairly static, food prices rise, since many foods, especially processed and ready-to-eat foods contain corn by-products.
Then, Congress in a manner most Soviet dictated that corn is to be used for ethanol, in spite of the fact that sugar beets produce 714 gallons of ethanol per acre, while corn only yields 354 gallons per acre.
A more intelligent Congress would have dictated the use of sugar beets, and perhaps provided for low-interest loans to farmers to claim some of the 100s of Millions of acres of fallow farmland in the US and put that land in use again to grow sugar beets for ethanol.
Because you diverted Millions of bushels of corn from those markets to the new ethanol market, and because Demand remained constant, food prices rose.
As any moron -- except the idiot author -- can see, the Federal Reserve and its policies have nothing to do with that.
When Bovine Spongiform Encephalopathy was an issue, several Million head of cattle had to be slaughtered. That temporarily caused an increase in the price of beef and beef-products, but it was only temporary.
The Federal Reserve had nothing to do with that, either.
As everyone except the dumbest morons know, Monetary Inflation causes the price of everything to rise.
Everything means every thing as in every singe thing.
If you don't understand the meaning of "everything" then look around the room you're in now and count the number of items in the room.
Don't forget to count door hinges, door knobs, doors, door frames, light fixtures, light bulbs, light switches, electrical outlets, the covers for light switches, the covers for electrical outlets, carpeting, tiling, linoleum, curtains, curtain rods, windows, window frames, tools, furniture, clothing, medicine, medical care, insurance of all kinds, wages and salaries, utility costs, subscription costs, food, personal hygiene products, shower curtains, rugs, printers, laptops, notebooks, desktops, cell-phones, TVs, musical instruments, printer ink, books, kitchen utensils, pots and pans, paper, pencils, pens, paperclips, chalk, crayons, magic markers, clocks, microwaves,...
That's what "everything" means. If the price of everything is not rising, then you do not have Monetary Inflation and the Federal Reserve is powerless to do anything
Drop the claim that The Fed. can't do anything about demand-pull inflation. Your source for that claim was/is wrong and you are too. The originator of the notion of dead pull inflation, though long dead, didn't agree with you nor do his modern acolytes.
Cracker-Jack's version. Broad based demand pull sets in near full employment. As gross wages rise demand does too and supply tends to lag. The Fed. can kill that by increasing interest rates snuffing out net new investment, employment and gross wages fall etc. etc.
Ah yes, ED. Spoken like a true academic with no grounding in the real world. Do you even shop for your own food, lol? I keep an itemized list of grocery store products that I purchase. More than half have gone up 10%+ in the last year. There is also a significant portion with the same price but the packaging size went down considerably. Some products closer to 30%. I know, just made up fantasy though.
So to be clear, you accuse someone of having no grounding in how their conclusions are reached, then proceed to prattle about your personal grocery bill inflation rate and make conclusions about "the average consumer" in the same post?
Any statement that fails to comport with one's preconceived notions, is liable to be labeled as propaganda.
I disagree. It is almost always (at least on these forums) attributed to the government in some shadowy attempt to shape opinion, as in the post here where it is implied the government is softening people up for future Fed Reserve actions.
For example, I recently saw someone post on a travel forum about the number of tourists who visit China, it was higher than Italy. Most others expressed surprise since lots of assumptions that the European destinations would rule the rankings but I didn't see anyone declare it to be propaganda.
So to be clear, you accuse someone of having no grounding in how their conclusions are reached, then proceed to prattle about your personal grocery bill inflation rate and make conclusions about "the average consumer" in the same post?
I love it.
I shop at a major grocery chain and track the prices of the common food items I purchase. The majority of items have increased 10+% in price over the past year and/or packaging size is smaller with the same price. So yes, all consumers at the same store (and likely chain) would be experiencing the same price increase with these items.
I shop at a major grocery chain and track the prices of the common food items I purchase. The majority of items have increased 10+% in price over the past year and/or packaging size is smaller with the same price. So yes, all consumers at the same store (and likely chain) would be experiencing the same price increase with these items.
You're again proving how silly it is to be lecturing others about how they reach their conclusions on macroeconomic trends.
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