Most of these price increases (e.g. semiconductors, lumber, consumer perishables) are supply-chain related. It’s reasonable to expect them to subside as the most acute phase of the pandemic recedes. Only one I’m not sure about is the price of a meal at a restaurant …
“Oh hey Jim, I know we hired you at $25/hr.. well now that things are normalizing, well have to pay you the real rate of $12/hr”
Even the PepsiCo CEO was commenting on passing higher prices and the consumer accepting them just fine.
There used to be the real divide between both, but now every action by the fiscal side is effectively done by the monetary side. Congress writes some laws, the treasury calls up the FED the night before the day of selling new bonds and just like magic, the bonds get sold at a superb price.
The fed is very much aware of the inflation, but is on the awkward position that were they to raise the rates even a tiny bit, it would bankrupt the federal government. Going from 0-1% to 4-5% interest rates, would lead to default as just the interest on the money owed is at $hundreds-billions yearly. Now double or tripe that cost…
So what’s the FED to do?
Why are living expenses going up faster than real wages?
Why do you think theres a godly group of supremely moral and righteous humans sitting at the FED?
This should not be happening. Something is Broken.
The car salesman won’t see the higher prices? The guy down the street won’t see the higher prices and ask for higher wages to afford the price increases?
Combination of supply limitation and a large number of start-ups/VC money in the sector.
It really is true today that buying a trusted used car is WAY easier than buying a new car.
This has squeezed a LOT of the previous depreciation math out of the market (read: there was a huge arbitration opportunity)
Could you elaborate on this? Is this a recent development?
I bought a new car in November 2020 and while I certainly don’t _love_ the dealership experience and I’m probably less uncomfortable with financial negations than your average person, it didn’t strike me as a particularly painful experience.
When they say transitory inflation they obviously mean transitory inflation above 2%. One problem with transitory is that a lot of people think the timescale is very short, maybe it will be over by the end of 2021 but nobody really knows because it all depends on how quickly the supply chains catch up.
Also we all experience inflation differently and our past experiences influence our expectations. The things I look at are already highly inflated (electronics, cars, housing, restaurants). Those are not everything. But I bet readers of this Website most often look at those same things …
