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0 pointsabernard14y ago0 comments

> My reply: asset prices don't matter to ordinary people.

They do. A large percentage of the population has 401Ks, and many public sector pension plans have equity components. Housing prices are also assets, and inflation in that sector has priced out many people from affording homes, despite low financing costs.

> Full employment is going great -- the job market is tight

We are nowhere close to full employment. We're 3M jobs lower than pre-COVID in the U.S [1], and according to Keynesians, Monetarists, Monetary Keynesians, or whatever hybrid form of wishy washy economics that has used the Phillips curve as policy guidance, this inflation should not happen.

> In the larger sense, the fed's hands are tied, unless their legal mandate is amended to include "not creating asset bubbles"

The Fed's "dual mandate" presumes that (based upon the Phillips curve) there is a sweet spot between full employment and inflation. The correlation is entirely, completely broken [2].

[1] https://fred.stlouisfed.org/series/PAYEMS [2] https://www.nber.org/digest/sep19/phillips-curve-still-usefu...

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corpdronejuly4y ago

The job market seems to be tight because the folks hiring are unwilling to pay folks to keep up with the inflation we're seeing. It's not worth it for many people in a family to take outside work when childcare costs so much more.

abernard1OP4y ago

How do you suppose to quantify that? How do you suppose the Fed should quantify that? How do you suppose the parent poster can justifiably say we're at full employment without a hand-wavy appeal to authority?

I won't agree or disagree with your comment, I will just say that the parent poster's comments are all unsupported by data. Clearly, we had a realm only two years ago with (1) millions of people more in the labor market, (2) inflation at 1/4 of what it is now.

We also have been told for two years that inflation like this was impossible, despite editorial after editorial from non-Keynesians saying that we should expect high inflation and supply shocks. This is because supply shocks inevitably happen when capital is mispriced and aggregate demand is forced via government spending. The notoriously smooth supply chains (ha ha) of Soviet command economies was not a historical aberration generated via inflation.

So I won't be listening to the people who have been wrong for two years. Their economic model is wrong, and we can expect their predictions to look like the "Cloud of Points" section of the Phillips curve from the 1970s [1].

[1] https://www.stlouisfed.org/open-vault/2020/january/what-is-p...

altcognito4y ago

> How do you suppose to quantify that? How do you suppose the Fed should quantify that? How do you suppose the parent poster can justifiably say we're at full employment without a hand-wavy appeal to authority?

The FRED numbers saying who is seeking work is the data and far supersedes the source you're not even naming. I'm guessing you're upset because a certain % of the population isn't in the workforce. Well, that's not what full employment is. Random commentors are on the internet don't decide the "full employment" really is. The term full employment applies to those people that are seeking work and can't find it. Unemployment is quite low.

> We also have been told for two years that inflation like this was impossible

"Inflation like this". I'm amazed that we've returned to inflation levels that were the norm for many, many decades during times of relative prosperity, and inflationistas think that they've suddenly been vindicated. No, I'm sorry, 7% isn't the Zimbabwe Republic inflation you've predicted for decades ad nauseum, and no, we've not suddenly adopted a Soviet command economy.

corpdronejuly4y ago

Ultimately I only have anecdotes. But I suppose we could look at the child-care sectors employment growth vs other sectors to see if it's recovering at the same rate as the rest of the economy.

Not very strong evidence but I think it would support the idea that more families are taking care of children in the household economy rather than the cash economy if it is recovering less quickly.

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0 pointsabernard14y ago0 comments

> My reply: asset prices don't matter to ordinary people.

> Full employment is going great -- the job market is tight

> In the larger sense, the fed's hands are tied, unless their legal mandate is amended to include "not creating asset bubbles"

The Fed's "dual mandate" presumes that (based upon the Phillips curve) there is a sweet spot between full employment and inflation. The correlation is entirely, completely broken [2].

[1] https://fred.stlouisfed.org/series/PAYEMS [2] https://www.nber.org/digest/sep19/phillips-curve-still-usefu...

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corpdronejuly4y ago

abernard1OP4y ago

[1] https://www.stlouisfed.org/open-vault/2020/january/what-is-p...

altcognito4y ago

> We also have been told for two years that inflation like this was impossible

corpdronejuly4y ago

Ultimately I only have anecdotes. But I suppose we could look at the child-care sectors employment growth vs other sectors to see if it's recovering at the same rate as the rest of the economy.

Not very strong evidence but I think it would support the idea that more families are taking care of children in the household economy rather than the cash economy if it is recovering less quickly.

j / k navigate · click thread line to collapse