5 ms·

So it is not inflation, it is a congestion, a squeeze. When things settle, we'll see lots of supply w/o demand (due to economic players overreacting and new pla

So it is not inflation, it is a congestion, a squeeze. When things settle, we'll see lots of supply w/o demand (due to economic players overreacting and new players trying to take advantage) and price drop

xapata 5y ago
Inflation can be followed by deflation in quick succession, though I suppose the term is more often used to describe a long-term trend.
adam-a 5y ago
The underlying cause seems to be a surge in demand though. Its sounds like inflation, but if this is caused by covid relief money then hopefully it will calm down once that money is spent.
- osivertsson 5y ago
  With work from home, for some workers the time previously spent in a commute may have partly been converted into time spent consuming. I know this applies to me at least. WFH also allows online shopping during breaks, that was not something I would do at the office. I personally have spent way more than normal on sports goods, clothes, furniture, and home improvement during the pandemic. Life is lived differently nowadays and some changes will persist, it will be interesting to see how this impacts global trade.
- hellbannedguy 5y ago
  A few up weeks, or months, ago Halo 2 Coloector's edition mint in original packaging hit close to $900 on ebay. I think it was Covid money? It seemed like a lot of people were buying things they didn't really need. I was happy for them though.
lovecg 5y ago
Inflation is… complicated. One component of inflation is people’s expectations of future inflation. If prices keep going up, people will start to expect it and won’t hold on to cash for as long, which creates its own feedback loop, etc.
- quickthrower2 5y ago
  I was imagining how this works. It might make me bring forward some expenses, like if I am thinking of getting a new car, I'll get it sooner, or maybe I'd invest as much $ as possible as soon as I get it, if I didn't need to purchase anything.
- kqr 5y ago
  This is in some sense also the primary cause of inflation in many cases. When demand for money drops, its value relative to stuff decreases, and you need more of it for the same things. (This is often followed by an increase in money supply, not, primarily, caused by it. The increase in supply is usually people (government or their ilk) creating more money to afford things once it's value has dropped.) So why does demand for money go down in the first place? Now that's complicated. The demand for money is determined by the market which is sometimes predictable and sometimes works in mysterious ways.
vmception 5y ago
This is a useless distinction as capital is never efficiently and evenly allocated If prices of things go up with a 100% correlation to an increase in the money supply, thats inflation It can also simultaneously be other things and no price increase has to be permanent
- dalbasal 5y ago
  Either it's a useless distinction, or general inflation itself is a useless concept... or these are both exaggerations. I do think inflation indexes, as we have been using them in recent decades isn't quite as "real" as we have been treating it. We over learned lessons from 20th century inflation events... and the importance of such indexes in monetarism... also "unemployment." When inflation is low, price fluctuations noise out trends. General inflation is somewhat theoretical. We don't understand this stuff as well as we pretend to.
  - vmception 5y ago
    okay, sure, inflation is a very reductive term, the mechanism isn't hard to understand. when water accumulates at the top of a mountain it gravitates downward to certain areas and pools or flows from those areas. money is created in a very similar mechanism, when the money pools instead of flows, the issuer creates more money to make it more likely to overflow from those areas. excessive pooling makes investments expensive, excessive flowing makes commodities and services scarce. the issuer tries to moderate the velocity of both by issuing just the right amount of money. of this set of actions that the issuer does (it can do more than just issue money), both cause price distortions upward, where you need more money to buy the same asset or good or service. but unlike rain water, this approach has very limited utility as you are trying to force humans to behave certain ways and many times they just don't want to for reasons they were never asked about. most of the debate around the word inflation is simply whether the target inflation has been met, because nobody can agree on which assets should be counted and it is a political football that is easy to unilaterally manipulate.
    - imtringued 5y ago
Clewza313 5y ago
You can't just magic more cargo shipping capacity out of thin air, the lead times from signing to paperwork to having a container ship sail out of the dock are measured in years. It's also very much a boom and bust industry, and there has been a succession of past bubbles that has left shipping companies very wary of building extra capacity only for it to sit around unused.
Bombthecat 5y ago
Whiplash effect
imtringued 5y ago
Heavily simplified: "High" inflation happens during seller markets. (sellers have more power) Low inflation or even deflation happens during buyer markets. (buyers have more power) There, the monetary explanation of inflation no longer makes sense as you can create money in a way that does not turn the labor market into a seller market. The pandemic turns the economy into a sellers market temporarily so it is inflation but it is unlikely to last. As a bonus: Keynesian economics is mostly about buyer markets, Austrian/neoclassical/neoliberal economics are mostly about seller markets. The theories aren't even competing against each other because they aren't even talking about the same thing.

xapata 5y ago

Inflation can be followed by deflation in quick succession, though I suppose the term is more often used to describe a long-term trend.

adam-a 5y ago

The underlying cause seems to be a surge in demand though. Its sounds like inflation, but if this is caused by covid relief money then hopefully it will calm down once that money is spent.

osivertsson 5y ago
With work from home, for some workers the time previously spent in a commute may have partly been converted into time spent consuming. I know this applies to me at least. WFH also allows online shopping during breaks, that was not something I would do at the office. I personally have spent way more than normal on sports goods, clothes, furniture, and home improvement during the pandemic. Life is lived differently nowadays and some changes will persist, it will be interesting to see how this impacts global trade.
hellbannedguy 5y ago
A few up weeks, or months, ago Halo 2 Coloector's edition mint in original packaging hit close to $900 on ebay. I think it was Covid money? It seemed like a lot of people were buying things they didn't really need. I was happy for them though.

lovecg 5y ago

Inflation is… complicated. One component of inflation is people’s expectations of future inflation. If prices keep going up, people will start to expect it and won’t hold on to cash for as long, which creates its own feedback loop, etc.

quickthrower2 5y ago
I was imagining how this works. It might make me bring forward some expenses, like if I am thinking of getting a new car, I'll get it sooner, or maybe I'd invest as much $ as possible as soon as I get it, if I didn't need to purchase anything.
kqr 5y ago
This is in some sense also the primary cause of inflation in many cases. When demand for money drops, its value relative to stuff decreases, and you need more of it for the same things. (This is often followed by an increase in money supply, not, primarily, caused by it. The increase in supply is usually people (government or their ilk) creating more money to afford things once it's value has dropped.) So why does demand for money go down in the first place? Now that's complicated. The demand for money is determined by the market which is sometimes predictable and sometimes works in mysterious ways.

vmception 5y ago

This is a useless distinction as capital is never efficiently and evenly allocated If prices of things go up with a 100% correlation to an increase in the money supply, thats inflation It can also simultaneously be other things and no price increase has to be permanent

dalbasal 5y ago
Either it's a useless distinction, or general inflation itself is a useless concept... or these are both exaggerations. I do think inflation indexes, as we have been using them in recent decades isn't quite as "real" as we have been treating it. We over learned lessons from 20th century inflation events... and the importance of such indexes in monetarism... also "unemployment." When inflation is low, price fluctuations noise out trends. General inflation is somewhat theoretical. We don't understand this stuff as well as we pretend to.
- vmception 5y ago
  okay, sure, inflation is a very reductive term, the mechanism isn't hard to understand. when water accumulates at the top of a mountain it gravitates downward to certain areas and pools or flows from those areas. money is created in a very similar mechanism, when the money pools instead of flows, the issuer creates more money to make it more likely to overflow from those areas. excessive pooling makes investments expensive, excessive flowing makes commodities and services scarce. the issuer tries to moderate the velocity of both by issuing just the right amount of money. of this set of actions that the issuer does (it can do more than just issue money), both cause price distortions upward, where you need more money to buy the same asset or good or service. but unlike rain water, this approach has very limited utility as you are trying to force humans to behave certain ways and many times they just don't want to for reasons they were never asked about. most of the debate around the word inflation is simply whether the target inflation has been met, because nobody can agree on which assets should be counted and it is a political football that is easy to unilaterally manipulate.
  - imtringued 5y ago

Clewza313 5y ago

You can't just magic more cargo shipping capacity out of thin air, the lead times from signing to paperwork to having a container ship sail out of the dock are measured in years. It's also very much a boom and bust industry, and there has been a succession of past bubbles that has left shipping companies very wary of building extra capacity only for it to sit around unused.

Bombthecat 5y ago

Whiplash effect

imtringued 5y ago

Heavily simplified: "High" inflation happens during seller markets. (sellers have more power) Low inflation or even deflation happens during buyer markets. (buyers have more power) There, the monetary explanation of inflation no longer makes sense as you can create money in a way that does not turn the labor market into a seller market. The pandemic turns the economy into a sellers market temporarily so it is inflation but it is unlikely to last. As a bonus: Keynesian economics is mostly about buyer markets, Austrian/neoclassical/neoliberal economics are mostly about seller markets. The theories aren't even competing against each other because they aren't even talking about the same thing.