Thanks to Inflation, Gen Z and Millennials Will Now Need $3M in Retirement Savings To Live Comfortably
Thanks to Inflation, Gen Z and Millennials Will Now Need $3M in Retirement Savings To Live Comfortably
It has long been a rule of thumb to have $1 million saved for a comfortable retirement; but, thanks to inflation, the youngest generation of workers likely will need three times as much. According to...
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Again, they have raised prices before. Inflation didn't just start yesterday. I'm really not following the argument you're trying to make here. You still haven't actually explained the causal chain between the increase in money supply and inflation, nor have you provided any counter argument to my point which provides a clear and direct explanation of what's happening.
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Ah yes econ101, taking a complex and interconnected system that we don't fully understand, boiling it down to its simplest and most incorrect model.
This is a global issue, the fed pumping money shouldn't have had a big an effect. My best guess would be a mix of covid money from many countries going to the rich increasing the wealth gap, gas and oil companies hiking prices because of Russia even though a lot of them have no link to Russian oil or gas and causing a knock on effect. You've also got a number of bubbles around the world such as housing and car loans, these are definitely caused by greed.
Ah yes econ101, taking a complex and interconnected system that we don't fully understand, boiling it down to its simplest and most incorrect model.
Your issue with economics is that it says the ratio of currency to goods affects prices?
If prices didn't have to go up, then increasing the money ey supply would somehow magically increase wealth because you could just use the printed money to get more goods.
Obviously printing more money doesn't make more goods pop into
existence, so something else has to happen. That other thing is called inflation.
If prices didn't go up, there would be shortages because some people would be walking around with more to spend. Then next the businesses would find they controlled a smaller % of currency, reducing their own buying power as other increased their prices.
This is a global issue, the fed pumping money shouldn't have had a big an effect.
The Fed is the sole controller of the US money supply, and the US is the largest economy and the USD is held as a reserve currency for global trade.
My best guess would be a mix of covid money from many countries going to the rich increasing the wealth gap, gas and oil companies hiking prices because of Russia even though a lot of them have no link to Russian oil or gas and causing a knock on effect. You've also got a number of bubbles around the world such as housing and car loans, these are definitely caused by greed.
Greedy that always existed, but was enabled through recent events.
I agree with the Russian oil supplies being embargoed allowing greedy energy companies to charge more, but that is just one factor.
Money has no inherent value, it's value comes from being accepted and how rare it is.
A simple formula is, if you doubled the money supply, each dollar would have half the spending power it did before.
Since money is just a paper that says you get to trade it for other things, the more circulating the higher prices will be.
My issue was with using econ101 as part of an argument, I'm sure you've heard of the saying about economics is that you spend most of the course learning why econ101 doesn't actually work when applied to most real world scenarios.
Anyone with an economics background would agree that the money supply increasing will cause inflation if there isn't a corresponding increase in the supply of goods/services.
How else could it work? People print money and somehow just buy more stuff consequence-free?
Money supply is a specific term and it will not always result in inflation. You've acknowledged that several times but still repeat it. It will depend how that increase in money supply is used, if at all.
If I got a trillion dollars printed and did nothing with it, no change in inflation. If I deposit it at banks, there would probably be some knock on effects on interest rates that make their way to the broader system.
If I go on a coordinated buying spree of oranges with the explicit goal of owning every last orange and orange producing land possible, inflation in oranges and substitute goods of oranges will occur. Easy conclusion.
You can argue that: When the capital owners get free money in bailouts, while workers get crumbs, there is an obvious disparity. Capitalists see less value in currency and will want more of it in exchange for their contributions (leeching) to society. So they raise prices because selling an orange for $1 doesn't feel as good as before.
If workers got more money while capitalists got nothing, that disparity is reversed. Capitalists want to compete for a supply of cash that they didn't have access to before. Prices will rise in inelastic markets because the opportunity to exploit presents itself, but in competitive markets there is a real drive to entice more purchasing. That's not to say that prices will go down (they can!) But raising your prices on food because everyone got $1000 could mean missed sales if the price raise isn't coordinated across the industry.
You saying that inflation is driven by money supply is not the direct reason for prices rising.
If I got a trillion dollars printed and did nothing with it, no change in inflation. If I deposit it at banks, there would probably be some knock on effects on interest rates that make their way to the broader system.
The rich are spending the money, and just because regular people don't buy yachts doesn't change the fact that this reallocates labor, land, and raw materials from benefiting the regular person to benefiting the billionaire.
Even if they choose not to spend it, it would be invested into some other assets that do command resources in the economy. They buy stocks, raising the price, followed by the company liquidating stock value to fund expansion, which bids up the prices of inputs.
The rich are spending the money
If a rich person gets money, what evidence do you have that they would spend it or invest it? It is not a factual assumption and depends on many factors, and not just in a pedantic way. If market conditions are sour, a rich person would avoid investing it for fear of losing it.
Capitalists are middle men who sell our labor + a product back to us at a higher price. If they don't need cash right now, they will raise prices and sell fewer units at a higher rate to maximize the margin (on durable goods). If they do want cash, they will lower prices and trade margins for volume. Take oil as an example - if you can sell a barrel now for X or tomorrow for more, you would price the oil higher as long as opportunity cost < selling it lower now. How does other people having more money affect this?
Consider your labor and pretend you are fairly compensated right now. If the money supply increases, do you demand, or at least deserve, higher wages? If so, why?
If a rich person gets money, what evidence do you have that they would spend it or invest it?
Is this your argument, that the stimulus of trillions of dollars has no effect because they just sit on it?
The whole reason for the program is to give the recipients more y to spend, not just shits and giggles. Even if they just deposited it into a bank account, the bank reinvests the money into stocks, bonds, and loans.
There is evidence, if you really need to see the numbers, the FRED website tracks the exact money supply, including reinvested deposits.
Capitalists are middle men who sell our labor + a product back to us at a higher price. If they don't need cash right now, they will raise prices and sell fewer units at a higher rate to maximize the margin (on durable goods).
If you could just raise prices and make more money, they wouldn't have kept inflation to 2% for decades.
Raising prices can reduced volume and lose money, so businesses limit it. Recently, the money circulating has increased, and businesses that raise prices can keep sales up.
Consider your labor and pretend you are fairly compensated right now. If the money supply increases, do you demand, or at least deserve, higher wages? If so, why?
Of course, because I want to keep getting the same share of the total credits that I did before. If I'm getting less of the pie then I'm getting a pay cut.
Imagine a microeconomy, a small isolated village. One day the local currency changes and you go from making 2% of the currency to 1%, but the absolute number doesn't change. You still make 20 coins per day, but the total money supply has grown. That's a paycut in purchasing power.
The entire point of giving one group more % the money supply is so that they can command more of the resources that currency trades for. To think they just do that for no reason is naive.
Since the financial crisis banks have taken deposits and reinvested them at the Fed or other banks. Purchases of stock do not necessarily raise prices either. Prices can fall on heavy volume and rise in light volume.
That's a paycut in purchasing power.
Only if prices rise. Consider that this island only sells widgets in this currency. Will they raise prices because the money supply has increased? They were "maximizing" profit before, but now the money supply is different and the employee on the island still makes 20 coins. Will selling widgets at a new price point get them more money?
Rapid inflation did start at the same time the money supply was increased.
There was a brief period when people got direct cash during the pandemic which businesses used as an excuse to hike up prices. However, once again, it was the choice of the business owners to raise the prices.
If there’s more money circulating, there’s more businesses can ask for.
Only if that money goes to the working people who can in turn spend it. If the money stays at the top then it does not result in increased spending power. Most of the money that was created did not end up in the hands of the people who are spending it day to day. Bulk of the money went to the oligarchs, you get that right?
Do you think they weren’t greedy before? Do you think it’s a coincidence this inflation happened the same time the Fed suddenly pumped trillions into the money supply?
I think they saw an opportunity to jack up prices. In fact, we see this happen any time there's a disaster, no money printing is needed here. There's even a term for this: disaster capitalism.
There was a brief period when people got direct cash during the pandemic which businesses used as an excuse to hike up prices. However, once again, it was the choice of the business owners to raise the prices.
The cash regular people got was a fraction given to the capital class through Fed stimulus and PPP.
All three of these together means there's more money flowing. If businesses didn't increase their nominal prices, they'd in effect be lowering the real prices because the old price is suddenly a much smaller share of the total currency.
Even if all businesses tried this, there would be supply shortages because the amount of spending power would be more than the goods being sold.
Only if that money goes to the working people who can in turn spend it.
No because the inputs for what regular people need (like labor, land, or raw materials) are also something the wealthy want. They'd like people to use these resources for their own use.
If the inputs are all going to the rich, the working class has to spend more to bid for these now.
Someone building affordable housing might follow the money and switch to building yacht interiors because the rich have more to spend now.
The worker has to pay more to get them to come back to working for the regular person.
Bulk of the money went to the oligarchs, you get that right?
When an oligarch can hire more people, and hoards raw materials, where do you think that comes from?
Everything extra they can buy now comes at the expense of the workers.
Workers get outbid for the labor of others, or land, because an oligarch is buying more.
I think they saw an opportunity to jack up prices.
And that opportunity was an increase to the amount of money circulating.
You still haven't explained what your thesis here is exactly. If capitalists aren't raising wages then people don't have more spending power no matter how much money is printed. What you still haven't established here is how there's more money circulating in the economy when wages have remained stagnant. Nobody is arguing that the oligarchs aren't benefiting from the QE, but it's not a direct cause of inflation.
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Ok, but capitalists aren't the ones primarily consuming basic goods they raise the prices on. We're talking about consumer inflation here. An oligarch getting a big cash infusion and buying up land or hiring servers isn't affecting the prices of consumer goods.
Workers, and people selling land, and so on shifted from selling their time and resources to regular people, to serving oligarchs. They do this, because those oligarchs have more money now.
That still doesn't change the formula for inflation which is the relative cost of goods and services to salaries.
Then the money supply is inflated, and now $10 is circulating, but there’s still only 5 items for sale.
And who decides that it's now circulating for $10? The business owner decides that, which was my original point all along!
Meanwhile, your example is too simplistic because there isn't $10 circulating since economy isn't homogeneous. People consuming regular goods who are affected by inflation didn't get a chunk of the new money printed, so they have exact same spending power they did when there was $5 circulating.
If there’s more money, with the same supply of goods, price have to increase.
They don't have to increase, people who own businesses make a conscious decision to increase them. You're also conflating the amount of money in circulation with purchasing power here.
Printing money doesn’t magically let people buy more than exists.
We're in complete agreement here.
Ok, but capitalists aren't the ones primarily consuming basic goods they raise the prices on. We're talking about consumer inflation here. An oligarch getting a big cash infusion and buying up land or hiring servers isn't affecting the prices of consumer goods.
If they buy up land, you need to pay more to get some of your own. Or you pay more to rent some of your own.
If they hire workers who would otherwise be making and servicing consumer goods, it will be harder to get reliable goods. Fixing that will mean paying a premium to reattract workers.
That still doesn't change the formula for inflation which is the relative cost of goods and services to salaries
The relative cost of goods/services to salaries is a function of the underlying money supply.
And who decides that it's now circulating for $10? The business owner decides that, which was my original point all along!
No, they don't. The Fed chooses how much money circulates.
Meanwhile, your example is too simplistic because there isn't $10 circulating since economy isn't homogeneous. People consuming regular goods who are affected by inflation didn't get a chunk of the new money printed, so they have exact same spending power they did when there was $5 circulating.
Again, whoever gets the money and spends it will be using that money to computer for labor, land, and raw materials.
Metal for their boat doesn't go to a toaster. Or a repairman working on their new car has that career, instead of being a nurse for a working-class person. The land they buy goes off the market, raising prices on remaining land.
The fact that oligarchs buy different things doesn't matter, they take up many forms of resources that would otherwise be allocated to the regular person.
They don't have to increase, people who own businesses make a conscious decision to increase them. You're also conflating the amount of money in circulation with purchasing power here.
Purchasing power is directly tied to the money circulating.
If the money supply contracts there's more competition for the remaining money. If it expands, each dollar is less important.
If they buy up land, you need to pay more to get some of your own. Or you pay more to rent some of your own.
This doesn't apply to vast majority of the population who don't actually own any land.
If they hire workers who would otherwise be making and servicing consumer goods, it will be harder to get reliable goods. Fixing that will mean paying a premium to reattract workers.
Are you saying companies wouldn't want to produce and sell more goods if there was demand for them?
No, they don’t. The Fed chooses how much money circulates.
More money in circulation does not magically make prices increase, people who own businesses choose on what they charge. Increase in money supply also doesn't translate into decreased purchasing power all on its own.
Again, whoever gets the money and spends it will be using that money to computer for labor, land, and raw materials.
Again, the types of goods that oligarchs consume are not the same goods that regular people consume.
The fact that oligarchs buy different things doesn’t matter, they take up many forms of resources that would otherwise be allocated to the regular person.
That's nonsensical, if you're buying up all the oranges in town and I eat apples, the scarcity of oranges has no effect on me.
Purchasing power is directly tied to the money circulating.
No, it's not.
If the money supply contracts there’s more competition for the remaining money. If it expands, each dollar is less important.
LMAO, financial economy isn't some money pit that people dive into and grab as much as they can. Working people get money from their wages, and their wages don't magically increase when the money supply is increased.
This doesn't apply to vast majority of the population who don't actually own any land.
Did you miss the word "rent" there?
Are you saying companies wouldn't want to produce and sell more goods if there was demand for them?
I'm saying they will need to spend more to get land/labor/raw materials.
More money in circulation does not magically make prices increase, people who own businesses choose on what they charge. Increase in money supply also doesn't translate into decreased purchasing power all on its own.
It's not magic, currency represent wealth. If the wealth stays the same, and the amount of currency goes up then each unit of currency has less purchasing power.
Again, the types of goods that oligarchs consume are not the same goods that regular people consume.
You've said that multiple times, and multiple times ignored the part where I say:
It doesn't matter. Consuming different foods still bids up the price of land/labor/raw materials.
Are you going to ignore that a 4th time now and just repeat the same line?
That's nonsensical, if you're buying up all the oranges in town and I eat apples, the scarcity of oranges has no effect on me.
Agricultural labor is fungible.
Arable land can be used for either crop.
Grocers need to use land/labor to sell goods, regardless of what fruit you came in for.
So yes, eating different food still bids up prices.
No, it's not.
Any economist would disagree with you. This is hardly a controversial idea in academics.
LMAO, financial economy isn't some money pit that people dive into and grab as much as they can. Working people get money from their wages, and their wages don't magically increase when the money supply is increased.
When the total resources stay the same, but the currency representing that wealth is inflated, the price of everything goes up.
Unfortunately, the regulations around wages doesn't keep up, and wages often do rise slower than overall inflation.
Yeah this is not really what’s happening. QE went on for a long time before inflation really took off and mostly served to inflate asset prices without any meaningful effect on the price of consumer goods. As has been said, this is because that’s where the lion’s share of rich people’s money goes.
I think the key data point here is the increase in profits recently. Which would not be happening if this was all down to bog standard supply and demand throughout supply chains. Parking money in assets like stocks and real estate doesn’t cause consumer price inflation. But if businesses all realized that the talk of supply chain disruptions and COVID causing prices to go up was a good excuse to raise prices further together, that would exacerbate an otherwise minor bout of consumer price inflation. Which is exactly what happened.
And although it’s pretty damn close to collusion/price fixing in many cases, there is no real enforcement against that sort of thing. There is software that is used throughout industries that basically does the price fixing for you using data from other users/firms. Makes it easy and plausibly deniable because it was just an algorithm that told you to do it. Big part of rent inflation in particular. If there’s no competitor willing to undercut you, even though they could, the Econ 101 bullshit doesn’t really apply. It’s basically just class solidarity among capitalists. Circling the wagons because unusual circumstances temporarily drove wages up, and they weren’t having it.
Anyway, the main point is, if profit rates are going up, it’s not money supply causing the inflation.
Did you miss the word “rent” there?
I feel like we're just going in circles here. Unless workers get higher wages, their capacity to pay rent does not change.
I’m saying they will need to spend more to get land/labor/raw materials.
And that doesn't change the situation for the workers in any way because their wages are not rising.
It’s not magic, currency represent wealth. If the wealth stays the same, and the amount of currency goes up then each unit of currency has less purchasing power.
Currency does not represent wealth, and if anything currency only impacts financial wealth. When currency starts depreciating in value then people who own significant portion of financial wealth simply transfer it into physical assets or move it to other currencies. All this has little to do with internal inflation mechanics of the country.
Are you going to ignore that a 4th time now and just repeat the same line?
I didn't ignore this, I've addressed this multiple times in my replies. I'll address it for the 4th time I guess. Capitalists spending more on land/labor/raw materials does not translate into increased wages or increased spending power of the workers. Let me know if you need me to clarify that further for you.
So yes, eating different food still bids up prices.
You evidently missed the point being made.
Any economist would disagree with you. This is hardly a controversial idea in academics.
How many people agree with an idea says nothing about the merit of the idea. Plenty of western economists agree that neoliberal economics work and that you can do QE indefinitely.
When the total resources stay the same, but the currency representing that wealth is inflated, the price of everything goes up.
Once again, prices go up as a result of people who own businesses choosing to raise them. It's incredible that you continue to refuse to acknowledge this simple fact.
Finally, since you clearly just ignore what I say, maybe you can listen to an economist explain this instead https://www.youtube.com/watch?v=RH1tT4NW8NI