SithZedi

SithZedi

Audioholic General
In an interdependent world, President's have less control of their economy no doubt. You only mention demand in your sentence on what inflation is driven by nothing about supply. Economics studies both demand and supply.

The theory that Nixon's price controls began inflation in the 1970s neglects to recognize that price controls were used to control pre-existing inflation. Price controls are usually used in an ill advised means of controlling inflation. Nixon was trying to control existing inflation before the 1972 election.


The inflation of the 1970s began the mid/late 1960s.
 
davidscott

davidscott

Audioholic Ninja
In an interdependent world, President's have less control of their economy no doubt. You only mention demand in your sentence on what inflation is driven by nothing about supply. Economics studies both demand and supply.

The theory that Nixon's price controls began inflation in the 1970s neglects to recognize that price controls were used to control pre-existing inflation. Price controls are usually used in an ill advised means of controlling inflation. Nixon was trying to control existing inflation before the 1972 election.


The inflation of the 1970s began the mid/late 1960s.
And our current inflation probably began a few years ago.
 
SithZedi

SithZedi

Audioholic General
I take the view that this current round is a delayed reaction to money supply growth after the 2008 subprime crisis and the huge increase in the rate of government spending since the Iraq war, than accelerating further from 2009. That's the long term fuel. The short term boost has been the surge in the price of oil since the beginning of 2021. Covid distortions not withstanding. (That could be another thread.)
 
panteragstk

panteragstk

Audioholic Spartan
I was being somewhat facetious.....the president basically surfs what he's got to deal with. Drumphy did make poor decisions, but he's done that his whole life.

I was all too familiar with JIT manufacturing....many times I've had to expedite shipments to keep a factory from shutting down due lack of a critical component....long before 'rona :)
You had me wondering :)
 
panteragstk

panteragstk

Audioholic Spartan
Hard not to take a poke at what presidents are blamed for outside of their particular control....
Sort of like people not realizing that presidents inherit the economy of the last president. Good or bad.
 
D

Dude#1279435

Audioholic Samurai
I take the view that this current round is a delayed reaction to money supply growth after the 2008 subprime crisis and the huge increase in the rate of government spending since the Iraq war, than accelerating further from 2009. That's the long term fuel. The short term boost has been the surge in the price of oil since the beginning of 2021. Covid distortions not withstanding. (That could be another thread.)
Why the increase in spending after the wars? How about the oil surge?
 
SithZedi

SithZedi

Audioholic General
The war spending did not end after the Iraqi government was overthrown in 2003. The US went into police action phase after the fighting stopped and the spending continued. We also established many bases in the region to support those wars and project our power. That's expensive. So Afghanistan and Iraq in the 2000s and, to a lesser degree, Syria, Libya, Yemen, in the 2010s. More spending. We only pulled out of Afghanistan last September.

The recent oil price surge is a combination of factors both domestic and foreign. Increases in fossil fuel costs in Europe due to government policies, US economy starting to recover from initial Covid impact, but mainly the reduction of supply of oil or the perception of the Oil Futures markets that demand will outstrip supply.

On day one, the new Administration began a policy of shutting down pipelines, Keystone being the first, reinstated methane emissions rules, fired the drill happy staff at the EPA, pulled drilling leases in various parts of the country, and started an aggressive green agenda. Not expressing an opinion on these policies, but just stating the fact that the effects of the policies reduces supply and hence prices increase.
 
mtrycrafts

mtrycrafts

Audioholic Slumlord
...

Wood is a great example. They slowed production due to lack of demand, but then demand went nuts and wood couldn't keep up. They were playing catch up and probably still are. That's one of many industries. Chip makers can't make chips quick enough, and the demand for those is only going up.
....
Yes, demand is almost instantaneous while supply takes a while. And, if you are in the driver's seat, you can dictate prices because you can.
 
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mtrycrafts

mtrycrafts

Audioholic Slumlord
The war spending did not end after the Iraqi government was overthrown in 2003. The US went into police action phase after the fighting stopped and the spending continued.....
Let's not forget the unfunded tax cuts, then and since.
 
SithZedi

SithZedi

Audioholic General
Let's not forget the unfunded tax cuts, then and since.
If we had responsible people in office, tax cuts should be accompanied by cuts in government spending and that rarely happens. Tax cuts are another tool to stimulate the economy. If tax cuts are enacted and at the same time government spending is not cut you will get excess demand and its inflationary.

To further your point, not much is funded even Social Security and Medicare.

For example, people believe and were told that the SS Fund owns trillions of assets collecting interest on investments. In reality, the SS Fund is book assets, not actual dollars. The dollars going into the SS Fund every year are spent as soon as possible on anything the government wants, defense, general welfare, etc. Those book assets are in Treasury bills paying prevailing interest rates (yikes) and are IOUs redeemable at whatever future date their maturity is. So SS Fund has no real assets, the unfunded liabilities are dependent on the future ability of the US government to pay those IOUs.

I'm going to stop myself as i probably not being clear. I attach the following article from a couple of years ago that does a better job.

 
D

Dude#1279435

Audioholic Samurai
If we had responsible people in office, tax cuts should be accompanied by cuts in government spending and that rarely happens. Tax cuts are another tool to stimulate the economy. If tax cuts are enacted and at the same time government spending is not cut you will get excess demand and its inflationary.

How does gov't spending create excess demand? Or is that excess demand in gov't programs?

SS cut offs- ain't happenin'. $239 trillion debt? Sounds more accurate, eh? LOL.

I thought that was the problem with Biden's first year. In the middle of covid and he ushers in the green while the demand remains for natural resources. I'd have waited till things return to a relative normal. At a minimum.
 
highfigh

highfigh

Audioholic Slumlord
The dollars going into the SS Fund every year are spent as soon as possible on anything the government wants, defense, general welfare, etc. Those book assets are in Treasury bills paying prevailing interest rates (yikes) and are IOUs redeemable at whatever future date their maturity is. So SS Fund has no real assets, the unfunded liabilities are dependent on the future ability of the US government to pay those IOUs.


The SS fund wouldn't be operating at a deficit if Congress would leave it the eff alone. It's like they're acting as their own loan shark, then complaining about the cost of borrowing the money.
 
MaxInValrico

MaxInValrico

Full Audioholic
The SS fund wouldn't be operating at a deficit if Congress would leave it the eff alone. It's like they're acting as their own loan shark, then complaining about the cost of borrowing the money.
That's not how it works.
 
SithZedi

SithZedi

Audioholic General
How does gov't spending create excess demand? Or is that excess demand in gov't programs?

SS cut offs- ain't happenin'. $239 trillion debt? Sounds more accurate, eh? LOL.

I thought that was the problem with Biden's first year. In the middle of covid and he ushers in the green while the demand remains for natural resources. I'd have waited till things return to a relative normal. At a minimum.
Gov't spending competes with the private sector for the same products and labour.
The Biden Administration has received alot of pressure from the green lobby and the extreme left wing of the party to move quickly.
 
highfigh

highfigh

Audioholic Slumlord
That's not how it works.
OK, Mr Wizard- who is allowed to hoover finds from the SS Trust? Enlighten us, don't just tell people they're wrong. CONGRESS f&cks up the budget, POTUS signs it, we're screwed and it's not party-specific, although it was LBJ who signed the bill to allow dipping into SS to use for the general fund.
 
MaxInValrico

MaxInValrico

Full Audioholic
OK, Mr Wizard- who is allowed to hoover finds from the SS Trust? Enlighten us, don't just tell people they're wrong. CONGRESS f&cks up the budget, POTUS signs it, we're screwed and it's not party-specific, although it was LBJ who signed the bill to allow dipping into SS to use for the general fund.
You need to enlighten yourself. With respect to Social Security, you can start by reading the Social Security Act of 1935 since the rules for Social Security receipts have been the same since 1935. All SS receipts that exceed payouts have always been invested in exactly the same thing; US Government T-Bills so as a result of that fact, SS funds have always been available to Congress to spend on whatever it decides to budget for. You're whining about accounting tricks as if somehow it's coming out of your pocket when it's not. The Federal government has been running budget deficits for hundreds of years, it's nothing new. Debt is what drives the economy.
 
highfigh

highfigh

Audioholic Slumlord
You need to enlighten yourself. With respect to Social Security, you can start by reading the Social Security Act of 1935 since the rules for Social Security receipts have been the same since 1935. All SS receipts that exceed payouts have always been invested in exactly the same thing; US Government T-Bills so as a result of that fact, SS funds have always been available to Congress to spend on whatever it decides to budget for. You're whining about accounting tricks as if somehow it's coming out of your pocket when it's not. The Federal government has been running budget deficits for hundreds of years, it's nothing new. Debt is what drives the economy.
The fund was started in 1939 but I found where my problem was- the transactions began to be included in the unified budget in '69, not the general fund. Sorry for the salt, but the tone of "That's not how it works" without an explanation is pretty condescending from this side of the conversation.

It would be very difficult to balance the budget at this point, but they could at least try to piss away less money.
 
H

Hetfield

Audioholic Samurai
The easiest way to solve the SS fund problem is just raise the cap on salary to, well I say to infinity but how about a million bucks. There is zero reason why Elon Musk and Jeff Bezos don't pay into SS the entire year on what they make, v they are flying themselves into space at this point they have do much money.

Sent from my Pixel 4 XL using Tapatalk
 
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