Ugly Inflation Headlines, Some Helpful Context from Milton Friedmann

[james.hendrickson]

Hi Guys,

I woke up this morning and the financial news headlines were screaming about inflation.

For example:

CBS is saying: U.S. inflation in January surged at fastest rate in 40 years => here.

LinkedIn news reports that Prices rose the fastest since 1982 => linky.

What strikes me is how thin most of the media context is.

So, to help the crew here at the forums, I wanted to share this video from Milton Friedmann. If you don't know who Friedmann is, he won a nobel prize in 76' for his work on monetary theory.

Friedmann basically says the primary cause of inflation is government increasing the supply of money. He also argues this is because of public demand for inflation. Everyone wants the government to print more money (case in point - covid stimulus payments in 2020), and they demand their congressional representatives support pro-inflation policies (hey congress, send me my check and don't raise my taxes).

He also notes that both the public at large and the government have incentives for mild inflation. It decreases the real cost of current debt obligations.

Helpful context. Give it watch if you've got the time.

[ua_guy]

I believe Friedmann has relevance, but I see more evidence that his theory only partly describes what is happening now. We should have seen commensurate inflation with every stimulus, the kind of "crisis" we are seeing now (~6%?). I use quotes because the right-leaning media is manufacturing a crisis out of this for political reasons, and while prices have increased, it needs much more context. Much larger factors are at play including increased demand for goods, supply chain issues, and the employment equation tipping in the worker's favor.

[QuarterMillionMan]

I don't know what rosy colored lenses you're looking through my friend. All this money printing and spending needs to stop. Think drunken sailors. I think inflation will get worse but I hope I'm wrong.

[myrdale]

In addition to Milton Friedmann, I'd also suggest Thomas Sowell. He has hours of talks on YouTube on a variety of topics, economics included.

Also look up the video on exponential growth by Albert Bartlett. While there is a lot of scare mongering in the news today that I think is garbage, peak oil and raw material sustainability is a concern for the near future (<200 years).

[ua_guy]

I don't know what rosy colored lenses you're looking through my friend. All this money printing and spending needs to stop. Think drunken sailors. I think inflation will get worse but I hope I'm wrong.

It might get worse before it gets better.
People have been talking about printing money since before I could legally drive a car, that’s to say, multiple decades ago. It all amounts to the same story, different day. Sure, it contributes to inflation. But it’s not what caused the crisis du jour.

[LivingAlmostLarge]

Well i find it horrible when you consider I ordered a large matcha green tea latte at a local coffee shop because i had 50% off coupon = $8 before coupon. I nearly died and my eyes fell out when the lady took my order (drive thru). She apologized and said we've raised prices 3x lately. I politely told her I doubt i'll be back again soon.

[james.hendrickson]

All - following up on this.

Someone looked at the size of tea candles from Ikea and found that while the tea lights had remained the same in terms of price, they were shorter, smaller and lighter than previous versions - which had not been disclosed in their marketing materials.

Thread is here, shrinkflation in pictures.

[Jluke]

Or potato chip bags shrinking from 9.5 to 7.75 oz.

[kork13]

.... And then a couple years from now, they'll advertise the now-normal size of everything as a "new bigger size!" or whatever nonsense...

[james.hendrickson]

All,

Following the inflation theme, here is some data I borrowed from Liz Ann Sonders, who is my favorite stock analyst

Pretty much everyday grocery items are like 30% more expensive than a few years ago. And, eggs really are getting more expensive. They're about 200% more than in 2017.

[disneysteve]

Egg prices are coming back down. They were $3.99 yesterday and had been over $5.00 a few weeks ago.

[james.hendrickson]

Egg prices are coming back down. They were $3.99 yesterday and had been over $5.00 a few weeks ago.

its just...amazing how expensive they got. Lets hope they come down soon.

[disneysteve]

its just...amazing how expensive they got. Lets hope they come down soon.

It takes time to build back up the chicken population that got wiped out by avian flu.

[ua_guy]

Bacon and eggs are expensive in California. It has to be produced using bougie pigs and chickens. I kid, but actually the requirement is that they be raised cage-free, and that's something I agree with. We typically buy "organic" and cage-free up here in Washington anyway. It's nice seeing the different colors and sizes of eggs that come in a carton...kind of makes one wonder why we process some of our more natural foods so much when natural is actually pretty beautiful.