[Steve_American]

Because most of those loans are eventually repaid, thereby ‘destroying’ the extra money by removing it from the economy. In effect, it’s ‘virtual money’, in the same sort of way that there are ‘virtual particles’ in quantum physics. So long as the virtual particles eventually annihilate each other, there’s no problem. Problems can arise, of course, if the loans are not or cannot be repaid. This is effectively what happened before and during the 2008 financial crisis which almost brought down the entire financial system of the world - the entire financial house of cards had been built on the sand of bad debts.

I'm no expert. What I know is =>
1] Some PPP loaans were forgiven, for example some to Repuds in Congress & Senate were forgiven, who then objected to student loan forgivness of 1/10 of what they took advantage of. See MTG =MTGreen.
2] Not all of the help to corps was ;oans.
3] I googled it and got little. Mainly many of these loans are on hold, they are not being paid back yet.
4] Just like private debt can make a recession worse because paying off loans destroys the money created to make the loan.
5] So, if extra dollars in the economy will always cause inflation, then the loans have caused inflation, but will reduce incomes of someone when the borrower has to pay them bach. This will reduce the GDP then. So, the loans do double damage. 1st, they cause infltion, then 2nd they eat up GDP as they are repaid. So, they are not a wash.

Note that, normally new loans are not hugely more than the payments paying off old loans. A massive burst of new loans is different. The money surges into the economy, and then later it fairly quickly is removed. So, the double damage is more noticeable.

.

[Rich]

This is effectively what happened before and during the 2008 financial crisis which almost brought down the entire financial system of the world - the entire financial house of cards had been built on the sand of bad debts.

This is when Obama and his Liberal friends rushed into bail out the bankers and the rich depositors. Making an alliance with cuckservative Republicans they were able to force the bailout through Congress. This however initiated a rebellion within the Republican party against the cuckservatives and the bailout. Anyone who opposed the bailout was labelled as a a racist. That revolt would culminate in the election of Donald Trump.

Now you might wonder why the anti banker rebellion broke out in the Republican party not the Democratic party. That's because as long as their Trans, White hatin, woke open borders agenda was being advanced the Liberals considered bailing out the bankers and rich depositors was a small price to pay.

[wat0n]

@Steve_American at least services GDP seems to have gotten back to trend in 2021. I wouldn't say restrictions are having any clear impact right now.

Price adjustments, of course, don't necessarily happen at the same time as output adjustments do. In fact, they usually don't since prices are sticky.

Hence all the more reason to look at the figures and take them seriously.

https://data.worldbank.org/indicator/NV ... start=1997

[Steve_American]

wat0n wrote:
None of this explains clearly why has core service inflation gone up, too. Supply chain restrictions account for the increase in the inflation of goods minus food, but not the rest.

I will also note that we've gone back to normal for the most part but core services inflation has not clearly abated yet. Exactly my point.

Then I replied to answer his request for an explanation with some detailes (it's back at the bottom of page 2). And he replies with this.

@Steve_American at least services GDP seems to have gotten back to trend in 2021. I wouldn't say restrictions are having any clear impact right now.

Price adjustments, of course, don't necessarily happen at the same time as output adjustments do. In fact, they usually don't since prices are sticky.

Hence all the more reason to look at the figures and take them seriously.

https://data.worldbank.org/indicator/NV ... start=1997

Lurkers, please make a note. He asked for my take on why core services are inflating.
I gave him that with details.
And, his reply ignores every word I wrote.

Did he accept every point I made and had no reply, so he changed the subject or moved the goal posts.

It is replies like this one, that make me reply to you, the Lurkerss. It seems like the posters here can't have a conversation.

.

[wat0n]

I did not accept your points, @Steve_American

The timing doesn't fit your narrative. Why is core goods inflation around 0 while core services inflation remains high?

[late]

I did not accept your points, @Steve_American

The timing doesn't fit your narrative. Why is core goods inflation around 0 while core services inflation remains high?

Are you running away from demographics the way you run from income inequality?

[wat0n]

Are you running away from demographics the way you run from income inequality?

So you're saying the current services inflation is because boomers are retiring? What's your explanation for it and what makes you believe that type of inflation is temporary?

Also, I'm not "running" from income inequality. I just find it a poor explanation for inflation, crime and other problems based on the incontrovertible fact those problems were also present when income inequality was lower in the 1960s and 1970s.

[Steve_American]

I did not accept your points, @Steve_American

The timing doesn't fit your narrative. Why is core goods inflation around 0 while core services inflation remains high?

1st, there is no reason they need to be related.
2nd, core goods inflation is reducing because the supply chains are getting back to normal and corps with pricing power no longer have the cover, aka excuse, to keep increasing prices. They may have already made up and more any lost profits during covid.
3rd, core services are inflating for some other reason.
4th, if the money supply theory of inflation was true then, I'll ask you to explain why they are not inflating together? It seems like they should both always inflate together, right?
5th, I don't know why core services are inflating so much. Maybe their owners still need to make up more of the profits that they didn't earn during covid. You do realize that services were crushed during the lockdowns, and then later because some people were still afraid to get covid by mingling with the public. Like I said, owners think they are specisl and society owes them their normal profit, but owners also think that workers are not entitled to make up the wages they didn't earn. Owners are special and workers are not.
. . . A 2nd reason may be that many small service businesses didn't survive the lockdowns. This would have reduced the 'supply' of service providers. This would show up in the shops of the survivers as more customers each day. So, the owners think they can increase their prices and not see a drop in sales. That is, they can't meet the demand for their sercice (because some of their competition went out of business), so they can increase their price. It is called, supply and demand, right?.

.

[wat0n]

1st, there is no reason they need to be related.

There is if you claim core services inflation is due to the supply chain constraints.

After all, those supply chain constraints would affect the price of physical goods, yet we aren't seeing that.

2nd, core goods inflation is reducing because the supply chains are getting back to normal and corps with pricing power no longer have the cover, aka excuse, to keep increasing prices. They may have already made up and more any lost profits during covid.

Hence why it's not a good way to explain core service inflation right now.

3rd, core services are inflating for some other reason.

Sure, why and what makes you believe it is transitory?

It is precisely because that "some other reason" is no easily apparent that there are concerns about inflation, at least part of it, being permanently higher than the Fed's 2% target. Note that core services inflation alone makes overall inflation go well above the Fed's target.

4th, if the money supply theory of inflation was true then, I'll ask you to explain why they are not inflating together? It seems like they should both always inflate together, right?

There are lags, changes in money supply/interest rates translate into higher inflation 1-2 years later.

Do you think core services inflation is high because there's a lagged effect from goods to services? It is possible, but far from clear that's the case.

5th, I don't know why core services are inflating so much. Maybe their owners still need to make up more of the profits that they didn't earn during covid. You do realize that services were crushed during the lockdowns, and then later because some people were still afraid to get covid by mingling with the public. Like I said, owners think they are specisl and society owes them their normal profit, but owners also think that workers are not entitled to make up the wages they didn't earn. Owners are special and workers are not.
. . . A 2nd reason may be that many small service businesses didn't survive the lockdowns. This would have reduced the 'supply' of service providers. This would show up in the shops of the survivers as more customers each day. So, the owners think they can increase their prices and not see a drop in sales. That is, they can't meet the demand for their sercice (because some of their competition went out of business), so they can increase their price. It is called, supply and demand, right?.

.

Maybe, but it's far from clear any of this is actually the case. I would expect, by now, to see new businesses replacing those ones and I am also not so sure about how many businesses went bust due to the pandemic given the various federal stimulus to keep them afloat during the lockdowns and if this was enough to translate into higher inflation.

I think part of it may just reflect a lagged effect of core goods inflation, but I doubt all of the current higher than normal core service inflation can be explained by that. This also reinforces the idea that inflation is showing persistence and justifies the Fed's intervention.

[late]

So you're saying the current services inflation is because boomers are retiring?

What's your explanation for it and what makes you believe that type of inflation is temporary?

Also, I'm not "running" from income inequality. I just find it a poor explanation for inflation, crime and other problems based on the incontrovertible fact those problems were also present when income inequality was lower in the 1960s and 1970s.

Supply and demand, perhaps you've heard of it?

It's complicated. But what a lot of economists are saying is that the Fed is overdoing the interest rate increases. Speaking of which, you have not responded to my comment that they are looking after the rich. They are trying to hammer down wages when the economy wants to grow, and there is a shortage of workers.

Got some bad news for ya, crime is always there... Income inequality distorts the economy, and the politics. Pretty sure you simply haven't paid attention to it.

https://www.amazon.com/Price-Inequality-Divided-Society-Endangers/dp/0393345068/ref=sr_1_1?crid=1R199PEFYF3SU&keywords=price+of+inequality&qid=1681747836&sprefix=price+of+i%2Caps%2C135&sr=8-1

[wat0n]

Supply and demand, perhaps you've heard of it?

It's complicated. But what a lot of economists are saying is that the Fed is overdoing the interest rate increases. Speaking of which, you have not responded to my comment that they are looking after the rich. They are trying to hammer down wages when the economy wants to grow, and there is a shortage of workers.

The Fed is simply fulfilling its legal mandate of price stability and full employment.

I am aware some economists believe the Fed may have overdone the rate hikes. I think the last news of stabilizing core inflation is encouraging as it suggests the current tightening cycle may be approaching an end.

Got some bad news for ya, crime is always there... Income inequality distorts the economy, and the politics. Pretty sure you simply haven't paid attention to it.

https://www.amazon.com/Price-Inequality-Divided-Society-Endangers/dp/0393345068/ref=sr_1_1?crid=1R199PEFYF3SU&keywords=price+of+inequality&qid=1681747836&sprefix=price+of+i%2Caps%2C135&sr=8-1

And yet it used to be a lot higher when inequality was lower.

[late]

And yet it used to be a lot higher when inequality was lower.

Crime is mostly done by the young. The Boomers, the biggest generation, was young back then.

As to inflation, and the other economic factors, that was highly variable. Interesting thing about the Carter years, is the economy was doing really well for the first couple years. I mean as good as it gets. Then a number of things caught up with us (Nixon's spending spree, going off gold, the oil shock, etc) and inflation took off.

You keep trying to dismiss this, and it's not working.

At all...

[wat0n]

Crime is mostly done by the young. The Boomers, the biggest generation, was young back then.

As to inflation, and the other economic factors, that was highly variable. Interesting thing about the Carter years, is the economy was doing really well for the first couple years. I mean as good as it gets. Then a number of things caught up with us (Nixon's spending spree, going off gold, the oil shock, etc) and inflation took off.

You keep trying to dismiss this, and it's not working.

At all...

So what you are saying then that it's mostly about young people more than anything else, am I correct? What does inequality have to do with this?

[Steve_American]

Wall Street Journal Admits The Truth About Corporate Profits, The Young Turks.

The Wall Street Journal recently wrote an article that admits high inflation is being caused by corporate price gouging. Ana Kasparian discusses on The Young Turks.

From the WSJ article,

"Inflation has proved more stubborn than central banks bargained for when prices started surging two years ago. Now some economists think they know why: Businesses are using a rare opportunity to boost their profit margins.

Remove the [==] and post to your browser to see it.
https://www.you[==]tube.com/watch?v=UIG2zItam1U&list=TLPQMDcwNTIwMjMfTo5z8kCLbQ&index=3