What do folks think the effect cryptocurrency will have on inflation, if any? The creation of loads of these coins is essentially just adding to the amount of total currency of the world, while there's no equivalent increase in the amount of goods and services being purchased. Will it have any meaningful impact on global inflation?

Saw this coming, load up on metals, food, water, guns

https://www.nytimes.com/2021/05/13/o...inflation.html

They're dusting off Krugman to say inflation as a result of $ printing is overblown, I actually thought it was a good read.

A few things I don't really understand is why do so many say the savings glut is why interest rates are suppressed? I'm sure this plays a role but central banks have purchased like 15-20T worth of bonds last 12 years and cut short-term rates to 0. Isn't this doing more to suppress yields?

Also don't really get his point on the $ being hoarded because there is nothing to invest in, all asset prices are sky high right now because all this excess $ is flowing into them.

I think it’s because banks need to buy treasuries to cover all the deposit in their banks because of the 2008 crisis.
More people saves, more bank need treasuries .
Both aspect suppress yield .

Seem to me you answer your own question in second part .

I suspect it's more along these lines:
https://voxeu.org/article/circular-r...interest-rates
Money flowing into financial assets is money not flowing into investments in the means of production. I don't think it's really an issue of nothing to invest in though because I know we have a massive backlog of implementable productive technology. Rather monetary actions have made it so a company can get a better roi on their profits through buybacks or markets than investing in their own productivity growth. I believe the effects of that are so great that if I had one bullet left to improve things economically, I'd make a reduced capital gains rate apply only to investments that increase productivity.

Why wouldn't we implement this productive technology if we have a backlog of it?

It isn't like it isn't profitable to do so. Anything and everything IPO's for a billion or more these days and most of these "Technologies" are awful and add nothing to society.

For the same reason the Antebellum South didn't implement available productivity improving technology at the same rate as the North.
Yeah, the the productivity returns on IT and related is about nil. Has been for quite some time. I don't think that's the whole truth because a lot of the advances in IT are more of the qualitative sort that are hard to put a dollar amount on. For instance the total societal opportunity cost of a smartphone is probably somewhere around $100K/ea. when the total spend on their development is taken into account. My guess is most people don't feel like they're walking around with $100K in their pockets.

Got a real world example of a productive technology that is ready to go but isn't being implemented? It isn't like we got nuclear fusion ready to scale but we're holding out because we're concerned about how it will affect gas station employees.

I don't know, I just don't think there is as much low hanging fruit to take out as some others believe.

The main bottleneck in improving US productivity is talented engineers. Affirmative action has made that a lot worse, given that affirmative action minorities study STEM at much lower rates than the objectively superior candidates they replaced (by definition; or you wouldn't need affirmative action).

This seems like an oversized number to me. In fact I'm not even sure what this means. Are you claiming that society has foregone $100K in other stuff they'd have/other economic development by developing smartphones? What would we likely have instead? Smartphone research has been display research and ecosystems (broad benefits), chip research (broad benefits), camera research and ecosystems (broad benefits), untethered networking research and ecosystems (broad benefits).

I think by the far the greatest inefficiency in society right now is poorly done education. A good percentage of degrees are pure waste and have negative economic outcomes compared to those young minds learning on the job or learning something actually economically useful.

Education needs a complete and total revamp. I don’t want to cut out the classics and social sciences or anything like you probably do but there needs to be some component or track of the curriculum focused on ensuring employable skills. There needs to be the message that yes, please study Homer all you want but you also need to do xyz because here’s how many job openings BLS predicts for Homer BAs in 2025.

As unintuitive as it sounds (Solow's Paradox), there's not a significant positive correlation between IT and productivity. So comparing opportunity costs with investing and spending in something like textile manufacturing technology* is essentially comparing geometric growth with a flat line. Maybe I was a little high with the smartphone but I doubt it's by much and honestly I was thinking more along the lines of the broader IT experience consumers enjoy via the phone than merely the phone. That's not to say IT investment is wasteful or whatnot. But it functions more like advertising rather than robotics in that businesses aren't really buying and implementing IT to increase productivity but rather to either maintain or gain a competitive advantage over their competitors.

*"a real world example of a productive technology that is ready to go but isn't being implemented (much)"
Yeah, no doubt there's way more latency in human capital than what I was shooting at. But that's also a much tougher target to hit. It gets complicated when it comes to STEM fields but I think we need to start thinking about severing education from employment training. With the way things are changing in the employment sector I can't help but think most people will need to change careers or update their skills in a significant way multiple times throughout their lives. So having the ability to basically retool themselves throughout their lives without a complete disruption to their lives in the process sure wouldn't hurt. But as you said, job one is ensuring the best get the best of our resources first. Not exactly an easy sell in today's political climate.

Autonomous driving. Google is ready. Integrate 5g and people can be highly productive while commuting. I mean people will probably just be on YouTube but possibility is there.

Ice cream used to come in half gallon size. Then it was 1.75 quarts and now they come in 1.5 quarts.

This is interesting ... I notice the number of voters, (i.e. 34) who believe inflation will be running in the 2-4 percent range is matched [exactly] by the number who believe inflation will be running above 4 percent a year from now. Will be interesting to see where we are this time next year.

Yea this comment is comical. If real inflation was somehow 5-10%, current wage growth wouldn’t support the everyday consumer looking to buy goods and live a similar lifestyle to the prior year.

Real estate inflation is most pronounced in major world cities and asset inflation in store of wealth items like Rolex watches. The price of silver doubled for example.

When it comes to food items it's mostly locally farmed stuff that can't be imported from developing countries.

Strawberries have reached $8 a pound this year here.

https://www.dailymail.co.uk/news/art...ts-triple.html

Mohamed El-Erian's Inflation Concerns

https://www.marketplace.org/2021/06/...-the-recovery/

LOL @ tooth thinking there is gonan be deflation, i saw massive inflation from a mile away

Some smart people believes in deflation .
I mean if no better currency than the US exist , deflation seem likely no ?
How can you inflate the reserve currency ?

Seem to me as long trillions of dollars are in debts running around the world , the demand of the US dollar will stay high and so it’s value , has long nothing is ready to replace it or all the debts gets paid .

The fed adds money to the money supply. Money machine goes brrrrrrrrrrrrrrrr.

https://fred.stlouisfed.org/series/M1SL

Inflation bulls miss one factor.

It does not matter how much central bank printers go brrr, if commercial bank printers stop going brrrrr.

If commercial credit to consumers and businesses gets turned off or become substantially more costly, then you get deflation.

Which is exactly what happened in 2008. even though the CB printed a ton of money.

One thing most people dont understand about the financial system is that its not just the CBs that inflate the money supply.

Anyone who thinks all the debt commercial banks provide comes from savings, needs to stop being completely deluded.

So if there is a major systematic event ala 2008, deflation is a perfectly reasonable prediction.

Im not saying deflation will happen, just saying that its reasonable, not something to just be loled.

Oh you mean like a global pandemic?

Deflation lol

I am not sure how anyone in the usa cannot see that there is major inflation going on and it will continue into the foreseeable Future.

The ratio of sales to inventory is the highest in history. Not an economist but if I remember my econ 101 course, prices rise when there are is a higher demand than supply. Too much money chasing too few goods. Thank you mr fed.

Also anecdotally, we are a small manufacturer and every supplier we have has raised their prices since the beginning of the year. Box prices are about to go up for the third time. We import most of our materials from overseas and the price of containers has tripled and even at that price we are waiting several weeks for goods to be shipped.

We can't find any help and we have had to raise our wages almost 20% this year, to attract workers. Every other business owner I have spoken with has had to do the same. Even doing this we still can't find enough help.

My view is that this well end and it will probably end badly, with a recession like 2008, but that will not be happening for awhile and right now I don't see any downward pressure on prices.

My main question is how do you make money on this? I am heavily invested in commodities and precious metals. These have taken a dump the last few days, is this just a short term correction because of what China did or is this a trend? Any thoughts would be most appreciated, if you know there is inflation how do you make money off it?

Kaf11 right ,

Banks are printing money by creating loans , not the fed .
Banks aren’t lending .

If no wages increases , how can inflation persist ?
If people with their savings spend on paying debts with their stimulus checks and not consuming , money gets destroyed .
And again , you can’t inflate easily the reserve currency if the demands of is always high .

Anyway Im not saying inflation won’t happen but there is more nuances than the fed goes brrr.

My belief is that PMs and commodities are down big on the false belief the fed is in control and will successfully control inflation. Imo, when the market loses faith, and the narrative flips that the fed has lost all credibility commodities and PMs go thru the roof. Im big in PMs and holding. Bought in big when gold was around 1400. Not worried at all until gold is back down near there.

This is just a major shake out, imo