mookiemcgee wrote:jusplay4fun wrote:Money Growth, Money Velocity, and Inflation
Low, stable inflation optimizes economic growth.
Inflation results when aggregate demand exceeds aggregate supply.
Aggregate demand is influenced both by the supply of money and the velocity of money.
The classical theory of inflation states that money growth causes inflation.
Inflation depends on money growth and the velocity of money.
The velocity of money equals the average number of times an average dollar is used to buy goods and services per unit of time.
https://thismatter.com/money/banking/money-growth-money-velocity-inflation.htm
I find it interesting you haven't once brought up tarrifs and the trade war with China as a fundamental source of our recent inflation pressure. yet you've listed 'stoopid dems and joe biden' and 'gov't spending'. The supply of money certainly has an impact, as does the inelasticity of our supply chain. But maybe you need to dig a little deeper in your research. People talk alot about the 'causes' of inflation, but lets not forget the definition itself is 'prices go up'. We still buy almost everything from China except for our food, and virtually all of those good are still being 'tarrifed' at 25% or higher which one way or the other means massive inflationary pressure. I guess since the media doesn't talk about tarrifs and the trade war anymore people have forgotten? For a while companies were able to absorb those costs and not directly pass them on to the consumer, but the supply chain disruptions due to covid and rising transport costs means there is no more room for companies to absorb it and consumer prices rise. Congrats republicans, you've stoped the globalist agenda but now you are paying more for things... time to ignore what you've spent four years doing and blame newly elected democrats!
As I understand things, President Trump imposed tariffs on some imports from China for various reasons. I will not delve into that, unless you want to discuss the reasons and rationale for imposing tariffs.
Some or most of those tariffs have been around some 1-2 years before President Biden took office, so to blame our current round of inflation on tariffs is a rather weak argument.
Of course the basic definition of inflation is rising prices. There is no need to debate or even discuss the fact that prices are going up: food, fuel, and much more. The REAL question is the cause(s) of inflation. If you look at the discussion present by Duk, HitRed, and me, you will see that those causes have been a major part of the discussion and tariffs has not appeared as a cause. I think too that the data presented (via links) that HitRed cites on M2 money supply and the velocity of money are important measures of the current rate of inflation. The graph of M2 is quite cogent; you should look at that. I think I tried to copy and paste it in this thread, but was not successful.
Do you want to offer any evidence to support your conjecture? Yes, much of our manufactured goods are from China, but the US has also shifted more imports from other countries to lessen our dependence on one country. I have looked at import numbers and have seen such a shift, but those numbers are not that critical to me; I cannot cite them without looking them up again. As I recall too, tariffs were initially imposed on specific commodities, such as steel, where the US and Trump accused China of "dumping" into the world market. I also know that Trump used tariffs as a "bargaining chip" in trade talks with China and were not intended to be a permanent part of US policy on imports. I have not kept up with the role of tariffs as that issue has not gotten much attention in the past 3 years or so. I do not think inflation was an issue back then. I do not see any real correlation of inflation to tariffs, so I will await your analysis and data, Mookie.
Further, one has to appreciate the magnitude of the COVID shut down on the economy and the MASSIVE disruption wrought on the Economy due to this massive government intervention. The response has had major repercussions, too. ALL those factors, fewer goods and services available as workers were not allowed to work and produce and PAYING many people to sit at home doing nothing is a major disruption, OBVIOUSLY. Now many work from home, a disruption. Now many who do not and cannot work from home want to do so and want a new job AND/OR they have retired. Fewer workers and another disruption.
As I predicted about one month ago, we will continue to hear about disruptions to the "SUPPLY CHAIN" for months. All these factors that I cited here have led to this. Of course there is pent-up demand, and yes, there was less order made. And NOW, we want our "plastic trinkets" (and other goods) from China (and other parts of Asia) in record amounts for Christmas.
Understand my basic premise: The Federal Government is basically printing money and giving it away (result: INCREASE of DEMAND) while discouraging work (and its result: less SUPPLY). Result: inflation. QED
