You’re asking a question that nobody has an answer to.
this post was submitted on 05 Feb 2024
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Actually, the (quasi) negative inflation era we had in the 10's was the exception. Economist believe there is a sweet spot around 3%.
And for an average person with more debt than money inflation isn't that bad. Think about the people who got a mortgage in 2019-2020 where 1.5% was a crazy high interers rate. Who have now a rate 3-4 times better than inflation.
The big issues is that many countries stop indexing the wages with inflation which is a gigantic hold up for the rich (especially when rent are tied to inflation but not salaries)
For inflation rates over 4%? In the US, likely no more than another year or three. There were a ton of inflationary pressures between COVID handouts, the Russian invasion of Ukraine curtailing wheat and oil exports, and Yemen attacking global shipping. The first is over already, the second is being worked around, and the third is not going to last a huge amount of time.
For Turkey, good luck to them and their hyperinflation. They managed their economy like shit.
For Germany, probably going to be longer, they were too tied to Russian gas and they were forced to sign expensive long-term contracts to secure LNG. Though, they are buying increasing amounts of nuclear power from France, which is easing their LNG requirements.
For Russia, probably as long as the sanctions last. So as long as they continue their invasion of Ukraine.
For everyone else? No clue, I'm not familiar enough with their monetary and political processes.
Ive read that in Australia we are looking at about 15 years before things settle down
Until they stop printing money and devaluing the dollar...
Too many people think inflation only means price increases. That's just a symptom. If banks and governments keep flooding the market with cheap loans and subsidies, you're inflating the money supply, meaning you're adding more money into circulation.
The more money sloshing around the more you'll need to purchase goods (hence why your dollar starts to devalue)... And hence price increases.
And no government is doing enough to solve inflation, even with these rate hikes.
If it was just devalued currency the corporations would also be dealing with a devalued currency and not recording record profits. That's one of the reasons getting a handle on it was such a challenge.
Are these record profits adjusted for inflation? As in, are they earning more or is it nominally higher?
My logic being, overhead gets more expensive as the currency diminishes. Companies raise prices (which you're seeing) to offset that. And then nominally, yes they'd be making record numbers. Like Zimbabwe, they made record numbers when they had hyperinflation. Didn't mean they were doing well.
And yeah I mean it's not just devalued currency, there are a lot of factors that go into inflation. But Id say it's one of the biggest contributors for sure.
Interest rates stayed low for too long and people borrowed up to their eyeballs (corporations included), pumping a lot of currency into the market. That's got to account for something no?
Yes, that is adjusted for inflation. They raised prices beyond what was necessary to account for increased costs and had record high profit margins, so you had companies like ConAgra foods reporting profits 60% higher than the same quarter the year before, and people accepted it because of the pandemic and stimulus packages ("Biden dumped money in the economy!") and labor shortages. It made a great scapegoat. Those loans existed before the pandemic, they really don't account for what happened. Inflation driven by corporate gouging had never been seen before like this.
You can find a lot of information about greedflation.
I've read a lot of articles suggesting it's profit seeking, i.e., greed, and not monetary supply. We made the money printers go brrr for a very long time with almost no inflation.
We made the money printers to brrr for a very long time with almost no inflation
You can't print without consequences. The more you pump into circulation, the more currency you need to buy the same goods and services. You're basically losing purchasing power.
If you give everyone a million dollars, you're going to see prices increase. If prices don't rise, people could buy out entire stocks of goods and you'll have supply problems. So you need prices to increase to adjust for the amount of currency circulating. That's inflation.
Chart on your purchasing power over the years:
