Inflation: By Randy Weir...Author, journalist, minister People often have a poor understanding of what inflation is or how it works. I won’t assume that’s the case here, but it’s still...

slatten49 Loc: Lake Whitney, Texas

By Randy Weir...Author, journalist, minister

People often have a poor understanding of what inflation is or how it works. I won’t assume that’s the case here, but it’s still worth taking the time to give a simple economics lesson for anyone who reads the question.

First, let’s deal with the disinformation. Biden lowered the deficit by 17% in 2021. So inflation isn’t being caused by him “printing money”. That was the last guy, who multiplied the deficit sixfold and added more to the national debt in one term than both Bushes added in their twelve years combined.

Gas prices aren’t higher because we stopped building a Canadian pipeline that would have let them t***sport dirty tar sands oil across a crucial US water supply for export overseas. I can’t believe that even has to be explained, but sadly, I hear this one over and over. They’re higher because we have a global oil shortage artificially created when the former guy said low gas prices were bad for America, then pressured OPEC to slow production to spike prices.

So that said, what is inflation? Inflation is the measure of this year’s prices compared to last year’s prices. Now before we delve into why prices go up or down, let’s talk about the trend of inflation. “Built-in inflation” is the idea that prices generally rise, and consumers expect that. If you compare prices in 2021 vs. 2019 vs. 2017, etc., you’ll see that “built in inflation” accounts for most of what we saw in 2021. The real outlier was 2020, when we had little inflation (or even negative inflation) because of a failing economy. And the confusion is that we’re comparing 2021 vs. 2020 when the economy was the worst we’ve seen in almost a century. Similarly, the reason Biden saw near-record GDP growth last year is because that growth is compared against 2020 when our GDP dropped.

So prices were lower than normal in 2020 but slightly higher than normal in 2021, resulting in a bigger ratio than we would have seen if 2020 had been a normal year. Let’s simplify this. If every year the price of a thingamajig goes up by $1, then one year it goes down by $2 one year because no one is buying thingamajigs, if the next year it goes up $2, then you’ll see double the normal increase for year over year, even though the price is the same as it was two years ago.

So what affected prices in 2020? Obviously the shutdowns from the p******c. With 75% of schools closed and 3 million people losing their jobs, there was a reduction in the need for goods and people had less money to spend on goods. Even the stimulus didn’t have the effect economists hoped on consumer spending because people used that money to pay bills and pay off debt instead of buying things. Why? Because you need less when you’re locked in your house. You don’t need school supplies and school clothes. You aren’t buying clothes for work or going to the dry cleaner. You aren’t eating out. You aren’t entertaining guests. You aren’t traveling or going to concerts. This is what we call “demand-pull inflation”. As the demand for goods rises, prices rise. Conversely, as the demand for goods falls, prices fall.

So what caused prices to be higher in 2021? Again, it’s primarily demand-pull. 99% of schools are open and we created over six million jobs. Life got somewhat back to normal for most Americans in 2021, so they resumed normal spending. And they spent a bit more because of underspending in 2020. If you didn’t buy the normal amount of clothes in 2020, you have more clothes that have worn out and need replacement in 2021. People going back to work needed new clothes for their new jobs, and businesses bringing people back to work needed new computers, printers, and furniture, and more office supplies and toiletries, etc.

We also saw the cost-push effect in 2021. This is when the cost of production drives up prices. Thanks to a certain someone’s ill-advised trade war, we already were short on things like computer chips before the p******c, and tariffs drove up prices on the things we can’t make here (or at least can’t make here affordably). Then the p******c shut down so many industries in 2020 that manufacturers are still struggling to get the components they need, which is driving production costs. Extra precautions in the manufacturing process because of c***d also create new costs (especially in regard to food and healthcare products) that were passed on to consumers. And higher oil prices sparked by the former guy’s push to get OPEC to slow production in April 2020 means higher freight costs in addition to the higher prices the world has seen at the pump.

So how do we fix this? We can’t. Seriously. Because as the economy grows, we’re comparing a strong economy to a weaker economy, and that means we’ll see a bigger ratio. That said, as the economy cools down, some of this solves itself. People catch up on the purchases they skipped in 2020. Businesses get their offices outfitted for their increased staff, and purchases level off. New businesses who spent startup money opening in 2021 won’t spend that again in 2022. The longer we go without lockdowns, the more stable our production is, and the less it costs to manufacture goods. The former guy’s deal with OPEC expires in Spring, so they should start resuming normal production soon. That will lower freight costs and prices should fall across the board.

And most importantly, soon we’ll be comparing life under Biden over life under Biden, and comparing 2022 against the healthy economy of 2021 means we are comparing growth over growth instead of growth over shrinkage, and the inflation factor hits the normal range, and possibly falls to even below normal levels.

PeterS

slatten49 wrote:

By Randy Weir...Author, journalist, minister

People often have a poor understanding of what inflation is or how it works. I won’t assume that’s the case here, but it’s still worth taking the time to give a simple economics lesson for anyone who reads the question.

Inflation is always caused by the opposition party. Conservatives aren't about to rationalize inflation as a product of the p******c even though inflation grew by 7.5% under Trump with no hint of slowing down. No matter, this is about politics and so long as there are seats to be picked up and a president to elect you can damn well bet that Republicans will blame it on Biden--even though they enjoyed all the free money he was passing out...nary a one of them sent it back!

Quote:

First, let’s deal with the disinformation. Biden lowered the deficit by 17% in 2021. So inflation isn’t being caused by him “printing money”. That was the last guy, who multiplied the deficit sixfold and added more to the national debt in one term than both Bushes added in their twelve years combined.

You are using logic against a people who are 100% irrational. It will never work--for conservatives, when they regain power inflation will become a thing of the past and not a day before...

woodguru

slatten49 wrote:

By Randy Weir...Author, journalist, minister

People often have a poor understanding of what inflation is or how it works. I won’t assume that’s the case here, but it’s still worth taking the time to give a simple economics lesson for anyone who reads the question.

First, let’s deal with the disinformation. Biden lowered the deficit by 17% in 2021. So inflation isn’t being caused by him “printing money”. That was the last guy, who multiplied the deficit sixfold and added more to the national debt in one term than both Bushes added in their twelve years combined.

Gas prices aren’t higher because we stopped building a Canadian pipeline that would have let them t***sport dirty tar sands oil across a crucial US water supply for export overseas. I can’t believe that even has to be explained, but sadly, I hear this one over and over. They’re higher because we have a global oil shortage artificially created when the former guy said low gas prices were bad for America, then pressured OPEC to slow production to spike prices.

So that said, what is inflation? Inflation is the measure of this year’s prices compared to last year’s prices. Now before we delve into why prices go up or down, let’s talk about the trend of inflation. “Built-in inflation” is the idea that prices generally rise, and consumers expect that. If you compare prices in 2021 vs. 2019 vs. 2017, etc., you’ll see that “built in inflation” accounts for most of what we saw in 2021. The real outlier was 2020, when we had little inflation (or even negative inflation) because of a failing economy. And the confusion is that we’re comparing 2021 vs. 2020 when the economy was the worst we’ve seen in almost a century. Similarly, the reason Biden saw near-record GDP growth last year is because that growth is compared against 2020 when our GDP dropped.

So prices were lower than normal in 2020 but slightly higher than normal in 2021, resulting in a bigger ratio than we would have seen if 2020 had been a normal year. Let’s simplify this. If every year the price of a thingamajig goes up by $1, then one year it goes down by $2 one year because no one is buying thingamajigs, if the next year it goes up $2, then you’ll see double the normal increase for year over year, even though the price is the same as it was two years ago.

So what affected prices in 2020? Obviously the shutdowns from the p******c. With 75% of schools closed and 3 million people losing their jobs, there was a reduction in the need for goods and people had less money to spend on goods. Even the stimulus didn’t have the effect economists hoped on consumer spending because people used that money to pay bills and pay off debt instead of buying things. Why? Because you need less when you’re locked in your house. You don’t need school supplies and school clothes. You aren’t buying clothes for work or going to the dry cleaner. You aren’t eating out. You aren’t entertaining guests. You aren’t traveling or going to concerts. This is what we call “demand-pull inflation”. As the demand for goods rises, prices rise. Conversely, as the demand for goods falls, prices fall.

So what caused prices to be higher in 2021? Again, it’s primarily demand-pull. 99% of schools are open and we created over six million jobs. Life got somewhat back to normal for most Americans in 2021, so they resumed normal spending. And they spent a bit more because of underspending in 2020. If you didn’t buy the normal amount of clothes in 2020, you have more clothes that have worn out and need replacement in 2021. People going back to work needed new clothes for their new jobs, and businesses bringing people back to work needed new computers, printers, and furniture, and more office supplies and toiletries, etc.

We also saw the cost-push effect in 2021. This is when the cost of production drives up prices. Thanks to a certain someone’s ill-advised trade war, we already were short on things like computer chips before the p******c, and tariffs drove up prices on the things we can’t make here (or at least can’t make here affordably). Then the p******c shut down so many industries in 2020 that manufacturers are still struggling to get the components they need, which is driving production costs. Extra precautions in the manufacturing process because of c***d also create new costs (especially in regard to food and healthcare products) that were passed on to consumers. And higher oil prices sparked by the former guy’s push to get OPEC to slow production in April 2020 means higher freight costs in addition to the higher prices the world has seen at the pump.

So how do we fix this? We can’t. Seriously. Because as the economy grows, we’re comparing a strong economy to a weaker economy, and that means we’ll see a bigger ratio. That said, as the economy cools down, some of this solves itself. People catch up on the purchases they skipped in 2020. Businesses get their offices outfitted for their increased staff, and purchases level off. New businesses who spent startup money opening in 2021 won’t spend that again in 2022. The longer we go without lockdowns, the more stable our production is, and the less it costs to manufacture goods. The former guy’s deal with OPEC expires in Spring, so they should start resuming normal production soon. That will lower freight costs and prices should fall across the board.

And most importantly, soon we’ll be comparing life under Biden over life under Biden, and comparing 2022 against the healthy economy of 2021 means we are comparing growth over growth instead of growth over shrinkage, and the inflation factor hits the normal range, and possibly falls to even below normal levels.

By Randy Weir...Author, journalist, minister br b... (show quote)

People, especially "real" americans simply cannot connect dots over periods that go from one administration to another.

Rose42

slatten49 wrote:

By Randy Weir...Author, journalist, minister

People often have a poor understanding of what inflation is or how it works. I won’t assume that’s the case here, but it’s still worth taking the time to give a simple economics lesson for anyone who reads the question.

First, let’s deal with the disinformation. Biden lowered the deficit by 17% in 2021. So inflation isn’t being caused by him “printing money”. That was the last guy, who multiplied the deficit sixfold and added more to the national debt in one term than both Bushes added in their twelve years combined.

Gas prices aren’t higher because we stopped building a Canadian pipeline that would have let them t***sport dirty tar sands oil across a crucial US water supply for export overseas. I can’t believe that even has to be explained, but sadly, I hear this one over and over. They’re higher because we have a global oil shortage artificially created when the former guy said low gas prices were bad for America, then pressured OPEC to slow production to spike prices.

So that said, what is inflation? Inflation is the measure of this year’s prices compared to last year’s prices. Now before we delve into why prices go up or down, let’s talk about the trend of inflation. “Built-in inflation” is the idea that prices generally rise, and consumers expect that. If you compare prices in 2021 vs. 2019 vs. 2017, etc., you’ll see that “built in inflation” accounts for most of what we saw in 2021. The real outlier was 2020, when we had little inflation (or even negative inflation) because of a failing economy. And the confusion is that we’re comparing 2021 vs. 2020 when the economy was the worst we’ve seen in almost a century. Similarly, the reason Biden saw near-record GDP growth last year is because that growth is compared against 2020 when our GDP dropped.

So prices were lower than normal in 2020 but slightly higher than normal in 2021, resulting in a bigger ratio than we would have seen if 2020 had been a normal year. Let’s simplify this. If every year the price of a thingamajig goes up by $1, then one year it goes down by $2 one year because no one is buying thingamajigs, if the next year it goes up $2, then you’ll see double the normal increase for year over year, even though the price is the same as it was two years ago.

So what affected prices in 2020? Obviously the shutdowns from the p******c. With 75% of schools closed and 3 million people losing their jobs, there was a reduction in the need for goods and people had less money to spend on goods. Even the stimulus didn’t have the effect economists hoped on consumer spending because people used that money to pay bills and pay off debt instead of buying things. Why? Because you need less when you’re locked in your house. You don’t need school supplies and school clothes. You aren’t buying clothes for work or going to the dry cleaner. You aren’t eating out. You aren’t entertaining guests. You aren’t traveling or going to concerts. This is what we call “demand-pull inflation”. As the demand for goods rises, prices rise. Conversely, as the demand for goods falls, prices fall.

So what caused prices to be higher in 2021? Again, it’s primarily demand-pull. 99% of schools are open and we created over six million jobs. Life got somewhat back to normal for most Americans in 2021, so they resumed normal spending. And they spent a bit more because of underspending in 2020. If you didn’t buy the normal amount of clothes in 2020, you have more clothes that have worn out and need replacement in 2021. People going back to work needed new clothes for their new jobs, and businesses bringing people back to work needed new computers, printers, and furniture, and more office supplies and toiletries, etc.

We also saw the cost-push effect in 2021. This is when the cost of production drives up prices. Thanks to a certain someone’s ill-advised trade war, we already were short on things like computer chips before the p******c, and tariffs drove up prices on the things we can’t make here (or at least can’t make here affordably). Then the p******c shut down so many industries in 2020 that manufacturers are still struggling to get the components they need, which is driving production costs. Extra precautions in the manufacturing process because of c***d also create new costs (especially in regard to food and healthcare products) that were passed on to consumers. And higher oil prices sparked by the former guy’s push to get OPEC to slow production in April 2020 means higher freight costs in addition to the higher prices the world has seen at the pump.

So how do we fix this? We can’t. Seriously. Because as the economy grows, we’re comparing a strong economy to a weaker economy, and that means we’ll see a bigger ratio. That said, as the economy cools down, some of this solves itself. People catch up on the purchases they skipped in 2020. Businesses get their offices outfitted for their increased staff, and purchases level off. New businesses who spent startup money opening in 2021 won’t spend that again in 2022. The longer we go without lockdowns, the more stable our production is, and the less it costs to manufacture goods. The former guy’s deal with OPEC expires in Spring, so they should start resuming normal production soon. That will lower freight costs and prices should fall across the board.

And most importantly, soon we’ll be comparing life under Biden over life under Biden, and comparing 2022 against the healthy economy of 2021 means we are comparing growth over growth instead of growth over shrinkage, and the inflation factor hits the normal range, and possibly falls to even below normal levels.

By Randy Weir...Author, journalist, minister br b... (show quote)

Everyone has an opinion. Biden apologists opinions are at odds with Trump apologists opinions and others at odds with both

All I know is prices go up and though they may come down a bit they never really go down that much.

Coos Bay Tom Loc: coos bay oregon

Rose42 wrote:

Everyone has an opinion. Biden apologists opinions are at odds with Trump apologists opinions and others at odds with both

All I know is prices go up and though they may come down a bit they never really go down that much.

They get used to the money--

ACP45 Loc: Rhode Island

slatten49 wrote:

By Randy Weir...Author, journalist, minister

People often have a poor understanding of what inflation is or how it works. I won’t assume that’s the case here, but it’s still worth taking the time to give a simple economics lesson for anyone who reads the question.

First, let’s deal with the disinformation. Biden lowered the deficit by 17% in 2021. So inflation isn’t being caused by him “printing money”. That was the last guy, who multiplied the deficit sixfold and added more to the national debt in one term than both Bushes added in their twelve years combined.

Gas prices aren’t higher because we stopped building a Canadian pipeline that would have let them t***sport dirty tar sands oil across a crucial US water supply for export overseas. I can’t believe that even has to be explained, but sadly, I hear this one over and over. They’re higher because we have a global oil shortage artificially created when the former guy said low gas prices were bad for America, then pressured OPEC to slow production to spike prices.

So that said, what is inflation? Inflation is the measure of this year’s prices compared to last year’s prices. Now before we delve into why prices go up or down, let’s talk about the trend of inflation. “Built-in inflation” is the idea that prices generally rise, and consumers expect that. If you compare prices in 2021 vs. 2019 vs. 2017, etc., you’ll see that “built in inflation” accounts for most of what we saw in 2021. The real outlier was 2020, when we had little inflation (or even negative inflation) because of a failing economy. And the confusion is that we’re comparing 2021 vs. 2020 when the economy was the worst we’ve seen in almost a century. Similarly, the reason Biden saw near-record GDP growth last year is because that growth is compared against 2020 when our GDP dropped.

So prices were lower than normal in 2020 but slightly higher than normal in 2021, resulting in a bigger ratio than we would have seen if 2020 had been a normal year. Let’s simplify this. If every year the price of a thingamajig goes up by $1, then one year it goes down by $2 one year because no one is buying thingamajigs, if the next year it goes up $2, then you’ll see double the normal increase for year over year, even though the price is the same as it was two years ago.

So what affected prices in 2020? Obviously the shutdowns from the p******c. With 75% of schools closed and 3 million people losing their jobs, there was a reduction in the need for goods and people had less money to spend on goods. Even the stimulus didn’t have the effect economists hoped on consumer spending because people used that money to pay bills and pay off debt instead of buying things. Why? Because you need less when you’re locked in your house. You don’t need school supplies and school clothes. You aren’t buying clothes for work or going to the dry cleaner. You aren’t eating out. You aren’t entertaining guests. You aren’t traveling or going to concerts. This is what we call “demand-pull inflation”. As the demand for goods rises, prices rise. Conversely, as the demand for goods falls, prices fall.

So what caused prices to be higher in 2021? Again, it’s primarily demand-pull. 99% of schools are open and we created over six million jobs. Life got somewhat back to normal for most Americans in 2021, so they resumed normal spending. And they spent a bit more because of underspending in 2020. If you didn’t buy the normal amount of clothes in 2020, you have more clothes that have worn out and need replacement in 2021. People going back to work needed new clothes for their new jobs, and businesses bringing people back to work needed new computers, printers, and furniture, and more office supplies and toiletries, etc.

We also saw the cost-push effect in 2021. This is when the cost of production drives up prices. Thanks to a certain someone’s ill-advised trade war, we already were short on things like computer chips before the p******c, and tariffs drove up prices on the things we can’t make here (or at least can’t make here affordably). Then the p******c shut down so many industries in 2020 that manufacturers are still struggling to get the components they need, which is driving production costs. Extra precautions in the manufacturing process because of c***d also create new costs (especially in regard to food and healthcare products) that were passed on to consumers. And higher oil prices sparked by the former guy’s push to get OPEC to slow production in April 2020 means higher freight costs in addition to the higher prices the world has seen at the pump.

So how do we fix this? We can’t. Seriously. Because as the economy grows, we’re comparing a strong economy to a weaker economy, and that means we’ll see a bigger ratio. That said, as the economy cools down, some of this solves itself. People catch up on the purchases they skipped in 2020. Businesses get their offices outfitted for their increased staff, and purchases level off. New businesses who spent startup money opening in 2021 won’t spend that again in 2022. The longer we go without lockdowns, the more stable our production is, and the less it costs to manufacture goods. The former guy’s deal with OPEC expires in Spring, so they should start resuming normal production soon. That will lower freight costs and prices should fall across the board.

And most importantly, soon we’ll be comparing life under Biden over life under Biden, and comparing 2022 against the healthy economy of 2021 means we are comparing growth over growth instead of growth over shrinkage, and the inflation factor hits the normal range, and possibly falls to even below normal levels.

By Randy Weir...Author, journalist, minister br b... (show quote)

Slat, I have no idea who Randy Weir is, but he sure is no economist or mathematician.

I'm not in the mood or have the time to do a full critique of his logic, but I will address the first two points.

'Biden lowered the deficit by 17% in 2021. So inflation isn’t being caused by him “printing money”.
If our national debt increased to $29.6 Trillion in 2021 from $27.7 the previous year, how does he figure that Biden lowered the deficit by 17%?

And,Gas prices aren’t higher because we stopped building a Canadian pipeline that would have let them t***sport dirty tar sands oil across a crucial US water supply for export overseas. I can’t believe that even has to be explained, but sadly, I hear this one over and over. They’re higher because we have a global oil shortage artificially created when the former guy said low gas prices were bad for America, then pressured OPEC to slow production to spike prices.

US Oil production decreased from 11,283 barrels a day in 2020, to 11,185 in 2021. Between the cancelled XL pipeline, and non-approval for any gas and oil leases, the Biden administration sent a clear message to the markets, that he was anti f****l f**l and pro-g***n e****y. Couple that with his recent actions of sanctioning Russian oil, HE OWNES the issue of rising oil prices. You guys on the left always look to shift the blame to someone other than yourselves for your policy blunders.

https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=a

Rose42

Coos Bay Tom wrote:

They get used to the money--

Its just good old fashioned greed and/or selfishness

slatten49 Loc: Lake Whitney, Texas

ACP45 wrote:

Slat, I have no idea who Randy Weir is, but he sur... (show quote)

Neither of us are economists or mathematicians, either, ACP45.

Read the below chart...

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mcrfpus2&f=m&msclkid=1a2e29d5a56511ecbb6657f59a08874c

And, regarding the debt and deficit: They are separate entities...

"Deficit in a country’s economy is the excess of expenditure or spending by government over its income and revenues it is calculated for a particular period and represents the amount that needs to be borrowed whereas the Debt is the total sum of money already borrowed by the government from other countries or lenders to accommodate the expenditure and it represents the total amount borrowed and still outstanding." ...plus interest.

https://www.usnews.com/news/business/articles/2021-10-22/us-budget-deficit-hits-277-trillion-in-2021-2nd-highest?msclkid=234fd748a56811ec89b6b24efc9cb3ac

ACP45 Loc: Rhode Island

Point taken. But taking credit for "lowering the deficit by 17% in 2021" after the world's economies in 2020 were locked down and shuttered, is like saying the deficit in 1930 was an improvement over the great depression of 1929. That's not a bar that requires a lot of heavy lifting, is it?

The U.S. budget deficit totaled $2.77 trillion for 2021, the second highest on record but an improvement from the all-time high of $3.13 trillion reached in 2020. The deficits in both years reflect trillions of dollars in government spending to counteract the devastating effects of a global p******c.

slatten49 Loc: Lake Whitney, Texas

ACP45 wrote:

Point taken. But taking credit for "lowering ... (show quote)

Thank you. As the following excerpt from my OP exemplifies, your point is also well-taken...

"And the confusion is that we’re comparing 2021 vs. 2020 when the economy was the worst we’ve seen in almost a century. Similarly, the reason Biden saw near-record GDP growth last year is because that growth is compared against 2020 when our GDP dropped.

So prices were lower than normal in 2020 but slightly higher than normal in 2021, resulting in a bigger ratio than we would have seen if 2020 had been a normal year."

Coos Bay Tom Loc: coos bay oregon

slatten49 wrote:

Thank you. As the following excerpt from my OP ex... (show quote)

We are doing better than some will admit

woodguru

ACP45 wrote:

Point taken. But taking credit for "lowering ... (show quote)

The deficit in 2019 was reflecting the deficit increases since trump took office when it was around $500 Billion. No deficit ever reached over three trillion before, let alone increased that much during one administration. Yes there is something to be said for the amounts added due to C***d relief, but they were already up due to tax cuts and subsidies for ill conceived tariffs and trade war policies

Coos Bay Tom Loc: coos bay oregon

woodguru wrote:

The deficit in 2019 was reflecting the deficit increases since trump took office when it was around $500 Billion. No deficit ever reached over three trillion before, let alone increased that much during one administration. Yes there is something to be said for the amounts added due to C***d relief, but they were already up due to tax cuts and subsidies for ill conceived tariffs and trade war policies

Big Kahuna

Rose42 wrote:

Everyone has an opinion. Biden apologists opinions are at odds with Trump apologists opinions and others at odds with both

All I know is prices go up and though they may come down a bit they never really go down that much.

When gas prices go down to under $1.98 a gallon like it was under President Trump, I will declare that yes we have no inflation under this current weasel and e******n f***dster currently in office. Until that time comes people like Slatten can continue to talk and spin their f**e tales about Biden's ability to run our country while always messing everything up including starting the war with Russia by high tailing it out of Afghanistan while leaving $$$$ billions of hardware and American citizens behind.

slatten49 Loc: Lake Whitney, Texas

Big Kahuna wrote:

When gas prices go down to under $1.98 a gallon li... (show quote)

You should be more concerned with your own delusions than those which you wrongly perceive in others.