What causes inflation?

[greg]

You're right about Japan intentionally creating inflation, but I don't know if consumerism is what they were trying to drive. I don't know any consumers who say "OMG! Jennifer, take a look at that inflation rate -- let's go to the mall and stock up!"

You, of course, are correct. Japan isn't "intentionally" (primarily) creating inflation. They are trying to juice up the economy, more borrowing and using of money. It is the easiest, quickest way to stimulate. Inflation is, oftentimes, a consequence of easy money behavior.

And I also agree that people don't say "OMG! Jennifer look at that inflation rate. . . ." My point about that can be expressed in a pool table analogy: if the table is slightly tilted toward one side (consumerism), people oftentimes don't see THAT. They just see the balls moving around--maybe a bit funnily. A more experienced pool player will see that bias almost immediately. I see things biased in that direction. My macro evidence is the national debt and our trade deficit.

But I DON'T want to talk about digital money though

--Greg

 

[ladelfina]

Apocalypse, I really like your pool table analogy.. although I always thought of it as more of an organic situation like Woody Allen's relationship shark. Like cells in your body that have to keep growing and renewing themselves.. if they grow too fast it's bad news, but if they stop it's even worse; there has to be that little sweet spot that is 'just right'.

I don't know any consumers who say "OMG!   Jennifer, take a look at that inflation rate -- let's go to the mall and stock up!"

Ummm, tell that to my mom, who still has stocks of stuff in the basement she and my dad bought when inflation was rampant in the '70s.. plastic bags, paper towels, detergent.. : !

 

[greg]

ladelfina: After my father passed, you should have seen the all the stuff we had to . . . um . . . offload. Packrat from hell. When we bought our first house, the basement was just loaded with rolls of aluminum foil. We're still using it. The current one has a little paper stickum price tag of 19 cents on the side of the box. You know, before bar codes, where the price can now be changed between you grabbing it from aisle and getting it to check out.

I was going to mention how I see the tilt in one consumer item. Someone drives by the car dealer one day and sees a shiny new car on a platform. He thinks "Boy, we haven't purchased a new car in over three years, and our house has just appreciated another 20% this year." He walks in and the salesman offers 0% financing, a high trade-in price , insurance while you wait, etc. Kaa-Ching. The ball falls in the pocket. Elements of this can be seen everywhere on the consumer end of things. Easy money. Wal-Mart, or someone, comes out with an easy to get credit card. No interest for six months financing at Best Buy. Need I go on? Kaa-Ching. A lubricated, tilted table. Things are out of whack. Most everyone here sees that and has avoided the problem by not participating as much on the surface of the table. And you see why some are so adamant about refusing to believe it is going on. They have a vested interest in that table continuing to work as it always has in the past. Have fun!

--Greg