"thanks to a combination of poor weather, increased demand and virus-mangled global supply chains."
Seems like a lost opportunity to create so much anxiety with a long piece like this, to then only have this single line to hint at a reason for the rise.
Can anybody more economically minded clarify if this is just post-covid rebound supply chain prices or is this food prices adjusting closer to their 'real' cost?
Also what events do they refer to regarding 'poor weather'?
Please research Texas agriculture. Cattle does account for half of ag commodities. However it’s such a large state that it is the top US producer of several non-livestock ag commodities.
Sure, almost all central banks over the world have printed an astronomical amount of money. Even though they may state there is no significant inflation, I dont buy it and neither do many other economists. Stock prices, house prices and now, at last, commodity prices have gone through the roof... But you're probably earning about as much as you were a year ago, or less, if your industry was affected...
Inflation can be created, basically, by two things, an excess of demand respect to what the economy can produce or problems of supply.
Personally, I'm surprise at how robust are the global supply chains that have been able to keep things more or less normal despise what we have been through the last year.
The quantity of reserves created by the Central Banks are irrelevant if they are not spend in the economy. There are two effects to this "printing money": one is that the interest rate goes down facilitating borrowing from the private sector. The second is that governments have the ammunition to spend in stimulus. If the two things happen we could see inflation, but, notice that this the desired effect: compensate for a fall in the normal demand in the economy.
>" [..] central banks over the world have printed an astronomical amount of money. Even though they may state there is no significant inflation, I dont buy it [..]"
It seems to me that, in your model of the world, this should be leading to hyperinflation. If this is the case, my model of the world is wrong and I will make an effort to change it. I wish all the people has been predicting hyperinflation the last 30 years did the same if it doesn't happen. Somehow, I doubt it.
By now, the quantity theory of money based in the fractional reserve banking model should be discredited.
The examples given above seem like a textbook definition of inflation inside of a closed loop economic system.
That is not what the U.S. has and it’s definitely not the situation if a country has a reserve currency. The Triffin dilemma may hold the answer in that as you supply your currency to the rest of the world, you are creating local deflationary effects while essentially exporting inflation.
When the rest of the world begins using other systems than the reserve currency to conduct trade, the end result is that the inflation returns home as demand for your currency drops.
The grandparent says explicitly in the comment "all the central banks". We are not talking specifically about the USA.
Anyway, the "reserve currency" excuse doesn't explain Japan in the last 20 years or the Euro in the last ten. The theory is just wrong. I don't know what more have to happen for people changing their minds.
It's spending what can generate inflation, specifically, spending above what the economy can produce. If Biden tomorrow created a trillion dollar coin and keep it under their bed, there will not be inflation. If the Central Banks create reserves, the interest rate will fall to zero (but not more), and if, despise the low interest rates, nobody is borrowing, there will not be inflation.
I was referring more to your comment that inflation can be caused by only two things. It's much more complicated than that. In fact, if you were able to predict such things with an accuracy matching the confidence of your position, you would be a very wealthy person indeed.
Inflation is caused by somebody asking for more money and somebody else paying it.
That's a failure of competition keeping prices in check, and little else.
The wealthy person you are looking for is Warren Mosler. He retired to the US Virgin Islands many years ago having made a fortune off the back of people who believed in the Quantity Theory of Money
You can read his conclusions in the book "Soft Currency Economics".
Asking for investment advice in a forum is probably not the best idea, but does anyone have any advice for someone who's been sitting almost entirely in cash for over 2 years (including missing the covid rebound)? I have a fair amount of experience in the market but from an intuition perspective, I feel like I have alzheimer's or something, I haven't a clue what a person should do in this situation.
Same. I think market bubble is going to keep going atleast in near future because of the new stimulus money that is going to start flowing to the market soon.
The market != The Economy. The market trades on multiples that represent asset prices in the future, and the stimulus was priced in months ago. The recent movement in the market was a reaction to the possibility that inflation shows up 6-12 months in the future, and the Fed doesn't raise rates. Subsequently high inflation will erode the value of bonds (Corporate debt). Who is holding them? Banks. If the banks fail lending tightens and the whole thing implodes. People can't get mortgages, corporations can't pay employees, home prices crash, etc.
It's possible something could set off the market today that accelerates the whole process, like the upcoming supplementary leverage ratio change. Or, the bubble could continue inflating until doesn't. But either way the whole thing is incredibly fragile and much more complicated than the "Stimulus is good for the economy" talk politicians are peddling.
Stock market is always the best available long term bet on average, because that's where you can disguise your assets to mix in with wealthy people assets that gets government bailouts.
There are other things like real estate and government contacts, but those are less available to the casual investor, except through stock market funds.
Don’t try to time the market. Just put the money in a diversified portfolio at a roboadvisor.
The market is up 2% YTD, but down 4% from peak. It’s a reasonable time to buy (better than peak, at least).
If you must try to time the market, use time cost averaging to reduce volatility from getting a peak (or trough) price when you enter the market, but know that doing so reduces expected returns. The basic idea is to put 1/n of your money in over the next n weeks.
tldr:
Suppose I offer you a security that will pay $100 two days from today. You can buy as much of it as you like today at $50, or you can wait until tomorrow. Tomorrow, I’ll flip a coin. If it’s heads, I’ll sell you the security at $99. If it’s tails, I’ll sell you the security at $25. What should you do?
Clearly, if you buy the security today, you’ll double your money two days from now. That’s a 100% expected return for each dollar you invest, over that 2-day period. If you wait, you’ll earn nothing on the first day, but you’ll then have two possibilities. If heads, you’ll get just 1% on your invested money. If tails, you’ll get a 300% return, quadrupling your money. With a 50/50 chance at each, your expected return for every dollar you invest is 0.51% + 0.5300% = 150.5%. So waiting adds 50.5% to your expected return over that 2-day period.
Interest rates are at zero. When official inflation starts ticking up they'll raise interest rates which will deflate the stock & house price bubble and cut inflation off at the knees.
We have lots of things to worry about -- inflation isn't one of them.
But at least the bubble popping would make it easier for the middle class newcommers enter the market.
Just inflating the bubble further, as every European bank and government is doing, to make existing property owners richer on paper and get their votes, is not a viable long term solution.
IMHO, it can't pop sooner. Houses should be for living, not for speculation and hoarding wealth. The younger generations have been screwed enough by the old established wealth hoarders.
I was around during 2008, that's exactly the opposite of what will happen. Financing will dry up and the newcomers will find themselves in a highly competitive rental environment with inflated prices, while the banks and wealthy snap up SFH's for pennies on the dollar.
Maybe the government can raise rates and offer some kind of refund to people who bought their first house in the last year?
Otherwise, the number of people in that "put their life savings as a downpayment on an overpriced house" category is only going to grow, making the problem worse when the collapse eventually happens.
>offer some kind of refund to people who bought their first house in the last year
I think we run into real problems in America trying to protect people from the consequences of their own bad decision making. In addition to being deeply patronising, it eliminates so many of the normal incentives to be responsible and pushes up risk appetite across the board.
If individuals make poor investments (whether on a house or gamestop otm call options) they'll learn their lesson and move on. There's enough of a safety net in America to ensure no one truly goes hungry from bad luck (and before you point to homelessness- that's a complicated issue intertwined with drug addiction, mental illness and in some cases a free lifestyle choice)
I agree, but at the moment, it seems that same desire to protect them results in preferring a policy that drives prices ever upward. This would be a less destructive compromise.
This attitude that the market must always go up has never worked out historically, just makes the eventual reckoning that much worse.
Fortunately that mentality means that renters like my wife and I who want our future kids to grow up in a good house in a quality school district can just keep saving money, waiting to capitalize on the inevitable normalization when all the speculators and eggs-in-one-basket people fail to learn from history... again.
> We have lots of things to worry about -- inflation isn't one of them.
I really hate this comment. I am worried about not being able to ever being afford a house for my family. Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane.
Maybe you already own a house and are happy that prices are up. But its really weird to tell other ppl what they should be worried about.
> Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane.
Sure, and your point about housing prices mattering is a good one (see my other comment on this story). But, this describes maybe a few dozen housing markets. Probably only a couple dozen if you cut out resort/ski towns. It's a regional problem, not systemic problem with the national economy.
'few dozen' is what like 3 dozens? Assuming its a problem only in 36 markets. Wouldn't that be a 'national problem' ? 36 markets should covers a majority of population in the country.
Because relatively few regional housing markets have non-luxury 2 bed condos going for $525,000 (75K over 450K, per your original post).
E.g., in the Midwest you'd have to be in a nice part of Chicago or choosing the most expensive city neighborhood of a mid-sized city to find a meaningful number of $525K 2 bed condos. And even then, spending that much on a condo is 100% an unnecessary luxury. 10 minutes in any direction prices will crater, and by the time you get to the suburbs starter homes are from the $200s and $525K is a mansion. For the entirety of the midwest and most parts of the south.
Even on the coasts $525K for a 2 bed condo is a Big City thing. E.g., $500-$700K is the going rate for 2 bed condos in most of Boston, but drive an hour away from Boston in any direction? Not so much. Hell, even Wakefield has a 2 bed condo below $300K and that's only a 25 minute drive. And that's one of the more expensive housing markets in the US.
Living 20 minutes from major city centers via public transit has become a luxury, sure. But it's just not accurate to say that $525K for a 2 bed condo is "normal" in the US. It's not. It's quite specific to a very high CoL markets.
Ah yea i see what you mean. that might be an exception to suburbs of altanta. It was just an example of insanity of housing market in USA. I was not implying that the going price of condo.
Our old apartment in Chicago, which was in a nice neighborhood had its rent prices drop by at least $500/month. It might be more now.
When I look at real estate in general in Chicago, it's been dropping a little, not a ton, but it's not like how other are describing the huge increase in housing costs in other parts of the country.
It seems like there are big regional differences going on with housing costs in the US. Supply/demand and policy I'm guessing are making the difference.
Hint: ask anyone that lives overseas. Australia, Britain, France... anywhere without a Strong public housing subsidy:
This problem is Global, because our markets are global. The banks flipping houses for profit without so much as touching the keys? Compete with home owners to treat homes as an 'investment' of a 'commodity'.
In the US, there were 7 empty homes for each homeless person before the pandemic.
Less than 3% of the stock market now serves the actual economy of production. Might this be the culprit?
It also describes the most populous US state. The median housing price is now over $700k in California, while the median household income is around $80k.
$700k is the median. The average is even higher, and especially so in “outlier markets” (where outlier here means the cities and surrounding suburbs where most people live).
Also, more Americans live in California than any other state. So if it’s an outlier, it’s an especially impactful one.
It will also cut cheap corporate debt off at the knees, and likely begin a domino effect where people are laid off, home prices are depressed, and inflation continues in spite of all that as a result of supply shock.
Inflation due to monetary policy is a hot topic right now, but it’s getting too much blame for current events.
Prices are up for multiple reasons, including more pressure on shipping channels due to increased demand for goods across the board.
Also, this article is largely about inflation in developing nations like Indonesia. The inflation noted in countries like the United States is more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
I mean, just look at that first picture. It's a small child sitting in a sandy place with a stainless steel bowl with porridge like food inside. There is no civilization in sight. Maybe some village houses, which represent the bare minimum shelter needed. So now you get to ask yourself, should I feel pity or should I recognize that this child is not living in an environment that is conductive to escaping poverty? If I do take pity, will people pity me if I do a hike without food and end up starving on some forest path far away from civilization? I somehow doubt they would pity me.
My point is, this problem is fundamentally unsolvable without either bringing civilization to these people or bringing the people to civilization. Taking pity on them doesn't do anything except maybe convince yourself that you did your part.
Fighting against world hunger feels like a worthy goal that is fulfillable but it isn't. You don't solve world hunger by feeding people, you solve it by restructuring society.
What do you mean by 'resurrect the idea of “civilizing” people'?
It smells remarkably like you're trying to manufacture a culture war out of whole cloth when the the comment you're replying to was talking about "bringing civilisation" which is quite clearly being used in the with the meaning of "infrastructure", not the meaning of "white western culture".
So you're a proponent of the "give the fish" and not "teach to fish"? If the supplies flowing to them stop they starve again, so I am not sure you're right.
Strange thought for someone writing a reply on a message board using a device there's no way they could build from scratch.
We've structured society in a way that not everyone needs to be a farmer (or microchip designer/electronic factory line worker) for people to obtain food/devices that access the internet. Are you a proponent of 'give the fish' because you didn't build the device you are typing in?
You can both give a person a fish, and at the same time teach them to fish as well. It is not, and never should have been presented as, an either/or argument.
I think the biggest risk here - and the reason why talking about "bringing civilization" anywhere attracts strong pushback - is that historically, what happened was people ending up held hostage over supply of fishing equipment.
Giving hungry people fish obviously isn't a good solution, because then the fish giver becomes a SPOF. But also because the fish giver now has power over the hungry, and some givers will abuse it. Teaching people to fish doesn't work if they're still hungry. It also doesn't work if you're teaching methods that they can't employ. If your solution to the last problem is giving (especially licensing) them means to do fishing, then we're back to square one, with you being SPOF/risk of becoming exploitative.
The solution has to be helping people build self-sufficiency. That may involve giving money, or donating equipment and know-how - but with no strings attached, including non-obvious ones like "you'll have to buy spare parts from us, because your industry can't make them". The goal here is not absolute self-sufficiency (nobody truly has that), but avoiding the situation in which given society's affairs are being managed by outsiders, under threat of starvation or illness.
Would you please stop posting flamewar comments to HN? The GP may not have been a great comment but "resurrect the idea of “civilizing” people" is a wild and gratuitously hostile stretch. The site guidelines ask you not to do that.
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."
You've done it before, and even worse—for example here: https://news.ycombinator.com/item?id=26342816. And generally your account has been making a habit of posting unsubstantively and/or aggressively. We've asked you many times in the past not do to that, and we ban accounts that keep breaking the rules this way. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and using HN in the intended spirit, we'd be grateful.
Have you ever left a city? Even in some suburbs it's possible to take a picture of someone with only a few houses behind them. In my smallish town, only tens of thousands of people, I live next to the busiest road and I could find an equally barren background about three blocks away.
Not living in an urban environment is not devoid of civilization.
For context the photo is actually from May 1, 2012: "two-year-old Aliou Seyni Diallo eats dry couscous given to him by a neighbor, after he collapsed in tears of hunger in the village of Goudoude Diobe, in the Matam region of northeastern Senegal"
It should be noted that the entire industry is notorious for doing every dodgy thing they can get away with, wage theft, rent theft, extreme conditions, so local workers stay as far away from these jobs as they can.
Most cereal, corn, and even some fruit harvest is highly mechanized, whereas many other types of produce require manual labor, so it's really not surprising.
In Europe, there are seasonal harvests that require surges of workers, who are sometimes legal and sometimes not. For example loads of foreign workers flock to the vineyards in France, Italy or Spain to collect the grapes for winemaking. It's around 3 weeks of work, obviously not worth a permanent contract.
There were very few restrictions in those countries by the time of harvest (September) so wine prices, to my knowledge, have remained largely unaffected, but if it happened otherwise, winemakers would have been, without doubt, lobbying against the restrictions.
Well, it is still somewhat tricky to pick strawberries etc. with robots. There is R&D going on, but humans still win.
You need to take into account that income differences within the EU are enormous. Badly paid job in Germany still translates into very paid job in Bulgaria or Romania. That is why a lot of the seasonal workers come from the Balkans. Within a month they make enough money to live off for several months back home. No qualification needed.
Not sure that we're operating on the same definition of "backpacking" here, it's just low cost travel[1]. On certain visas in Australia you can extend the duration by working in a specified area[2], which is where that form of travel intersects with the food production issues.
Working Holiday visa. If you're under 30 it's a rubber stamp thing.
Pay the 400 bucks and you're good for a year.
You can work legally as long as it's no more than 6 months anywhere, and it's pretty easy to get around that.
You can extend your visa for another year if you do 88 days (~3 months) of "farm work" -- doesn't have to be on a farm per se, I know a guy who worked in a hyper-remote rural gas station ("road house").
I worked on a very remote cattle farm digging watering trenches and welding cattle pens. Then hitchhiked across the country.
There's an additional article that was on here the other day, that says there's a world-wide shipping problem.
Many containers are abandoned in countries that aren't on major routes because they took PPE to those countries, but never bothered to bring the empty containers back.
Also lots of boats moored off the US East and West coasts, plus Europe, waiting of loading/unloading because of delayed supply chains due to COVID.
It's a butterfly or ripple effect of high optimized supply chains being affected by small changes caused by nature/the government throwing a virus shaped spanner in the works.
> Most people in the western world aren't likely to buy more food, just because they have more money.
If you have more money and you use it to buy more food, that's not inflation.
Inflation is when you have more money and you use it to buy the same amount of food. Give people more money, and you will see the price of everything rise without seeing the amount of stuff they buy go up.
Give people more money, and you will see the price of everything rise without seeing the amount of stuff they buy go up.
In the specific case of COVID in the UK, people have been given money to replace the money they would have earned. The people don't have extra money. The system hasn't changed except for the fact that the money is coming from the government instead of the their employer.
Did you respond in the wrong place? "More money" is a premise of "Most people in the western world aren't likely to buy more food, just because they have more money."
Yes, and my reply was to clarify that in some parts of the world COVID hasn't resulted in people having more money despite the government 'money printing machine' going in to overdrive.
People have been given money to replace the amount they would've earned, but the work they would've done hasn't happened. All of the goods and services they would've produced no longer exist. The government tried to make up for the fact that large amounts of the real economy were shuttered by printing money, with predictable results.
Care to elaborate, because *if* there is going to be a fallout from these massive stimulus packages, it certainly doesn't feel predictable to me.
Indeed, we all like to think doomsday scenario, and covid-19 have trained our brains to think the unlikely is likely.. but it's not even obvious there is going to be a fallout from all this stimulus.
Yeah exactly, cyberpsybin's comment reads as "now that people have enough money to buy food they ate all of it".
No, the problem is that there isn't enough food in the first place. The rising price rewards farmers who produce additional food. You just need to run a stimulus program for farmers so that they can expand and mechanize their farms to increase yields.
I wish people would look at physical reality first and then look where physical reality takes the market rather than looking at the market and ignoring what physical reality looks like.
For about a year now i buy food in bulk. Mostly because its really nice to have everything at home. However i likely buy more food now too as i never experience the 'nothing nice to eat better go to sleep' situations any more.
Maybe not buy food directly for personal consumption but buying commodities is a possibility that becomes a self-fulfilling prophecy (like GameStop!). When all financial assets increase to all time highs and commodities don’t then speculators push them up to eliminate cross asset price disparities.
Wouldn't it be great if we did that instead of bailing out American Airlines and propping up overpriced real estate?
That's the issue here: not only is stuff you need getting more expensive because of the expanding money supply but the new money is being used directly to cause it rather than helping the individuals that need help.
The graph uses average hourly wages which does not include overtime, bonuses, shift premiums, and employer benefits. It also doesn't account for all workers.
Thanks for the interesting data point regarding purchasing power. I think we would agree that you’d expect purchasing power to increase when efficiency increases, rather than staying constant. And as efficiency (as measured by value i.e. usefulness/efficiency of capital) has continued to increase while purchasing power stayed mostly stagnant since 1971, those earning their income from labour are drawing the short stick, while those earning their income from capital gains (ie efficiency of productive stuff) are doing much better.
If I misinterpreted your comment (I think we agree), I welcome your explanation of why purchasing power stays the same when efficiency increases since 1971.
> why purchasing power stays the same when efficiency increases since 1971.
i would expect that purchasing power remains consistent for people doing the same work.
It's true that capital gains is captured by those who own the capital - but those who do own such capital had to take capital risk to obtain such gains.
Labour income (aka, wage income) increased if the labour changed to be more efficient without said use of capital - for example, programmers' income is very high. But for someone whose labour output hasn't changed from the 70's, is it expected that their purchasing power somehow increases (compared to someone else's)?
I appreciate your argument that most labour have not increased in value - I guess this metric would be called “labour productivity”. If you have the graph you linked with a longer timeline - it starts just before 1970s - thatd be interesting.
I still see graphs as these https://wtfhappenedin1971home.files.wordpress.com/2020/06/im... as clearly saying labour compensation correlated with advances in technology until 1971, when there was a dramatic shift, and that this is also the time when supply of $ was put in the hands of central bankers rather than any real and external asset.
The article is about developing countries like Indonesia.
They mention US inflation down below:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Money printing isn’t the only or even the main driver of inflation. Increased demands for goods during lockdown has put upward pressure on shipping costs, which is reflected in food prices.
After reading this article, I want to stock up on more food for myself and my five dependents. Double our reserves of biscuits, cereals, frozen meat, frozen bread, canned food, preserves, long-life milk, honey, multivitamins, MREs, etc etc.
Is this panic buying? Is it OK? Does it hurt other people? I’d be interested to hear some different points of view.
Given that you don't know how the future will be, instead of doubling all your reserves right away, which definitely sound like panic buying, you may consider a less aggressive approach. Don't just buy everything right away, instead focus only on the most important type of food you need and slowly increase your reserve by buying a bit more when you do your groceries (you buy rice once every 2 weeks? Consider buying a few more kg each time and add to your reserve). And once you're good with rice/noodles/cereals you can do the same for other stuff.
It's never bad to have a little extra if you have the storage space and rotate through it. If that unlikely hurricane comes, or whatever your area might suffer, you don't have to be a pepper to be a normal level of prepared.
But don't panic buy. Don't now go to the store and stock up massively. Put in an extra shelf-stable item, and next time you go shopping do it again, but don't panic now. That's how you create a food shortage.
Even if you add "only" 10% extra to your purchase, I think that's what happened with toilet paper. I purposefully didn't buy any, figuring the crazies would get their fill soon enough, but a month later it was still going and we were trying not to be in the store more than once a week to prevent that being a spreading place but could now only buy 2 rolls at a time per family and many stores were completely out. Of course, we didn't even have to ask neighbours yet (some neighbors will have had to spare, not as if the rolls all disappeared into thin air) so it wasn't bad in any way in the end, but this panic behaviour is unnecessary and very quickly detrimental, even when a majority of people understand it's unwarranted.
You know it's panic buying and you know it will harm other people. That's why you want to do it yourself. You know that if others do it and you don't that it will harm you. So you take the "can't beat 'em, join 'em" approach and do it yourself. Is it wrong for an individual to "join 'em"? No. Is it wrong that individuals feel the only way to be safe is to "join 'em"? Yes. But that's not a problem you can solve by yourself.
The tragedy is that much of the food being stocked up in people's homes will go to waste as they don't have the facilities or knowledge to store it properly. Food suppliers have way better storage facilities than you do at home. They know how to keep food available all year round. There's also plenty of food to go around as should be blindingly obvious by observing the waistlines of people around you and that's including the fact that the food supply chain already has a ton of waste built in.
It is indeed "panic buying" by the definition, but it need not be panicked. It is prudent to have a few months of supplies on hand if you know you're going to need them.
> After reading this article, I want to stock up on more food for myself and my five dependents.
You should always have some amount of food reserves. Space allowing, at least a few days of food. Canned and dry goods with long shelf lives - eat the oldest of this first during regular usage and refresh the stock so you don't end up with 5 year old canned goods.
> Is this panic buying?
A little, yes. There's not much risk of long-term food insecurity in the first world (at least not in the US). There are occasionally disasters that affect us short term - think hurricanes, floods, electricity outages, earthquakes, winter storms in Texas. I'd advise being able to get through those.
> Is it OK? Does it hurt other people?
It can hurt others. At the beginning of the pandemic there was a lot of panic buying. Part of that was an overreaction, part profiteerism, part of it was the world being unready to pivot to consumer goods (like with toilet paper). Do it gradually. Don't go out and buy out a canned goods section at your local supermarket.
"It can hurt others. At the beginning of the pandemic there was a lot of panic buying."
On the other hand, having a stock on hand already can be helpful. It means you won't need to join the panic buying, because you're already stocked, and you stocked at a time when the system could easily handle it.
It is a good thing for everyone to have some supplies on hand. It makes all of society more resilient against all sorts of disasters. It means that if your area finds itself in need of emergency services, those emergency services may not have to go to you, leaving them for someone else who may be in more trouble (e.g., someone who was at the epicenter of whatever and legitimately had their supplies totally destroyed).
It is the socially responsible thing to do to have some vital supplies on hand and be able to survive independently for a few days on as few services as possible in your area.
This article and the associated study are about food costs in developing nations like Indonesia.
The article mentions that inflation in the United States is much more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Buying and storing food is an inherently inefficient process relative to buying the same food as needed. You would end up spending more to build and maintain food reserves than you would save against inflation. Far more.
The article doesn’t suggest that we’re at risk of running out of food.
In a crisis bad enough that your prudence and foresight significantly affects other people by depriving them of food you can give them some of your food.
But in that situation you're probably done for already, and should have gone up in the hills, eh?
John Titor said something that scared the shit out of me. Paraphrasing, it was something like, "If you want to survive, move to a place three days further out than a starving person can walk."
( https://en.wikipedia.org/wiki/John_Titor "John Titor is a name used on several bulletin boards during 2000 and 2001 by a poster claiming to be an American military time traveler from 2036." )
If you're worried about the collapse of civilization then, no, stocking up is not going to help as much as just getting way the hell out there in the woods and being self-sufficient. You'll be rolled by starving people. ("People always raid before they starve." https://spaswell.wordpress.com/2016/11/18/dr-gwynne-dyer-geo... )
For disasters less severe than that, then YES! Stocking up is the responsible thing to do and we should all do it as a matter of course, virus or no virus.
"three days further out than a starving person can walk" sounds cool if you're posting fake apocalypse theories on the internet (aka John Titor), but is generally pretty terrible advice. First of all, there are an enormous amount of cars in America and there are roads nearly everywhere. The furthest spot from any road in the lower 48 US states is in Yellowstone, 21.7 miles from the closest road: https://www.bbc.com/news/world-us-canada-42104894
Even assuming that there's some kind of enormous EMP that kills all modern cars, there are plenty of pre-80s cars around and around a third of Americans have bikes. You can cover some serious distance on a bike if you're motivated enough (aka by hunger.) There are millions of horses in the USA, not to mention other animals and tools you can use for transportation (canoes etc.) If your bet is to hope that your fellow members of the most adaptable species on Earth won't get to you, you're generally screwed. If you plan to use force (say firearms) to hold back your place, well, that'll attract attention from anyone else (if you look at failed states, you're likely to see roving bands of criminals with more firepower than you.)
There are fairly few examples of people who made their apocalypse preparations and actually rode out the local serious disaster in their bunkers, so to me, it's obvious what your best bet is - to simply live in a safe, sane and successful society.
Even in normal times you always need a month supply of everything. During pandemic or any other major crisis event it's probably best to keep 3 months supply of everything. That's not panic buying. That's planning for your and your dependants safety and wellbeing. Don't let anyone tell you otherwise.
I don't get how food consumption can increase in a pandemic. Should be constant in or outside a pandemic situation. Possibly somewhere crops are getting rotten because of newly imposed export restrictions, or for some other things.
In the UK at least, it's very much due to new-found export (and import) restrictions. The price of food has slightly increased since brexshit, whereas its availability has plummeted: the number of varieties of vegetables stocked by my local Tesco, for example, has plummeted, and the stock sells out almost immediately after delivery.
Oh I agree, what limitations on stock there are, are probably down to Covid and it being winter.
Still, why even have brexit if we're going to do our level best to pretend we're still in the EU as hard as we can. Is being subject to full export restrictions, hammering British businesses, while allowing many European goods to flow in un-checked really the brexit you signed up for?
> The price of food has slightly increased since brexshit, whereas its availability has plummeted: the number of varieties of vegetables stocked by my local Tesco, for example, has plummeted, and the stock sells out almost immediately after delivery.
Zero problems in any of the major supermarkets in my area in the South East. My food bills haven't increased notably either, if anything, looking at my bank statement right now, they seem lower over the past 4-5 months than the year before.
The only anecdotal thing I have noticed, is that there a few new brands on the shelves that weren't there previously, but that's probably just observational and confirmation bias, because I was looking for something, I saw it.
> the number of varieties of vegetables stocked by my local Tesco, for example, has plummeted, and the stock sells out almost immediately after delivery.
Are you in a really shitty area or something? I only saw what you described in the first week of lockdown one. Nothing has noticeably changed in my local Morrisons for the last few months.
I'm in an urban area that perhaps is a bit poorer than some others nearby, yes. The bigger out-of-town supermarkets have better stock but my usual urban Tesco (and to a lesser extent the two Sainsbury's Locals nearby) just don't have that much stock. It changed a lot in Lockdown 1 and hasn't really recovered.
I certainly noticed a few months ago that the supermarket in my local small town seemed to be better stocked than the larger supermarket in the nearby medium sized city.
Tesco here in Greater Manchester doesn't seem to have been impacted by availability. Where about in the country have you experienced this? Have you tried a different supermarket?
Aldi, Lidl, M&S, Morrisons and the local greengrocer all seem the same as usual here.
But with most restaurants closing your will also have to subtract the food that would have been used there. Obviously most of them tried to change to a takeaway service, but I am pretty sure their overall customers went down by alot during all of this.
Restaurant supply chains are a totally separate beast. Bulk foods being supplied were mostly sent to landfills. Tons of potatoes for example that were only ear-marked for restaurants went straight to the dump.
Supplier A only supplies to restaurants it's normally a safe bet, so that's all they do. No restaurants buying - holy shit - my entire crop is excess...
I'm not a farmer but this is what I've read.
There's also the fact a lot of panic buyers might buy too much, then end up throwing a bit away because of fear that when they need it - it won't be there, but then it just spoils at home, etc.
Also food banks are taking a lot of the food. More people actually have money for food (one thing the govt does do is make sure people don't starve (usually) maybe more if you have kids).
TLDR: You can't just move all restaurant food to consumer/grocery like it's a commodity in Factorio... it takes a lot to shift global supply chains and get new contracts on how deliverables are received, etc...
Not to forget availability of labour. Which travel restrictions affect. Also processing has challenges. When your line worker might be out of service for week or two it can affect output, same goes for increasing the hygiene standards. And those also involve costs which will be moved to consumers.
> I don't get how food consumption can increase in a pandemic
There are a lot of people comfort eating and generally grazing out of boredom. I'm sure I've been eating a little more than I should with the crappy foods. Plus, people are saving so they are probably buying more foods to stock up on and thus throwing it all away.
Food consumption changes: Pre-pandemic, a good amount of meals would be eaten out of the house. School lunches, breakfast on the way to work, lunch break at the work cafeteria or a fast food place (sure, some folks bring lunch, but many places don't offer a break room that is adequate).
All of this - and things like toilet paper - shifts to consumer goods instead of bulk goods, which takes different equipment and processing in factories, often at different times. A portion of school lunches in the US are the result of government subsidy foods: Cheeses, potatoes, and so on are very low cost to public schools.
In short: Consumer foodstuff demand has increased.
Additionally, more folks are spending a bit of time with food, changing the demands. Plus, home and slightly depressed/anxious with newly found free time means you have more time to eat - and many have taken up eating more.
And then you do have crops that couldn't be picked, disruption in shipping (food travels far), and disruptions in factories that complicates things.
In the UK, last year we had a terrible shortage of bread flour in the supermarkets.
Actually, what we had was a sudden reduction in the amount of flour being used by bakeries, and an increase in the amount of flour being used at home. There wasn't a shortage of flour - there was a shortage of small bags to put it in for selling at a supermarket. The industry was all set up for selling a decent proportion of flour in really large bags.
Likewise, for simple goods like vegetables, dairy, and beer, some suppliers have suddenly had their customers disappear, because they normally sold to restaurants, pubs, and caterers, where other suppliers have not been able to keep up with demand, because they sold to supermarkets. The obvious solution is for the suppliers who previously sold to caterers to sell to supermarkets instead, but it takes a while for these contracts and logistics to be sorted out.
Yes, similar in the US. First all flour was sold out, then as it became available again it was bulk bins first, and then brands that sold in 1 and 5 pound bags last.
Interestingly (well kinda) the similar yeast shortage is still not back to normal. The shortage was partly related to packaging and the yeast at my grocer is still in the post COVID foil packaging and not in the packages it was before. (Luckily I had yeast in the freezer)
We had a load of news stories on TV about dairies and brewers pouring their milk/beer down the drain, and people spluttering about how they couldn't find any beer or milk on the supermarket shelves. That isn't a supply/demand problem, that's a logistics problem.
(Also - seriously, you have 1 pound bags of flour over there? Most bags here are 1.5kg (3.3 pounds), with some specialist flours in 1kg (2.2 pounds) bags. 1 pound seems a little small.)
After just finishing reading Griftopia; I would not be surprised if Goldman Sachs had something to do with this or at least speculation of perishable commodities.
Speculation in commodities reminded me of the onion futures act [0]
"""
The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".[1]
In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of January 2021, it remains in effect.[1]
The law was amended in 2010 to add motion picture box office futures to the list of banned futures contracts, in response to lobbying efforts by the Motion Picture Association of America.[2]
"""
Prior to the pandemic, I always advocated for a couple weeks worth of non-perishables to be at the ready. Storms can cause issues getting to stores (or shipments arriving), and illness can make it a pain to make a weekly run. Now my significant other is entirely on board.
When normal ingredients we used became unavailable, it caused us to continually try new things. I have to admit I was pretty surprised to see today's customers buy up the basic scratch ingredients like rabid consumers early in the pandemic. Flour, sugar, etc. were all a real pain to get a hold of.
I thought prices were increasing pretty steadily before the pandemic and now it's even worse. I can remember so many items being as cheap as 25 cents each during the 90s and into the 00s... now most of them at $1.50 each. Meanwhile, our state minimum wage has increased not nearly as much (but employers are having to offer closer and closer to double to rope in anyone).
> prices were increasing pretty steadily during the pandemic and now it's even worse. I can remember so many items being as cheap as 25 cents each during the 90s and into the 00s...
How long have you been having a pandemic for?
Joking aside (that sentence read a bit weirdly), I don't think you should compare what happened in the 90s with what happened since 2020-02. If inflation surpasses minimum wage in the long term, that's not the same as prices soaring because of supply chain changes. And for what it's worth, I've not noticed any price increases here between 2020-02 and last week. This is way too anecdotal and conflating different situations to be useful.
The data does, really - on an off-hand search I found this[1], though I'm sure many more could be found. The US has trailed the rest of the world for decades on wage growth and income equality.
That's great, they're just two items and a lot of people didn't routinely buy flour (or something like yeast). Meanwhile, everything else has gone up in addition. A number of produce items have increased 25-50% in the last year here.
Gotta love some of the people on HN. Maybe it's just the late night crowd?
"The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”
The poor person paid out $100 over 10 years, for the equivalent goods that would've costed $50 in upfront capital (good shoes).
So an enterprising banker would be willing to lend this poor person $50, to be repaid with eight $10 installments yearly, for a total of $80 - a 60% return on investment (7.5% pa returns).
This would've kept the poor person's cashflow the same - $10 per year, and he'd have paid an extra $30 for the priviledge of the upfront capital, but saved $20 vs buying new shoes every year for $10, ten years straight.
If those shoes were so important, this would've been the way to do it, not buy a crappy pair every year that end up costing you more in the long run.
Edit: my main point is that financing is a potential way out for those who lack the capital, but is able to to handle the cashflow.
Then they get hit with an unexpected $1k medical bill. They now default on your shoe loan, and the coat loan, and the car loan, and the rest of the microloans.
Poor people generally don't have access to capital except at incredibly high APRs that typically make things worse, not better.
if they were going to get a medical bill, they would've been in the same, or worse position. They would've been without a shoe, instead of with a shoe and face default on the shoe loan.
Production has decreased, or at least ability to ship it has.
Consumption is probably the same for most families, albeit they may buy 10% more to make sure certain staples are good in case of a shortage.. more so during the ebb/flow of covid-19 waves and lockdowns.
So a family might end up wasting more food just to be sure they have enough for planned meals or alternatives.
A lot of people are having mental health issues from lockdown, that can affect eating behaviors as well - depression can cause gain or loss of appetite so that's up in the air - could also make you plan to eat in but then decide to get take out because you're too depressed to cook. (Source: I've done this as my anxiety/depression has been really bad this year and my wife who's never been depressed is barely functional this year).
I think the biggest thing is just everything's shifting. We're not just dealing with covid-19 but also fires and other natural disasters. Unfortunately, I think climate change could keep this the norm even if covid-19 is completely normalized (i.e. we return to some semblance of normal).
Covid-19 variants could also keep things an issue. I'm going to get flagged for fear-mongering but I don't see how the next decade gets any better than it is right now, except for fleeting relief cycles as we come out of the pandemic ... but there's a lot of shifting global strife.
You can almost feel the change from day to day everything's changing faster and faster and it's getting harder to predict the future. Kind of like the singularity when technology speeds up.
I remember seeing an article about how some container ship crews haven't been able to leave their ships and see other people for crazy periods of time because of lockdowns. That can't be good for retention and shipping.
As someone that is the food mostly spice trade prices have started going up in the last 2-3 weeks though prices have not even reached pre pandemic levels. Black Pepper prices have jumped 20+% in the last 20day that price is still 50% cheaper than what it was 4-5 years ago. The largest problem is not availablity of goods rather shipping. I would advise investing in shipping companies if you are active in the stock market. As now days they are charging 3-4 times the freight and still hard to get space so they probably rare raking it in
Which was all caused by an extremely large drop in the dollar. Anytime there is such a drop, you get global food chaos from a big spike in the price of commodities that destabilizes markets until they're able to adjust. And then you get civil wars out of that inevitably, it helped to cause the Arab Spring as one example.
The US Dollar Index was at 120 in early 2002, and then proceeded to fall persistently until the middle of 2008 when it rested at around 71. An epic collapse by the dollar that triggered all sorts of nasty global effects. Fortunately this time around the dollar drop hasn't been so bad, most major currencies are debasing at the same time. The dollar is merely back to where it was in 2015 and 2018, so far.
I'm just beginning to learn about investing...Is there any book and/or website to learn about how the dollar can affect commodities that you would recommend?
I don't think you need a book. When commodities are priced primarily in USD then a decrease in the value of USD leads to an increase in the number of dollars required to make the same purchase.
Increase in any price can be seen as an increase in item value or a decrease in USD value. It takes a more in depth analysis of the market to determine which is the cause of price increase.
Be careful with your reliance on BDI. As the name implies, it does not reflect prices for the entire shipping industry (e.g. container ships). I used to have investments in the area as an institutional investor, and it was common to see people not understand this.
Common stock advice: if you hear about an investment opportunity, you've probably already missed out.
Ex: Bitcoin stocks (yes they're stocks / investment products) are only really reported on when they're at an all-time high. They may go up a little more if you're reading something fresh off the press, but it's not going to go up as much as it already has. I mean if you bought a year ago you could have had a 10x return on investment, if you invest now it'll be 10-20% return on investment at best.
Bitcoin has different fundamentals IMO. For buy and hold I still think 10x from here (over the long term) is possible. This year we might see up to 100k. It’s extremely fickle. We could easily see 5k again. No one really knows, though. The best fundamental analysis that gives a bright future is of Bitcoin replacing some significant market cap for gold. Probably not though.
If “hear about” means major media wrote a news story about it because it has gone up then yes. But I’ve learned about profitable investments from places like twitter, reddit etc if you are deeply plugged in to what is happening.
Historically when they reach all time high again after a crash they still go up quite a bit (like 400% last upswing). Obviously not a huge sample size there though
Yup, stock market is all about factored in valuations and others saw the writing on the wall. Since rises and drops are due to surprises, the only way it’ll rocket further is if things will go even EVEN better than already expected. I sometimes have to repeat all this for myself... it helps :p
Closed borders, no students/backpackers, farmers unprepared to pay minimum wages to Australians is resulting in a lot of produce being plowed back into the ground. I just don't know how this economy keeps rolling.
How can farmers meet the payments on their loans?
Reading 'The great depression: A diary' and looking at the world today just shocks the hell out of me. We are following it step for step and the crash is going to be devastating.
Am I interpreting this correctly that there’s a minimum wage that applies to Australians but not foreigners, and farmers thus rely on foreign labor?
Edit: In Sweden we have/have had similar situations with temporary immigrants that for example pick berries for exploitative wages, but that’s because there’s no actual minimum wage per se - in the rest of society decent wages are ensured by strong unions (except in areas where demand is high anyway, like say for software developers).
I'll pay you minimum wage, but charge you exorbitant amounts for board and lodging and you have no choice because it's the middle of nowhere.
Or for the extra dodgy types, cash payments below minimum wage because they know international workers are less likely to know their rights and be aware of what the minimum wage is.
The first happens in The Netherlands on large scale, since they deregulated job agencies. There are 1,000's of shady ones, where administratively all is fine and dandy, but in practice foreign labour is paid far below minimum wage + they are often threatened to not speak up, passport taken, etc.
This, btw, happens all across the EU is my impression. Modern-day slavery very much alive globally even!
Sounds just like what happens in Australia, joy...
Jobseeker agencies paid by the Federal government to 'place' workers, this doesn't factor in the jobs actually being suitable or useful mind.
The workers on unemployment are also required to apply for a quota of jobs or risk losing their benefits, even though there may actually be no new jobs to apply for.
I've heard first hand about this happening in Denmark on a large scale as well. It's hard not believing the government knows about this but does nothing. I wouldn't call it slavery in this case because people come by buses from Poland and go back home after the work is done. They have their freedom of movement. It's just the origin countries are so much worse than the ones where they go to work
It's usually not even that they are so much worse. It's just that the monetary value differences make up the difference. These people can live a much better life in Poland with a Denmark subsistence wage, then they can in Poland with the minimum wage. So they sacrifice some months of their lives living in worse conditions in order to make some money for back home, where they can use that money to improve the lot of their children.
The problem here is more of a supply / demand thing which you can't simply ignore that because the issue will never go away so long as the incentives for it exist.
If farmers paid good wages they wouldn't need to rely on foreign labour and food prices would go up. This is a workable solution, but is is what people living in western countries want?
We have the same issue here in the UK with the NHS.. We pay NHS workers terrible wages so we need to import foreign labour because wages aren't high enough to attract domestic workers. In one sense it's great because we get better health care than we would otherwise afford and foreigners have an opportunity to get better pay in the UK (even if it's bad by UK standards).
I've found many people here get angry about what we pay NHS workers while also getting angry about NHS waiting times. If we wanted to we could increase wages which would either require resource cuts and lower output or higher taxes for the same level of care. It would also mean we wouldn't need to depend on foreign labour, but who benefits from this? By paying more foreigners now have less opportunity to move to the UK and British citizens have sub-par / higher cost health care.
Presumably, it's the same with agricultural workers. Sure you can pay more, but who benefits from it? The root "problem" is that labour is extremely cheap outside of developed countries. Developed countries can cut themselves off from that labour supply if they like, but I have no idea what the economic incentive (or benefit) of doing so is for either the workers or the citizens. Call it modern-day slavery if you like but these are consensual working relationships, which presumably wouldn't take place if they didn't benefit both the worker and the employer.
So long as labour remains cheap outside of the developed world a trade off will always exist – paying more will just mean higher prices for citizens and fewer opportunities for those living in the poorest parts of the world, but on the up side you can say you pay a fairer wage by your own national standards.
> Developed countries can cut themselves off from that labour supply if they like, but I have no idea what the economic incentive (or benefit) of doing so is for either the workers or the citizens.
It would end supply of people who are willing to work for unlivable wages, thus making wages for low-end work to go up. The lowest rungs of society would benefit greatly from it, while everyone pay would pay for it (via increased prices).
Some of Australia's visa's require that the applicant spend a few months working on a farm, usually fruit-picking. These workers are still entitled to the same minimum wages (as far as I know) and other protections, in theory.
(Australia's geographical isolation makes it difficult to attract seasonal workers, unlike throughout Europe where traveling for work is comparatively cheaper and easier.)
However, farmers have always benefited from the fact that people wanted the visa more than the didn't want to work — many workers are taken advantage of. Now that there are none of these workers, farmers are having to complete for labor like anyone else and that is costing more than they intended.
In addition to supposedly paying them minimum wage - the farmers employ a racket where they charge the poor souls exorbitant rates to stay on the farm as it is rural and there is no other accommodation thereby bringing the effective minimum wage down significantly.
We have a similar situation in the UK where minimum wage is payed but work and living conditions are horrendous.
No locals will do the work because... Why would you. Living in a caravan for the whole summer and working 12 hours a day isn't a good deal. Maybe its worth it if you intend to move back to a county where you get much better purchasing power?
I don’t mean to downplay this, but it’s similar to the migrant worker booms across the globe over past decades.
For example, people from Central America trek up at risk of their lives through dangerous drug lord territories to get to US states where they can work illegally for less than minimum wage, then send that money back to their families because they can make much more doing that than they could at home and may have no other choice.
The working and living conditions can be terrible, and answer is not to deport them or make their conditions worse; that hurts the host country as well as the workers and creates more division. Similar workers boosted the US culturally and economically because industry and governments embraced them for labor and taxes.
Really? Top voted comment on Hacker News? Yikes. Things have really gone downhill around here. Stick to tech, folks.
"During the early 1920s, for example, prices dropped a total of 20%. And during the worst years of the Great Depression, from 1930 to 1933, prices fell a total of 25%"
I mean, the title of the article was even : "Food Prices Soar Globally"
If you want to be a doomer, than at least compare it to the stagflation of the 70s, but honestly, that's probably not accurate either.
That was in regards to following the diary step for step - Farmers plowing food back into the fields, enactment of minimum wage laws, booming house prices followed by a massive crash with nobody attending auctions, booming stock market with massive unemployment.
I, for one, appreciate it. This thing on HN where you have to beat around the bush and phrase your sentences objectively and in a general way, when everybody knows that you are just talking about a specific instance, saying things like "if you [x] then someone may respond [y]" when it is clear that someone literally said [x] so you can just say [y] in reply.. All that stuff is incredibly tiring to read IMHO. If you just want to call out someone's bullshit you should be able to do so in a straightforward manner and in a tone that corresponds with "calling out someone's bullshit".
If we could just be a little bit more honest here I think it would be an improvement.
While I somewhat agree with the sentiment of your comment, one of the reasons I believe Hacker News is so civilized is because the arguments are always very rationalized. That is, it is easy to point out faulting logic.
Following up with your example: If someone simply states [y] then the context of where [y] came from is lost and the discussion turns into a person saying [x] and a person saying [y], which is a step too close to becoming Twitter.
While I agree it can sometimes be a bit tiresome to read and write, I say this significantly improves the overall quality of the conversations.
I understand your position, it is definitely more natural to answer less analytically and more emotionally.
But this is commonplace elsewhere on the Internet and you can see the results. Too often the argument deteriorates into ad-hominem mud flinging.
HN is pretty rare in its analytic culture. I appreciate it and enjoy the difference from Twitter, Reddit et al. enormously.
It is important to realize that we cannot really read the minds on the other side of the screen and a lot of our assumptions what somebody really wanted to say are just prejudice.
It isn't normally clear that someone just said [x]. HN is united only in interests; the usual crowd has a pretty broad range of cultural backgrounds and there enormous room to misinterpret people without body language. Twitter has sentences, HN has paragraphs. It is an improvement, but it isn't really a suitable format for discussion.
And in that vein, the most reasonable interpretation of the thread ancestor is "look, we've been through this sort of thing a couple of times in the last 7,000 odd years of recorded history - why does this all seem to be surprising to the people in charge and catching them unprepared?".
We know we've been here before, and it isn't that crazy to say the current state of the world looks like the prelude to WWI or WWII. Reading books like "The great depression: A diary" is a pretty decent idea. It would have been much more helpful if old mate had argued why there were similarities. Maybe with coaxing they would have. "Yikes. Things have really gone downhill around here. Stick to tech, folks." does not encourage anything half as productive as looking to the past for answers. There are bigger problems afoot in 2021 than tech.
Okay but this was the start of some pretty dark times, so I think it's necessary to be historically accurate here which is not the case. The great depression followed the first more or less industrialized war, also the geo-political situation was a completely different one.
I didn’t really read it as snark. It has historically been pretty shocking here to find a top comment so confidently wrong and just seemingly totally made up (farmers going bankrupt just like the Great Depression.. because food prices are going up?), and it’s fair to directly call it out. It wasn’t done in any particularly mean way as best I can tell.
> It has historically been pretty shocking here to find a top comment so confidently wrong
You should not be shocked by that, because every comment starts out as the top comment, votes only affect how quickly it drops. If you come back a few days later and the top comment is still confidently wrong, maybe you can be shocked then.
When posters assume competence within a domain that they do not have and make predictions with absolute confidence that they have no evidence for, it damages the greatest quality of this board, which is open intellectual discussion. When bullshit get called out in a snarky tone its in the defence of that quality.
I've not heard any British politicians say that lockdowns are free but I have heard the Chancellor say that any borrowing at the moment is cheap due to low interest rates.
The same was true for Covid at the beginning, no one could quantify how bad it actually would be with wild figures in the 5%+ mortality rate. So we screamed for shutdown.
Problem though is that now it's very much clear that Covid was nowhere near that level of mortality, still bad but not the doomsday scenario. Now we we'll have to see what the cost of maintaining the reaction to the initial Covid doomsday estimation; with lockdowns and short term shoring of the economy through fiat currency production.
I’m sure these 13.5 million people in the US, who now can’t afford food anymore, wouldn’t have been such enthusiastic lockdown supporters had they realized they would pay the price themselves.
The most enthusiastic lockdown supporters are unlikely to be the ones that can't afford food now. Much more likely to be people reading HN or writing for the NYT.
Unfortunately the ruling class will always find a way to trickle down costs, so it's no surprise that the poorer you are the more impacted you are. With or without lockdown
"I am once again asking for your financial support" meme for tax payers bailing out megacorp bonuses yet again
The costs of ignoring the pandemic are very country-dependent. In countries whose economies are based on extraction of natural resources, only a fairly small amount of people are needed to run the extraction and export sector. All the other tens of millions of people living in that country have bluntly been called things like "superfluous population" by thinktanks. That small workforce maintaining the economy is little affected by a disease like COVID with its median death age of ~80.
Also, it was believed that COVID presented a threat to the broader economy because it could overwhelm the healthcare system, preventing the broader workforce from accessing treatment. However, one approach is to triage COVID victims, denying them hospital beds so that those beds remain available for the broader population. Liability or elected officials’ sensitivity to accusations of "letting grandma die" prevented some countries from implementing this triaging, but other countries could.
This article is primarily about inflation in developing nations like Indonesia.
The inflation in countries like the United States is much lower (around 3% on food compared to 1.5% overall inflation).
Ironically, some of that inflation is due to increased demand for goods providing more demand for shipping services due to lockdown. People had a lot more money to save or spend during lockdown (personal savings rates spiked upward), so shipping prices are inflating due to demand. Food is often shipped, so these inflation costs are partially from shipping costs.
The article blames transportation cost due to Covid, and an increase in raw food prices for the rise in food cost.
In my little bubble, in the Bay Area, it feels like plain old greed, and opportunity, but not price gouging.
When the government tells me where I can shop, along with my fear of how certain stores have dealt with Covid precautions, my buying habits don’t take price into account like before.
The first few months; I bought transportation, and raw costs, but now I’m not so sure.
My local Safeway has raised prices on everything. At first, they looked like they were trying to be fair. Now——it looks like they know people can basically shop fir food, so why not raise prices on everything while they have you there?
Same goes for Homedepot. Yea, raw wood prices, and appliances have gone up, but it looks like everything they sell went up.
I haven’t been into Whole food because my local store has had too many sick employees.
(While we are on prices, Mercury Insurance refunded me $6.46 on a $600 policy, and that was last year. Why hasn’t my insurance gone way down? It just seems like accidents would be down? My policy is minimum I can legally get away with. I was going to switch to an insurance company that bills per mile, but my old car does not have a computer that Tye “honesty” devise can plug into. I would be happy to send the company a picture of my odometer monthly, but that is not an option.)
With regards to satisfying hunger, if the government has closed bars and sit-down restaurants in an area, that shifts food procurement towards grocers.
Pre-pandemic, I suspect I purchased over half of my caloric intake from a food vendor other than a grocer. 15 years ago, that would have been 90+% (as so I expect the younger cohorts today would be similar)
Where I am restaurants have been available throughout the pandemic at least for take out, and most have setup ways to have outdoor seating which is still allowed. There are a few which have closed permanently, but not as many as I expected, thankfully.
We did many similar things here, though when the outside temps are 0º to -5º C, it's a lot less appealing to eat and socialize outside, so the government prohibition or limitations on indoor dining have still caused a sharp reduction in percentage of calories purchased this way. (I'm not arguing that they are improper, just that they have caused a sharp change in consumption patterns which have, in turn, benefited grocers.)
If you're in California and carrying the minimum legal limits for car insurance, you're exposing yourself to a massive liability risk, especially if you're a tech worker (savings/high income), since you're not judgement-proof.
Nothing to do with COVID though, food production and distribution in India has always been horrendously inefficient. Crops rotting in trucks stuck in multi-day customs queues at interstate borders, etc.
It sounds like you’re feeling on edge after a very tough year.
HN isn’t only for tech and building things.
> On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.
I’m guessing under normal circumstances you wouldn’t curse at somebody who shared a worrisome story you didn’t want to see.
This pandemic has us all a little feral, doesn’t it?
If food prices are soaring, and there's a bubble in all kinds of other assets like stocks and bitcoin, why aren't we calling it inflation - can anyone explain why policymakers aren't really concerned?
There's little choice but to rationalize this state of affairs.
Continuing to inflat the money supply is the politically expedient option. Price inflation is a related phenomenon. The Fed is unable to decrease it's balance sheet in a meaningful way.
Some politicians are critical of central bank monetary policy. They are frequently maligned.
It is a feeling to ppl who want to start a family, buy a house. Official Inflation doesn't count for those. What else is the word that we can use here?
Not quite sure what you mean by 'may not real'. Its not possible for most ordinary ppl to even think about buying a house right now. Why isn't this a concern for policy makers.
I mean that the prices need to be measured objectively, because people aren't very good a tracking prices. They may think prices have risen when they have not.
Rents are falling slightly in dense urban areas that were already inflated from a decades long surge (65% in LA, 30% nationally [1]), but are actually increasing in suburban areas [2]. In those areas, the increases are affecting all sectors of the market:
"Overall, CoStar data show the largest rent increases have come in higher-end properties, where average rent for a vacant unit in the Inland Empire has grown 9.3% over the last year, compared with the previous four-year average of 3.8%.
In older, more rundown properties where lower-income households are likely to live, rent is up 3.4%, compared with the previous four-year average of 4.9%."
Sure, but inflation should be viewed as individual vectors.
Each vector corresponding to a delta of price and time in a generalized location for a specific good.
Something like the CPI cannot be a hard science as it refuses to acknowledge that each and every person will experience inflation based on the inflationary vectors of goods and services multiplied by a persons relative use of said goods and services.
Every person experiences a unique inflation rate, and to try and average that in something as wholly simplistic as a basket of goods is pure chicanery aimed at making this topic intractable.
That would be the cost of living for a particular person. Inflation is not that. It's literally a change in the price level of an economy, and what they are trying to measure is exactly that.
Yes, the average of the above for the entire economy. I agree, but the methodology of CPI does not at all match anything grounded in the averaging of the above logic.
A proper measure of inflation should start from the individual level and reason from there.
So if on average 1 loaf of bread is bought by a US consumer and a loaf of bread's rate of inflation is increasing(or even decreasing) by %x, and that's %y of the average consumer's expenditure, then that should contribute %x*%y of the overall inflation rate experienced by the average American consumer.
Clearly this is a complex line of reasoning, but it should be the basis of thought on measuring inflation. Yet, housing and medical expenditure are not even considered in CPI. CPI is a terrible measure that I believe was designed to obfuscate.
Housing and health expenditure are listed as components of the CPI [0], so it's almost certain that they're included in its calculation.
Again, inflation means an increase in the general price level. An increase in the price of bread is not inflation, because the price of bread is not the price level. It can be used as a data point to try to estimate a change in the price level, but by itself it doesn't tell us anything about the inflation rate (unless of course bread is the only good being produced in the economy).
Talking about inflation seems to have turned into some sort of political issue. I know I can feel the prices rising everywhere. But ppl counter it immediately by saying 'fed has tools like increasing interest rates if it really becomes a problem, they know better than you'
> Talking about inflation seems to have turned into some sort of political issue.
It is political. The method in which inflation is created benefits bankers via interest. Further, higher inflation widens the divide between the asset class and the rest of us.
However, the mainline (I would say propaganda) is that `...they know better than you` where `they` are unelected technocrats.
Are you kidding. There will be an insane recession, if not a depression.
Capitalist economies have a short boom bust cycle and a long one. Short ones cause recessions every 10-20 years. Long ones cause depressions every 100~ years.
It was clearly stated that Covid (if nothing else) could easily cause a recession, with other factors played in as well then it could easily trigger a depression.
A recession is an actual economic term, a depression is a cultural term with no economic definition that basically means "a massive terrible recession".
These boom bust cycles are caused by fiat money, inflationary debt/spending, government stimulus and over regulation that causes false market signals and creates bubbles, it’s not a capitalism problem, capitalism would be the solution.
Yes, and the most accepted theory nowadays is that gold-tied money was a leading cause of the ~10y cycle we saw at the 18th century.
As soon as countries adopted fiat money, that one cycle mostly disappeared and even its timing became much more variable. But there are a lot of confounding factors, so this isn't the smoking gun it appears at first.
Fiat money is the outcome of unfettered capitalism. The government needs money to pay its loans that it took with interest, so what does it do? Detach the currency from anything tangible like gold or other precious metals, then print more money as it desires, devaluing the hard work of people who are trying to save money.
There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity.
Market competition is good. Interest and usury are destructive dangerous practices.
The usury comes from the government taking loans with interest, so it is forced to print more money to cover its deficits which keep growing due to interest.
Printing money is the problem there, not interest. If you banned interest/loaning, you could still end up having inflation because government would print money (or do other things such as https://en.wikipedia.org/wiki/Coin#Debasement_and_clipping ).
It's a combination of interest as well as printing money. Interest keeps the deficit growing, forcing the government to print money. If we switch to a non-inflationary currency not at the control of a single entity, these wouldn't happen.
There's information on Wikipedia, even though Wikipedia is generally not a good source on nuanced religious topics. I found many incorrect things mentioned about Islam for example (I'm Muslim).
> At times, many nations from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change). [1]
So we see how the Church changed its opinion over time. They weaseled their way out of the prohibition, and today they don't say anything. Separation of Church and State also made it easier to engage in these sorts of practices.
So in the same paragraph you blame capitalism for something the government does without our consent? We have to at least assign blame equally, instead of picking and choosing which involved systems and actors to blame. Especially if we can't agree on the actual causes.
On a side note: I have seen some good analysis/speculation/theorizing done about how interest/loaning would work in a world without government-regulation. Have a look, there may be some redemption in those concepts for you if you divorce them from government meddling (which I would posit, causes a huge chunk of all the evils we blame on capitalism).
We have to move away from interest as an underlying mechanism, it's one of the root causes of the chaos in today's financial world.
The superior model is investments, similar to how VCs invest in companies in exchange for equity. Loans are to be relegated to charity only. If we apply all this, loans will become close to non-existent. We have seen this successfully work because interest is prohibited in Islam, yet it was able to flourish especially in the Islamic Golden Age to push the boundaries of knowledge and science and exploration, during a time where Europe was in the dark ages.
How do you reconcile your idea that Islamic banking systems will lead to no inflation with the inflation rates of countries that have large Islamic banks, which are much higher than the US?
Why? The very fact that they are engaging in usurious loans is a sign of incompetence. Who ends up paying for it? The hard working people trying to save money.
So they're forcing me how to spend my money. What if I don't want to engage in interest (practically all companies deal with interest in one form or another), so when I buy their stocks I'm dealing with interest in some form.
Do you really expect the entire country to change its monetary policy in order to accommodate the peculiar way in which you conduct your finances? That doesn't seem very reasonable.
Well, then let people keep crying everytime the market crashes due to the destructive practice that underly it. As I said, Islam, Christianity, and Judaism prohibit interest, we don't learn from history.
Why do you feel that a dollar bill needs to buy exactly the same amount of real-world stuff in a decade's time? Cash is not an investment, so why do you expect it to be one?
> The government needs money to pay its loans that it took with interest, so what does it do? Detach the currency from anything tangible like gold or other precious metals, then print more money as it desires.
That sounds like a government problem--not a capitalism problem. Though I do agree that this is the heart of the fiat issue.
As population grows and goods get cheaper, it can work the other way too. That can make money more scarce and more valuable.
Economics is complicated. Pointing to one lever and saying "I understand the whole machine" is lazy. I call it 'playing dot to dot'. If you just draw lines between any dots you please, you can make the picture look like anything you want.
But there is a real picture there, it has lots of dots, and its worth understanding. Pontificating on the internet is not showing real understanding.
That's why we also should use a bartering system to keep things in check, just like how societies survived for thousands of years.
I'm not claiming to understand the whole machine, however, we know for certain there are rotten practices that make the machine unstable and also much more difficult to understand. Interest and usury are at the core, along with other things that are prohibited by Islam (e.g. selling things that you don't own and several more).
Once those are removed, the system will become much more stable, fair, and better off for everyone.
You have to face reality at some point. Literally every single capitalist economy, any time, anywhere, with or without fiat money, at all practically possible levels of stimulus, and regulation, has gone through a boom/bust cycle.
If anything, they got better since the introduction of Keynesianism, not worse.
It's inherent to capitalism. Don't try to delude yourself.
It isn't just "capitalism", it's inherent to economics, period. One of the valuable lessons of studying differential equations is just how easy it is to have cyclic behavior appear. Anywhere you have a the size of a change in velocity that is the negative of how far the value is away from some baseline... in other words, the second derivative is negative... you almost certainly have a cycle of some sort showing up. (Technically it can be avoided, but a lot of those ways are physically implausible.) Negative second derivatives are going to be pretty common.
(It doesn't have to be "pure". "Simple harmonic motion" is the result of when the negative second derivative fully characterizes a system. There are, of course, plenty of systems that aren't as simple, and things get complicated... but where ever you get a significant negative second derivative you've got a system that is going to exhibit some sort of cyclic behavior, even the the cycles vary wildly in size, duration, how fractal the value behaves on smaller time scales, etc.)
Economies do not necessarily have to follow differential equations with highly volatile second derivatives.
In fact, historically, they haven't.
This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices.
And this loop is the unique and defining feature of capitalism. It didn't exist before capitalism, and in experiments like those of the Soviet Union, it didn't exist either, because there were no capital markets at all.
What you're describing is a behaviour of capital markets, but due to a lack of perspective it's described as a behaviour of economies in general - and it isn't.
Basically every time varying system, no matter how complex, can be thought of as a system of differential equations. Human systems of production -- any such system -- is a time varying system, and as such, probably has some cyclic behavior, instability, etc. somewhere inside.
The USSR experienced all sorts of issues like this, where the central management would first over supply something, then react by massively undersupplying it, then overreact in the other direction. It also experienced a total collapse. It makes no sense to point to it as a model of stability.
(Also, as you read my message here, recall my claim isn't that communisms has cycles and capitalism doesn't, but everything does because there is no way to build an economic system that doesn't have -d^2/dt^2 terms showing up somewhere in it.)
Just because a set of differential equations has -d^2/dt^2 somewhere in it doesn't mean that it will lead to an increasing amount of instabilities that will eventually lead to spontaneous -30% economic activity.
The economy of the USSR, in aggregate, literally only ever suffered two recessions - one in 1963 due to political instability (which was a very minor fall in GDP), and one at the beginning of WW2. The collapse of the USSR itself was a purely political issue - the USSR maintained growth right up until its dissolution.
I understand your point, but it is a case of diagnosing a second-order effect but not taking into account it's actual impact. Outside of capitalism, there were not really any economic systems that had such gigantic vorticity that they would spontaneously enter disastrous depressions.
Those cycles that you diagnosed, for example, eventually ended up by either a worker lying to stop the cascade, or someone at the planning office realizing the issue. They never snowballed into a Great Depression, because that simply could not happen. The reason the behaviour of unrestrained vorticity is possible in capitalism is because of capital markets. Without capital markets, or an equivalent, the behaviour you are diagnosing is inevitably dampened.
Think about it like a PID loop - there is a -d^2/dt^2 term in it, the D-loop term. But because of the I-term and the P-term, if you tune it correctly, general error always goes down over a full wavelength. Capital markets allow the D-term to overpower the loop.
I got massively downvoted in my other comment for pointing out that there are boom and bust cycles and that COVID just brought ours closer to one of the larger bust cycles, but in the interest of informing (I wrote that on a phone) I found a link which explains it much better than I could[0].
I highly recommend taking 30 minutes to watch it, the person speaking is a well regarded economist.
I have been buying GSG for the last few weeks as a hedge. Beyond transient effects of COVID-19, more chaotic weather due to climate change seems to be wreaking havoc. Beyond that, our economy seems to be increasingly reliant of raw materials that are increasingly harder to extract or that we demand more and more of.
For examples of climate havoc, look at the drought in Taiwan and the deep cold in Texas.
For examples of resource contention, look at oil and even at nickel. Those batteries meant to replace oil in turn require cobalt or nickel (at least for certain applications).
The climate havoc and resource contention have much greater than linear effects. I don’t think most people realize this. Food shortages lead not only to higher prices but to civil unrest.
lithium Iron Phosphate batteries have improved to the point they’re good enough for entry level long-range electric cars (Tesla uses them sometimes), and iron is super duper common. Lithium and phosphate nearly so, as well. So I don’t really agree there.
I agree. I may be being pedantic, but I think food prices are (or should be) the first and most important component of what we measure inflation with.
It's much clearer to say "the rest of the basket hasn't risen above normal yet, but I am concerned the headline I quoted will mislead people who don't understand inflation.
You are making a lot of assumptions here. Chief among them is that the price of food must always be strongly tied to the prices of other things in the consumer price index. But clearly, that does not need to be the case. Especially after how unsustainably humans use farmland:
Why? Food prices are usually few percent (6-18% in the western countries) of total household expenses. If you want to look at something that impacts people way more, look at rent or house prices.
Housing is by far the largest component (42%) (contrary to the common misconception that housing is not in the CPI), followed by Food and Beverages (15%) and Transportation (15%). If you want to up-weight food, you must necessarily down-weight some other component. The prime candidate would be shelter (most other categories are already much smaller than food), but that's of course not the answer that CPI-doubters are looking for.
But the CPI targets a generic US consumer. I would argue that poor people have a different priority list than the rich. The US economy is increasingly polarized with a widening gap between rich and poor.
I am curious as to whether the CPI targets the average person or the average consumer. Rich people spend more. They consumer more and are therefore overrepresented in most consumer-related measurements. Is the CPI meant as a measure of the cost of living or a tool for the calculation of available spending power?
I believe those are the two housing sub components of the basket, with owners’ equivalent rent weighted more than the rent one. Eyeballing it they both look under 2%.
Food price rises are not inflation. Inflation is an increase in the general price level, and specifically it's not an increase in the prices of a selected set of goods.
Would it not be fair to say that different subpopulations experience different effective inflation rates because they buy different things?
Seriously, would it? I’m not an economist. I am aware of RPI/CPI, and inflation is measured independently in different countries within the Eurozone, so it’s not like we can’t have multiple measures for different purposes or populations.
The concept of inflation is an attempt to measure price increases that are due to general monetary factors, as opposed to price increases that are due to market forces in specific industries. It’s fair to try and measure the practical household budget of a typical family, and many governments do, but calling this measurement “inflation” tends to mislead people into thinking that any increase must be because there’s an oversupply of money.
You can definitely say that the cost of living has risen at different rates for different subpopulations, but you can't say they have experienced different rates of inflation. Inflation is change in the general price level of the economy, and an economy is something that we can study at a macroeconomic level. In this sense, unless you regard a social group as being an economy on its own, with its own GDP, balance of payments, and whole set of macroeconomic variables, we can't speak of it as experiencing a particular inflation rate.
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The study found that food prices are rising faster than inflation.
3% is high, and 1.5% over inflation is also concerning, but I think a lot of people are jumping to conclusions based on the headline. Those inflation numbers would go unnoticed by most during normal times. We’re only seeing these headlines because inflation is a popular media topic right now.
Do we have a way of seeing periodic media obsessions? Seems like a good AI challenge, although would require a good corpus.
I saw another analysis suggesting a 75% drop in media coverage of Biden vs. Trump, at this same point in each’s presidency. That’s a useful statistic that I have a hard time finding in a comprehensive way.
>> Do we have a way of seeing periodic media obsessions?
We have dozens. Countless companies have tools to show you how things are happening on social media, and all the big new outlets mirror their content to social media. At the most simple level, basic word counts can track how issues appear and disappear. When you hear about a 75% drop in coverage of "Biden v. Trump" that is almost certainly taken from the number of times those two names are included in news reports. Counting words or highlighting the use of new words does not require AI.
Disagree that this is alarmism. The question is whether the way inflation is being measured matches the way we use it to make decisions. Graphs like AEI's Chart of the Century [1] have been highlighting for years that inflation numbers are inappropriately averaging decreasing costs for discretionary purchases, while costs for essentials like healthcare and education grow out of control. When food also starts outpacing the average (historically it has paralleled wages in the USA), you really have to ask what inflation is measuring.
Low inflation is essential to justifying the monetary easing policies that have been sustaining the stock market through the pandemic... so it is important for everyone to keep an eye on how dialog changes around these numbers.
Education and healthcare have pathological cost growth in large part because they aren’t subject to ordinary market pressures (the consumers are either over a barrel and can’t say no or aren’t paying in the first place). We need to fix them but it would be a mistake to let those pathologies drive monetary policy.
I don't have many proactive opinions about monetary policy, but it's worth noting that health care and education together make up 25% of US dollar-valued GDP and significantly more than that of GDP growth. If their pathologies enable them to successfully suck up spare dollars, that is a meaningful hole in the bucket for efforts meant to impact other behaviors.
The food inflation number was isolated in the article to be around 3%.
Much of that increase can be traced back to increased shipping costs during COVID lockdown.
Monetary policy isn’t the only or even the primary driver of inflation. In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services).
The alarmism in the comment section largely comes from people misreading the headline. The article is about soaring food costs in developing nations, but the comment section is treating the headline as if it’s about US food prices.
The article also discussed the fact that US prices are temporarily buffered by the supply chain but that big providers like GM are discussing price increases do to sustained cost increases. This is alongside existing practices like shrinkflation that make it harder for a CPI to accurately benchmark costs. It makes sense that articles and readers are looking for leading indicators.
> Monetary policy isn’t the only or even the primary driver of inflation.
After two degrees in economics, my perception is that monetary policy is definitely considered a primary driver of inflation, probably THE primary driver. But this is probably irrelevant - see below.
> In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services).
Yes, for example: "in North America... a shortage of both shipping containers and truck drivers".
> The alarmism in the comment section largely comes from people misreading the headline.
To me, it feels alarmist for Bloomberg to consistently say "inflation" instead of "price increases" throughout the article. A temporary problem with supply/demand is not the same as inflation. Food prices will almost certainly fall back to their normal trajectory within a year or two, once supply/demand normalizes, whereas if there was truly inflation that would almost certainly NOT occur.
> Graphs like AEI's Chart of the Century [1] have been highlighting for years that inflation numbers are inappropriately averaging decreasing costs for discretionary purchases, while costs for essentials like healthcare and education grow out of control.
To be fair, three out of the seven categories that are under inflation can also be considered "essential". Imagine the outrage if cars (or more generally, transport) and clothing increased 2x over inflation, or if cellphone/internet access became less and less affordable (remember all the "internet should be an essential service" headlines at the start of the pandemic?).
yeah, i don't love my discretionary/essential breakdown there.
it's more about the combo of essential + non-exchangeability -- you need a car but there are a lot of options, but when you need a hospital there's usually one best place. (and education is non-exchangeable due to competitiveness).
the other big correlate is just goods vs services (even textbooks are service-like due to editions). I am not an economist but I'm really curious whether rapid depreciation caused by planned obsolescence of e.g. consumer electronics is causing a poor measurement of price trends in that area. Today's iPhone will cost much less next year, but the cost of maintaining a cutting-edge smart phone keeps going up.
> When food also starts outpacing the average (historically it has paralleled wages in the USA), you really have to ask what inflation is measuring.
inflation is measuring the value of a currency. CPI is a way to infer inflation from the nominal price of consumer goods; but it is not the definition of inflation. put another way, if an apple costs twice as much as it did last year, that fact is not enough to say whether the currency inflated.
"the value of a currency" isn't a physical reality; it is only observed through price fluctuations. so, defining it this way is just kicking the can. The fact that you can measure very different values by focusing on Forex, labor costs, or various CPI baskets is exactly the concern with gaining too much comfort from any single-number summary in the face of price changes that are impacting daily life for millions.
I would consider the value of currency to be as real as the value of a software license, even though neither is a physical item per se. I guess that's somewhat philosophical.
my real point here is that nominal price increases do not necessarily imply inflation. if the price of one type of good is increasing much faster than the others, a better explanation is that the real value of those specific goods is increasing. does this matter to ordinary people buying food? not really. their main concern here is the nominal price of food compared to their nominal earnings.
It's entirely possible that all the things in the consumer price index and other measures of inflation rise overall faster than the headline inflation measures - they do some weird things with weighting and so-called hedonistic adjustments which means that it's probably literally impossible for someone to experience inflation that low. For example, they compensate for the supposed increase in values from, say, flash drives increasing in size, computers in speed, and TVs in size in a way that doesn't make sense if you can't even save money by buying a smaller flash drive or slower computer, or you need a faster PC to do the same things, or if the 32 inch TVs have the same resolution, sound and picture quality as a 24 inch of yesteryear and you have to go up to 40-50 inches to get something actually equivalent in quality to a 32 inch TV from years ago.
For a while, one of the key US inflation measures even assumed that if people's medication went up in price massively they'd substitute it for whatever medicine hadn't exploded in price even if it was for some completely different condition! And I'm not convinced that, even for things which genuinely are substitutable like different kinds of food, it's actually possible over the long term to substitute your spending in a way that matches up with official inflation figures.
That’s a good point. The CPI has a huge impact on policy and really just about every financial thing in our lives. It’s kind of insane that we don’t have good visibility and oversight into it!
I have a pretty imperfect understanding of inflation, but wouldn’t increased food and energy prices mean that a consumer will have less money to spend on discretionary purchases? Ie, aren’t food price rises DEflationary?
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[ 4.6 ms ] story [ 360 ms ] threadSeems like a lost opportunity to create so much anxiety with a long piece like this, to then only have this single line to hint at a reason for the rise.
Can anybody more economically minded clarify if this is just post-covid rebound supply chain prices or is this food prices adjusting closer to their 'real' cost?
Also what events do they refer to regarding 'poor weather'?
I wonder how many warehoused things that require power and integrity got damaged.
It's not just food. Lumber, Steel and Oil aswell. https://www.ft.com/content/6a7c232e-9c63-420c-ac05-40aea84a9...
EDIT: noticed link is paywalled (but not when you access via google) alternative article here: https://www.reuters.com/article/us-global-markets-idUSKBN2AM... "World shares slide on inflation fears, commodities surge"
Personally, I'm surprise at how robust are the global supply chains that have been able to keep things more or less normal despise what we have been through the last year.
The quantity of reserves created by the Central Banks are irrelevant if they are not spend in the economy. There are two effects to this "printing money": one is that the interest rate goes down facilitating borrowing from the private sector. The second is that governments have the ammunition to spend in stimulus. If the two things happen we could see inflation, but, notice that this the desired effect: compensate for a fall in the normal demand in the economy.
>" [..] central banks over the world have printed an astronomical amount of money. Even though they may state there is no significant inflation, I dont buy it [..]"
It seems to me that, in your model of the world, this should be leading to hyperinflation. If this is the case, my model of the world is wrong and I will make an effort to change it. I wish all the people has been predicting hyperinflation the last 30 years did the same if it doesn't happen. Somehow, I doubt it.
By now, the quantity theory of money based in the fractional reserve banking model should be discredited.
When the rest of the world begins using other systems than the reserve currency to conduct trade, the end result is that the inflation returns home as demand for your currency drops.
Anyway, the "reserve currency" excuse doesn't explain Japan in the last 20 years or the Euro in the last ten. The theory is just wrong. I don't know what more have to happen for people changing their minds.
It's spending what can generate inflation, specifically, spending above what the economy can produce. If Biden tomorrow created a trillion dollar coin and keep it under their bed, there will not be inflation. If the Central Banks create reserves, the interest rate will fall to zero (but not more), and if, despise the low interest rates, nobody is borrowing, there will not be inflation.
That's a failure of competition keeping prices in check, and little else.
The wealthy person you are looking for is Warren Mosler. He retired to the US Virgin Islands many years ago having made a fortune off the back of people who believed in the Quantity Theory of Money
You can read his conclusions in the book "Soft Currency Economics".
https://www.cnbc.com/2021/03/08/how-the-young-plan-to-spend-...
It's possible something could set off the market today that accelerates the whole process, like the upcoming supplementary leverage ratio change. Or, the bubble could continue inflating until doesn't. But either way the whole thing is incredibly fragile and much more complicated than the "Stimulus is good for the economy" talk politicians are peddling.
There are other things like real estate and government contacts, but those are less available to the casual investor, except through stock market funds.
The market is up 2% YTD, but down 4% from peak. It’s a reasonable time to buy (better than peak, at least).
If you must try to time the market, use time cost averaging to reduce volatility from getting a peak (or trough) price when you enter the market, but know that doing so reduces expected returns. The basic idea is to put 1/n of your money in over the next n weeks.
John Hussman has a nice article on the option value of cash. https://www.hussmanfunds.com/comment/mc201201/
tldr: Suppose I offer you a security that will pay $100 two days from today. You can buy as much of it as you like today at $50, or you can wait until tomorrow. Tomorrow, I’ll flip a coin. If it’s heads, I’ll sell you the security at $99. If it’s tails, I’ll sell you the security at $25. What should you do?
Clearly, if you buy the security today, you’ll double your money two days from now. That’s a 100% expected return for each dollar you invest, over that 2-day period. If you wait, you’ll earn nothing on the first day, but you’ll then have two possibilities. If heads, you’ll get just 1% on your invested money. If tails, you’ll get a 300% return, quadrupling your money. With a 50/50 chance at each, your expected return for every dollar you invest is 0.51% + 0.5300% = 150.5%. So waiting adds 50.5% to your expected return over that 2-day period.
We have lots of things to worry about -- inflation isn't one of them.
Just inflating the bubble further, as every European bank and government is doing, to make existing property owners richer on paper and get their votes, is not a viable long term solution.
IMHO, it can't pop sooner. Houses should be for living, not for speculation and hoarding wealth. The younger generations have been screwed enough by the old established wealth hoarders.
Otherwise, the number of people in that "put their life savings as a downpayment on an overpriced house" category is only going to grow, making the problem worse when the collapse eventually happens.
I think we run into real problems in America trying to protect people from the consequences of their own bad decision making. In addition to being deeply patronising, it eliminates so many of the normal incentives to be responsible and pushes up risk appetite across the board.
If individuals make poor investments (whether on a house or gamestop otm call options) they'll learn their lesson and move on. There's enough of a safety net in America to ensure no one truly goes hungry from bad luck (and before you point to homelessness- that's a complicated issue intertwined with drug addiction, mental illness and in some cases a free lifestyle choice)
This attitude that the market must always go up has never worked out historically, just makes the eventual reckoning that much worse.
Fortunately that mentality means that renters like my wife and I who want our future kids to grow up in a good house in a quality school district can just keep saving money, waiting to capitalize on the inevitable normalization when all the speculators and eggs-in-one-basket people fail to learn from history... again.
I really hate this comment. I am worried about not being able to ever being afford a house for my family. Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane.
Maybe you already own a house and are happy that prices are up. But its really weird to tell other ppl what they should be worried about.
Sure, and your point about housing prices mattering is a good one (see my other comment on this story). But, this describes maybe a few dozen housing markets. Probably only a couple dozen if you cut out resort/ski towns. It's a regional problem, not systemic problem with the national economy.
Its a national problem
https://www.redfin.com/us-housing-market
'few dozen' is what like 3 dozens? Assuming its a problem only in 36 markets. Wouldn't that be a 'national problem' ? 36 markets should covers a majority of population in the country.
E.g., in the Midwest you'd have to be in a nice part of Chicago or choosing the most expensive city neighborhood of a mid-sized city to find a meaningful number of $525K 2 bed condos. And even then, spending that much on a condo is 100% an unnecessary luxury. 10 minutes in any direction prices will crater, and by the time you get to the suburbs starter homes are from the $200s and $525K is a mansion. For the entirety of the midwest and most parts of the south.
Even on the coasts $525K for a 2 bed condo is a Big City thing. E.g., $500-$700K is the going rate for 2 bed condos in most of Boston, but drive an hour away from Boston in any direction? Not so much. Hell, even Wakefield has a 2 bed condo below $300K and that's only a 25 minute drive. And that's one of the more expensive housing markets in the US.
Living 20 minutes from major city centers via public transit has become a luxury, sure. But it's just not accurate to say that $525K for a 2 bed condo is "normal" in the US. It's not. It's quite specific to a very high CoL markets.
When I look at real estate in general in Chicago, it's been dropping a little, not a ton, but it's not like how other are describing the huge increase in housing costs in other parts of the country.
It seems like there are big regional differences going on with housing costs in the US. Supply/demand and policy I'm guessing are making the difference.
This problem is Global, because our markets are global. The banks flipping houses for profit without so much as touching the keys? Compete with home owners to treat homes as an 'investment' of a 'commodity'.
In the US, there were 7 empty homes for each homeless person before the pandemic.
Less than 3% of the stock market now serves the actual economy of production. Might this be the culprit?
It, uh, describes all of Canada actually.
https://www.reuters.com/article/us-canada-economy-housing-an...
Also, more Americans live in California than any other state. So if it’s an outlier, it’s an especially impactful one.
Prices are up for multiple reasons, including more pressure on shipping channels due to increased demand for goods across the board.
Also, this article is largely about inflation in developing nations like Indonesia. The inflation noted in countries like the United States is more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
1. Biblical scale locust infestation in much of Africa, and Asia
2. Floods in East Asia
3. Early winter in Russia, Ukraine, and North China
4. Failed, and missed sowing of grains in much of above regions
5. Shipping disruptions, and resulting food spoilage, and waste
6. Granaries busted, and people burning through many months worth of grain, and flour in much of third world due to initial COVID panic
7. Financial speculators having the best field run on agriculture in decades
8. Anxiety about point 6 repeating runs on food wholesalers again
https://www.aljazeera.com/news/2020/12/10/nobel-winner-wfp-w...
I mean, just look at that first picture. It's a small child sitting in a sandy place with a stainless steel bowl with porridge like food inside. There is no civilization in sight. Maybe some village houses, which represent the bare minimum shelter needed. So now you get to ask yourself, should I feel pity or should I recognize that this child is not living in an environment that is conductive to escaping poverty? If I do take pity, will people pity me if I do a hike without food and end up starving on some forest path far away from civilization? I somehow doubt they would pity me.
My point is, this problem is fundamentally unsolvable without either bringing civilization to these people or bringing the people to civilization. Taking pity on them doesn't do anything except maybe convince yourself that you did your part.
Fighting against world hunger feels like a worthy goal that is fulfillable but it isn't. You don't solve world hunger by feeding people, you solve it by restructuring society.
Also impressive you’ve attempted to resurrect the idea of “civilizing” people.
It smells remarkably like you're trying to manufacture a culture war out of whole cloth when the the comment you're replying to was talking about "bringing civilisation" which is quite clearly being used in the with the meaning of "infrastructure", not the meaning of "white western culture".
We've structured society in a way that not everyone needs to be a farmer (or microchip designer/electronic factory line worker) for people to obtain food/devices that access the internet. Are you a proponent of 'give the fish' because you didn't build the device you are typing in?
Giving hungry people fish obviously isn't a good solution, because then the fish giver becomes a SPOF. But also because the fish giver now has power over the hungry, and some givers will abuse it. Teaching people to fish doesn't work if they're still hungry. It also doesn't work if you're teaching methods that they can't employ. If your solution to the last problem is giving (especially licensing) them means to do fishing, then we're back to square one, with you being SPOF/risk of becoming exploitative.
The solution has to be helping people build self-sufficiency. That may involve giving money, or donating equipment and know-how - but with no strings attached, including non-obvious ones like "you'll have to buy spare parts from us, because your industry can't make them". The goal here is not absolute self-sufficiency (nobody truly has that), but avoiding the situation in which given society's affairs are being managed by outsiders, under threat of starvation or illness.
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."
You've done it before, and even worse—for example here: https://news.ycombinator.com/item?id=26342816. And generally your account has been making a habit of posting unsubstantively and/or aggressively. We've asked you many times in the past not do to that, and we ban accounts that keep breaking the rules this way. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and using HN in the intended spirit, we'd be grateful.
Not living in an urban environment is not devoid of civilization.
https://en.wikipedia.org/wiki/2012_Sahel_drought
they are thought to be becoming more frequent
https://en.wikipedia.org/wiki/Sahel_drought
Borders are shut so no backpackers come in, so a lot of fruit died on the field.
https://www.nytimes.com/2021/03/02/world/australia/agricultu...
It should be noted that the entire industry is notorious for doing every dodgy thing they can get away with, wage theft, rent theft, extreme conditions, so local workers stay as far away from these jobs as they can.
Other industries have done OK though. Wheat grain, for example, is predicted to be pretty average: https://research.csiro.au/graincast/wheat-yield-forecasts/
In Europe, there are seasonal harvests that require surges of workers, who are sometimes legal and sometimes not. For example loads of foreign workers flock to the vineyards in France, Italy or Spain to collect the grapes for winemaking. It's around 3 weeks of work, obviously not worth a permanent contract.
There were very few restrictions in those countries by the time of harvest (September) so wine prices, to my knowledge, have remained largely unaffected, but if it happened otherwise, winemakers would have been, without doubt, lobbying against the restrictions.
You need to take into account that income differences within the EU are enormous. Badly paid job in Germany still translates into very paid job in Bulgaria or Romania. That is why a lot of the seasonal workers come from the Balkans. Within a month they make enough money to live off for several months back home. No qualification needed.
[1] https://en.wikipedia.org/wiki/Backpacking_(travel) [2] https://immi.homeaffairs.gov.au/visas/getting-a-visa/visa-li...
Pay the 400 bucks and you're good for a year.
You can work legally as long as it's no more than 6 months anywhere, and it's pretty easy to get around that.
You can extend your visa for another year if you do 88 days (~3 months) of "farm work" -- doesn't have to be on a farm per se, I know a guy who worked in a hyper-remote rural gas station ("road house").
I worked on a very remote cattle farm digging watering trenches and welding cattle pens. Then hitchhiked across the country.
Many containers are abandoned in countries that aren't on major routes because they took PPE to those countries, but never bothered to bring the empty containers back.
Also lots of boats moored off the US East and West coasts, plus Europe, waiting of loading/unloading because of delayed supply chains due to COVID.
It's a butterfly or ripple effect of high optimized supply chains being affected by small changes caused by nature/the government throwing a virus shaped spanner in the works.
Most people in the western world aren't likely to buy more food, just because they have more money.
Not saying, we won't see inflation, who knows, but I doubt we'll see it in household items.
If you have more money and you use it to buy more food, that's not inflation.
Inflation is when you have more money and you use it to buy the same amount of food. Give people more money, and you will see the price of everything rise without seeing the amount of stuff they buy go up.
In the specific case of COVID in the UK, people have been given money to replace the money they would have earned. The people don't have extra money. The system hasn't changed except for the fact that the money is coming from the government instead of the their employer.
Care to elaborate, because *if* there is going to be a fallout from these massive stimulus packages, it certainly doesn't feel predictable to me.
Indeed, we all like to think doomsday scenario, and covid-19 have trained our brains to think the unlikely is likely.. but it's not even obvious there is going to be a fallout from all this stimulus.
No, the problem is that there isn't enough food in the first place. The rising price rewards farmers who produce additional food. You just need to run a stimulus program for farmers so that they can expand and mechanize their farms to increase yields.
I wish people would look at physical reality first and then look where physical reality takes the market rather than looking at the market and ignoring what physical reality looks like.
That's the issue here: not only is stuff you need getting more expensive because of the expanding money supply but the new money is being used directly to cause it rather than helping the individuals that need help.
See here what happened to the correlation between productivity and labour income after this https://wtfhappenedin1971.com/
The graph uses average hourly wages which does not include overtime, bonuses, shift premiums, and employer benefits. It also doesn't account for all workers.
https://files.stlouisfed.org/files/htdocs/publications/es/07...
total compensation tracks pretty well.
If I misinterpreted your comment (I think we agree), I welcome your explanation of why purchasing power stays the same when efficiency increases since 1971.
i would expect that purchasing power remains consistent for people doing the same work.
It's true that capital gains is captured by those who own the capital - but those who do own such capital had to take capital risk to obtain such gains.
Labour income (aka, wage income) increased if the labour changed to be more efficient without said use of capital - for example, programmers' income is very high. But for someone whose labour output hasn't changed from the 70's, is it expected that their purchasing power somehow increases (compared to someone else's)?
I still see graphs as these https://wtfhappenedin1971home.files.wordpress.com/2020/06/im... as clearly saying labour compensation correlated with advances in technology until 1971, when there was a dramatic shift, and that this is also the time when supply of $ was put in the hands of central bankers rather than any real and external asset.
>Frank Martin, bought the restaurant from Philippe Mathieu in 1927, and then the coffee was priced at a nickel.
They mention US inflation down below:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Money printing isn’t the only or even the main driver of inflation. Increased demands for goods during lockdown has put upward pressure on shipping costs, which is reflected in food prices.
Is this panic buying? Is it OK? Does it hurt other people? I’d be interested to hear some different points of view.
I call this FCA, aka "Food Cost Averaging".
But don't panic buy. Don't now go to the store and stock up massively. Put in an extra shelf-stable item, and next time you go shopping do it again, but don't panic now. That's how you create a food shortage.
Even if you add "only" 10% extra to your purchase, I think that's what happened with toilet paper. I purposefully didn't buy any, figuring the crazies would get their fill soon enough, but a month later it was still going and we were trying not to be in the store more than once a week to prevent that being a spreading place but could now only buy 2 rolls at a time per family and many stores were completely out. Of course, we didn't even have to ask neighbours yet (some neighbors will have had to spare, not as if the rolls all disappeared into thin air) so it wasn't bad in any way in the end, but this panic behaviour is unnecessary and very quickly detrimental, even when a majority of people understand it's unwarranted.
No, they were going down the drain.
The tragedy is that much of the food being stocked up in people's homes will go to waste as they don't have the facilities or knowledge to store it properly. Food suppliers have way better storage facilities than you do at home. They know how to keep food available all year round. There's also plenty of food to go around as should be blindingly obvious by observing the waistlines of people around you and that's including the fact that the food supply chain already has a ton of waste built in.
Tragedy of the commons.
It is like energy and power demand on the electical grid. You lower the peak power demand.
You should always have some amount of food reserves. Space allowing, at least a few days of food. Canned and dry goods with long shelf lives - eat the oldest of this first during regular usage and refresh the stock so you don't end up with 5 year old canned goods.
> Is this panic buying?
A little, yes. There's not much risk of long-term food insecurity in the first world (at least not in the US). There are occasionally disasters that affect us short term - think hurricanes, floods, electricity outages, earthquakes, winter storms in Texas. I'd advise being able to get through those.
> Is it OK? Does it hurt other people?
It can hurt others. At the beginning of the pandemic there was a lot of panic buying. Part of that was an overreaction, part profiteerism, part of it was the world being unready to pivot to consumer goods (like with toilet paper). Do it gradually. Don't go out and buy out a canned goods section at your local supermarket.
On the other hand, having a stock on hand already can be helpful. It means you won't need to join the panic buying, because you're already stocked, and you stocked at a time when the system could easily handle it.
It is a good thing for everyone to have some supplies on hand. It makes all of society more resilient against all sorts of disasters. It means that if your area finds itself in need of emergency services, those emergency services may not have to go to you, leaving them for someone else who may be in more trouble (e.g., someone who was at the epicenter of whatever and legitimately had their supplies totally destroyed).
It is the socially responsible thing to do to have some vital supplies on hand and be able to survive independently for a few days on as few services as possible in your area.
The article mentions that inflation in the United States is much more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Buying and storing food is an inherently inefficient process relative to buying the same food as needed. You would end up spending more to build and maintain food reserves than you would save against inflation. Far more.
The article doesn’t suggest that we’re at risk of running out of food.
In a crisis bad enough that your prudence and foresight significantly affects other people by depriving them of food you can give them some of your food.
But in that situation you're probably done for already, and should have gone up in the hills, eh?
John Titor said something that scared the shit out of me. Paraphrasing, it was something like, "If you want to survive, move to a place three days further out than a starving person can walk."
( https://en.wikipedia.org/wiki/John_Titor "John Titor is a name used on several bulletin boards during 2000 and 2001 by a poster claiming to be an American military time traveler from 2036." )
If you're worried about the collapse of civilization then, no, stocking up is not going to help as much as just getting way the hell out there in the woods and being self-sufficient. You'll be rolled by starving people. ("People always raid before they starve." https://spaswell.wordpress.com/2016/11/18/dr-gwynne-dyer-geo... )
For disasters less severe than that, then YES! Stocking up is the responsible thing to do and we should all do it as a matter of course, virus or no virus.
Even assuming that there's some kind of enormous EMP that kills all modern cars, there are plenty of pre-80s cars around and around a third of Americans have bikes. You can cover some serious distance on a bike if you're motivated enough (aka by hunger.) There are millions of horses in the USA, not to mention other animals and tools you can use for transportation (canoes etc.) If your bet is to hope that your fellow members of the most adaptable species on Earth won't get to you, you're generally screwed. If you plan to use force (say firearms) to hold back your place, well, that'll attract attention from anyone else (if you look at failed states, you're likely to see roving bands of criminals with more firepower than you.)
There are fairly few examples of people who made their apocalypse preparations and actually rode out the local serious disaster in their bunkers, so to me, it's obvious what your best bet is - to simply live in a safe, sane and successful society.
It doesn't sound cool it sounds terrifying, for exactly the reasons you lay out.
> it's obvious what your best bet is - to simply live in a safe, sane and successful society.
Yeah it's obvious to me too. Do you know where I can find a planet like that? And a flying saucer to reach it?
Just the usual scaremongering.
I also shop at Tesco and the stocks haven't changed at all.
Still, why even have brexit if we're going to do our level best to pretend we're still in the EU as hard as we can. Is being subject to full export restrictions, hammering British businesses, while allowing many European goods to flow in un-checked really the brexit you signed up for?
EU is Oracle
Zero problems in any of the major supermarkets in my area in the South East. My food bills haven't increased notably either, if anything, looking at my bank statement right now, they seem lower over the past 4-5 months than the year before.
The only anecdotal thing I have noticed, is that there a few new brands on the shelves that weren't there previously, but that's probably just observational and confirmation bias, because I was looking for something, I saw it.
Are you in a really shitty area or something? I only saw what you described in the first week of lockdown one. Nothing has noticeably changed in my local Morrisons for the last few months.
Aldi, Lidl, M&S, Morrisons and the local greengrocer all seem the same as usual here.
depression spurs eating binges.
being inside what to do, oh lets make more advanced food. lets bake cakes with the kids instead of sending them out to play with friends. etc. etc.
so increased consumption in combination with other, probably more important, pandemic problems.
Supplier A only supplies to restaurants it's normally a safe bet, so that's all they do. No restaurants buying - holy shit - my entire crop is excess...
I'm not a farmer but this is what I've read.
There's also the fact a lot of panic buyers might buy too much, then end up throwing a bit away because of fear that when they need it - it won't be there, but then it just spoils at home, etc.
Also food banks are taking a lot of the food. More people actually have money for food (one thing the govt does do is make sure people don't starve (usually) maybe more if you have kids).
TLDR: You can't just move all restaurant food to consumer/grocery like it's a commodity in Factorio... it takes a lot to shift global supply chains and get new contracts on how deliverables are received, etc...
There are a lot of people comfort eating and generally grazing out of boredom. I'm sure I've been eating a little more than I should with the crappy foods. Plus, people are saving so they are probably buying more foods to stock up on and thus throwing it all away.
All of this - and things like toilet paper - shifts to consumer goods instead of bulk goods, which takes different equipment and processing in factories, often at different times. A portion of school lunches in the US are the result of government subsidy foods: Cheeses, potatoes, and so on are very low cost to public schools.
In short: Consumer foodstuff demand has increased.
Additionally, more folks are spending a bit of time with food, changing the demands. Plus, home and slightly depressed/anxious with newly found free time means you have more time to eat - and many have taken up eating more.
And then you do have crops that couldn't be picked, disruption in shipping (food travels far), and disruptions in factories that complicates things.
Actually, what we had was a sudden reduction in the amount of flour being used by bakeries, and an increase in the amount of flour being used at home. There wasn't a shortage of flour - there was a shortage of small bags to put it in for selling at a supermarket. The industry was all set up for selling a decent proportion of flour in really large bags.
Likewise, for simple goods like vegetables, dairy, and beer, some suppliers have suddenly had their customers disappear, because they normally sold to restaurants, pubs, and caterers, where other suppliers have not been able to keep up with demand, because they sold to supermarkets. The obvious solution is for the suppliers who previously sold to caterers to sell to supermarkets instead, but it takes a while for these contracts and logistics to be sorted out.
Interestingly (well kinda) the similar yeast shortage is still not back to normal. The shortage was partly related to packaging and the yeast at my grocer is still in the post COVID foil packaging and not in the packages it was before. (Luckily I had yeast in the freezer)
(Also - seriously, you have 1 pound bags of flour over there? Most bags here are 1.5kg (3.3 pounds), with some specialist flours in 1kg (2.2 pounds) bags. 1 pound seems a little small.)
""" The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".[1]
In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of January 2021, it remains in effect.[1]
The law was amended in 2010 to add motion picture box office futures to the list of banned futures contracts, in response to lobbying efforts by the Motion Picture Association of America.[2] """
0. https://en.wikipedia.org/wiki/Onion_Futures_Act
When normal ingredients we used became unavailable, it caused us to continually try new things. I have to admit I was pretty surprised to see today's customers buy up the basic scratch ingredients like rabid consumers early in the pandemic. Flour, sugar, etc. were all a real pain to get a hold of.
I thought prices were increasing pretty steadily before the pandemic and now it's even worse. I can remember so many items being as cheap as 25 cents each during the 90s and into the 00s... now most of them at $1.50 each. Meanwhile, our state minimum wage has increased not nearly as much (but employers are having to offer closer and closer to double to rope in anyone).
How long have you been having a pandemic for?
Joking aside (that sentence read a bit weirdly), I don't think you should compare what happened in the 90s with what happened since 2020-02. If inflation surpasses minimum wage in the long term, that's not the same as prices soaring because of supply chain changes. And for what it's worth, I've not noticed any price increases here between 2020-02 and last week. This is way too anecdotal and conflating different situations to be useful.
Source: https://www.epi.org/nominal-wage-tracker
[1]: https://www.epi.org/publication/charting-wage-stagnation/
I see that as a win. Neither flour nor sugar is essential or healthy.
Gotta love some of the people on HN. Maybe it's just the late night crowd?
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”
< https://www.goodreads.com/quotes/72745-the-reason-that-the-r... >
So in short: no. Everyone is wasting.
That would've prevented him from spending hundred dollars on bad boots over and over again. So i argue that it's poor planning.
So an enterprising banker would be willing to lend this poor person $50, to be repaid with eight $10 installments yearly, for a total of $80 - a 60% return on investment (7.5% pa returns).
This would've kept the poor person's cashflow the same - $10 per year, and he'd have paid an extra $30 for the priviledge of the upfront capital, but saved $20 vs buying new shoes every year for $10, ten years straight.
If those shoes were so important, this would've been the way to do it, not buy a crappy pair every year that end up costing you more in the long run.
Edit: my main point is that financing is a potential way out for those who lack the capital, but is able to to handle the cashflow.
Poor people generally don't have access to capital except at incredibly high APRs that typically make things worse, not better.
> So in short: no. Everyone is wasting.
The wealthiest 20% of the world's population consume 80% of resources, while the poorest 20% lack the basics to survive.
It just takes 40 seconds of research to completely disprove your point.
Therefore food prices shift right?
Consumption is probably the same for most families, albeit they may buy 10% more to make sure certain staples are good in case of a shortage.. more so during the ebb/flow of covid-19 waves and lockdowns.
So a family might end up wasting more food just to be sure they have enough for planned meals or alternatives.
A lot of people are having mental health issues from lockdown, that can affect eating behaviors as well - depression can cause gain or loss of appetite so that's up in the air - could also make you plan to eat in but then decide to get take out because you're too depressed to cook. (Source: I've done this as my anxiety/depression has been really bad this year and my wife who's never been depressed is barely functional this year).
I think the biggest thing is just everything's shifting. We're not just dealing with covid-19 but also fires and other natural disasters. Unfortunately, I think climate change could keep this the norm even if covid-19 is completely normalized (i.e. we return to some semblance of normal).
Covid-19 variants could also keep things an issue. I'm going to get flagged for fear-mongering but I don't see how the next decade gets any better than it is right now, except for fleeting relief cycles as we come out of the pandemic ... but there's a lot of shifting global strife.
You can almost feel the change from day to day everything's changing faster and faster and it's getting harder to predict the future. Kind of like the singularity when technology speeds up.
https://tradingeconomics.com/commodity/baltic
Also, in case anyone thinks the current environment is crazy then check out the commodities bubble period of 2008 for that index.
The US Dollar Index was at 120 in early 2002, and then proceeded to fall persistently until the middle of 2008 when it rested at around 71. An epic collapse by the dollar that triggered all sorts of nasty global effects. Fortunately this time around the dollar drop hasn't been so bad, most major currencies are debasing at the same time. The dollar is merely back to where it was in 2015 and 2018, so far.
Increase in any price can be seen as an increase in item value or a decrease in USD value. It takes a more in depth analysis of the market to determine which is the cause of price increase.
Ex: Bitcoin stocks (yes they're stocks / investment products) are only really reported on when they're at an all-time high. They may go up a little more if you're reading something fresh off the press, but it's not going to go up as much as it already has. I mean if you bought a year ago you could have had a 10x return on investment, if you invest now it'll be 10-20% return on investment at best.
How can farmers meet the payments on their loans?
Reading 'The great depression: A diary' and looking at the world today just shocks the hell out of me. We are following it step for step and the crash is going to be devastating.
Edit: In Sweden we have/have had similar situations with temporary immigrants that for example pick berries for exploitative wages, but that’s because there’s no actual minimum wage per se - in the rest of society decent wages are ensured by strong unions (except in areas where demand is high anyway, like say for software developers).
I'll pay you minimum wage, but charge you exorbitant amounts for board and lodging and you have no choice because it's the middle of nowhere.
Or for the extra dodgy types, cash payments below minimum wage because they know international workers are less likely to know their rights and be aware of what the minimum wage is.
This, btw, happens all across the EU is my impression. Modern-day slavery very much alive globally even!
Jobseeker agencies paid by the Federal government to 'place' workers, this doesn't factor in the jobs actually being suitable or useful mind.
The workers on unemployment are also required to apply for a quota of jobs or risk losing their benefits, even though there may actually be no new jobs to apply for.
If farmers paid good wages they wouldn't need to rely on foreign labour and food prices would go up. This is a workable solution, but is is what people living in western countries want?
We have the same issue here in the UK with the NHS.. We pay NHS workers terrible wages so we need to import foreign labour because wages aren't high enough to attract domestic workers. In one sense it's great because we get better health care than we would otherwise afford and foreigners have an opportunity to get better pay in the UK (even if it's bad by UK standards).
I've found many people here get angry about what we pay NHS workers while also getting angry about NHS waiting times. If we wanted to we could increase wages which would either require resource cuts and lower output or higher taxes for the same level of care. It would also mean we wouldn't need to depend on foreign labour, but who benefits from this? By paying more foreigners now have less opportunity to move to the UK and British citizens have sub-par / higher cost health care.
Presumably, it's the same with agricultural workers. Sure you can pay more, but who benefits from it? The root "problem" is that labour is extremely cheap outside of developed countries. Developed countries can cut themselves off from that labour supply if they like, but I have no idea what the economic incentive (or benefit) of doing so is for either the workers or the citizens. Call it modern-day slavery if you like but these are consensual working relationships, which presumably wouldn't take place if they didn't benefit both the worker and the employer.
So long as labour remains cheap outside of the developed world a trade off will always exist – paying more will just mean higher prices for citizens and fewer opportunities for those living in the poorest parts of the world, but on the up side you can say you pay a fairer wage by your own national standards.
The UK has done, it is known as Brexit.
It would end supply of people who are willing to work for unlivable wages, thus making wages for low-end work to go up. The lowest rungs of society would benefit greatly from it, while everyone pay would pay for it (via increased prices).
(Australia's geographical isolation makes it difficult to attract seasonal workers, unlike throughout Europe where traveling for work is comparatively cheaper and easier.)
However, farmers have always benefited from the fact that people wanted the visa more than the didn't want to work — many workers are taken advantage of. Now that there are none of these workers, farmers are having to complete for labor like anyone else and that is costing more than they intended.
No locals will do the work because... Why would you. Living in a caravan for the whole summer and working 12 hours a day isn't a good deal. Maybe its worth it if you intend to move back to a county where you get much better purchasing power?
For example, people from Central America trek up at risk of their lives through dangerous drug lord territories to get to US states where they can work illegally for less than minimum wage, then send that money back to their families because they can make much more doing that than they could at home and may have no other choice.
The working and living conditions can be terrible, and answer is not to deport them or make their conditions worse; that hurts the host country as well as the workers and creates more division. Similar workers boosted the US culturally and economically because industry and governments embraced them for labor and taxes.
Really? Top voted comment on Hacker News? Yikes. Things have really gone downhill around here. Stick to tech, folks.
"During the early 1920s, for example, prices dropped a total of 20%. And during the worst years of the Great Depression, from 1930 to 1933, prices fell a total of 25%"
I mean, the title of the article was even : "Food Prices Soar Globally"
If you want to be a doomer, than at least compare it to the stagflation of the 70s, but honestly, that's probably not accurate either.
I, for one, appreciate it. This thing on HN where you have to beat around the bush and phrase your sentences objectively and in a general way, when everybody knows that you are just talking about a specific instance, saying things like "if you [x] then someone may respond [y]" when it is clear that someone literally said [x] so you can just say [y] in reply.. All that stuff is incredibly tiring to read IMHO. If you just want to call out someone's bullshit you should be able to do so in a straightforward manner and in a tone that corresponds with "calling out someone's bullshit".
If we could just be a little bit more honest here I think it would be an improvement.
Following up with your example: If someone simply states [y] then the context of where [y] came from is lost and the discussion turns into a person saying [x] and a person saying [y], which is a step too close to becoming Twitter.
While I agree it can sometimes be a bit tiresome to read and write, I say this significantly improves the overall quality of the conversations.
But this is commonplace elsewhere on the Internet and you can see the results. Too often the argument deteriorates into ad-hominem mud flinging.
HN is pretty rare in its analytic culture. I appreciate it and enjoy the difference from Twitter, Reddit et al. enormously.
It is important to realize that we cannot really read the minds on the other side of the screen and a lot of our assumptions what somebody really wanted to say are just prejudice.
And in that vein, the most reasonable interpretation of the thread ancestor is "look, we've been through this sort of thing a couple of times in the last 7,000 odd years of recorded history - why does this all seem to be surprising to the people in charge and catching them unprepared?".
We know we've been here before, and it isn't that crazy to say the current state of the world looks like the prelude to WWI or WWII. Reading books like "The great depression: A diary" is a pretty decent idea. It would have been much more helpful if old mate had argued why there were similarities. Maybe with coaxing they would have. "Yikes. Things have really gone downhill around here. Stick to tech, folks." does not encourage anything half as productive as looking to the past for answers. There are bigger problems afoot in 2021 than tech.
You should not be shocked by that, because every comment starts out as the top comment, votes only affect how quickly it drops. If you come back a few days later and the top comment is still confidently wrong, maybe you can be shocked then.
Thirty year rates at 1.28%!
The same was true for Covid at the beginning, no one could quantify how bad it actually would be with wild figures in the 5%+ mortality rate. So we screamed for shutdown.
Problem though is that now it's very much clear that Covid was nowhere near that level of mortality, still bad but not the doomsday scenario. Now we we'll have to see what the cost of maintaining the reaction to the initial Covid doomsday estimation; with lockdowns and short term shoring of the economy through fiat currency production.
Looking back at the Spanish Flu, https://www.inquirer.com/health/coronavirus/coronavirus-covi... showed that lockdowns ended up being cheaper than no lockdowns
Unfortunately the ruling class will always find a way to trickle down costs, so it's no surprise that the poorer you are the more impacted you are. With or without lockdown
"I am once again asking for your financial support" meme for tax payers bailing out megacorp bonuses yet again
Also, it was believed that COVID presented a threat to the broader economy because it could overwhelm the healthcare system, preventing the broader workforce from accessing treatment. However, one approach is to triage COVID victims, denying them hospital beds so that those beds remain available for the broader population. Liability or elected officials’ sensitivity to accusations of "letting grandma die" prevented some countries from implementing this triaging, but other countries could.
The inflation in countries like the United States is much lower (around 3% on food compared to 1.5% overall inflation).
Ironically, some of that inflation is due to increased demand for goods providing more demand for shipping services due to lockdown. People had a lot more money to save or spend during lockdown (personal savings rates spiked upward), so shipping prices are inflating due to demand. Food is often shipped, so these inflation costs are partially from shipping costs.
In my little bubble, in the Bay Area, it feels like plain old greed, and opportunity, but not price gouging.
When the government tells me where I can shop, along with my fear of how certain stores have dealt with Covid precautions, my buying habits don’t take price into account like before.
The first few months; I bought transportation, and raw costs, but now I’m not so sure.
My local Safeway has raised prices on everything. At first, they looked like they were trying to be fair. Now——it looks like they know people can basically shop fir food, so why not raise prices on everything while they have you there?
Same goes for Homedepot. Yea, raw wood prices, and appliances have gone up, but it looks like everything they sell went up.
I haven’t been into Whole food because my local store has had too many sick employees.
(While we are on prices, Mercury Insurance refunded me $6.46 on a $600 policy, and that was last year. Why hasn’t my insurance gone way down? It just seems like accidents would be down? My policy is minimum I can legally get away with. I was going to switch to an insurance company that bills per mile, but my old car does not have a computer that Tye “honesty” devise can plug into. I would be happy to send the company a picture of my odometer monthly, but that is not an option.)
Which government is telling you where you can shop? In what way do they do that?
Pre-pandemic, I suspect I purchased over half of my caloric intake from a food vendor other than a grocer. 15 years ago, that would have been 90+% (as so I expect the younger cohorts today would be similar)
HN isn’t only for tech and building things.
> On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.
I’m guessing under normal circumstances you wouldn’t curse at somebody who shared a worrisome story you didn’t want to see.
This pandemic has us all a little feral, doesn’t it?
Continuing to inflat the money supply is the politically expedient option. Price inflation is a related phenomenon. The Fed is unable to decrease it's balance sheet in a meaningful way.
Some politicians are critical of central bank monetary policy. They are frequently maligned.
Ends up being Food and semi conductors.
Another crash coming in the next couple of years?
Sure all feels like inflation to me.
"Overall, CoStar data show the largest rent increases have come in higher-end properties, where average rent for a vacant unit in the Inland Empire has grown 9.3% over the last year, compared with the previous four-year average of 3.8%.
In older, more rundown properties where lower-income households are likely to live, rent is up 3.4%, compared with the previous four-year average of 4.9%."
1. https://www.latimes.com/business/real-estate/story/2019-12-2...
2. https://www.latimes.com/business/story/2020-11-23/rent-falli...
Each vector corresponding to a delta of price and time in a generalized location for a specific good.
Something like the CPI cannot be a hard science as it refuses to acknowledge that each and every person will experience inflation based on the inflationary vectors of goods and services multiplied by a persons relative use of said goods and services.
Every person experiences a unique inflation rate, and to try and average that in something as wholly simplistic as a basket of goods is pure chicanery aimed at making this topic intractable.
A proper measure of inflation should start from the individual level and reason from there.
So if on average 1 loaf of bread is bought by a US consumer and a loaf of bread's rate of inflation is increasing(or even decreasing) by %x, and that's %y of the average consumer's expenditure, then that should contribute %x*%y of the overall inflation rate experienced by the average American consumer.
Clearly this is a complex line of reasoning, but it should be the basis of thought on measuring inflation. Yet, housing and medical expenditure are not even considered in CPI. CPI is a terrible measure that I believe was designed to obfuscate.
Again, inflation means an increase in the general price level. An increase in the price of bread is not inflation, because the price of bread is not the price level. It can be used as a data point to try to estimate a change in the price level, but by itself it doesn't tell us anything about the inflation rate (unless of course bread is the only good being produced in the economy).
[0] https://www.bls.gov/cpi/tables/relative-importance/2020.htm
It is political. The method in which inflation is created benefits bankers via interest. Further, higher inflation widens the divide between the asset class and the rest of us.
However, the mainline (I would say propaganda) is that `...they know better than you` where `they` are unelected technocrats.
Capitalist economies have a short boom bust cycle and a long one. Short ones cause recessions every 10-20 years. Long ones cause depressions every 100~ years.
It was clearly stated that Covid (if nothing else) could easily cause a recession, with other factors played in as well then it could easily trigger a depression.
https://www.thoughtco.com/difference-between-a-recession-and...
As soon as countries adopted fiat money, that one cycle mostly disappeared and even its timing became much more variable. But there are a lot of confounding factors, so this isn't the smoking gun it appears at first.
There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity.
Market competition is good. Interest and usury are destructive dangerous practices.
> At times, many nations from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change). [1]
So we see how the Church changed its opinion over time. They weaseled their way out of the prohibition, and today they don't say anything. Separation of Church and State also made it easier to engage in these sorts of practices.
[1] https://en.wikipedia.org/wiki/Usury
On a side note: I have seen some good analysis/speculation/theorizing done about how interest/loaning would work in a world without government-regulation. Have a look, there may be some redemption in those concepts for you if you divorce them from government meddling (which I would posit, causes a huge chunk of all the evils we blame on capitalism).
The superior model is investments, similar to how VCs invest in companies in exchange for equity. Loans are to be relegated to charity only. If we apply all this, loans will become close to non-existent. We have seen this successfully work because interest is prohibited in Islam, yet it was able to flourish especially in the Islamic Golden Age to push the boundaries of knowledge and science and exploration, during a time where Europe was in the dark ages.
That sounds like a government problem--not a capitalism problem. Though I do agree that this is the heart of the fiat issue.
Economics is complicated. Pointing to one lever and saying "I understand the whole machine" is lazy. I call it 'playing dot to dot'. If you just draw lines between any dots you please, you can make the picture look like anything you want.
But there is a real picture there, it has lots of dots, and its worth understanding. Pontificating on the internet is not showing real understanding.
I'm not claiming to understand the whole machine, however, we know for certain there are rotten practices that make the machine unstable and also much more difficult to understand. Interest and usury are at the core, along with other things that are prohibited by Islam (e.g. selling things that you don't own and several more).
Once those are removed, the system will become much more stable, fair, and better off for everyone.
If anything, they got better since the introduction of Keynesianism, not worse.
It's inherent to capitalism. Don't try to delude yourself.
(It doesn't have to be "pure". "Simple harmonic motion" is the result of when the negative second derivative fully characterizes a system. There are, of course, plenty of systems that aren't as simple, and things get complicated... but where ever you get a significant negative second derivative you've got a system that is going to exhibit some sort of cyclic behavior, even the the cycles vary wildly in size, duration, how fractal the value behaves on smaller time scales, etc.)
In fact, historically, they haven't.
This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices.
And this loop is the unique and defining feature of capitalism. It didn't exist before capitalism, and in experiments like those of the Soviet Union, it didn't exist either, because there were no capital markets at all.
What you're describing is a behaviour of capital markets, but due to a lack of perspective it's described as a behaviour of economies in general - and it isn't.
Basically every time varying system, no matter how complex, can be thought of as a system of differential equations. Human systems of production -- any such system -- is a time varying system, and as such, probably has some cyclic behavior, instability, etc. somewhere inside.
I gave examples of economic systems that do not.
(Also, as you read my message here, recall my claim isn't that communisms has cycles and capitalism doesn't, but everything does because there is no way to build an economic system that doesn't have -d^2/dt^2 terms showing up somewhere in it.)
The economy of the USSR, in aggregate, literally only ever suffered two recessions - one in 1963 due to political instability (which was a very minor fall in GDP), and one at the beginning of WW2. The collapse of the USSR itself was a purely political issue - the USSR maintained growth right up until its dissolution.
I understand your point, but it is a case of diagnosing a second-order effect but not taking into account it's actual impact. Outside of capitalism, there were not really any economic systems that had such gigantic vorticity that they would spontaneously enter disastrous depressions.
Those cycles that you diagnosed, for example, eventually ended up by either a worker lying to stop the cascade, or someone at the planning office realizing the issue. They never snowballed into a Great Depression, because that simply could not happen. The reason the behaviour of unrestrained vorticity is possible in capitalism is because of capital markets. Without capital markets, or an equivalent, the behaviour you are diagnosing is inevitably dampened.
Think about it like a PID loop - there is a -d^2/dt^2 term in it, the D-loop term. But because of the I-term and the P-term, if you tune it correctly, general error always goes down over a full wavelength. Capital markets allow the D-term to overpower the loop.
The article mentions that US food prices are inflating at a much more pedestrian 3%:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
I highly recommend taking 30 minutes to watch it, the person speaking is a well regarded economist.
[0]: https://www.youtube.com/watch?v=PHe0bXAIuk0
You mean Ray Dalio? Wikipedia says he's a hedge fund manager and has a MBA, but no economics degree.
We printed our way out of a pandemic recession, so who knows what other nuclear options will be used to avoid near-term recessions.
For examples of climate havoc, look at the drought in Taiwan and the deep cold in Texas.
For examples of resource contention, look at oil and even at nickel. Those batteries meant to replace oil in turn require cobalt or nickel (at least for certain applications).
The climate havoc and resource contention have much greater than linear effects. I don’t think most people realize this. Food shortages lead not only to higher prices but to civil unrest.
https://www.ishares.com/us/products/239757/ishares-sp-gsci-c...
In other words a commodity ETF.
...Food price rises ARE inflation!
It's much clearer to say "the rest of the basket hasn't risen above normal yet, but I am concerned the headline I quoted will mislead people who don't understand inflation.
https://amp.theguardian.com/environment/2015/dec/02/arable-l...
Maybe for rich people. If you have an income of 2000/month, with the first 1000 or so going to rent, food is likely your second largest expense.
Housing is by far the largest component (42%) (contrary to the common misconception that housing is not in the CPI), followed by Food and Beverages (15%) and Transportation (15%). If you want to up-weight food, you must necessarily down-weight some other component. The prime candidate would be shelter (most other categories are already much smaller than food), but that's of course not the answer that CPI-doubters are looking for.
I am curious as to whether the CPI targets the average person or the average consumer. Rich people spend more. They consumer more and are therefore overrepresented in most consumer-related measurements. Is the CPI meant as a measure of the cost of living or a tool for the calculation of available spending power?
Causally, inflation in the US is driven by the Fed's 2% average inflation target.
How those 2% distribute amongst the basket of good is a different question, of course.
https://fred.stlouisfed.org/series/CUUR0000SEHA
I believe those are the two housing sub components of the basket, with owners’ equivalent rent weighted more than the rent one. Eyeballing it they both look under 2%.
I agree they're not the entirety of the basket, but they are a core component.
There is no "general price level".
Here's the full list, which make up the "general price level": https://www.bls.gov/cpi/tables/relative-importance/2020.htm If you believe food is underweighted, then what category do you believe is overweighted?
Seriously, would it? I’m not an economist. I am aware of RPI/CPI, and inflation is measured independently in different countries within the Eurozone, so it’s not like we can’t have multiple measures for different purposes or populations.
Inflation is measured based on the changing the value of a dollar. So no, you can't have different inflation for different people.
You can have a separate idea of a poverty line or cost of living. But that's a different concept and would need different measures.
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The study found that food prices are rising faster than inflation.
3% is high, and 1.5% over inflation is also concerning, but I think a lot of people are jumping to conclusions based on the headline. Those inflation numbers would go unnoticed by most during normal times. We’re only seeing these headlines because inflation is a popular media topic right now.
I saw another analysis suggesting a 75% drop in media coverage of Biden vs. Trump, at this same point in each’s presidency. That’s a useful statistic that I have a hard time finding in a comprehensive way.
We have dozens. Countless companies have tools to show you how things are happening on social media, and all the big new outlets mirror their content to social media. At the most simple level, basic word counts can track how issues appear and disappear. When you hear about a 75% drop in coverage of "Biden v. Trump" that is almost certainly taken from the number of times those two names are included in news reports. Counting words or highlighting the use of new words does not require AI.
Low inflation is essential to justifying the monetary easing policies that have been sustaining the stock market through the pandemic... so it is important for everyone to keep an eye on how dialog changes around these numbers.
[1] https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...
Much of that increase can be traced back to increased shipping costs during COVID lockdown.
Monetary policy isn’t the only or even the primary driver of inflation. In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services).
The alarmism in the comment section largely comes from people misreading the headline. The article is about soaring food costs in developing nations, but the comment section is treating the headline as if it’s about US food prices.
After two degrees in economics, my perception is that monetary policy is definitely considered a primary driver of inflation, probably THE primary driver. But this is probably irrelevant - see below.
> In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services).
Yes, for example: "in North America... a shortage of both shipping containers and truck drivers".
> The alarmism in the comment section largely comes from people misreading the headline.
To me, it feels alarmist for Bloomberg to consistently say "inflation" instead of "price increases" throughout the article. A temporary problem with supply/demand is not the same as inflation. Food prices will almost certainly fall back to their normal trajectory within a year or two, once supply/demand normalizes, whereas if there was truly inflation that would almost certainly NOT occur.
To be fair, three out of the seven categories that are under inflation can also be considered "essential". Imagine the outrage if cars (or more generally, transport) and clothing increased 2x over inflation, or if cellphone/internet access became less and less affordable (remember all the "internet should be an essential service" headlines at the start of the pandemic?).
the other big correlate is just goods vs services (even textbooks are service-like due to editions). I am not an economist but I'm really curious whether rapid depreciation caused by planned obsolescence of e.g. consumer electronics is causing a poor measurement of price trends in that area. Today's iPhone will cost much less next year, but the cost of maintaining a cutting-edge smart phone keeps going up.
inflation is measuring the value of a currency. CPI is a way to infer inflation from the nominal price of consumer goods; but it is not the definition of inflation. put another way, if an apple costs twice as much as it did last year, that fact is not enough to say whether the currency inflated.
my real point here is that nominal price increases do not necessarily imply inflation. if the price of one type of good is increasing much faster than the others, a better explanation is that the real value of those specific goods is increasing. does this matter to ordinary people buying food? not really. their main concern here is the nominal price of food compared to their nominal earnings.
There, fixed the headline.
For a while, one of the key US inflation measures even assumed that if people's medication went up in price massively they'd substitute it for whatever medicine hadn't exploded in price even if it was for some completely different condition! And I'm not convinced that, even for things which genuinely are substitutable like different kinds of food, it's actually possible over the long term to substitute your spending in a way that matches up with official inflation figures.
Does anyone have the data sets and the formulas used to calculate the CPI? No, I don't think so, because they are hidden.
Until the data used to calculate the CPI is open, it is all speculation.
Be sure to refer to overview.txt and for more high-level details refer to https://www.bls.gov/cpi/data.htm and https://www.bls.gov/cpi/methods-overview.htm — you might also find relevant information on weighting here https://www.bls.gov/cpi/tables/relative-importance/home.htm
Typical entries in the AP (Average Price) series look like: APU0000701322 2015 M05 1.335
where APU0000701322 is a pound of spaghetti or macaroni, and M05 is May.
I thought of telling you off for spreading misinformation to incite, but I figured that saying it this would gets my point across more strongly.
That survey data is what is not open as far as I know: https://www.bls.gov/opub/hom/cpi/data.htm.