Isn't that just the way it goes. The common man finally finds himself in a position of power and business has to start paying more and then we get 5-6% inflation.
Which is not likely to happen any time soon. Just look at the palava associated with the US debt ceiling. Fed tapering and interest rate rises will either result in a US government default (which won't be allowed to happen) or more money printing (which will). Either way, we are heading for hyperinflation.
Yeah, the hyperinflation story... Everyone seems to have forgotten what the Fed did in the 70s, namely cripple the private economy with massive interest raises. Did you really forget that QE is meant for government bonds? The short term federal funds rate for private banks and the treasury yield curve are two completely different things.
Those in debt (which is the majority of people) benefit from inflation though. Be it mortgages, car loans, or even just credit-card debts. If inflation/wage growth is 6% and your mortgage is 3% and your car payment is 5%, you're getting ahead.
The people who are hurt by inflation are people holding cash and/or bonds.
Luckily for those people, interest rates are at record lows as well. So even if you are in a variable-rate loan, you're still making it out ahead right now.
Hasn't this been the case for years? Where I work, yearly raises are usually 2-3% except for this year (they did 5%). During those years, inflation was somewhere in that same window.
Meanwhile I haven’t seen a wage change since 2018….when I accepted my current role.
It’s hard. It’s a good job. And I can do it with my eyes closed. But I’m probably definitely leaving a good percentage on the table, in exchange for other ancillaries (lots of time off per year, cheap benefits etc)
> It’s hard. It’s a good job. And I can do it with my eyes closed. But I’m probably definitely leaving a good percentage on the table, in exchange for other ancillaries (lots of time off per year, cheap benefits etc)
you can find this at a higher wage too. You will be surprised.
This just tells me spending increases. Nothing about absolute consumption. I don't know about others, but I'm consuming about the same amount of milk I was when I was getting $10/hr vs $35/hr. I might buy more "luxury" products (ice cream, organic milk, etc), but I'm certainly not buying more than I was at $10/hr. My caloric intake is about the same. Perhaps, I'm the odd one out. In my case, most of that extra money just went towards rent and a car.
Let’s assume this is the case. Anecdotally [0], I’ve observed (and seen many reports [1]) of the labor market being especially tight in low-margin, low paying industries (e.g. food service, agricultural work, trucking).
Perhaps the costs of goods that are now experiencing inflation (dining out, groceries, shipping) were artificially deflated due to severe underpaying of workers. In order to pay people who work in those industries living wages, prices must rise, since margins are so thin that they can’t absorb higher labor costs.
Pessimistically, I wonder if this will mean many businesses in those industries will close, since demand will suffer. If wages in the restaurant industry rise significantly (without concordant pay raises across the board), many people will no longer be able to afford to eat out.
[0] I recently went to a fast casual Mediterranean place. They recently increased starting pay for workers to $25/hour. A simple pita wrap now costs $15. I went somewhere else.
And on top of that tons of money was moved into high velocity parts of the economy (i.e. the pockets of everyone who's rent/mortgage/student payments were paused).
Interesting, in NZ you have an interest rate you pay to the bank for your mortgage that has to be renewed every few years. This interest rate is definitely impacted by inflation. Does the US/where you are from not have a similar system?
Nope. Most mortgage rates are fixed for the full term of the loan (typically 30 years).
If you can afford the down payment, it’s a great time to buy a house. (Even better would have been a few months ago, before inflation started to kick into high gear).
There are several varieties, fixed rate mortgages exist for 10-30 year terms.
Adjustable rate mortgages also exist and commonly with a lower starting interest rate, but they are often a trap for people with low incomes who suddenly cannot afford their home because of interest rates outside their control.
And some mortgages have a cliff, so that you're paying mostly just interest and very little principle. Then at the end of the term you basically have to pay the entire principle at once.
So you can do it either way. A fixed rate is vastly less risky, I'm surprised that an adjustable rate is the default in NZ. In the time I've had a home rates have varied from like <3% to 7%.
There's not much to like about the California tax code, but prop 13 is one good thing there. It caps the rate of property tax increase at 1% per year.
Whereas my property tax in Oregon is up 10% this year. That's a tax on an unrealized gain. Worse, it's not even a real gain, it's a tax for just keeping pace with inflation.
Proposition 13 is good for those who have had a property for a long time, but it's certainly not good for new buyers. They are effectively subsidizing long-term residents. I understand why property owners might like it after they've been somewhere for a while, but I personally find it fundamentally unfair.
Generally, the same group wants both ever increasing property taxes (because people who own property are evil rent-seeking slumlords) and completely frozen rents.
I read, this "inflation" is taking 30-36+ % of lower waged' earners income in food shopping alone. But only 8% of wealthier earners, they are hardly feeling any pinch.
One feels it deeply, the other does not. I read that some on Wall st are blaming the lower waged for inflation because of stimulus checks. (There wasnt a similar feeling of blame when Wall st got all the stimulus checks in the 2008 of course ;)
Double Standards; whereby those who earn above 250K are blame free, and those below must remain with no living standards raise lest THEY get blamed for inflation and the general untouchable like gangsterism on Wall st.
In a nutshell, If those on lower wages are not allowed to get ahead some, whats the point of capitalism??
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[ 2.8 ms ] story [ 91.1 ms ] threadThe people who are hurt by inflation are people holding cash and/or bonds.
Most mortgages in most parts of the world aren't long term fixed rate. Same is true of student debt and credit card debt.
it's a temporal win though.
it never ends well.
https://www.cbsnews.com/amp/news/tax-brackets-2022-inflation...
It’s hard. It’s a good job. And I can do it with my eyes closed. But I’m probably definitely leaving a good percentage on the table, in exchange for other ancillaries (lots of time off per year, cheap benefits etc)
you can find this at a higher wage too. You will be surprised.
my employer said rsu price increase was inflation adjustment. There is no adjustment to base pay.
https://www.ers.usda.gov/data-products/chart-gallery/gallery...
Perhaps the costs of goods that are now experiencing inflation (dining out, groceries, shipping) were artificially deflated due to severe underpaying of workers. In order to pay people who work in those industries living wages, prices must rise, since margins are so thin that they can’t absorb higher labor costs.
Pessimistically, I wonder if this will mean many businesses in those industries will close, since demand will suffer. If wages in the restaurant industry rise significantly (without concordant pay raises across the board), many people will no longer be able to afford to eat out.
[0] I recently went to a fast casual Mediterranean place. They recently increased starting pay for workers to $25/hour. A simple pita wrap now costs $15. I went somewhere else.
[1] https://news.ycombinator.com/item?id=28834365
Source: https://fred.stlouisfed.org/series/M1SL
If you can afford the down payment, it’s a great time to buy a house. (Even better would have been a few months ago, before inflation started to kick into high gear).
Adjustable rate mortgages also exist and commonly with a lower starting interest rate, but they are often a trap for people with low incomes who suddenly cannot afford their home because of interest rates outside their control.
And some mortgages have a cliff, so that you're paying mostly just interest and very little principle. Then at the end of the term you basically have to pay the entire principle at once.
So you can do it either way. A fixed rate is vastly less risky, I'm surprised that an adjustable rate is the default in NZ. In the time I've had a home rates have varied from like <3% to 7%.
Whereas my property tax in Oregon is up 10% this year. That's a tax on an unrealized gain. Worse, it's not even a real gain, it's a tax for just keeping pace with inflation.
One feels it deeply, the other does not. I read that some on Wall st are blaming the lower waged for inflation because of stimulus checks. (There wasnt a similar feeling of blame when Wall st got all the stimulus checks in the 2008 of course ;)
Double Standards; whereby those who earn above 250K are blame free, and those below must remain with no living standards raise lest THEY get blamed for inflation and the general untouchable like gangsterism on Wall st.
In a nutshell, If those on lower wages are not allowed to get ahead some, whats the point of capitalism??