The US is cooked. China is the new economic and industrial super power. The US "free market" is actively blocking all the future tech that the US can't compete with, first cars, latest is robotic parts. The rich are just soaking the rest of us for everything they can get before they GTFO.
Elison has his own island - wont take much to subdue the rest of it. Thiel's setting up in Argentina. A US in revolt is a markedly worse place for them than places already set up for repression.
Russia is hanging on by a thread, China is 1/3rd of global manufacturing capacity. The US coasts on dollar and US treasuries demand until it doesn't. The only thing the US builds anymore is grifts.
> The biggest economic story in the world right now is China’s growing dominance across advanced manufacturing sector after advanced manufacturing sector — from electric vehicles to batteries to solar panels to software like A.I. and open models, where they’ve become a world leader. What is happening here is very different than what we call the first China Shock, when China became a big exporter of things that were not that important to advanced economies — things that mattered maybe for particular communities, for many jobs, but weren’t the frontier of economic growth.
But now it’s different. China is very much at the frontier, and they’re dominating it, and that is going to transform geopolitics. It is going to transform the politics, many say of European countries, where China is pushing them out of manufacturing that has been the absolute cornerstone of their economies.
So I think understanding this second shock is about as essential to understanding economics and geopolitics in the coming era as literally anything is.
> U.S. tariffs have done little to slow China's export machine. Exports hit a record $3.8 trillion last year and are up 14% through July this year, even as shipments to the U.S. plunged.
> Now covering 64 critical technologies and crucial fields spanning defence, space, energy, the environment, artificial intelligence (AI), biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas, the Tech Tracker’s dataset has been expanded and updated from five years of data (previously, 2018–2022) to 21 years of data (2003–2023).
> These new results reveal the stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains. The US led in 60 of 64 technologies in the five years from 2003 to 2007, but in the most recent five years (2019–2023) is leading in seven. China led in just three of 64 technologies in 2003–2007 but is now the lead country in 57 of 64 technol...
Everywhere is cooked, but some places are less cooked than others. See how China reacted to the oil shortage: they just cut their oil imports and carried on. Arguably, China prevented a total meltdown in oil-dependent countries (USA).
This is an interesting example of a pangram false negative. It's very obvious from the jump that substantial AI assistance was used, but feeding some samples in I got a 100% human rating. I wonder if it's a case of adversarial prompting?
> constrain supply, raise prices far beyond what the constraint justifies, and then refuse to lower them
In a healthy competitive market, this doesn't work. In a Ronald Reagan / Robert Bork / Consumer Welfare Standard market, where the idea that antitrust policy should promote competition is scoffed at and all M&A is allowed so long as a business can scribble with crayons on butcher paper a rationalization for why their merger will totally reduce prices (pinky promise!), this is the intentional and inevitable result.
The most bothering aspect is that governments always hide behind a curtain of plausible deniability: "well you can't accuse us of not possessing a crystal ball to predict the future", except governments don't need crystal balls depicting the future.
Image companies A & B wish to merge for example, and claim lowered future consumer prices as a result of the merger. A government can shape this as a bet: proportional to your excess-price-over-prediction is positive, a government can institute a misprediction tax proportional to such excess. This places the prediction effort correctly with the companies instead of the government (if you believe governments were intrinsically better at predicting than companies, you'd be a communist).
Yes! Absolutely! If merging business were confident in their price reduction tall tales they would be willing to bet on them. Unfortunately, both the corporations who abuse the policy and the politicians who put it in place understand perfectly well what they are doing. Structuring the deal in a manner that would avoid corruption would defeat the purpose of doing corruption.
Re: crystal ball, a biography of Louis Brandeis would suffice. It turns out we had this exact same problem with the Robber Barons. The arguments were the same, the talking points were the same (they didn't even update the story about Standard Oil lol), time is a flat circle when it comes to American antitrust. In any case, the Robber Barons were defeated in the early 20th century and Reagan was just bringing back the policy that served them well using the excuses that served them well. He was not inventing something brave and new that might reasonably have been expected to behave differently. Reagan and Bork knew exactly what they were doing.
There is no such thing as a "healthy competitive market". That is a totem, or a fantasy. As is exemplified in the article itself, the reasonable behavior of commercial corporations is to make the market non-competitive and 'unhealthy', whatever the starting situation is.
But it goes deeper than this of course: A commodity-exchange-based economy only forms in 'unhealthy' situations, where people are dominated by powerful minorities which can control most property and input flows - lands, workshops, raw materials etc. Before that happens, economies are communal.
This isn't going to get solved at the consumer level. Yes, one perhaps can & should attempt to vote w/ one's wallet, but the real fix is anti-trust law enforcement. TFA knows this,
> Every pattern above can be explained without conspiracy.
(… and in a section titled "Ongoing collusion", too!) but conspiracy also explains some of it: the egg price increases were industry collusion[1]; Americans lost something like $3B to $6B in egg prices due to it. The DOJ permitted them to settle for what effectively amounts to "don't do that again".
Did I try avoiding eggs while they were $6/dz? Absolutely, but meanwhile Tyson ate one of our local meat suppliers, and those prices immediately went up 50%.
I feel like I am living in a different universe to the author. My beef still costs around $5/lb, my milk is still roughly $3/gal, similar on a lot of staples I buy regularly. My shirts cost about $5 for a t-shirt, and my jeans cost $20 or so. I spend 80% at Costco and 20% at King Soopers (Kroger).
Ancedota I know, but the author is writing like Big Business has 100% coverage of the whole market.
The article contains 31 references. Of course, no report on the _general_ market trends are going to cover every anecdote in the US. It could be that the staples you mentioned aren't affected to the same degree. How about your non-staples? How about cars? Houses? Vacation expenses?
In fact, your comment could be read as the exception that proves the rule: you haven't been affected by rising costs because you stick to staples and avoid "frivolous" purchases (that is, you live frugally, as suggested by the article).
Cattle herds are at historic lows to the point that meat packers have closed a handful of facilities, laid off thousands, and still have too much capacity. Your beer prices are either not accurate or not representative of the macro.
> Corporate profits drove more than a third of inflation from the start of the pandemic
This seems like it’s getting causation backwards. Shortages directly result in corporate profits somewhere, because there are companies that can raise prices. Most recently, in the oil industry, and in memory chips, and so on. Also, housing.
If there’s enough competing supply then they can’t raise prices. If there isn’t, they can and usually will.
Strategy often means anticipating shortages and having something to sell when they happen, but not overdoing it. It might be temporary but it can take years to resolve.
Deciding not to build new factories in anticipation of a memory shortage is a strategy. Often it’s justified by saying the shortage won’t last.
The people saying that the AI bubble will collapse are justifying a wait-and-see strategy that makes it worse.
Whenever I see someone quoting economic statistics I look them up on FRED and zoom out a little. Usually I close the article at that point. The "Ongoing collusion" table in this article is interesting, though. Capitalism breaks down without competition.
When prices rise and wages don't keep pace, individual solvency forces substitution. CPI's methodology then updates the basket to reflect the forced substitution and pretend it was voluntary. You think you are looking at rising real wages, but due to the basket methodology you are actually looking at the individual solvency constraint in a mirror. The economy could reduce people to eating bug burgers in homeless encampments and that line would still go up through the entire process.
Agree that measuring inflation is complex and expensive. It also glosses over devices getting new features and networks improving latency and bandwidth.
Unfortunately alternative measures are worse. Gold increased in price 37% in the last year. What does that tell me about the price of groceries? Housing prices depend on government committees approving what can be built where. We have no idea what a free market would produce.
No, CPI does not gloss over improvements in quality. CPI gets diligent hedonic adjustments. Good news is always welcome, it seems. By contrast, BLS usually doesn't even try to track enshittification. This compounds, and that's another reason why CPI is a poor measure.
Hypotheticals about a YIMBY parallel universe have no place in an inflation discussion. If NIMBYs inflated the price of houses and you want a house, it's inflation that is relevant to you, end of story. As for the volatility of gold, yeah, that disqualifies gold from being a good measure on short timescales. Fortunately, we have a good short-timescale replacement measure: CPI. But gold compounds correctly whereas CPI does not. In the short run, volatility is everything, in the long run, compounding is everything. Don't use gold to figure out how much inflation happened last year and don't use CPI to figure out how much inflation happened last decade.
I don't think commonly used inflation is helpful for many people, instead asset price inflation is more interesting and reflects people's feeling more accurate.
If you use asset price inflation, in the last 2 decades, most people's real income consistently dropped.
I think we 80% agree: people should use a measure of inflation that includes more asset inflation than CPI. The American Dream was not to Owner's Imputed Rent a house. However, there's a balance to be struck with reasonable expectations, and "I want to own an increasing fraction of the world economy" isn't a reasonable expectation for everyone to have, but that's what jumping to a wholesale asset inflation measure would get you. The way I pick a midpoint is by fixing the asset: one lump of gold, or one house, are reasonable to use as reference points. But not "one billionth of the revenue from the search monopoly" or "one billionth of all newly mined gold" because those things might be expected to grow without robbing me of anything I care about.
In a K-shaped economy a business will not succeed by making quality goods at reasonable prices. Who are the customers for that? The middle class no longer exists.
Every successful business will do one of two things. Some will make ludicrous luxury goods at preposterous prices for customers that are not price conscious. Others will make mass produced garbage at insanely low margins in vast quantities.
The shortage is only the strategy in the sense that a large part of luxury goods is status. If you have a luxury product, you have to make it into a status symbol to get sales. Limited availability increases desirability. If something is too popular, wealthy people don’t want it anymore at any price.
The only solution is to end wealth inequality and restore the middle class. Tax the rich.
45 comments
[ 2.5 ms ] story [ 22.4 ms ] threadThe US economy has outperformed every economy on earth for the last fifteen years.
China is at a permanent disadvantage because the United States and Russia are the largest producers of petroleum and natural gas on earth.
Anyone who thinks China is going to be passing the US anytime soon is uninformed.
Russia:
https://www.atlanticcouncil.org/dispatches/russia-will-sacri...
https://www.euronews.com/2026/08/20/russia-runs-out-of-petro...
China:
The Next China Shock Is Here - https://news.ycombinator.com/item?id=49393566 - August 2026
> The biggest economic story in the world right now is China’s growing dominance across advanced manufacturing sector after advanced manufacturing sector — from electric vehicles to batteries to solar panels to software like A.I. and open models, where they’ve become a world leader. What is happening here is very different than what we call the first China Shock, when China became a big exporter of things that were not that important to advanced economies — things that mattered maybe for particular communities, for many jobs, but weren’t the frontier of economic growth. But now it’s different. China is very much at the frontier, and they’re dominating it, and that is going to transform geopolitics. It is going to transform the politics, many say of European countries, where China is pushing them out of manufacturing that has been the absolute cornerstone of their economies. So I think understanding this second shock is about as essential to understanding economics and geopolitics in the coming era as literally anything is.
https://www.axios.com/2026/08/21/europe-china-shock-manufact...
> U.S. tariffs have done little to slow China's export machine. Exports hit a record $3.8 trillion last year and are up 14% through July this year, even as shipments to the U.S. plunged.
https://ember-energy.org/data/china-cleantech-exports-data-e...
> In 2024, China produced around 80% of the world’s solar PV modules and battery cells, and 70% of electric vehicles.
https://news.ycombinator.com/item?id=49288393 (citations)
https://news.ycombinator.com/item?id=45496507 (citations)
https://www.aspi.org.au/report/aspis-two-decade-critical-tec... (August 2024)
> Now covering 64 critical technologies and crucial fields spanning defence, space, energy, the environment, artificial intelligence (AI), biotechnology, robotics, cyber, computing, advanced materials and key quantum technology areas, the Tech Tracker’s dataset has been expanded and updated from five years of data (previously, 2018–2022) to 21 years of data (2003–2023).
> These new results reveal the stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains. The US led in 60 of 64 technologies in the five years from 2003 to 2007, but in the most recent five years (2019–2023) is leading in seven. China led in just three of 64 technologies in 2003–2007 but is now the lead country in 57 of 64 technol...
China's New Five-Year Plan Preps the Nation for Peak Oil - https://oilprice.com/Energy/Crude-Oil/Chinas-New-Five-Year-P... - August 21st, 2026
In a healthy competitive market, this doesn't work. In a Ronald Reagan / Robert Bork / Consumer Welfare Standard market, where the idea that antitrust policy should promote competition is scoffed at and all M&A is allowed so long as a business can scribble with crayons on butcher paper a rationalization for why their merger will totally reduce prices (pinky promise!), this is the intentional and inevitable result.
Image companies A & B wish to merge for example, and claim lowered future consumer prices as a result of the merger. A government can shape this as a bet: proportional to your excess-price-over-prediction is positive, a government can institute a misprediction tax proportional to such excess. This places the prediction effort correctly with the companies instead of the government (if you believe governments were intrinsically better at predicting than companies, you'd be a communist).
Re: crystal ball, a biography of Louis Brandeis would suffice. It turns out we had this exact same problem with the Robber Barons. The arguments were the same, the talking points were the same (they didn't even update the story about Standard Oil lol), time is a flat circle when it comes to American antitrust. In any case, the Robber Barons were defeated in the early 20th century and Reagan was just bringing back the policy that served them well using the excuses that served them well. He was not inventing something brave and new that might reasonably have been expected to behave differently. Reagan and Bork knew exactly what they were doing.
But it goes deeper than this of course: A commodity-exchange-based economy only forms in 'unhealthy' situations, where people are dominated by powerful minorities which can control most property and input flows - lands, workshops, raw materials etc. Before that happens, economies are communal.
Yes, it’s happening, just as it did in the seventies. Invest appropriately.
> Every pattern above can be explained without conspiracy.
(… and in a section titled "Ongoing collusion", too!) but conspiracy also explains some of it: the egg price increases were industry collusion[1]; Americans lost something like $3B to $6B in egg prices due to it. The DOJ permitted them to settle for what effectively amounts to "don't do that again".
Did I try avoiding eggs while they were $6/dz? Absolutely, but meanwhile Tyson ate one of our local meat suppliers, and those prices immediately went up 50%.
[1]: https://en.wikipedia.org/wiki/Egg_Clearinghouse#Price_fixing
Ancedota I know, but the author is writing like Big Business has 100% coverage of the whole market.
In fact, your comment could be read as the exception that proves the rule: you haven't been affected by rising costs because you stick to staples and avoid "frivolous" purchases (that is, you live frugally, as suggested by the article).
https://www.macrotrends.net/4487/us-steak-prices
https://www.bloomberg.com/news/newsletters/2026-08-21/after-...
This seems like it’s getting causation backwards. Shortages directly result in corporate profits somewhere, because there are companies that can raise prices. Most recently, in the oil industry, and in memory chips, and so on. Also, housing.
If there’s enough competing supply then they can’t raise prices. If there isn’t, they can and usually will.
Strategy often means anticipating shortages and having something to sell when they happen, but not overdoing it. It might be temporary but it can take years to resolve.
Deciding not to build new factories in anticipation of a memory shortage is a strategy. Often it’s justified by saying the shortage won’t last.
The people saying that the AI bubble will collapse are justifying a wait-and-see strategy that makes it worse.
Right, key word there is "competing". Large firms collude via all sorts of means to avoid competing. Many such cases
Let me inflation adjust that for you: https://fred.stlouisfed.org/graph/?g=1XUpo. Even better, as a percentage of disposable income: https://fred.stlouisfed.org/graph/?g=1XUpt
> real hourly wages, only 3%
Median usual weekly real earnings: Wage and salary workers: 16 years and over: https://fred.stlouisfed.org/graph/?g=1XUpE. Doesn't look so dire to me?
Whenever I see someone quoting economic statistics I look them up on FRED and zoom out a little. Usually I close the article at that point. The "Ongoing collusion" table in this article is interesting, though. Capitalism breaks down without competition.
Also breaks down when few individuals command tremendous power. Tax policy has been //fantastic// for the very wealthy.
Unfortunately alternative measures are worse. Gold increased in price 37% in the last year. What does that tell me about the price of groceries? Housing prices depend on government committees approving what can be built where. We have no idea what a free market would produce.
Hypotheticals about a YIMBY parallel universe have no place in an inflation discussion. If NIMBYs inflated the price of houses and you want a house, it's inflation that is relevant to you, end of story. As for the volatility of gold, yeah, that disqualifies gold from being a good measure on short timescales. Fortunately, we have a good short-timescale replacement measure: CPI. But gold compounds correctly whereas CPI does not. In the short run, volatility is everything, in the long run, compounding is everything. Don't use gold to figure out how much inflation happened last year and don't use CPI to figure out how much inflation happened last decade.
Complaining about CPI to defend using nominal values poorly is not improving the article's analysis.
Oh, perfect! So what about solving every problem by going $40 more trillion in debt, to reach $80 T in debt?
That way everything will be good inflation adjusted?
If you use asset price inflation, in the last 2 decades, most people's real income consistently dropped.
In a K-shaped economy a business will not succeed by making quality goods at reasonable prices. Who are the customers for that? The middle class no longer exists.
Every successful business will do one of two things. Some will make ludicrous luxury goods at preposterous prices for customers that are not price conscious. Others will make mass produced garbage at insanely low margins in vast quantities.
The shortage is only the strategy in the sense that a large part of luxury goods is status. If you have a luxury product, you have to make it into a status symbol to get sales. Limited availability increases desirability. If something is too popular, wealthy people don’t want it anymore at any price.
The only solution is to end wealth inequality and restore the middle class. Tax the rich.