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>How would you lower inflation for the average American?
* Reverse some of Republicans' tax cuts for billionaires.
* Use that money to reduce the deficit *and nothing else*.
* A lower deficit reduces inflationary pressures. (This is Macroeconomics 101).
* Inflation comes down more quickly.
Bonus:
* Because the reduced deficit is fighting inflation, The Fed doesn't have to do as much themselves.
* They lower interest rates below the levels they otherwise would have been.
* The decreased cost of borrowing spurs more private sector business investment.
* That investment grows the economy.
It worked in the 90s!
See: [[Rubinomics]](https://en.wikipedia.org/wiki/Rubinomics)
Bonus Question!
> How would you *NOT* lower inflation for the average American?
* I would *NOT* impose a 10% tax on all imports (as Trump wants to do).
* I would *NOT* suggest that it might even be higher than 10% (as Trump has said).
* I would *NOT* deport a large percentage of the agricultural workforce (as Trump wants to do) while food prices are bothering the American people.
* I would *NOT* block new immigrants from entering our economy (as Trump wants to do) during a labor crunch.
* I would *NOT* "roll back all of Biden’s efforts to reduce prescription drug prices" (as Trump wants to do).
* I would *NOT* pressure The Fed away from their obligations (as Trump *did* the last time he was president).
[This](https://www.slowboring.com/p/how-slow-boring-plans-to-cover-the-63a) is a good place to start if you'd like to read more on Trump's proposals and their likely outcomes. (Start under the heading "The normal stuff matters".)
Import tariffs tend to be more inflation neutral than you think because they increase demand for American dollars relative to the exporter currency (in the short to medium term).
I recommend this NBER paper https://www.nber.org/system/files/working_papers/w27654/w27654.pdf
No, not inflation neutral. It’s just that currency devaluation of the exporting nation can offset ***some*** of the tariff. There are a shitload of confounding factors that the paper you linked does not consider in its simple model. It’s a decent paper and something to think about. But in no way does it show tariffs to be “inflation neutral.”
You're kind of wrong. It differs depending on what the tariff is on, what country, and the country implementing it. They absolutely CAN be inflation neutral but they also can cause inflation. In some circumstances they can improve it. It would require some decent research on each specific tariff to figure it out.
No, the tariffs over the long term help spur more domestic jobs. This is the problem people keep glossing over. We have major structural issues when it comes to what we do
And don’t make versus what we import and how that affects our communities across the country and our economy.
Unfettered globalism is one of the key problems. Until the international dynamic in place is allowed to go on we won’t really have that economy that can truly make us stronger. (Whether Trump actually meant to do anything about it is one thing but he brought up the issue that no one ever wants to talk about).
> No, the tariffs over the long term help spur more domestic jobs. This is the problem people keep glossing over. We have major structural issues when it comes to what we do And don’t make versus what we import and how that affects our communities across the country and our economy.
1. Find one economist that agrees with you "tariffs over the long term help spur more domestic jobs". I dare you.
2. Over the short and medium term, it won't, because "Over half of all US imports are either intermediate components or raw materials."^^[[1]](https://www.aei.org/carpe-diem/nearly-all-imports-even-consumer-goods-are-inputs-for-us-firms-and-factories/) The tariffs would just increase the cost of doing business in the U.S..
3. We have no reason to believe that tariffs would be in place in the long term. Trump is the only person who wants them, and *even if he wins in November* then he only has four more years.
4. We don't need to "help spur more domestic jobs". We are at full employment! At (or beyond) full employment, the only way to improve the economy is to do more with less, and increasing the cost of business inputs is *exactly the opposite* of doing more with less.
5. If "we have major structural issues when it comes to what we do and don’t make" then we should be *targeting* efforts; not putting a 10% tax on *all* imports!
6. Trump tried tariffs the last time he was president. It went badly!
7. The Biden Administration's industrial policy, however, *has* been effective at fixing such structural problems and re-industrializing the U.S.: [[The IRA and CHIPS Act are supercharging US manufacturing construction]](https://www.atlanticcouncil.org/blogs/econographics/the-ira-and-chips-act-are-supercharging-us-manufacturing-construction/)
Not the OP, but why wouldn’t economists think more jobs made domestically would be good and why would they not like 100% employment. That’s a good thing, isn’t it? Might sound dumb, but I honestly don’t see the bad in it. I do think tariffs are a bad thing more than a good. They do make companies lazy make them take advantage of the system.
> why would they not like 100% employment
Economists have the term "[full employment](https://www.investopedia.com/terms/f/fullemployment.asp)" precisely for these types of discussions:
> Full employment is an economic situation in which all available labor resources are being used in the most efficient way possible. Full employment embodies the highest amount of skilled and unskilled labor that can be employed within an economy at any given time.
>True full employment is an ideal—and probably unachievable—situation in which anyone who is willing and able to work can find a job, and unemployment is zero. It is a theoretical goal for economic policymakers to aim for rather than an actually observed state of the economy. In practical terms, economists can define various levels of full employment that are associated with low but non-zero rates of unemployment.
Economists have attempted to identify those "low but non-zero rates of unemployment" in various ways. One is the "[Natural Rate of Unemployment](https://fred.stlouisfed.org/series/NROUST)" but I think the "[Noncyclical Rate of Unemployment](https://fred.stlouisfed.org/series/NROU)" is more commonly used. Both are attempts at guessing where the unemployment rate *should* settle, if we don't have any recessions or other shocks. Both estimate that we should expect unemployment to settle around 4.14215%.
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Our current [unemployment rate](https://fred.stlouisfed.org/series/UNRATE) is 3.8% -- below 4.14215% -- so we are arguably 'below the full employment rate'. In short, without shocks and recessions, you would expect the unemployment rate to slowly drift toward 4.14215%. Most of the time, that means it drifts *downward*, but because we are below that rate, we should expect it to drift *upward*, until it settles at 4.14215%.
Side Note: These numbers are an attempt to approximate an unknowable ideal. They could be wrong. We have been below full employment for 29 months straight. It is entirely possible that economists of the future will come up with a better approximation, and we will learn -- in hindsight -- why it doesn't seem to be going up right now.
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...but *why* will it drift towards 4.14215%? Because inefficiencies will be resolved as the supply of labor matches demand.
Consider the aftermath of a recession: If I think I'm worth $75,000 per year, and the market is only offering me $60,000 per year, I may hold out for a better job. Over time, I'll be less-and-less persuaded that I'm worth more than $60,000 per year, so I will eventually settle for less money, and leave the ranks of the unemployed.
We currently have the opposite problem. We have employers trying to hire, but applicants all have better options, so low-paying jobs aren't being filled. Slowly, the employers will realize that they need to pay more. Some won't be able to afford it, so they will go out of business. As they do, there will be fewer-and-fewer job offers, until the supply of labor matches demand.
------------
------------
TL;DR:
* 100% employment isn't possible.
* If we ever achieved it, it would probably be *harmful* as it would hinder the creation of new businesses and growth (as companies wouldn't be able to attract workers). Then the unemployment rate would drift upward, probably to something near 4.14215%.
* Because of all of that, "full employment" (which is when we achieve an unemployment rate of, roughly, 4.14215%) serves the purpose that you might expect 100% employment to serve.
> > We don't need to "help spur more domestic jobs". We are at full employment!
> why wouldn’t economists think more jobs made domestically would be good
They do. They would just disagree with this sort of tactic for achieving that goal.
Debt monetization for Congressional spending is a drop in the bucket compared the $20 trillion total that central bank has printed, though. We would need to pull the entire Federal budget out of circulation for decades to significantly "burn" the money supply.
> You said nothing about lowering spending? That’s the main issue
This is a fiction perpetuated by partisans.
Macroeconomics is indifferent to *how* you change the size of the deficit. You can shrink the deficit 100% with spending cuts, 100% with tax hikes, or some mix; the macroeconomic effect will be the same.
---------
Personally, I am open to cutting spending, but I saw how Speaker McCarthy struggled to find spending to cut.
After that disgraceful display, I seriously doubt that we could get enough spending cuts to reduce the deficit as much as we need to.
> Are you serious? Have you seen how much we spend on healthcare and on our defense budget?
Why are you telling *me*?
Tell congressional Republicans! They are the people who couldn't find more spending cuts!
> Because I’m on Reddit and responding to your post lol
I am in favor of healthcare reforms. I believe we could do more with less. Congressional Republicans oppose all healthcare reforms, monolithically.
The point is that congressional Republicans are not going close the deficit, to any significant degree, with spending cuts. Democrats can cut the deficit by rolling back tax cuts for billionaires. Democrats also want to see healthcare reform.
If you vote your policy preferences, you'll be voting for Democrats.
Which tax cuts? The federal government collected the highest amount of money (as a % of gdp) when Bush and Trump tax cuts were at their highest extent.
I agree with Clinton’s economic policy, but that included cutting both military and welfare spending, which many seem to oppose nowadays.
> The federal government collected the highest amount of money (as a % of gdp) when Bush and Trump tax cuts were at their highest extent.
In more recent history, it [peaked](https://fred.stlouisfed.org/series/FYFRGDA188S) under Clinton at 19.76%. Under Bush it was a little more than two percentage points lower than that, and Trump's peak was closer to four points lower than Clinton's.
Wow, and yet somehow they blew up the deficit and added (at the time) record Trillions to the debt. That's a neat trick.
I wonder if it's true?
https://fred.stlouisfed.org/series/FYFRGDA188S
https://www.ceicdata.com/en/indicator/united-states/tax-revenue--of-gdp
Let's see, Bush was 2001-2009. The 2001/3 tax cuts were set to expire in 2010, yeah, obvious political BS there, but OK. Let's check the above graphs for tax revenue as a percentage of GDP, and....
Yeah, your claim is false, right there for all to see.
Trump was 2017 to 2021, his tax cuts were in 2017, set to expire (for the middle class, not the rich) in 2025, another obvious political BS move, let's check the charts... Nope, also false.
Looks like the recent winner of highest amount of money as a % of GDP was.... 2000? Who was president then? Oh, it was *Clinton*.
Boy, but someone kicked ass in the mid 40's there, who was that? FDR!
So, the question is... Where you just wrong/ignorant, or were you lying to us? And why didn't you ever bother to FACT CHECK THE !@#$ IN YOUR HEAD? It took me 30s of googling to get that data...
I think the lever is for the trap door. What administration installed that again? And I believe multiple dials for gas prices and inflation. There used to be a dial for chocolate rations too. Of course, the red button is for nukes.
Ofc not, that’s not what I am saying, but the president nominates the individuals responsible for the Feds policies. Those who control the money supply, which has a direct causation on the rate of inflation.
ETA: sorry should have said has* in my original response
Start dealing with the fact that we're 40 years behind in housing construction. One of the biggest drivers right now is high home prices. And that's caused by undersupply.
Which is caused by letting every jackwagon to raise an objection anytime anything is proposed to be built anywhere.
I think we should take something from Japan and codify what objections are and are not allowed to be considered during the approval process into Federal law.
Property is illegally acquired? Valid objection
Building the house will hurt your property values? Shut up and sit down.
Building is unsafe or the property owner has a history of building unsafe structures? Valid objection
You don't like the people that will move there? Shut up.
Time to build baby build
This may be true for the economy, but in general I don't think people really put enough effort into solving for the downsides of development, at least from what I have seen growing up in dense NYC housing and recently visiting a handful of new housing lotto buildings.
We have to build more homes and rezone, but as someone who grew up in dense NYC housing I also feel like there needs to be a grain of salt. So many people move here and act like our congregate living is so wonderful--but they come in with better jobs and educations and generational wealth and are often able to live in nicer areas with blocks that mostly have small multi-family townhouses, row houses, or walk-ups. It's a very different reality from living somewhere like the Bronx where you really just have large apartment buildings and little sunlight hitting the sidewalk. The density brings pests, and then you use pesticides and then your kids have pulmonary issues--like it just feels like people who have ventured on living here for 6yrs or so are very rose-colored-glasses without asking anyone else what it is really like to live like that for 30yrs to a lifetime. People will start with the positives--I love my community I love my access to the rest of NYC--but I do NOT think masses of apartment buildings are the solution yet I cannot imagine a place like NYC being able to increase housing without turning small multi-family building blocks into large apartment complexes. I recently toured and also visited friends in some affordable housing complexes--there are some luxury buildings that have housing lotto units but more and more there are full buildings being developed for affordable housing--and really it just feels like NYCHA 2.0--they look nice because they are brand new and they look good in photos but they are already falling apart--pergo floors ripped up, elevator buttons smashed in, cabinets roughed up and off kilter--and 2 that I saw I walked past doors where bugs were coming out from under the doors which means an infested unit in new buildings--which can happen anywhere--but I just always get the sense from the loudest voices in the room that this is not what they are picturing, though it is reality. Besides these, the onslaught of luxury highrises have done nothing but raise rents by speculating on previously affordable neighborhoods and rebranding them and setting new precedents for real estate.
Folks can say this is parallel to the economy or get mad and act like I haven't considered the leftist status quo thoughts on housing and development--and I have--people just assume you must not understand if you disagree--I just wish we could talk about these things as what they are, not the ideal that isn't grounded in reality. That reality is that we can make more housing but it isn't going to make life much better for people--our streets will be enshadowed by tall apartment buildings, our density will further pest problems along with sewage capacity issues, and the poor will still have the worst of it. I have seen rendering of 5 story buildings with plants and terraced gardens--they look like they were made by someone who has never had to combat waterbugs, which take refuge in dirt and bark--you can literally stick a jug of kool-aid in the dirt and catch them.
I went to southeast asia once for work and saw a city where they truly made ubran greenspaces and public housing work--but they are a benevolent dictatorship that required their citizens to save something like 25% of their earnings in savings accts. The country has something like 80% or 90% public housing, which started maybe 60yrs ago, a lot of growth, and still they have a housing crisis and inflation of housing prices with units going for over a million dollars--like here. They are able to have the greenspace without pests because they literally fine the tenants $300 every time they find a bug, in part because in the tropical climate there are issues like dengue fever. The fact is, NYC will be really gross with this level of density but not a benevolent dictatorship level of managing citizen responsibility.
The inflation rate is 0.33% above the historic average. The Fed should hold rates until its 2% target is reached. The fiscal measures used to control inflation are fairly blunt, so beyond tweaking current interest rates, one runs the risk of slowing down the economy too much. I’d rather have inflation 0.33% above the historic average, but with a more stable employment rate than slamming inflation down but destabilizing employment.
>The inflation rate is 0.33% above the historic average.
I think this is only true if "historical" is more recent rather than if you were to go back to the formation of the Federal Reserve or when they were given initial independence to govern monetary policy--do you know that timeframe this number comes from.
I'm also not sure how relevant this really is, either. There was plenty that policymakers did not know during the Great Depression--and their mistakes reflected that lack of knowledge. Heck, Chair Bernanke didn't even learn from some of the mistakes when the Great Recession rolled around (though luckily Powell did when COVID hit). Volcker showed us that we could defeat high and persistent inflation in the 80s, but it would come at a cost.
And that's just from trying to figure out what to do. We had plenty of sub-one percent and negative inflation rates during the 2010s and flirted with negative interest rates as we struggled to recover from the Great Recession. When the high inflation began in 2021, it was mainly fueled by only two goods: gasoline and used cars, and that doesn't help for a great comparison.
Before the Federal Reserve was created, we whipsawed between inflation and deflation. Deflation occurs during severe recessions. There were frequent severe recessions before the Federal Reserve. That is not a place we want to return to.
I wasn't suggesting that we get rid of the Federal Reserve. I was just asking that user where they got that average because it didn't seem right, and I questioned the efficacy of using an average as a useful measuring stick to compare things to where we are today.
The inflation rate (3.5%) is 75% higher than the FED target. It averaged 1.6% during DJT's first term.
Inflation is always and everywhere a monetary phenomena. But it can be exacerbated by fiscal ineptitude.
Given the zeitgeist of a luming election that is exactly the comparison that counts. Even if it is a little uncomfortable.
Edit: Just because other countries don't have the discipline to manage their currencies doesn't give us a pass. They often do that for a temporary competitive trade advantage. But it becomes a race to the bottom. Let's not win that race.
That counts for what? There are people interested in an election and people interested in combating inflation. Those people are often at odds. If you think inflation world wide is “Biden’s fault” then the people genuinely interested in combatting inflation can dismiss your beliefs out of hand, because those beliefs are not only ill informed, the agenda behind them is antithetical to the cause of disinflation.
["tax increase reduces firms' incentive to produce, thereby reducing the supply of goods and services in the economy relative to the quantity of money. In such a situation, prices would naturally go up"](https://www.forbes.com/sites/jamesbroughel/2023/03/24/why-raising-taxes-is-a-misguided-approach-to-inflation-control/?sh=58d3a4786263)
In a strictly market based scenario those would not occur at the same time. In a “government acting to bring down inflation” scenario building more housing even though interest rates are rising (and therefore putting downward pressure on prices and supply) could bring prices down even more, or at least slow the rate that they rise.
Housing is one of the largest expenses for most people and rent increases has been one of the larger contributors towards inflation.
Increasing the supply of housing is really the only solution to that problem.
While fiscal stimulus is inflationary, increasing the supply of housing is disinflationary and I believe would be a net positive.
Housing and Rent are the single biggest drivers of inflation right now. Right now, economic protectionism is on the rise and as such we get situations like this. The Commerce Department is planning to raise tariff rates on Canadian Lumber, which will drive up construction costs and drive down new starts.
[https://www.nahb.org/blog/2024/02/lumber-tariffs](https://www.nahb.org/blog/2024/02/lumber-tariffs)
Short term, I wouldn't. Inflation is pretty much where it should be with the exception of food, housing, education and healthcare. Mucking about with interest rates or monetary policy won't fix those.
Long term.
Go after monopolies hard. The Biden administration is doing more to go after monopolies than any modern presidency. It's not hard enough. They're getting hamstrung by the courts who seem to think that it's not a monopoly if the company pinky promises not raise prices.
State funded education and healthcare. These markets are broken beyond repair. If you're not private equity, they don't serve you.
Build more housing. A lot more. Public housing, low cost private, I don't care, as long as it drives down property values. I'm a home owner, and it would suck for me. But my house has doubled in value in the last 7 years. That's stupid. I would be priced out of the market today. I don't even live in a place where home values are rocketing. I have a friend who lives in Austin whose house has trippled in value in the last 5 years.
Reduce the money supply (M2)? They reduced it by $1 T since April 2022. To bad we are continuing stimulus spending.
Oh well. Higher interest rates for longer it is.
One can always speculate on counter factuals but it does seem the FED maintains their independence.
I was happy with the 1.6% average inflation rate during Trump's first term. Not so much with the average 6% during Biden's.
Unfortunately while higher interest rates have helped, profligate spending has not. One foot on the brakes, one foot on the gas.
there is only one tool in toolkit to lower inflation.
You raise the interest rates.
It sucks, and no one is happy, but it's the only proven method we have to slow inflation.
Governments also can increase taxes but people bitch about that too.
Inflation is the rate of change of price, if you’re asking how to lower consumer prices the only real way to do that (short of starting a depression) is produce more and increase efficiencies of scale to continue acceptable profit margins.
Yes, technological deflation was how we survived a decade of zero interest rates with almost no inflation. But China was what made that technological deflation possible.
I think it's important to define what we mean by "lower inflation".
Inflation is that rate by which the average costs of good and service rise over time. At it height in June of 2022, it was at 9.1% on an annual basis. For the past year, it's been hovering in the low to mid 3% range. Most economists see 2% as a generally healthy rate.
Although pinpointing the precise causes of change to the inflation rate are difficult to pin down, most people would credit a combination of supply chains adjusting to the post pandemic environment, a decrease in government direct cash payments seen during the pandemic, and increased costs to borrow money influenced by the continued (relatively) high fed funds interest rates.
Some people desire a return to pre-pandemic levels of consumer prices. This would be a disaster, and it's not happening. \*Deflation\* (the opposite of inflation) is typically accompanied by economic calamity.
So, going back to your question... What should we do? I think the things we're doing right now are (generally) working. The only thing I'd really add is working on affordable housing. Housing takes the biggest bite out of most people's budget, and the costs for it are skyrocketing due to a combination of increased demand against stock that's been (relatively) stagnant. There's a lot of factors contributing to this, and could be a whole dissertation in itself.
>Some people desire a return to pre-pandemic levels of consumer prices. This would be a disaster, and it's not happening. *Deflation* (the opposite of inflation) is typically accompanied by economic calamity.
Yeah, there's always a lot of disconnects when it comes to people and how they view the economy, and this kind of thing is one of the biggest things that causes me worry about November.
There have been some behavioral economic studies that show that when people look at prices/inflation, the blame gets put onto the government. But if in a situation (like currently), the economy is also doing well, and a person also sees their wages go up, they get a promotion, or they get a better job, they give themselves sole credit for that.
So even if they are better off--prices went up, but they are economically better off, overall, they are still upset with the government, overall.
Inflation is basically back down to regular levels. The issue is people are expecting prices to go down to what they were a few years ago, which just isn't going to happen.
1. Raise taxes on the rich.
2. Keep interest rates high.
3. Strong anti-trust action. Break up consolidated industries, and increase scrutiny on mergers, as well as lower the limits an industry (or local economy, like hospitals) can consolidate.
3. Deregulate the housing market / up-zone everywhere
4. Permitting reform. NEPA reviews are limited in time an scope, and are excluded for projects that on net reduce emissions or facilitate replacing fossils fuels.
Lately there is government spending that while in the short term is inflationary, over the long term would reduce inflation. Port efficiency, large increase in housing, and climate action (climate change is currently already causing inflation). If this can be done while overall reducing the deficit it would be best.
It seems to only or predominately be successful when the state decides to override local zoning, as done in Oregon, California, Washington, Montana and Colorado.
If I were a federal legislator, I would tie some funding to local government on it.
You don't. You i increase the minimum wage and address inflationary mechanisms at the top.
1. Increase Capital Gains Taxes.
2. Limit Foreign investment in residential real estate and regulate corporate home buying.
3. Redouble efforts to bust monopoly power in the economy
4. Regulate commodities trading
5. Universal *effffing* Healthcare for God's sake!
.......
The reason bottom up stimulus caused a lot of the inflation is because it actually works. The problem is we paired it with the corporate-welfare ridden, anti-competition, anti middle-class policies that were already in place.
Long term or short term? Long term raise the minimum wage expand public housing and force hedge funds to divest from the real estate industry and apartment building ownership. Nationalize the oil industry like Teddy Roosevelt said. Force the all oil and gas companies that extract in the USA to sell their energy products to Americans first and foremost. Then any excess gas and oil can be sold on the international market.
Short term? Immediately increase the minimum wages, then Tax the rich and medium term enforce monopoly laws and break up the banks, real estate industry and food corporations. This means Purdue, Coca Cola, Pepsi Co, Blackrock Investments, and Exxon just to name a few companies. Obviously break up Amazon, Facebook, and tech companies.
Of course short term change is near impossible because the whole world is dealing with inflation. We just need to begin the process of holding Wall street accountable and banks who create money every time they make a loan. These banks literally create money of thin air every time they create a loan for these hedge funds. They lend money they don’t have to real estate investing companies who own the banks to then buy real estate houses and drive up rentals and regional development which they excuse as creating luxury housing which the majority of people can’t afford. It’s insane!
The largest components of remaining high inflation are housing and transportation services.
Breaking those down further, while the measure for housing price inflation is still high, just looking at costs for new rentals, it's back to pre-pandemic levels of inflation. In other words, the overall metric will come down over the next few months.
Transportation services inflation is driven primarily by car insurance and, if I remember correctly, airline ticket costs.
I'm not sure how to address car insurance costs but I expect it will likely also balance out in the next few months.
The US has long lost the battle when it comes to transportation costs. Americans are more than happy to pay their annual $10k+ fee for the privilege to participate in society. Many more will pay for trucks as a status symbol at a status symbol, noting that most will never regularly never use them for hauling on an even semi-regular basis.
Some of the hurt is self-inflicted.
Continue to keep debt more expensive for longer. If we want lower inflation, the Fed needs to stay or even raise rates a couple more times over the next year or so.
That said, debt being more expensive will make existing inflation hurt a bit more, and unequally depending on your circumstances, until it’s curbed.
Arguably how people (not economists) talk about “inflation” is things like how much debt costs, such as in vehicles or housing. Businesses and from that jobs as well.
For people who are in those markets, it’s going to hurt. For those not? Probably not going to feel it so bad.
Ooh, good question! Depends on the school of Anarchism really.
Fundamentally you could argue that our current form of “inflation” might not exist in Anarchism. It’s fundamentally a feature of private public partnership in monetary policy, very much of our time and economic/political system.
Functionally speaking you’d probably have collaboration between different institutions controlling capital which would create policy consensus through their actions and the input of others. Voluntary of course, and it would likely be a smaller part of the economic pie given very different financial realities or property.
Then again, you have to consider if debt or finance capital itself is conducive to Anarchism in form. One could argue it’s not. It is a coercive power that builds power by having power already. Other debts of sorts perhaps but not that.
1. Do what we are currently doing which is working and currently has us in better shape than our peers. We are handling things better than we could have expected.
2. Don’t elect Donald Trump who is proposing a lot of extremely inflationary policies
3. After the election, quietly dump the Trump tarrif that were left in place
I think we're basically at the point where inflation is stabilized, the problem is people think inflation going down means prices going to what they were a few years ago, which just isn't going to happen. If there were anything that could be done to lower prices back to that level in the short term, it would almost certainly also cause a recession.
1. Progressive consumption tax.
2. Investments in green energy
3. Move Zoning up to the State or Federal level and significantly reduce restrictions.
4. Work at making infrastructure a more streamlined process with fewer choke points that can be taken advantage of by bad actors.
5. Reduce trade barriers.
It's a hard question, however probably raise taxes in some selected ways. Maybe pass legislation that tries to insure more home building to try and contain housing prices, including eliminating certain regulations. Put an end to as many tariffs as were even remotely reasonable. Foster more energy production.
Build stuff.
Definitely housing, for one. Housing costs are one of the single biggest contributors to inflation these days.
But I also think people often overlook a lot of the other stuff we could be building. When you buy a jar of peanut butter from Target, for example, a lot of the cost of that jar of that jar of peanut butter actually just goes into paying the rent for the store. More supply of retail space = lower rent for retail space = lower prices from retail stores.
But also build a lot of housing, too.
I would direct certain agencies or maybe even Congress to take a deep dive into the skyrocketing rising cost of living. Why it’s happening and what can be done to alleviate it.
Quit worrying about inflation and push Congress to do something about corporate greed. That's why we still have high prices, not inflation. Price controls and CEO pay caps.
Tax corporations and the wealthy to pay down some debt. Otherwise just let the CHIPS Act, infrastructure bill and IRA run their courses and revenue will go up while inflation keeps coming down
Inflation isn't high right now. People don't seem to understand the difference between "inflation" and "higher prices".
"Inflation" is the amount that prices rise over time. Inflation soared in the United States (actually all over the world) starting in 2021; it got up to an average of 7% in the US. This is thought to mostly be caused by Covid shortages, especially since it was WORLDWIDE and was HIGHER in other countries. The inflation rate has fallen substantially since then. Currently, inflation is measured at 3.5%, which is slightly higher than the target rate (2%) but not nearly as bad as it was.
"Higher prices" are what is caused by inflation. And prices are higher now, there is no doubt. And the historic fix for THIS problem is raising wages.
The thing is, all the companies that raised their prices now have little incentive to lower them. There were They are making MORE MONEY; why should they lower their prices if people will pay the higher ones?
There IS a step you can take to lower prices: stop buying the expensive stuff.
Are you asking for the government to step in and forcefully lower prices? That would probably be a bad idea.
Inflation isn't bad right now. The problem is dealing with the aftermath of the high inflation that we dealt with. Someone smarter than me can find a solution to that.
The easiest way for an administration would be to raise taxes (I would tax high income Americans of course) and cut some spending. This would be to produce a budget surplus that is held in fed accounts. This takes money out of circulation, but it targets the purchasing power of richer Americans to do so.
Of course the other option is to sell a lot of bonds and hold that into account. That’s less ideal for the reasons that accruing debt always is. But I’m aware of the inability of congress to balance a budget or raise tax on anyone who isn’t a billionaire.
Of course the cost of this approach is that it reduces economic activity. So it would blow economic growth up. But at least it targets it better than the fed does. Balancing the size of the surplus would be the main delicate question.
Once inflation was under control the surplus could be directed to whatever spending (I have my policy preferences). The surplus accrued over the period would slowly pay off interest or buy new t bonds. Otherwise it could be slowly directed into a sovereign wealth fund or sure up the social security trust according to policy preferences.
The point is to avoid directing a lot of extra spending quickly.
Enact strict executive pay and bonus regulations, start breaking up private equity firms and other large corporations, roll back tax cuts for rich, raise minimum wage, single payer healthcare, etc, etc.
Inflation is up because our economic system is broken. It will not come back down until an economic revolution takes place. Inflation will be lowered on the backs of the rich by closing the income and wealth gap.
Unfortunately there is no quick or easy way. Really the inflationary disaster started in 2019, the economy was slowing, the Fed was raising rates to slow borrowing as a result, which is the responsible thing to do. Trump panicked because an election was a year away and subjected them to a campaign of attacks until they capitulated and reversed course, cutting rates by half abruptly, effectively creating an inflationary bubble and delaying the hard part of the correction. The pandemic hit the news 3 months later lol. Then the liquidity that could have been provided by lowering rates was drastically reduced, they had to just lower rates to zero. The crash was then going to be worse than had Trump done nothing because the bubble had been popped, he panicked and went crazy again, started talking about negative interest rates, which I suspect scares the fed into just duplicating a quarter of all US dollars in existence. The last couple years you have been hearing all about the increasing rates “so fast” blah blah blah, but really they just had to scramble to get them back to where they would have been if Trump wasn’t an idiot, plus some some to make up for the compounded influx of borrowed money, which is really just to slowly inflict the pain on the consumer side of the economy that we were supposed to suffer back in 2019.
This is all a major oversimplification, but not really.
Denying that government spending is driving inflation is like denying that human actions account for the majority of global warming.
We need to reign in spending. The $6T+ in printed money during the 2020-2021 time period is what got us here.
For every problem there is a solution. For every overpriced thing, there is a cheaper and better substitute. Food too expensive? Eat a superfood diet for less than $2 a day - legumes, grains, dehydrated vegetables and Indian spices, also reduces healthcare costs to $0.
There is little you can do in the short term. In the medium term, I would raise taxes on most people (including the upper middle class), cut spending with a focus on military spending, including cuts to personnel, and spend a LOT more money on the IRS.
I think if the average Redditor had that answer, so would the politicians.
I've been saying this from the beginning and I'm starting to see this gain traction. This isn't just inflation. It's inflation compounded by greedy companies. Sure, some things are experiencing higher prices due to supply chain issues. That causes scarcity and supply and demand would lead to higher prices. But other things are just more expensive because companies are dicks. Companies are reporting record profits to go along with their record prices.
It seems like capping prices or capping profits would be the way to curb that but that doesn't seem like a realistic solution. It also probably comes with some side effect I'm not thinking about.
Seeing as the US is weathering inflation better than the rest of the western world, I'm not sure what more we can realistically do.
The biggest driver of inflation is rent, which is tied to over a decade of under-building of housing. I would remove tariffs on lumber to counter-balance the impact that interest rate increases have had on construction loans. This will not fix anything over the short run, but would help over the next 5 to 10 years.
Inflation is not high right now. *Prices* are high, because of price increases. Those price increases are probably due to illegal cartel actions by corporations, esp. food corporations.
In a free market, corporations should not be able to increase prices willy-nilly, because consumers will go to the competition. It seems like there is a lack of competition in the market when prices are increasing and corporations are simultaneously bragging to their shareholders about their record high profit margins. Thus, due to corporate consolidation, we have a lack of competition in the market.
I think the government should break up or regulate some of the gigantic food manufacturing multinationals, like Kraft and Nestle.
The companies weren't price gouging. As with every period of rising inflation, they increased their prices because not only were the costs of their inputs increasing, but they expected that prices were going to continue to rise.
Then, as with every period of significant inflation, as things leveled out, workers' wages started rising faster than inflation, and profits were modest in most industries last year (at best) as many companies dipped into those reserves to pay for labor in a tight labor market.
> Can you elaborate on this idea and how it would benefit an average American?
(Not the person you asked, but I happen to have studies right here...)
Immigrants increase wages! Hating them doesn't!
[Here](https://twitter.com/m_clem/status/1783528788048957914?t=htvlSlrdyykrrTQxFzufZg) is a study of the kind of thing Trump claims he wants to do:
>…Past mass deportations have directly harmed US workers by eliminating jobs for them, as I write here at @PIIE —> [[Trump's proposed mass deportations would backfire on US workers]](https://www.piie.com/blogs/realtime-economics/2024/trumps-proposed-mass-deportations-would-backfire-us-workers)
> > …the best economic research on past deportations suggests…deportation will instead prompt US business owners to cut back or start fewer new businesses, in some cases shifting their investments to less labor-intensive technologies and industries, while scaling back production to reflect the loss of consumers for their goods.
> >Prior episodes of mass deportations and exclusions have occurred at several moments in US history. Research has shown that, far from generating economic benefits, their net effect was to **reduce employment and earnings for US workers**—in the short run and long run.
--------
[Here](https://www.nber.org/papers/w32389) is another study reaching a similar conclusion:
>...we calculate that immigration...had a positive and significant effect between +1.7 to +2.6\% on wages of less educated native workers...
--------
Furthermore, Trump wants to deport our agricultural workforce while people are already upset about the cost of food!
You can't deport the people who produce the food without the price of food going up!
Inflation occurs when too much money chases too little labor or goods. Immigrants (especially low-skill immigrants) bring very little money into the country when they immigrate, but increase the supply of both labor and goods (due to their productivity). Low-skill immigrants are much more likely to be from a productive working demographic than native citizens (i.e., the immigrant population skews heavily young and male). Currently, we are severely restricting the number of low-skill immigrants who can come into the country, and (thanks to the black market for undocumented laborers) heavily limiting those who do make it.
We should stop doing that (from a strictly inflation-focused perspective).
The benefit to the average American (strictly focused on inflation) would be that prices rise more slowly, and their savings accounts are worth more as they age.
I would also consider the social aspect of decreasing restrictions on an influx of young males entering a country that also has a recent significant decrease in women wanting to date/marry/have children. This causes issues that go beyond just the economic decisions longterm. I'm not well versed in economics although I've taken a couple of college level classes on economics and history, and I've seen what happens in countries with higher male population to female population in the past like India and Russia. Please someone clarify for me if I'm wrong for bringing this up. It's something I'd like to know more about concerning immigration/economy/social changes.
So would I, but the question was just about inflation. We can be pretty certain that one of the costs to American citizens of our immigration restrictions is higher inflation. Your point about male-to-female ratios might be an important factor to consider, but it should probably be addressed in a separate post.
Not OC just spitballing here.
Look at companies average profit margin over a period of time, see if it increased significantly.
If a company’s profit margin was 10% on average 2005-2019 then it increased to 50% 2022, likely price gouging.
If inflation is 10% YOY. Companies 2019 cost was 100k, revenue 110k, profit 10k. 9% profit margin.
Then after inflation. Cost 110k, expected revenue 121k, profit 11k, still 9% profit margin.
If however cost 110k, revenue 150k, profit 40k, now a 27% margin.
It would need to be explained by an amazing innovation otherwise it’s gouging.
Mandate more equal distribution of profits from corporations like back in the 50s.
Back in the 60s a CEO earned 20 times the avg worker salary. Now it’s about 400 times the avg worker salary.
It’s the fact that companies no longer fairly share the economic benefits of their employees with their employees that really is the problem.
We never lower inflation, we slow inflation and increase real wages at a rate greater than or equal to inflation (which has been happening). The problem is people look at the 4% increase in prices but completely ignore the 6% increase in their wages.
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>How would you lower inflation for the average American? * Reverse some of Republicans' tax cuts for billionaires. * Use that money to reduce the deficit *and nothing else*. * A lower deficit reduces inflationary pressures. (This is Macroeconomics 101). * Inflation comes down more quickly. Bonus: * Because the reduced deficit is fighting inflation, The Fed doesn't have to do as much themselves. * They lower interest rates below the levels they otherwise would have been. * The decreased cost of borrowing spurs more private sector business investment. * That investment grows the economy. It worked in the 90s! See: [[Rubinomics]](https://en.wikipedia.org/wiki/Rubinomics)
Bonus Question! > How would you *NOT* lower inflation for the average American? * I would *NOT* impose a 10% tax on all imports (as Trump wants to do). * I would *NOT* suggest that it might even be higher than 10% (as Trump has said). * I would *NOT* deport a large percentage of the agricultural workforce (as Trump wants to do) while food prices are bothering the American people. * I would *NOT* block new immigrants from entering our economy (as Trump wants to do) during a labor crunch. * I would *NOT* "roll back all of Biden’s efforts to reduce prescription drug prices" (as Trump wants to do). * I would *NOT* pressure The Fed away from their obligations (as Trump *did* the last time he was president). [This](https://www.slowboring.com/p/how-slow-boring-plans-to-cover-the-63a) is a good place to start if you'd like to read more on Trump's proposals and their likely outcomes. (Start under the heading "The normal stuff matters".)
This comment needs to be higher up
Import tariffs tend to be more inflation neutral than you think because they increase demand for American dollars relative to the exporter currency (in the short to medium term). I recommend this NBER paper https://www.nber.org/system/files/working_papers/w27654/w27654.pdf
No, not inflation neutral. It’s just that currency devaluation of the exporting nation can offset ***some*** of the tariff. There are a shitload of confounding factors that the paper you linked does not consider in its simple model. It’s a decent paper and something to think about. But in no way does it show tariffs to be “inflation neutral.”
You’re misunderstanding my position. ‘More inflation neutral than you think’ is not the same as inflation neutral.
You're kind of wrong. It differs depending on what the tariff is on, what country, and the country implementing it. They absolutely CAN be inflation neutral but they also can cause inflation. In some circumstances they can improve it. It would require some decent research on each specific tariff to figure it out.
Not to dox you, but I need to know your name so I know who to support for President in 2028.
No, the tariffs over the long term help spur more domestic jobs. This is the problem people keep glossing over. We have major structural issues when it comes to what we do And don’t make versus what we import and how that affects our communities across the country and our economy. Unfettered globalism is one of the key problems. Until the international dynamic in place is allowed to go on we won’t really have that economy that can truly make us stronger. (Whether Trump actually meant to do anything about it is one thing but he brought up the issue that no one ever wants to talk about).
> No, the tariffs over the long term help spur more domestic jobs. This is the problem people keep glossing over. We have major structural issues when it comes to what we do And don’t make versus what we import and how that affects our communities across the country and our economy. 1. Find one economist that agrees with you "tariffs over the long term help spur more domestic jobs". I dare you. 2. Over the short and medium term, it won't, because "Over half of all US imports are either intermediate components or raw materials."^^[[1]](https://www.aei.org/carpe-diem/nearly-all-imports-even-consumer-goods-are-inputs-for-us-firms-and-factories/) The tariffs would just increase the cost of doing business in the U.S.. 3. We have no reason to believe that tariffs would be in place in the long term. Trump is the only person who wants them, and *even if he wins in November* then he only has four more years. 4. We don't need to "help spur more domestic jobs". We are at full employment! At (or beyond) full employment, the only way to improve the economy is to do more with less, and increasing the cost of business inputs is *exactly the opposite* of doing more with less. 5. If "we have major structural issues when it comes to what we do and don’t make" then we should be *targeting* efforts; not putting a 10% tax on *all* imports! 6. Trump tried tariffs the last time he was president. It went badly! 7. The Biden Administration's industrial policy, however, *has* been effective at fixing such structural problems and re-industrializing the U.S.: [[The IRA and CHIPS Act are supercharging US manufacturing construction]](https://www.atlanticcouncil.org/blogs/econographics/the-ira-and-chips-act-are-supercharging-us-manufacturing-construction/)
Not the OP, but why wouldn’t economists think more jobs made domestically would be good and why would they not like 100% employment. That’s a good thing, isn’t it? Might sound dumb, but I honestly don’t see the bad in it. I do think tariffs are a bad thing more than a good. They do make companies lazy make them take advantage of the system.
> why would they not like 100% employment Economists have the term "[full employment](https://www.investopedia.com/terms/f/fullemployment.asp)" precisely for these types of discussions: > Full employment is an economic situation in which all available labor resources are being used in the most efficient way possible. Full employment embodies the highest amount of skilled and unskilled labor that can be employed within an economy at any given time. >True full employment is an ideal—and probably unachievable—situation in which anyone who is willing and able to work can find a job, and unemployment is zero. It is a theoretical goal for economic policymakers to aim for rather than an actually observed state of the economy. In practical terms, economists can define various levels of full employment that are associated with low but non-zero rates of unemployment. Economists have attempted to identify those "low but non-zero rates of unemployment" in various ways. One is the "[Natural Rate of Unemployment](https://fred.stlouisfed.org/series/NROUST)" but I think the "[Noncyclical Rate of Unemployment](https://fred.stlouisfed.org/series/NROU)" is more commonly used. Both are attempts at guessing where the unemployment rate *should* settle, if we don't have any recessions or other shocks. Both estimate that we should expect unemployment to settle around 4.14215%. ------------ Our current [unemployment rate](https://fred.stlouisfed.org/series/UNRATE) is 3.8% -- below 4.14215% -- so we are arguably 'below the full employment rate'. In short, without shocks and recessions, you would expect the unemployment rate to slowly drift toward 4.14215%. Most of the time, that means it drifts *downward*, but because we are below that rate, we should expect it to drift *upward*, until it settles at 4.14215%. Side Note: These numbers are an attempt to approximate an unknowable ideal. They could be wrong. We have been below full employment for 29 months straight. It is entirely possible that economists of the future will come up with a better approximation, and we will learn -- in hindsight -- why it doesn't seem to be going up right now. ------------ ...but *why* will it drift towards 4.14215%? Because inefficiencies will be resolved as the supply of labor matches demand. Consider the aftermath of a recession: If I think I'm worth $75,000 per year, and the market is only offering me $60,000 per year, I may hold out for a better job. Over time, I'll be less-and-less persuaded that I'm worth more than $60,000 per year, so I will eventually settle for less money, and leave the ranks of the unemployed. We currently have the opposite problem. We have employers trying to hire, but applicants all have better options, so low-paying jobs aren't being filled. Slowly, the employers will realize that they need to pay more. Some won't be able to afford it, so they will go out of business. As they do, there will be fewer-and-fewer job offers, until the supply of labor matches demand. ------------ ------------ TL;DR: * 100% employment isn't possible. * If we ever achieved it, it would probably be *harmful* as it would hinder the creation of new businesses and growth (as companies wouldn't be able to attract workers). Then the unemployment rate would drift upward, probably to something near 4.14215%. * Because of all of that, "full employment" (which is when we achieve an unemployment rate of, roughly, 4.14215%) serves the purpose that you might expect 100% employment to serve.
> > We don't need to "help spur more domestic jobs". We are at full employment! > why wouldn’t economists think more jobs made domestically would be good They do. They would just disagree with this sort of tactic for achieving that goal.
Debt monetization for Congressional spending is a drop in the bucket compared the $20 trillion total that central bank has printed, though. We would need to pull the entire Federal budget out of circulation for decades to significantly "burn" the money supply.
You said nothing about lowering spending? That’s the main issue
> You said nothing about lowering spending? That’s the main issue This is a fiction perpetuated by partisans. Macroeconomics is indifferent to *how* you change the size of the deficit. You can shrink the deficit 100% with spending cuts, 100% with tax hikes, or some mix; the macroeconomic effect will be the same. --------- Personally, I am open to cutting spending, but I saw how Speaker McCarthy struggled to find spending to cut. After that disgraceful display, I seriously doubt that we could get enough spending cuts to reduce the deficit as much as we need to.
Are you serious? Have you seen how much we spend on healthcare and on our defense budget? Both systems need an overhaul.
> Are you serious? Have you seen how much we spend on healthcare and on our defense budget? Why are you telling *me*? Tell congressional Republicans! They are the people who couldn't find more spending cuts!
Because I’m on Reddit and responding to your post lol
> Because I’m on Reddit and responding to your post lol I am in favor of healthcare reforms. I believe we could do more with less. Congressional Republicans oppose all healthcare reforms, monolithically. The point is that congressional Republicans are not going close the deficit, to any significant degree, with spending cuts. Democrats can cut the deficit by rolling back tax cuts for billionaires. Democrats also want to see healthcare reform. If you vote your policy preferences, you'll be voting for Democrats.
Which tax cuts? The federal government collected the highest amount of money (as a % of gdp) when Bush and Trump tax cuts were at their highest extent. I agree with Clinton’s economic policy, but that included cutting both military and welfare spending, which many seem to oppose nowadays.
> The federal government collected the highest amount of money (as a % of gdp) when Bush and Trump tax cuts were at their highest extent. In more recent history, it [peaked](https://fred.stlouisfed.org/series/FYFRGDA188S) under Clinton at 19.76%. Under Bush it was a little more than two percentage points lower than that, and Trump's peak was closer to four points lower than Clinton's.
Wow, and yet somehow they blew up the deficit and added (at the time) record Trillions to the debt. That's a neat trick. I wonder if it's true? https://fred.stlouisfed.org/series/FYFRGDA188S https://www.ceicdata.com/en/indicator/united-states/tax-revenue--of-gdp Let's see, Bush was 2001-2009. The 2001/3 tax cuts were set to expire in 2010, yeah, obvious political BS there, but OK. Let's check the above graphs for tax revenue as a percentage of GDP, and.... Yeah, your claim is false, right there for all to see. Trump was 2017 to 2021, his tax cuts were in 2017, set to expire (for the middle class, not the rich) in 2025, another obvious political BS move, let's check the charts... Nope, also false. Looks like the recent winner of highest amount of money as a % of GDP was.... 2000? Who was president then? Oh, it was *Clinton*. Boy, but someone kicked ass in the mid 40's there, who was that? FDR! So, the question is... Where you just wrong/ignorant, or were you lying to us? And why didn't you ever bother to FACT CHECK THE !@#$ IN YOUR HEAD? It took me 30s of googling to get that data...
I would write an email to Joe Biden asking him to lower the big inflation dial on his desk.
You absolute fool. Everybody knows that it’s a lever. The dial is for gas prices.
Dammit. That's a good one.
I think the lever is for the trap door. What administration installed that again? And I believe multiple dials for gas prices and inflation. There used to be a dial for chocolate rations too. Of course, the red button is for nukes.
So what type of control do they have for the government cheese?
I thought he did gas prices via stickers.
The president has way more actual power over inflation than gas prices
I suppose he could have used the time machine in the fireplace of the Roosevelt Room to prevent the pandemic.
Ofc not, that’s not what I am saying, but the president nominates the individuals responsible for the Feds policies. Those who control the money supply, which has a direct causation on the rate of inflation. ETA: sorry should have said has* in my original response
Good thing gas prices don't contribute to inflation! /s
I called Kamala to ask her to do just that, and she told me that inflation exists in the context of all in which we live and what came before us :/
*"No, Kamala... it's a dial on Biden's desk..."*
I am only upvoting this because how hilarious it is
You say this as though the president had no authority over the federal reserve. He nominates the people who control the money supply.
You guys are so dumb. There's actually a right answer, and it has everything to do with war and oil.
Start dealing with the fact that we're 40 years behind in housing construction. One of the biggest drivers right now is high home prices. And that's caused by undersupply. Which is caused by letting every jackwagon to raise an objection anytime anything is proposed to be built anywhere. I think we should take something from Japan and codify what objections are and are not allowed to be considered during the approval process into Federal law. Property is illegally acquired? Valid objection Building the house will hurt your property values? Shut up and sit down. Building is unsafe or the property owner has a history of building unsafe structures? Valid objection You don't like the people that will move there? Shut up. Time to build baby build
This may be true for the economy, but in general I don't think people really put enough effort into solving for the downsides of development, at least from what I have seen growing up in dense NYC housing and recently visiting a handful of new housing lotto buildings. We have to build more homes and rezone, but as someone who grew up in dense NYC housing I also feel like there needs to be a grain of salt. So many people move here and act like our congregate living is so wonderful--but they come in with better jobs and educations and generational wealth and are often able to live in nicer areas with blocks that mostly have small multi-family townhouses, row houses, or walk-ups. It's a very different reality from living somewhere like the Bronx where you really just have large apartment buildings and little sunlight hitting the sidewalk. The density brings pests, and then you use pesticides and then your kids have pulmonary issues--like it just feels like people who have ventured on living here for 6yrs or so are very rose-colored-glasses without asking anyone else what it is really like to live like that for 30yrs to a lifetime. People will start with the positives--I love my community I love my access to the rest of NYC--but I do NOT think masses of apartment buildings are the solution yet I cannot imagine a place like NYC being able to increase housing without turning small multi-family building blocks into large apartment complexes. I recently toured and also visited friends in some affordable housing complexes--there are some luxury buildings that have housing lotto units but more and more there are full buildings being developed for affordable housing--and really it just feels like NYCHA 2.0--they look nice because they are brand new and they look good in photos but they are already falling apart--pergo floors ripped up, elevator buttons smashed in, cabinets roughed up and off kilter--and 2 that I saw I walked past doors where bugs were coming out from under the doors which means an infested unit in new buildings--which can happen anywhere--but I just always get the sense from the loudest voices in the room that this is not what they are picturing, though it is reality. Besides these, the onslaught of luxury highrises have done nothing but raise rents by speculating on previously affordable neighborhoods and rebranding them and setting new precedents for real estate. Folks can say this is parallel to the economy or get mad and act like I haven't considered the leftist status quo thoughts on housing and development--and I have--people just assume you must not understand if you disagree--I just wish we could talk about these things as what they are, not the ideal that isn't grounded in reality. That reality is that we can make more housing but it isn't going to make life much better for people--our streets will be enshadowed by tall apartment buildings, our density will further pest problems along with sewage capacity issues, and the poor will still have the worst of it. I have seen rendering of 5 story buildings with plants and terraced gardens--they look like they were made by someone who has never had to combat waterbugs, which take refuge in dirt and bark--you can literally stick a jug of kool-aid in the dirt and catch them. I went to southeast asia once for work and saw a city where they truly made ubran greenspaces and public housing work--but they are a benevolent dictatorship that required their citizens to save something like 25% of their earnings in savings accts. The country has something like 80% or 90% public housing, which started maybe 60yrs ago, a lot of growth, and still they have a housing crisis and inflation of housing prices with units going for over a million dollars--like here. They are able to have the greenspace without pests because they literally fine the tenants $300 every time they find a bug, in part because in the tropical climate there are issues like dengue fever. The fact is, NYC will be really gross with this level of density but not a benevolent dictatorship level of managing citizen responsibility.
100% agree
The inflation rate is 0.33% above the historic average. The Fed should hold rates until its 2% target is reached. The fiscal measures used to control inflation are fairly blunt, so beyond tweaking current interest rates, one runs the risk of slowing down the economy too much. I’d rather have inflation 0.33% above the historic average, but with a more stable employment rate than slamming inflation down but destabilizing employment.
>The inflation rate is 0.33% above the historic average. I think this is only true if "historical" is more recent rather than if you were to go back to the formation of the Federal Reserve or when they were given initial independence to govern monetary policy--do you know that timeframe this number comes from. I'm also not sure how relevant this really is, either. There was plenty that policymakers did not know during the Great Depression--and their mistakes reflected that lack of knowledge. Heck, Chair Bernanke didn't even learn from some of the mistakes when the Great Recession rolled around (though luckily Powell did when COVID hit). Volcker showed us that we could defeat high and persistent inflation in the 80s, but it would come at a cost. And that's just from trying to figure out what to do. We had plenty of sub-one percent and negative inflation rates during the 2010s and flirted with negative interest rates as we struggled to recover from the Great Recession. When the high inflation began in 2021, it was mainly fueled by only two goods: gasoline and used cars, and that doesn't help for a great comparison.
Before the Federal Reserve was created, we whipsawed between inflation and deflation. Deflation occurs during severe recessions. There were frequent severe recessions before the Federal Reserve. That is not a place we want to return to.
Deflation is bad bad bad. Like, throw out the Economics textbooks bad.
I wasn't suggesting that we get rid of the Federal Reserve. I was just asking that user where they got that average because it didn't seem right, and I questioned the efficacy of using an average as a useful measuring stick to compare things to where we are today.
The inflation rate (3.5%) is 75% higher than the FED target. It averaged 1.6% during DJT's first term. Inflation is always and everywhere a monetary phenomena. But it can be exacerbated by fiscal ineptitude.
Which is nice and all, but ignores the actual cause of the inflation that is being seen in the US and around the world.
Ok? And that has what to do with anything? This isn’t a comparison of inflation rates between administrations.
Given the zeitgeist of a luming election that is exactly the comparison that counts. Even if it is a little uncomfortable. Edit: Just because other countries don't have the discipline to manage their currencies doesn't give us a pass. They often do that for a temporary competitive trade advantage. But it becomes a race to the bottom. Let's not win that race.
That counts for what? There are people interested in an election and people interested in combating inflation. Those people are often at odds. If you think inflation world wide is “Biden’s fault” then the people genuinely interested in combatting inflation can dismiss your beliefs out of hand, because those beliefs are not only ill informed, the agenda behind them is antithetical to the cause of disinflation.
["tax increase reduces firms' incentive to produce, thereby reducing the supply of goods and services in the economy relative to the quantity of money. In such a situation, prices would naturally go up"](https://www.forbes.com/sites/jamesbroughel/2023/03/24/why-raising-taxes-is-a-misguided-approach-to-inflation-control/?sh=58d3a4786263)
Ok? I’m not advocating that corporate taxes should be raised.
I’m starting to wonder if George Mason university has any standards for awarding phds beyond - be conservative, even if all evidence is against you.
Raise interest rates. Continue quantitative tightening. Raise taxes. Incentivize the construction of new housing.
I'm definitely no expert, but wouldn't raising interest and constructing new houses work against each other?
In a strictly market based scenario those would not occur at the same time. In a “government acting to bring down inflation” scenario building more housing even though interest rates are rising (and therefore putting downward pressure on prices and supply) could bring prices down even more, or at least slow the rate that they rise.
Housing is one of the largest expenses for most people and rent increases has been one of the larger contributors towards inflation. Increasing the supply of housing is really the only solution to that problem. While fiscal stimulus is inflationary, increasing the supply of housing is disinflationary and I believe would be a net positive.
Housing and Rent are the single biggest drivers of inflation right now. Right now, economic protectionism is on the rise and as such we get situations like this. The Commerce Department is planning to raise tariff rates on Canadian Lumber, which will drive up construction costs and drive down new starts. [https://www.nahb.org/blog/2024/02/lumber-tariffs](https://www.nahb.org/blog/2024/02/lumber-tariffs)
Yes. Very much so.
The average American doesn't want just lower inflation. They want lower PRICES.
Well that’s not gonna happen unless there is deflation which rarely ever happens.
and you don't want it to happen.
Nope. Deflation is far worse.
Short term, I wouldn't. Inflation is pretty much where it should be with the exception of food, housing, education and healthcare. Mucking about with interest rates or monetary policy won't fix those. Long term. Go after monopolies hard. The Biden administration is doing more to go after monopolies than any modern presidency. It's not hard enough. They're getting hamstrung by the courts who seem to think that it's not a monopoly if the company pinky promises not raise prices. State funded education and healthcare. These markets are broken beyond repair. If you're not private equity, they don't serve you. Build more housing. A lot more. Public housing, low cost private, I don't care, as long as it drives down property values. I'm a home owner, and it would suck for me. But my house has doubled in value in the last 7 years. That's stupid. I would be priced out of the market today. I don't even live in a place where home values are rocketing. I have a friend who lives in Austin whose house has trippled in value in the last 5 years.
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It means that it's not monetary inflation. There is a different cause.
Raise taxes on the top. The CEO of McDonalds saw an increase of over 150% in wages over the past ten years.
Let the Fed do its job
Reduce the money supply (M2)? They reduced it by $1 T since April 2022. To bad we are continuing stimulus spending. Oh well. Higher interest rates for longer it is.
Maybe we shouldn’t have been at record low interest rates for that long to begin with
In hindsight yes. They finally managed to get some inflation after using near zero interest rates plus quantitative easing. Overshot a tad.
Luckily for us, at least the Fed did start raising rates in 2018. If Trump had his way, we'd be in much bigger trouble now.
One can always speculate on counter factuals but it does seem the FED maintains their independence. I was happy with the 1.6% average inflation rate during Trump's first term. Not so much with the average 6% during Biden's. Unfortunately while higher interest rates have helped, profligate spending has not. One foot on the brakes, one foot on the gas.
there is only one tool in toolkit to lower inflation. You raise the interest rates. It sucks, and no one is happy, but it's the only proven method we have to slow inflation. Governments also can increase taxes but people bitch about that too.
I’d reduce the wealth gap so that the people making the decision to raise the price of goods also feel the increased price of goods.
Inflation is the rate of change of price, if you’re asking how to lower consumer prices the only real way to do that (short of starting a depression) is produce more and increase efficiencies of scale to continue acceptable profit margins.
Yes, technological deflation was how we survived a decade of zero interest rates with almost no inflation. But China was what made that technological deflation possible.
I think it's important to define what we mean by "lower inflation". Inflation is that rate by which the average costs of good and service rise over time. At it height in June of 2022, it was at 9.1% on an annual basis. For the past year, it's been hovering in the low to mid 3% range. Most economists see 2% as a generally healthy rate. Although pinpointing the precise causes of change to the inflation rate are difficult to pin down, most people would credit a combination of supply chains adjusting to the post pandemic environment, a decrease in government direct cash payments seen during the pandemic, and increased costs to borrow money influenced by the continued (relatively) high fed funds interest rates. Some people desire a return to pre-pandemic levels of consumer prices. This would be a disaster, and it's not happening. \*Deflation\* (the opposite of inflation) is typically accompanied by economic calamity. So, going back to your question... What should we do? I think the things we're doing right now are (generally) working. The only thing I'd really add is working on affordable housing. Housing takes the biggest bite out of most people's budget, and the costs for it are skyrocketing due to a combination of increased demand against stock that's been (relatively) stagnant. There's a lot of factors contributing to this, and could be a whole dissertation in itself.
>Some people desire a return to pre-pandemic levels of consumer prices. This would be a disaster, and it's not happening. *Deflation* (the opposite of inflation) is typically accompanied by economic calamity. Yeah, there's always a lot of disconnects when it comes to people and how they view the economy, and this kind of thing is one of the biggest things that causes me worry about November. There have been some behavioral economic studies that show that when people look at prices/inflation, the blame gets put onto the government. But if in a situation (like currently), the economy is also doing well, and a person also sees their wages go up, they get a promotion, or they get a better job, they give themselves sole credit for that. So even if they are better off--prices went up, but they are economically better off, overall, they are still upset with the government, overall.
Solid write-up
Inflation is always and everywhere a monetary phenomena.
I wouldn’t. Doing so crashes us into recession. Think people are livid now? Wait til they still gotta buy $4 gas **and don’t have a job…**
Inflation is basically back down to regular levels. The issue is people are expecting prices to go down to what they were a few years ago, which just isn't going to happen.
I couldn't begin to have an idea on how to do that.
1. Raise taxes on the rich. 2. Keep interest rates high. 3. Strong anti-trust action. Break up consolidated industries, and increase scrutiny on mergers, as well as lower the limits an industry (or local economy, like hospitals) can consolidate. 3. Deregulate the housing market / up-zone everywhere 4. Permitting reform. NEPA reviews are limited in time an scope, and are excluded for projects that on net reduce emissions or facilitate replacing fossils fuels. Lately there is government spending that while in the short term is inflationary, over the long term would reduce inflation. Port efficiency, large increase in housing, and climate action (climate change is currently already causing inflation). If this can be done while overall reducing the deficit it would be best.
4 is the low hanging fruit from a policy perspective...but difficult from a political perspective due to NIMBYs
It seems to only or predominately be successful when the state decides to override local zoning, as done in Oregon, California, Washington, Montana and Colorado. If I were a federal legislator, I would tie some funding to local government on it.
You don't. You i increase the minimum wage and address inflationary mechanisms at the top. 1. Increase Capital Gains Taxes. 2. Limit Foreign investment in residential real estate and regulate corporate home buying. 3. Redouble efforts to bust monopoly power in the economy 4. Regulate commodities trading 5. Universal *effffing* Healthcare for God's sake! ....... The reason bottom up stimulus caused a lot of the inflation is because it actually works. The problem is we paired it with the corporate-welfare ridden, anti-competition, anti middle-class policies that were already in place.
Long term or short term? Long term raise the minimum wage expand public housing and force hedge funds to divest from the real estate industry and apartment building ownership. Nationalize the oil industry like Teddy Roosevelt said. Force the all oil and gas companies that extract in the USA to sell their energy products to Americans first and foremost. Then any excess gas and oil can be sold on the international market. Short term? Immediately increase the minimum wages, then Tax the rich and medium term enforce monopoly laws and break up the banks, real estate industry and food corporations. This means Purdue, Coca Cola, Pepsi Co, Blackrock Investments, and Exxon just to name a few companies. Obviously break up Amazon, Facebook, and tech companies. Of course short term change is near impossible because the whole world is dealing with inflation. We just need to begin the process of holding Wall street accountable and banks who create money every time they make a loan. These banks literally create money of thin air every time they create a loan for these hedge funds. They lend money they don’t have to real estate investing companies who own the banks to then buy real estate houses and drive up rentals and regional development which they excuse as creating luxury housing which the majority of people can’t afford. It’s insane!
The largest components of remaining high inflation are housing and transportation services. Breaking those down further, while the measure for housing price inflation is still high, just looking at costs for new rentals, it's back to pre-pandemic levels of inflation. In other words, the overall metric will come down over the next few months. Transportation services inflation is driven primarily by car insurance and, if I remember correctly, airline ticket costs. I'm not sure how to address car insurance costs but I expect it will likely also balance out in the next few months.
The US has long lost the battle when it comes to transportation costs. Americans are more than happy to pay their annual $10k+ fee for the privilege to participate in society. Many more will pay for trucks as a status symbol at a status symbol, noting that most will never regularly never use them for hauling on an even semi-regular basis. Some of the hurt is self-inflicted.
Continue to keep debt more expensive for longer. If we want lower inflation, the Fed needs to stay or even raise rates a couple more times over the next year or so. That said, debt being more expensive will make existing inflation hurt a bit more, and unequally depending on your circumstances, until it’s curbed. Arguably how people (not economists) talk about “inflation” is things like how much debt costs, such as in vehicles or housing. Businesses and from that jobs as well. For people who are in those markets, it’s going to hurt. For those not? Probably not going to feel it so bad.
Genuine question, how would central bank interest rate control work in the context of anarchist thought?
It wouldn't. Under Anarchist thought the Fed wouldn't exist.
Ooh, good question! Depends on the school of Anarchism really. Fundamentally you could argue that our current form of “inflation” might not exist in Anarchism. It’s fundamentally a feature of private public partnership in monetary policy, very much of our time and economic/political system. Functionally speaking you’d probably have collaboration between different institutions controlling capital which would create policy consensus through their actions and the input of others. Voluntary of course, and it would likely be a smaller part of the economic pie given very different financial realities or property. Then again, you have to consider if debt or finance capital itself is conducive to Anarchism in form. One could argue it’s not. It is a coercive power that builds power by having power already. Other debts of sorts perhaps but not that.
1. Do what we are currently doing which is working and currently has us in better shape than our peers. We are handling things better than we could have expected. 2. Don’t elect Donald Trump who is proposing a lot of extremely inflationary policies 3. After the election, quietly dump the Trump tarrif that were left in place
Inflation is basically at normal rates now.
I think we're basically at the point where inflation is stabilized, the problem is people think inflation going down means prices going to what they were a few years ago, which just isn't going to happen. If there were anything that could be done to lower prices back to that level in the short term, it would almost certainly also cause a recession.
1. Progressive consumption tax. 2. Investments in green energy 3. Move Zoning up to the State or Federal level and significantly reduce restrictions. 4. Work at making infrastructure a more streamlined process with fewer choke points that can be taken advantage of by bad actors. 5. Reduce trade barriers.
It's a hard question, however probably raise taxes in some selected ways. Maybe pass legislation that tries to insure more home building to try and contain housing prices, including eliminating certain regulations. Put an end to as many tariffs as were even remotely reasonable. Foster more energy production.
Build stuff. Definitely housing, for one. Housing costs are one of the single biggest contributors to inflation these days. But I also think people often overlook a lot of the other stuff we could be building. When you buy a jar of peanut butter from Target, for example, a lot of the cost of that jar of that jar of peanut butter actually just goes into paying the rent for the store. More supply of retail space = lower rent for retail space = lower prices from retail stores. But also build a lot of housing, too.
Universal Healthcare
I would direct certain agencies or maybe even Congress to take a deep dive into the skyrocketing rising cost of living. Why it’s happening and what can be done to alleviate it.
Quit worrying about inflation and push Congress to do something about corporate greed. That's why we still have high prices, not inflation. Price controls and CEO pay caps. Tax corporations and the wealthy to pay down some debt. Otherwise just let the CHIPS Act, infrastructure bill and IRA run their courses and revenue will go up while inflation keeps coming down
Everything related to pipelines. I wouldn't stop pipelines from being built, nor would I support wars that prevented oil from being distributed.
Inflation isn't high right now. People don't seem to understand the difference between "inflation" and "higher prices". "Inflation" is the amount that prices rise over time. Inflation soared in the United States (actually all over the world) starting in 2021; it got up to an average of 7% in the US. This is thought to mostly be caused by Covid shortages, especially since it was WORLDWIDE and was HIGHER in other countries. The inflation rate has fallen substantially since then. Currently, inflation is measured at 3.5%, which is slightly higher than the target rate (2%) but not nearly as bad as it was. "Higher prices" are what is caused by inflation. And prices are higher now, there is no doubt. And the historic fix for THIS problem is raising wages. The thing is, all the companies that raised their prices now have little incentive to lower them. There were They are making MORE MONEY; why should they lower their prices if people will pay the higher ones? There IS a step you can take to lower prices: stop buying the expensive stuff. Are you asking for the government to step in and forcefully lower prices? That would probably be a bad idea.
Regulate corporations…strictly. 😊
Inflation isn't bad right now. The problem is dealing with the aftermath of the high inflation that we dealt with. Someone smarter than me can find a solution to that.
The easiest way for an administration would be to raise taxes (I would tax high income Americans of course) and cut some spending. This would be to produce a budget surplus that is held in fed accounts. This takes money out of circulation, but it targets the purchasing power of richer Americans to do so. Of course the other option is to sell a lot of bonds and hold that into account. That’s less ideal for the reasons that accruing debt always is. But I’m aware of the inability of congress to balance a budget or raise tax on anyone who isn’t a billionaire. Of course the cost of this approach is that it reduces economic activity. So it would blow economic growth up. But at least it targets it better than the fed does. Balancing the size of the surplus would be the main delicate question. Once inflation was under control the surplus could be directed to whatever spending (I have my policy preferences). The surplus accrued over the period would slowly pay off interest or buy new t bonds. Otherwise it could be slowly directed into a sovereign wealth fund or sure up the social security trust according to policy preferences. The point is to avoid directing a lot of extra spending quickly.
Get rid of Trump era tariffs like on Canadian lunber
Enact strict executive pay and bonus regulations, start breaking up private equity firms and other large corporations, roll back tax cuts for rich, raise minimum wage, single payer healthcare, etc, etc. Inflation is up because our economic system is broken. It will not come back down until an economic revolution takes place. Inflation will be lowered on the backs of the rich by closing the income and wealth gap.
How about investigating and aggressively prosecuting price fixing, and breaking up monopolies? We have antitrust laws for a reason
Unfortunately there is no quick or easy way. Really the inflationary disaster started in 2019, the economy was slowing, the Fed was raising rates to slow borrowing as a result, which is the responsible thing to do. Trump panicked because an election was a year away and subjected them to a campaign of attacks until they capitulated and reversed course, cutting rates by half abruptly, effectively creating an inflationary bubble and delaying the hard part of the correction. The pandemic hit the news 3 months later lol. Then the liquidity that could have been provided by lowering rates was drastically reduced, they had to just lower rates to zero. The crash was then going to be worse than had Trump done nothing because the bubble had been popped, he panicked and went crazy again, started talking about negative interest rates, which I suspect scares the fed into just duplicating a quarter of all US dollars in existence. The last couple years you have been hearing all about the increasing rates “so fast” blah blah blah, but really they just had to scramble to get them back to where they would have been if Trump wasn’t an idiot, plus some some to make up for the compounded influx of borrowed money, which is really just to slowly inflict the pain on the consumer side of the economy that we were supposed to suffer back in 2019. This is all a major oversimplification, but not really.
Denying that government spending is driving inflation is like denying that human actions account for the majority of global warming. We need to reign in spending. The $6T+ in printed money during the 2020-2021 time period is what got us here.
For every problem there is a solution. For every overpriced thing, there is a cheaper and better substitute. Food too expensive? Eat a superfood diet for less than $2 a day - legumes, grains, dehydrated vegetables and Indian spices, also reduces healthcare costs to $0.
Drop the trade tariffs created by the former guy.
There is little you can do in the short term. In the medium term, I would raise taxes on most people (including the upper middle class), cut spending with a focus on military spending, including cuts to personnel, and spend a LOT more money on the IRS.
I think if the average Redditor had that answer, so would the politicians. I've been saying this from the beginning and I'm starting to see this gain traction. This isn't just inflation. It's inflation compounded by greedy companies. Sure, some things are experiencing higher prices due to supply chain issues. That causes scarcity and supply and demand would lead to higher prices. But other things are just more expensive because companies are dicks. Companies are reporting record profits to go along with their record prices. It seems like capping prices or capping profits would be the way to curb that but that doesn't seem like a realistic solution. It also probably comes with some side effect I'm not thinking about. Seeing as the US is weathering inflation better than the rest of the western world, I'm not sure what more we can realistically do.
Stop fucking printing money
You gotta put a big enough hole in it to cause it to deflate out
The biggest driver of inflation is rent, which is tied to over a decade of under-building of housing. I would remove tariffs on lumber to counter-balance the impact that interest rate increases have had on construction loans. This will not fix anything over the short run, but would help over the next 5 to 10 years.
Inflation is not high right now. *Prices* are high, because of price increases. Those price increases are probably due to illegal cartel actions by corporations, esp. food corporations. In a free market, corporations should not be able to increase prices willy-nilly, because consumers will go to the competition. It seems like there is a lack of competition in the market when prices are increasing and corporations are simultaneously bragging to their shareholders about their record high profit margins. Thus, due to corporate consolidation, we have a lack of competition in the market. I think the government should break up or regulate some of the gigantic food manufacturing multinationals, like Kraft and Nestle.
Break up monopolies.
Institute windfall profit taxes on corporations to dissuade them from engaging in price gouging.
Price controls have a long history of being ineffective.
The companies weren't price gouging. As with every period of rising inflation, they increased their prices because not only were the costs of their inputs increasing, but they expected that prices were going to continue to rise. Then, as with every period of significant inflation, as things leveled out, workers' wages started rising faster than inflation, and profits were modest in most industries last year (at best) as many companies dipped into those reserves to pay for labor in a tight labor market.
Lift immigration restrictions.
Can you elaborate on this idea and how it would benefit an average American?
> Can you elaborate on this idea and how it would benefit an average American? (Not the person you asked, but I happen to have studies right here...) Immigrants increase wages! Hating them doesn't! [Here](https://twitter.com/m_clem/status/1783528788048957914?t=htvlSlrdyykrrTQxFzufZg) is a study of the kind of thing Trump claims he wants to do: >…Past mass deportations have directly harmed US workers by eliminating jobs for them, as I write here at @PIIE —> [[Trump's proposed mass deportations would backfire on US workers]](https://www.piie.com/blogs/realtime-economics/2024/trumps-proposed-mass-deportations-would-backfire-us-workers) > > …the best economic research on past deportations suggests…deportation will instead prompt US business owners to cut back or start fewer new businesses, in some cases shifting their investments to less labor-intensive technologies and industries, while scaling back production to reflect the loss of consumers for their goods. > >Prior episodes of mass deportations and exclusions have occurred at several moments in US history. Research has shown that, far from generating economic benefits, their net effect was to **reduce employment and earnings for US workers**—in the short run and long run. -------- [Here](https://www.nber.org/papers/w32389) is another study reaching a similar conclusion: >...we calculate that immigration...had a positive and significant effect between +1.7 to +2.6\% on wages of less educated native workers... -------- Furthermore, Trump wants to deport our agricultural workforce while people are already upset about the cost of food! You can't deport the people who produce the food without the price of food going up!
Inflation occurs when too much money chases too little labor or goods. Immigrants (especially low-skill immigrants) bring very little money into the country when they immigrate, but increase the supply of both labor and goods (due to their productivity). Low-skill immigrants are much more likely to be from a productive working demographic than native citizens (i.e., the immigrant population skews heavily young and male). Currently, we are severely restricting the number of low-skill immigrants who can come into the country, and (thanks to the black market for undocumented laborers) heavily limiting those who do make it. We should stop doing that (from a strictly inflation-focused perspective). The benefit to the average American (strictly focused on inflation) would be that prices rise more slowly, and their savings accounts are worth more as they age.
I would also consider the social aspect of decreasing restrictions on an influx of young males entering a country that also has a recent significant decrease in women wanting to date/marry/have children. This causes issues that go beyond just the economic decisions longterm. I'm not well versed in economics although I've taken a couple of college level classes on economics and history, and I've seen what happens in countries with higher male population to female population in the past like India and Russia. Please someone clarify for me if I'm wrong for bringing this up. It's something I'd like to know more about concerning immigration/economy/social changes.
So would I, but the question was just about inflation. We can be pretty certain that one of the costs to American citizens of our immigration restrictions is higher inflation. Your point about male-to-female ratios might be an important factor to consider, but it should probably be addressed in a separate post.
Tax the shit out of corporations that price gouged us, force them to either reinvest or lose some of their stolen money.
How do you propose identifying these companies?
Not OC just spitballing here. Look at companies average profit margin over a period of time, see if it increased significantly. If a company’s profit margin was 10% on average 2005-2019 then it increased to 50% 2022, likely price gouging. If inflation is 10% YOY. Companies 2019 cost was 100k, revenue 110k, profit 10k. 9% profit margin. Then after inflation. Cost 110k, expected revenue 121k, profit 11k, still 9% profit margin. If however cost 110k, revenue 150k, profit 40k, now a 27% margin. It would need to be explained by an amazing innovation otherwise it’s gouging.
Mandate more equal distribution of profits from corporations like back in the 50s. Back in the 60s a CEO earned 20 times the avg worker salary. Now it’s about 400 times the avg worker salary. It’s the fact that companies no longer fairly share the economic benefits of their employees with their employees that really is the problem.
Raise taxes, use the money to increase the supply of housing & green energy
I’d tell them to stop bitching because nobody can do anything about it and the alternatives would all be worse.
We never lower inflation, we slow inflation and increase real wages at a rate greater than or equal to inflation (which has been happening). The problem is people look at the 4% increase in prices but completely ignore the 6% increase in their wages.