A Short History on Inflation - Why Component Costs and No Costs Are Going Down Soon

[Veteran]

This is a short 3 page article from Imprimis Magazine at Hillsdale College.

I like that it starts by giving the history of inflation in the United States starting in 1776.

It also I believe makes the point ad nauseum throughout that inflation is always caused by printing and spending too much paper money not backed with a store of value relative to the supply of goods or ability to produce goods to satisfy that spending demand.

Inflation in the United States

What causes the price of money to fall? The answer is very simple: an increase in the supply of money relative to other goods and services. As the Nobel Prize-winning economist Milton Friedman explained, “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be...

imprimis.hillsdale.edu

I for one have said many times,
I see no way reloading components or ammo will be going down for at least 2 to 3 years and then if and only if we have a change in the administration, and government and
the monetary policies of the government.

This article is a great resource.
Gravity has not been repealed and neither has inflation when too much money is chasing too few goods
with printed play money.

Expect to wait 2 to 3 years for things to change. Got gasoline?
Average price today is $4.00 plus across the USA.

 

[257Tony]

Yes sir, won't see a change in ammo/components until at least one year into the next Republican president's first term, hopefully that is 2026 and not 2030 or longer. They will never come back to where they were, $35/1000 primers and $20/lb powder will not be seen again.

 

[The Oregonian]

People are forgetting the other side of the equation. Wage growth is strong and employees are in high demand. My company added 6 vacation days this year to sweeten the benefits package. We got zero US holidays but got 26 days of PTO last year, then they added 6 more days this year. We are giving employees the option of being partially, 100%, or 0% remote, with nothing written in stone or mandated, so if you choose one option and it isn't working for you, you can switch.

Wage growth is strong, as is inflation. Real estate prices are up, but so is home equity (and so are rents). Remember that house you bought 3 years ago at 3.5% for a 30 year? Inflation makes that less of a burden each month, and the asset itself is very likely worth quite a bit more today. Asset up, real borrowing costs down makes for a pretty good return.

I'm not saying everything is rosy and not everyone owns their home, nor does every job have the same wage growth. But what I am saying is that you can't lament inflation alone without mentioning other factors that help offset the impact. Every single piece of the economy is tied together and should be looked at holistically.

 

[Rick Richard]

People are forgetting the other side of the equation. Wage growth is strong and employees are in high demand. My company added 6 vacation days this year to sweeten the benefits package. We go zero US holidays but got 26 days of PTO last year, then they added 6 more this year. We are giving employees the option of being partially, 100%, or 0% remote, with nothing written in stone or mandated, so if you choose one and it isn't working for you, you can switch.

Wage growth is strong, as is inflation. Real estate prices are up, but so is home equity (and so are rents). Remember that house you bought 3 years ago at 3.5% for a 30 year? Inflation makes that less of a burden each month.

I'm not saying everything is rosy and not everyone owns their home, nor does every job have the same wage growth. But what I am saying is that you can't lament inflation alone without mentioning other factors that help offset the impact. Every single piece of the economy is tied together and should be looked at holistically.

Fine and dandy for the ones still employed and not on a fixed income, but what about the retiree's.? Just saying.

 

[The Oregonian]

Fine and dandy for the ones still employed and not on a fixed income, but what about the retiree's.? Just saying.

Certainly not everyone is impacted the same and what you mentioned certainly should be a part of the discussion. My main point is that only knowing half of the equation doesn't tell the whole story.

 

[Veteran]

More taxes are never good for finances, as more taxes especially when its the government spending the money is really inefficient and winds up mis allocating capital efficiently to the economy.

The same way, more inflation is never a good thing because it makes your dollars and savings worth less, and diminishes your purchasing power. And even if you get raises, its with a lag and a long negotiation, and may not wholly compensate for inflationary forces.

You also can't spend the equity in your main asset your home. So your home value inflates, how can you efficiently take that asset value to gas pump and buy $4 gasoline? When you start trying to spend "inflated asset value" that was purchased with borrowed money, ie debt, that's where you really get in a bind, and get set up for a double whammy.

Nope, inflation, especially when rampant and out of control, hurts anyone who gets paid in dollars or currency.

Its not our friend.

Stable money and inflation say in the 2-3% range which is manageable inflation is ok. 7-8% and greater inflation like we have now is not a good thing. When it becomes, 20%, we become Venezuela.

 

[The Oregonian]

Im not arguing whether inflation is good or not, and I'm certainly not saying that the current rate of inflation is a good thing, And i am not in any way arguing for taxes. But those are not at all the point….my point is that people complain about prices going up as if that is the whole story. People are talking in nominal terms and rather than real terms. That is the only point I am making, full stop.

 

[Mark37082]

It just amazes me how so many people don't have a clue what creates inflation. It is a very simple formula. Out of control inflation like we are currently experiencing is never a good thing.

 

[BillLarson]

Inflation is caused by poor management.

 

[Veteran]

Im not arguing whether inflation is good or not, and I'm certainly not saying that the current rate of inflation is a good thing, And i am not in any way arguing for taxes. But those are not at all the point….my point is that people complain about prices going up as if that is the whole story. People are talking in nominal terms and rather than real terms. That is the only point I am making, full stop.

I actually think its the other way around. What people are concerned about is that their dollars have been devalued in real terms.

Gasoline has gone to $4.50 per gal.
It used to be they got a gallon for $3.00. They now pay $100 for a brick of primers that used to cost $40.

The present value of their wages on a parity basis of goods and services received per dollar is quite diminished.

In a model, if we were talking about current dollars or nominal dollars everything would get inflated including wages.....so that primers go up 50%, wages go up 50%, its all good. The point is that does not and is not happening in the real world, only in economist's models..
.
Real dollars is what counts. Its
a comparison of real dollar value and purchasing power parity adjusted for or with inflation stripped out.

 

[shortgrass]

Lots of people won't get 6 days of paid leave added to their benefit package. And most who do get a wage increase won't see enough of an increase to keep up with the raising prices. This bout of inflation will definately widen the "wage gap".

 

[QuietTexan]

Fine and dandy for the ones still employed and not on a fixed income, but what about the retiree's.? Just saying.

Inflation is a backdoor transfer from people who saved money to people who purchased assets. If a retiree holds assets they should be fine as those values inflate, but fixed income via pensions/ annuities contracts are essentially money savings and they will lose.

They'll lose doubly so because there is pressure to keep interest rates artificially low to finance government spending. The government is butting up against the limits of the half-hearted modern monetary theory implementation going on since 2008 in that they didn't go whole-hog on printing money and handing it out to people directly and instead insisted on selling bonds to release new dollars. Suddenly they're finding they can't tax away demand as predicted because shockingly Americans almost always feel like they, personally, pay enough tax, and wouldn't be happy to hear that they need to lose double from each paycheck to help stop prices from going up. The core argument behind opposing tax cuts from the left isn't that they need your money to spend it (under MMT they already have all the money they need - they get to make more whenever they want to), they need those taxes to take away your money because in their theoretical model that makes prices go down because demand will soften because consumers have less money. (Don't shoot the messenger, MMT is a real, albeit insane, economic school of thought).

The MMT solution is to stop issuing Federal debt instruments, pay off existing bonds in new dollars, and just straight up pass out cash whenever demand softens to the point it causes problems. IMO the end result of that is hyperinflation, but the MMTs swear we'll all just be happier paying more in taxes when they up them to soften demand, and we'll all be fine. The astounding lack of self-awareness evident in saying that to a group of people who to this day culturally drink coffee after starting a war over paying a tax on tea astounds me.

 

[The Oregonian]

Im not arguing whether inflation is good or not, and I'm certainly not saying that the current rate of inflation is a good thing, And i am not in any way arguing for taxes. But those are not at all the point….my point is that people complain about prices going up as if that is the whole story. People are talking in nominal terms and rather than real terms. That is the only point I am making, full stop.

I actually think its the other way around. What people are concerned about is that their dollars have been devalued in real terms.

Gasoline has gone to $4.50 per gal.
It used to be they got a gallon for $3.00. They now pay $100 for a brick of primers that used to cost $40.

The present value of their wages on a parity basis of goods and services received per dollar is quite diminished.

In a model, if we were talking about current dollars or nominal dollars everything would get inflated including wages.....so that primers go up 50%, wages go up 50%, its all good. The point is that does not and is not happening in the real world, only in economist's models..
.
Real dollars is what counts. Its
a comparison of real dollar value and purchasing power parity adjusted for or with inflation stripped out.

Are we not saying the same thing? It sounds like you are agreeing with me while arguing with me.

 

[Veteran]

If you agree w me then I guess Im not arguing.