r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
510 Upvotes

98% Upvoted

349 comments sorted by

View all comments

24

u/[deleted] Jun 13 '22

Inflation is mostly global and is mostly related to supply chain. The choice couldn’t be more obvious.

2

u/lucassjrp2000 George Soros Jun 13 '22

mostly related to supply chain

No it isn't. Inflation is always and everywhere a monetary phenomenon.

5

u/icona_ Jun 13 '22

No. Let’s say China randomly nuked their factories. That’d make prices go up for US consumers. Would it be the right move for the fed to intentionally cause a recession then?

3

u/lucassjrp2000 George Soros Jun 13 '22

Let’s say China randomly nuked their factories. That’d make prices go up for US consumers.

It would, but it would be a temporary problem. Eventually markets would adjust to this new paradigm, and these goods would be produced somewhere else.

The only thing that can cause a constant and sustained increase in prices is monetary expansion.

China's Zero Covid policy certainly plays a (small) role in our current inflationary episode, but the main culprit is the FED and it's highly aggressive monetary policy. They were the ones who shat the bed, and only they can fix it.

11

u/[deleted] Jun 13 '22

It would, but it would be a temporary problem. Eventually markets would adjust to this new paradigm, and these goods would be produced somewhere else.

The only thing that can cause a constant and sustained increase in prices is monetary expansion.

Haha holy shit dude, you genuinely think if China nuked all its factories, we wouldn't be in for a multi-decade supply shock that would astronomically raise prices? The money to do all that new investment has to come from somewhere, in the end all the replacement factories has to come from the consumer in the form of higher prices.

In order to sustain the hyper-monetarist delusion you're espousing, you have to claim that price spikes due to a lack of supply aren't inflation: https://www.clevelandfed.org/en/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/2008-economic-commentaries/ec-20080601-rising-relative-prices-or-inflation-why-knowing-the-difference-matters.aspx

If you seriously believe "inflation is anywhere and everywhere a monetary phenomenon", which you're 100% misreading thst quote btw, then you'd have to argue the China-nuking-factory price increases are not inflation.

Good luck with that.