Inflation/Price Increase

[Dry Brett Kavanaugh]

Some bipartisan economists criticize the Fed policy:

http://gregmankiw.blogspot.com/2022/10/paul-krugman-may-be-right.html

Plus, Supply-side view:

https://www.japantimes.co.jp/opinion/2022/07/06/commentary/world-commentary/supply-side-inflation-fix/

[Pohjolas Daughter]

Some bipartisan economists criticize the Fed policy:

http://gregmankiw.blogspot.com/2022/10/paul-krugman-may-be-right.html

Plus, Supply-side view:

https://www.japantimes.co.jp/opinion/2022/07/06/commentary/world-commentary/supply-side-inflation-fix/

Speaking of supply-side issues, I heard this morning (thanks to CNN) that drought conditions have been so bad (in many areas of the US not to mention in many areas around the world) that the Mississippi River's water levels have sunk so low that barges are running aground and that there is now a long cue.  According to an article that I just found, the Army Corps of Engineers have been busy dredging the river and were hoping to get things moving again by today.  Does anyone know whether or not they have been able to do so?  I'm guessing not or not yet, since I just heard the story today on their t.v. channel though the article online is older.

In any event, when they do get things moving again, the barges will also have to proceed with a lighter load.

https://edition.cnn.com/2022/10/07/business/mississippi-river-closures-grounded-barges-drought-climate/index.html

PD

[Todd]

Some bipartisan economists criticize the Fed policy:

http://gregmankiw.blogspot.com/2022/10/paul-krugman-may-be-right.html

Both are Keynesian ("New" or not).  That one was a Republican and one is a Democrat doesn't mean anything.  There are also Keynesians who want to see more tightening.  There are also non-Americans who want to pursue contractionary monetary policy to eliminate inflation.

Plus, Supply-side view:

https://www.japantimes.co.jp/opinion/2022/07/06/commentary/world-commentary/supply-side-inflation-fix/

Spence's article does not explain how so-called supply side policies would reduce inflation.  Reducing tariffs would reduce the price only of taxed imports.  By definition, that would not reduce inflation.  Even in the midst of neomercantalist policies emerging around the globe, tariffs are not imposed on a broad enough array of products to materially impact core inflation.  I'm all for reducing all tariffs to zero.  That won't solve the problem. 

The bit about technology solutions is even weaker:

At the same time, efforts must be made to improve productivity. Digital technologies will be crucial here. While the pandemic helped to accelerate the digital transformation, many sectors — including the public sector — are lagging and concerns about the effects of automation on employment persist.

But in a supply-constrained world characterized by persistent labor shortages, productivity-boosting digital technologies, together with higher wages for workers, would go a long way toward improving the balance between supply and demand. For example, artificial-intelligence-based tools can perform a wide range of functions, from screening luggage more efficiently at airports to analyzing medical imaging to detect cancers. Beyond digital technologies, regulatory regimes can be streamlined and improved, in order to reduce supply-side bottlenecks.

"Digital technologies will be crucial here" doesn't really mean anything - it's amorphous to the point of practical uselessness - and Spence does not explain how "digital transformation" will reduce inflation.  Converting old federal systems built on 70s and 80s era technologies (eg, the IRS, the Fed) to new technologies is underway now and will take years.  The same applies to many state governments and even local governments.  Pinning monetary policy hopes on "artificial-intelligence-based tools" is as fashionable as it is irrelevant.  Spence should keep it more direct: the government should pursue tax policies that increase private sector investment and should modernize government processes, allowing for a head count reduction.

It should be noted that the last bout of high inflation in the US also resulted in a preference for supply side policies, though inflation was eliminated by punishingly high interest rates and the most severe recession of the post-war era. 

[Dry Brett Kavanaugh]

^ The Harvard guy is not a Keynesian. Yes, I found the article by the Nobel laureate rather superficial. I was thinking about perhaps corporate/producer (henceforth business) tax cut, loans/grants/subsidiaries to business, subsidiary for hiring, the same to solar and other energy sectors, reduction in tariffs and quotas, increase in free trade, etc.

[Todd]

^ The Harvard guy is not a Keynesian.

He's a proponent of New Keynesianism, hence my inclusion of "New".  New Keynesianism attempts to merge Keynesian and Neoclassical approaches. 

I was thinking about perhaps corporate/producer (henceforth business) tax cut, loans/grants/subsidiaries to business, subsidiary for hiring, the same to solar and other energy sectors, reduction in tariffs and quotas, increase in free trade, etc.

I guess you mean subsidy, not subsidiary.  If so, you advocate a form of industrial policy (or neomercantalism) at the same time as an increase in free trade.  These are contradictory policies.  Subsidies are trade barriers.  Neomercantilism is all the rage now.  Some people will benefit, others will not.  The general public may even benefit.

[Dry Brett Kavanaugh]

^ Yes, subsidies. I regret my error.

[Todd]

^ Yes, subsidies. I regret my error.

But do you still advocate contradictory policies - that is, an increase in free trade while simultaneously relying on more trade barriers? 

[Dry Brett Kavanaugh]

I'm not advocating anything. I make living by doing research on these things. As you already know, the subsidies I mentioned are not those given to USA exporters or domestic firms competing with foreign goods. They are subsidies/grants for hiring people and research/operations to cut production costs.

[Todd]

As you already know, the subsidies I mentioned are not those given to USA exporters or domestic firms competing with foreign goods. They are subsidies/grants for hiring people and research/operations to cut production costs.

You are explicitly advocating several things, including subsidies.  On the hiring side, do you advocate subsidies to encourage hiring only in lower skilled and lower wage service industries, which arguably do not require additional subsidization?  Given current labor markets, who, precisely, would you target for hiring for any industry?  Even in the slowing economy, U3 is at or near all-time lows.  Is your objective to increase labor force participation?  If so, what does your research show in terms of effectiveness of hiring subsidies as compared to continuing education and retraining programs targeting people not currently in the labor force?

On the so-called research/operations side, you previously mentioned "solar and other energy sectors".  China is the largest manufacturer of solar panels.  Subsidies for US solar panel manufacturers would directly aid US producers and would therefore directly compete with foreign goods in that case.  "Other energy sectors" is amorphous, so which other sectors?  Are you focused on renewables?  If so, subsidies would have to be very carefully crafted so as to not compete with foreign manufacturers in certain sectors, such as wind turbines.  Or do you mean that you would focus subsidies in even more specialized sectors such as, say, geothermal or tidal power, or that you would subsidize large scale energy storage by funneling funds to pumped storage hydro?

Without details as to what types of subsidies you advocate and/or have researched, claims that they would not compete with foreign goods are unsubstantiated.

Of course, with the WTO now basically toothless, complaints from foreign competitors would be less significant than they were only a few years ago.

[Todd]

Why the Fed must keep on its current path.

[Pohjolas Daughter]

Saw a video clip on CNN's website over the weekend in which they compared the current prices of certain food items vs. their respective prices in 2021:

Milk:  17% higher
Flour:  23% "
Eggs:  40% "
Bread:  16% "

https://www.cnn.com/videos

PD

[Dry Brett Kavanaugh]

Saw a video clip on CNN's website over the weekend in which they compared the current prices of certain food items vs. their respective prices in 2021:

Milk:  17% higher
Flour:  23% "
Eggs:  40% "
Bread:  16% "

https://www.cnn.com/videos

PD

The figures are very high. Probably medical cost too. I guess some people in developed economies are moving to low-cost countries. I am thinking about it myself too. In the time of electronic books and mp3, it's easy to move. Only problem would be finding good audio set.

[Todd]

[Pohjolas Daughter]

The figures are very high. Probably medical cost too. I guess some people in developed economies are moving to low-cost countries. I am thinking about it myself too. In the time of electronic books and mp3, it's easy to move. Only problem would be finding good audio set.

Well, I would weigh in a lot of factors (which you are probably already doing) before moving.  Things like:

Political climate
Crime
Economy
Healthcare and insurance
Infrastructure
Language and Cultural Differences and how to make friends and fit in

I'm sure that there are some good articles and resources out there.  Including how to/what to expect when applying for a working visa.

Good luck! 

PD

[Todd]

'Bad situation': Soaring US dollar spreads pain worldwide

[Todd]

Bad: Germany dodges recession but inflation climbs to 11.6%

Maybe worse: Eurozone inflation climbed to new record high of 10.7% in October

[Todd]

Supporting rationing over negotiation should be a red flag.

[Todd]

I'm not advocating particularly for one or the other. I literally said "I wonder if..." we'd ever see rationing again.

Oh.

[Todd]

[Todd]

Mounting global price pressures threaten to trigger more rate rises