Anon Report This Comment Date: June 23, 2022 07:04AM
Have you noticed we're being sold a furphy?
Inflation is caused by a boost in the amount of money in the system. It's never
caused by a shortage of a commodity.
The claim it's caused by a shortage of a commodity is by the same people who,
after first demanding a free flow of money across borders, boosted the amount of
money in the system.
Have you noticed the lack of the term 'Underlying Inflation' at the moment?
pulse Report This Comment Date: June 23, 2022 07:11AM
Except for when it is helped by the cost of a commodity.
If the production of your goods uses fuel; and fuel goes up by 20%, then the
production cost of your goods goes up; which you will need to reclaim, by
increasing the wholesale price.
Then you need to ship your goods, be it around the corner or around the world.
This has also gone up 20% now; except it hasn't, because shipping has gone up
600% in the past year due to various backlogs and price gouging by shipping
companies. But let's pretend it's a flat 20%. Now getting your goods to retail
has gone up, so your widget that cost $10 to make, and retailed for $20, now
costs $14 to get to retail.
Well, the retailer still want their cut. So the $14 widget is now $24 to
maintain the same $10 profit, OR $28 to maintain the same percentage profit
ratio.
This is a VERY simplistic way of looking at things. Let's say your $10 widget is
made of 10 parts, each of which now costs 20% more to ship to you, etc etc etc.
It doesn't take much to become an inflationary issue WITHOUT adding more money
to the economy.
If your goods are in short supply, then there's also higher demand for each
individual part, driving up costs.. it becomes a vicious cycle until it cools
down.
Anon Report This Comment Date: June 23, 2022 09:55AM
Pulse, that's supply, demand and price gouging, simple yes, but I'm not arguing
with what you're saying, you're not addressing the fact there's a massive amount
of new money in the system that's not being withdrawn. I don't even come across
talk of the interest paid on those government bonds bought with it being
cancelled, or used to pay down debt... nothing.
I don't know if changes in governments will change the path nations are on (here
in Australia the new parliament is launching a much needed review of how our
reserve bank works (direct investing new money in the stock market to fund
sovereign wealth funds will be far better than lending it to banks. Once again
prohibiting our companies from raising funds from abroad will also repair a
fragility a former parliament built into the system).
pulse Report This Comment Date: June 23, 2022 10:51AM
Supply, demand and price gouging; yes. However that all contributes to
inflationary pressure, when every component of everything has gone up 50% in
price because of shipping, because of fuel, because of price gouging.. that
leads to upwards inflation at a massive rate. The world hasn't kept up with
demand for more than 2 years now. It's not Russia invading Ukraine that's the
problem (though speculative markets around oil and food haven't been helped by
it); it's been going this way since COVID lockdowns started, since governments
everywhere started pumping the economy full of money to keep it afloat.
Unfortunately, it looks like most pumped too hard and for too long.
What new money is being pumped into the system without being withdrawn? What's
the source of it?
Anon Report This Comment Date: June 24, 2022 05:12AM
Pulse: "What new money is being pumped into the system without being
withdrawn? What's the source of it?"
Quantitative Easing. Central banks. And I forgot to mention underlying
inflation earlier. I haven't heard that term for a while.
quasi Report This Comment Date: June 24, 2022 10:40AM
Just do what about half of my idiot countrymen do, blame President Biden.
Anon Report This Comment Date: June 25, 2022 05:25AM
Quasi. That's constructive.
Possibly you're affected by this: [
www.plus613.net].
People said in the 1990's the technique was coming and I didn't realise what
they meant. In fact I only comprehended when I saw that image recently.
Washington first demanded free trade, then free flow of money across borders,
then sprung 'Quantitative easing' on everyone like a trap (wealth lost to
inflation doesn't disappear, it's transferred to whomever has the new money -
it's a wealth transfer). It doesn't matter what political party in that country
Charles Dickens described so well: "A swindle", the same plan is
followed - Trump was just a suspension. I don't care about your politics but I
did notice his enemies, and I don't mean those protesting in the street, but
coiffured in suits and dresses.
It's called The Catillion Effect, in short, dump enough new money in the system
and income paying assets will go up in price, lowering dividends, without
causing inflation, but putting those assets out of reach of the many. But 'your
countrymen' are so dumb these 'elite' imagine this will pervert the judgements
of courts and the content of sermons to suit the wealthiest. There's no proof
it will. They just imagine it will, as so many dumb yanks imagine hunting is
better than farming (acre for acre, farming is more productive).
quasi Report This Comment Date: June 25, 2022 12:16PM
Capitalism is reverting back to a form of feudalism.
Anon Report This Comment Date: June 26, 2022 03:54AM
Quasi, there's nothing natural or inevitable about it. An experiment was tried
in Australia, to force the banks to increase their cash reserves instead of
increasing interest rates. It was:
- done too fast for that percentage increase, or;
- too high a percentage increase for that time frame.
Look at it either way, but the technique worked.
During a downturn the extra money can be 'released', half to the bank (I
recommend paying down and off completely derivatives - the money is bank
shareholders funds - and using depositor's funds), the other half to the central
government, who, pay down debt with it, and use a third of the saved interest to
continue paying it down, until they are out of debt completely.
Understand this: there is absolutely no need for the coming mass of
foreclosures (and subsequent renting, what you're alluding to?). There is need
for an Australian style regulator of banks who can issue the orders as before.
Yes, it will impact bank dividends. Diddums. And I'm a bank shareholder.
Anonomous Report This Comment Date: April 09, 2024 04:39AM
I'll add: if a central bank didn't pay its government the interest it received
on the bonds it bought with quantitative easing, but instead cancelled 1/4 of
it, and lowered the price it will sell the bonds by 1/8 of what it received in
interest, using the rest to invest in it's own country's stock market, to build
sovereign wealth funds:
Funding students in tertiary education (so the smartest get in, not 'dumb rich
kids'),
Funding roads,
Funding independent schools,
Funding health care,
Funding old age pensions,
Funding nursing homes, and,
Funding the armed forces.
That would change the country for the better. Enough new money was stupidly
dumped into the systems for this to be possible.
Also, when the bonds are finally sold, the money is cancelled up to the
quantitative easing funds (bond for bond), and the profit paid to government,
who can pay down their massive debt with it, as the generations after the baby
boomers will struggle to do that for a long time - the only way out I can see.
That list therefore may not be completed, but it doesn't matter, solving, even
partly, the problems the next generation are about to inherit does.
Anon Report This Comment Date: May 14, 2024 02:54AM
Regards being sold a furphy, there's a con in Australia.
It's quite common for commercials to do forward projections. Best and worst
case scenarios and so on. I notice the worst cases never seem to happen, but,
excluding anything about experimental gene therapy jabs, early deaths and
sterilizations:
Let's do some extrapolating, about something no one is talking about:
Australia's compulsory pension fund system (Super, we call it). All public
comment to date is about the size of the super funds and what type they are,
private or union (so-called 'Industry Super', they're just index funds) and the
effect the size has on the economy. No one is talking about what happens in ten
years time when a lot of Baby Boomers have died and a lot more have retired.
Super funds don't pay tax in Australia, when you retire the money is no longer
building up tax free wealth but is being spent or invested by you. Tax is
generated by its spending. In ten years time a lot more will be out of the
investment game and being spent. Its movement will adjust the economy. Again
when it's inherited (not all of it will go to an heir's Super). This increases
gumbyment revenue, and you'd have to be a gumby to fall for the miss-impression
it's giving, by its deafening silence on this.
Also, no one is talking about what happens in thirty years time when the first
generation to have compulsory Super all their working lives retires, with their
inheritances.
If you're a Baby Boomer who owns your own home outright and worked all your
life, or inherit from one and you worked all your life, you'll be fine. Those
demographics will increase their holdings of property and shares.
If you're an immigrant from a culture that doesn't buy a home, pay it off and
own it outright, you and your descendants will be locked into an underclass.
Any other immigrant will find it hard to buy real estate, the odds of
advancement are against them.
So why are they coming? Why is gumbyment desperately flooding them in?
Anon Report This Comment Date: May 16, 2024 04:56AM
Correction: Super funds pay a low rate of 15% in Australia and those with
AUD$3million or over will soon pay 30%. This changes the scale of the dynamics
above, but not the dynamics.