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Comment by socialismisok | Hacker News Reader

It's not a primary cause, though it likely had a minor impact.

We're supply side constrained.

> We're supply side constrained.

What does this even mean? If there were no supply-side constraint, prices would dive toward zero like some post-scarcity Star Trek society. There is always a supply side constraint; when you dump a bunch of demand in on top of that, of course prices will go up.

It means we're experiencing a period of uniquely high constraints. There are less goods available now than there used to be, because the normal levels of supply are constrained by pandemic and war.

I'm not sure that is backed up by data. If you look at consumption, I think you see an increase in the volume goods purchased, not a reduction.

Business inventories are the highest they've been in a decade right now.

There are pockets of supply constraints, like energy and raspberry pis, but for the most part we are overflowing with inventory.

If this were even true, it would only mean that aggregate demand has to decrease proportionately in order to maintain price stability.

Maybe for some industries, but this inflation is very broad base. A supply constraint is likely to cause inflation in individual sectors, and we certainly see that for things like new cars. But it’s hard to buy into every single sector being supply constrained at the same time.

Really? We've had a global pandemic wrecking supply chains all over the world, lockdowns continue in China - one of the world's largest manufacturing entities, and we have the Ukrainian War wrecking energy and food supplies. Altogether every single sector of the economy is impacted. I'm not sure why you'd think that wouldn't be the case.

Not to mention a decade of very loose money policy.

Exactly, you see it also in the domestically produced Goods and at the supermarket as well

It is absolutely a primary cause. Adding more demand worsens supply side issues.

If it results in demand. Not all spending by the government leads to demand. I see people blaming student loan forgiveness, for example, and like... No one has redeemed that yet and it's not clear how much that will even have an immediate effect. If someone keeps paying off their loans at the same rate they were, they won't have increased demand right away.

Likewise, if people increase their savings or pay down other debts, demand isn't increased right away.

It's just not as simple to draw a line to specific government spending and say "that caused inflation".

Here’s an easy counterpoint: soda, which is primarily water and bottled locally so gas shouldn’t affect the price too much, has gone up just as much as everything else.

I was able to collect unemployment as a sole proprietor due to COVID. It was needed as I’m a photographer, but we were also allowed to deduct expenses from what we made that each week. When the math lined up I absolutely bought some new equipment to offset my profits which allowed me to get unemployment that week, and other weeks my usual expenses offset my profits as well.

I then had extra money to invest. I’m sure I’m not the only one. Huge amounts of cash was injected everywhere in the economy. The fact that Biden was calling for 3 separate “once in a generation investments” after that and during “transitory inflation” should have been enough to get him absolutely destroyed in the media.

The plural of anecdote is not data. My spending has remained more or less constant.

The supply chain in soda is complex, you have corn producers (whose equipment, fuel, labor, and seed costs are influenced by supply), the price for corn is increased as global farm production is hit by war, you have water costs (which, depending on region, could be increasing), you have fuel and distribution costs, labor costs, plastic bottle costs... I guarantee you can trace back increased costs to regions hit hard by pandemics.

I think you're alone if your spending has remained constant. I don't know of a single grocery item that I buy that hasn't gone up in price significantly.

My wife used to work for a well known food brand. Somewhat early on in the pandemic grocery stores raised their prices for that brand's products, even though they weren't paying any more for the product. Eventually the brand did raise their own prices as they decided they'd rather have that money themselves.

In both cases it was as simple as other prices being raised, consumers had the money to spend, so why not?

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