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Comment by WalterBright | Hacker News Reader

Inflation is how we pay for deficit spending. It isn't free money.

This isn't necessarily true if the deficit spending increases the amount of real goods sufficiently.

For example, if the government increases the money supply by 10% by deficit spending, but the activity induced by that spending increases the amount of goods in the economy by 10%, the action will have no effect on the general price level.

The activities that typically fall under this category are building infrastructure or introducing legislation that mitigates collective action problems.

Obviously, a lot of (most?) government spending doesn't meet this criteria, so your comment is still a fair criticism of most governments in practice.

How come the 99%s wages aren't going up with inflation?

"Because, it's been a tough year. We'll look to implement a bonus scheme next year which will help us keep up with inflation"

... and all that boll@cks.

Advice: either be in the 1%, or change jobs regularly enough to consistently boost salary ahead of inflation.

Inflation lifts banks and other entities that can issue new money. After them, it lifts people with good contact with the former set, and goes group by group in proportion to how much (economic) contact they have, getting diluted each time.

This is a pretty fundamental mechanic of markets. Stuff don't spread around if there aren't any transactions.

Trickle down economics. I promise it’ll work this time!

Folks, unions and high taxation with an emphasis on public works and strengthening the public sector literally has proof that it works. High taxation with an emphasis on military won’t help, so we need to address that first.

The dream of trickle down economics has been proven false time and time again. In the US, in Russia, in UK. It’s not a strategy that has long term success. And it’s driving the world to suffocate itself, so in a very long term scale it’s actually disastrous.

It didn't appear to work because the government sector growth consumed all of it.

I'm at loss what in my comment made you think about trickle down economics.

What you’re suggesting is one of the talking points of trickle down economics

What part of my comment suggests that trickle down economics work? Thew one where I say things don't propagate through the economy immediately or the one that says that the farther away people are from the origin of something, the least of it they will get?

And what part of it applies to trickle down economics anyway, that is about wealth redistribution, instead of immediate diffusion of a specific good?

They are going up (in nominal terms) with inflation.

From the latest BLS report on the topic: “Real average hourly earnings decreased 1.9 percent, seasonally adjusted, from November 2021 to November 2022.”*1

Average hourly earnings went from $31.23 in Nov 2021 to $32.82 in Nov 2022.*2 That’s where you see average current income rising with inflation (+5.1% YoY)

*1 https://www.bls.gov/news.release/realer.nr0.htm

*2 https://www.bls.gov/news.release/realer.t01.htm

> [...] rising profit margins have accounted for roughly 40% of the rise in prices.

https://www.epi.org/blog/inflation-minimum-wages-and-profits...

Inflation came from supply chains breaking down with Asia. Inflation will continue until that problem is addressed.

and the fact we doubled monetary base at the same exact time had no effect ?

And the amount of PPP loans we gave out to people with no accountability.

And the reduction in taxes, in the years prior to that.

If that explanation was correct, we'd see periods of deflation when those problems go away. We don't see any deflation, and haven't since 1914 when we switched to fiat money.

(other than a brief deflationary period during the Great Depression)

Before 1914 we saw periods of inflation and deflation, netting out to about zero.

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