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Comment by TuringNYC | Hacker News Reader

>> What I don't understand is this 2% price target.

It is statistical trickery and a headline number used to make people think things are OK. It is also a convenient number for COLA increase targets which make people think their incomes/pensions are going up (when effectively they are not on a real basis.)

Also, as you note, we re-baseline each year and dont talk about the cumulative compounded inflation e.g., over the past 5yrs.

Americans on fixed incomes (e.g., pension, social security) and those without wage elasticity (e.g., restaurant workers) are absolutely miserable right now because they are squeezed from both sides, even after modest wage increases in 2021/2022. This is not good for a Democracy.

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Low wage workers have actually seen the most wage growth recently.

https://www.epi.org/publication/swa-wages-2022/

>> Low wage workers have actually seen the most wage growth recently.

Yes and no(?)

From the study "Real wage growth across the wage distribution, 2019–2022" shows 9% real wage growth. The "real" portion is compared to engineered inflation figures. In the day-to-day world where people pay actual prices, price increases have not be 2% or whatever CPI claims them to be, they are much worse.

We can back into rosy numbers, but the real numbers are felt by people. I'd suggest speaking to a variety of people and see how they feel. Ensure to also speak to someone on social security income. I speak to my mom and see the numbers on a weekly basis.

Restaurant workers are probably the biggest winners over the past three years. Their wages are a large component driving inflation.

The wage-price spiral is a myth. The cause of inflation is, as usual, the government running the printing press and printing "free" money.

Then, the pesky Law of Supply and Demand devalues the extra money, which we call "inflation".

I didn't say anything about the wage price spiral. One category that has had above-average inflation is food away from home. That's mostly driven by wages of the workers, not wages of the clientele.

The pesky law you mention is indeed the issue. Not enough people are willing to work in restaurants, and/or not enough people are willing to modify their habits to avoid eating in restaurants when the prices increase.

Whether "printing" money was a cause of generalized inflation is a matter of debate. It's hard to argue it didn't have some effect, but I think you'd probably expect the inflation to have been worse if it were just dependent on the amount of dollars in the system. Given the tightness in the labor market and reduced workforce participation, it seems to me that the pandemic was a large-scale, impromptu test of the UBI, and society failed it very badly. Turns out people will actually not work if they don't have to, and robots are not yet prepared to pick up the slack.

> Whether "printing" money was a cause of generalized inflation is a matter of debate.

It's only a debate for people who haven't looked at the history of money and inflation. Inflation is always the result of an increase in the supply of money relative to the value of goods and services in the economy. It happens when there are gold rushes, silver rushes, and running the government printing press.

Our current inflation happened soon after a massive increase in deficit spending.

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