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If you believe Milton Friedman, inflation is always and everywhere a monetary phenomenon. So the problem was the printing of the money and throwing it at anything and everything. The 2k stimulus checks contributed but much more salient were PPP loans and Fed policy of 0% interest and high balance sheet.
With hindsight, I think we overreacted to Covid. Quite a lot. But for a year or so we freaked out about it.
If you believe Milton Friedman, inflation is always and everywhere a monetary phenomenon. So the problem was the printing of the money and throwing it at anything and everything. The 2k stimulus checks contributed but much more salient were PPP loans and Fed policy of 0% interest and high balance sheet.
With hindsight, I think we overreacted to Covid. Quite a lot. But for a year or so we freaked out about it.
Its a monetary phenomenon in the sense that if the money wasn't in circulation, one wouldn't see inflation. What we would have seen instead is people without money in absolute poverty and destitution. Businesses shut down for months in many places. Some industries barely functioned at all. I count the airlines and the travel industry in that group. Those that were open had reduced staff and reduced hours. Without the assistance furnished by government people would have lost their housing and ended up on the street. Did that cause some inflation? I'm sure it did. However, the alternative was worse.
Where the supply chain issues come into place is when people with money go to purchase a product and find that it is not available and on back order. The price goes up because the merchant knows some people will pay an additional 20% to get it. Perhaps, the merchant has to pay his/her wholesaler 20% more too. This kind of thing went on for probably a year or more following the Covid 19 crisis. Only today, have those issues largely been resolved.
Covid 19 was a real crisis. We lost a million people because of the disease. Average life expectancy actually declined a full year because of it. It is not something to be minimized.
What I find surprising today is that even though inflation is down to 3% people don't act like it. I think many think prices ought to return to where they were before Covid 19. That would mean negative inflation and probably a recession to get to that point.
Entry level used to pay a hard working man enough to buy a house and raise a family.
Why? Because what he did all day created THINGS that would earn enough PROFIT to allow that level of income*.
The SERVICE ECONOMY doesn't allow that. It doesn't work for a responsible adult employee ...or the employer.
*In 1903 Ford offered $5/day (x5d x 45wk) = at least $1125/yr
In 1903 a modest family home could be bought outright for that same amount.
“ You know what the trouble is, Brucey? We used to make s*** in this country, build s***. Now we just put our hand in the next guy's pocket.”
If you think a bit more broadly, the response to COVID entailed ~$5 Trillion of new spending (including transfer payments) when you add up everything, mostly financed by creation of new money & new debt, which debt must be repaid.
To think that did not impact current inflation is, well, naive.
Well, yes, if you take all the stimulus and "keep everything afloat" efforts, it did absolutely contribute to where we are.
But those ~$2,000 checks or so for people earning under $100k annually are long gone.
Its a monetary phenomenon in the sense that if the money wasn't in circulation, one wouldn't see inflation. What we would have seen instead is people without money in absolute poverty and destitution. Businesses shut down for months in many places. Some industries barely functioned at all. I count the airlines and the travel industry in that group. Those that were open had reduced staff and reduced hours. Without the assistance furnished by government people would have lost their housing and ended up on the street. Did that cause some inflation? I'm sure it did. However, the alternative was worse.
Where the supply chain issues come into place is when people with money go to purchase a product and find that it is not available and on back order. The price goes up because the merchant knows some people will pay an additional 20% to get it. Perhaps, the merchant has to pay his/her wholesaler 20% more too. This kind of thing went on for probably a year or more following the Covid 19 crisis. Only today, have those issues largely been resolved.
Covid 19 was a real crisis. We lost a million people because of the disease. Average life expectancy actually declined a full year because of it. It is not something to be minimized.
What I find surprising today is that even though inflation is down to 3% people don't act like it. I think many think prices ought to return to where they were before Covid 19. That would mean negative inflation and probably a recession to get to that point.
Covid seemed like a crisis at the time. In retrospect, I think we should have taken a "surge health care resources" approach rather than a lockdown approach. Also, just prepare people that there is going to be attrition, give them the best information there is, let them make their own choices. A lot of people would have chosen to quarantine, wear masks, and limit their public activity.
The prevalence of asymptomatic infections and the aerosolized transmission meant that lockdowns, unless they were EXTREMELY strict beyond what Americans are capable of complying with, would never work. The lockdowns we did were haphazard, contradictory, and sometimes arbitrary. Once we found out Covid was aerosolized, cloth or cheap surgical masks were never going to do much good. I think we did a lot of damage and the 1.3 or so million people we lost would have been lost anyway. We just did a lot of damage on top of it trying to ineffectively stop it. At the end of the day, we didn't have much power to stop covid. We just had to let it run its course.
What I find surprising today is that even though inflation is down to 3% people don't act like it. I think many think prices ought to return to where they were before Covid 19. That would mean negative inflation and probably a recession to get to that point.
Because a lot of people are still making 2019 wages, which for many were considered inadequate then. In my profession, the entire enterprise has been priced out and now we have almost an existential crisis facing us. The death spiral of people retiring early, leaving the profession, and not taking job offers is now combining with young people choosing not to pursue the career, understandably because of inadequate wages relative to education cost necessary to do the job, and housing cost necessary to live where the jobs are.
Those of us in the mid range of our career are left with the squeeze of doing extra work for no extra wages. And we may very well be the ones to turn the lights out.
The employer/public seem absolutely determined NOT to raise wages relative to inflation, so I don't know what will happen.
Pay people a fair wage and they will work. The problem is many major companies (Walmart, MacDonald's, Subway, etc.) economic model is based on hiring minimum wage help. You get what you pay for.
Covid seemed like a crisis at the time. In retrospect, I think we should have taken a "surge health care resources" approach rather than a lockdown approach. Also, just prepare people that there is going to be attrition, give them the best information there is, let them make their own choices. A lot of people would have chosen to quarantine, wear masks, and limit their public activity.
The prevalence of asymptomatic infections and the aerosolized transmission meant that lockdowns, unless they were EXTREMELY strict beyond what Americans are capable of complying with, would never work. The lockdowns we did were haphazard, contradictory, and sometimes arbitrary. Once we found out Covid was aerosolized, cloth or cheap surgical masks were never going to do much good. I think we did a lot of damage and the 1.3 or so million people we lost would have been lost anyway. We just did a lot of damage on top of it trying to ineffectively stop it. At the end of the day, we didn't have much power to stop covid. We just had to let it run its course.
It is estimated that vaccination, masking, and isolating saved as many as 3,000,000 lives in this country. I believe there is no question it was worth it. Frankly, this study leaves me with little patience for those who run around insisting they have "freedom" not to vaccinate or take preventive measures from Covid 19.
It is estimated that vaccination, masking, and isolating saved as many as 3,000,000 lives in this country. I believe there is no question it was worth it. Frankly, this study leaves me with little patience for those who run around insisting they have "freedom" not to vaccinate or take preventive measures from Covid 19.
Would it have been 3M though? I don't think we know that.
Oh I always would have been pro-vaccine. I'm just against shutting down the economy over it and doing things that didn't make a difference, like masks.
I'm in education... and I can guarantee you, you WILL feel the economic effects of the 2-year learning loss as this generation phases through the system. It's bad, man. The student cohorts' capabilities have dropped significantly more than any 2-3 period any of us have ever seen. The big problem moving forward is that new teachers are also demonstrably worse - also products of the 2 year learning loss themselves. On top of that, because nobody's paying enough to get anybody decent to take the job. "Catch up" is not happening. There are not the resources for it.
All of this is going to trickle both up and down. We're already hearing about it from some sectors. We're going to be paying for what we did in response to Covid for at least a decade. We will feel it in a variety of ways.
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