Prices and inflation

Gerard Barry wrote:
So you'll continue to charge high prices that enable you to have a good standard of living but you don't want to see the lowest paid workers in the economy earn a little more to match inflation? That seems a bit selfish.

Gerard Barry wrote:
...expensive renewable energy...

Novian Cahyadi wrote:



Not an economist either, but I always thought that managing the inflation is the domain of your national central bank? If so, there's nothing we, as citizens, can do to keep it under control. I'd imagine global trades would make this to be a much more complicated matter as well (i.e. scarcity of commodities seems to affect the inflation rate considerably, if not the main factor that causes it).

@Economists
Feel free to correct me if I'm wrong. I'd like to know myself.

[Edited at 2022-02-22 04:26 GMT]

Gerard Barry wrote:
It's like all the "green people" here in Germany: they're usually high earners and don't seem to care that poorer people might have difficulty heating their homes thanks to Germany's obsession with expensive renewable energy.

Evgeny Sidorenko wrote:

I can't just sit and watch things get more expensive everyday without fighting back by earning more on my side. Inflation has become so visible during the last 3-4 months, so yes I have started to raise my rates, which is more or less successful depending on the client. I still have to think how to handle the everyday living costs and leave the global matters to economists and governments. I guess it's easier to speculate about economic theories living in more stable countries in Europe, but I can't really see what else there is to do with inflation at 'personal' level.

Jan Truper wrote:



I'm one of the "green people" in Germany, and I care (so do most other "green people" I know, by the way, as they tend to be rather empathetic). Please tone down your baseless slander.

Paul Lambert wrote:
Inflation as such is the result of central banks increasing the money supply. You then have a greater number of pounds, dollars, franc etc chasing the same number of goods and services. That is what inflation is by definition.

The confusion comes in when people refer to any increase in the price of a commodity as "inflation", and the media and even many economists do not help to clear up the confusion. If your local grocery store burns down (God forbid) and then food has to be transported in from elsewhere which incurs costs, those costs will be reflected in the prices of the food sold at the stand outside the smoking ruins of the grocery store. That is not inflation, strictly speaking, though people will use this as an example of "price inflation". If a central bank stops printing money, inflation is licked. Period. Prices may still go up and down for other reasons.

Paul Lambert wrote:

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I wouldn't say that "green people" don't care and they may be empathetic, but they don't have the same personal stake in it and can afford to maintain their green identities. After all, we are constantly told to "make sacrifices". If that sacrifice is a little bit of money when you have plenty, you can afford to feel like a good person. If that sacrifice means choosing between turning off the heat or the lights, one's feelings might be different.

It is like with food. The price of food is not a major concern to the rich. It is a crucial concern to the poor.

Jan Truper wrote:




Renewables are the world's cheapest energy source -- especially if you factor in consequential costs.

Ice Scream wrote:



Isn’t prices going up the very definition of price inflation?

You seem to be defining monetary inflation.

The current spike in consumer prices is very much a matter of supply and demand issues, actual and potential, no?

Paul Lambert wrote:

..... This matter is very, very poorly discussed in the mainstream.

Ice Scream wrote:



Did I say any of that?

I was just regurgitating textbook economics. Yes the spike in inflation will hit the poorest hard, but the solution is not to hike wages, which could make the problem last longer, but to subsidise their bills somehow.

Ice Scream wrote:

Isn’t prices going up the very definition of price inflation?

You seem to be defining monetary inflation.

The current spike in consumer prices is very much a matter of supply and demand issues, actual and potential, no?

Paul Lambert wrote:
No. Inflation is, by definition, is the increase in the money supply. A general rise in prices is the result of inflation.

Not blaming you for the confusion either. This matter is very, very poorly discussed in the mainstream.

Jan Truper wrote:

I'm one of the "green people" in Germany

Paul Lambert wrote:



Historically, the only thing individuals can do to hedge inflation is to put your savings in gold or silver. They tend not to lose their intrinsic value, i.e., in 1900 one ounce of gold would support a family for a week. In 2022, one ounce of gold will do the same.

In this context, cash is a perishable good that goes bad the longer you leave it. When you need to spend money, you can sell you gold, but then the cash starts "going bad" right away.