Thoughts on inflation?

Instead of, once again, sticking it to the middle and upper middle class, why don’t we look for the money elsewhere? What about welfare reform? What about our military budget?

I’m more than happy to pay more for things than I’ll get from them. We have to do that to have a functioning society. But I’d be lying if I didn’t say that I hated every one of your listed ideas, especially the one where if you have planned for your retirement then you don’t get this as a supplement. So as a reward for planning and deferring immediate consumption (needed or not), I get to subsidize 100% of the retirement of those who didn’t. That’s going to be a tough sell.

3 Likes

Raising minimum wage is another option and would help a lot. Turns out 12.4% of $15/hr is a lot more than 12.4% of 7.50/hr.

There is a modified version of this. Make a “donut hole” in the income subject to SS tax.

1 Like

all the ways to “fix” SS are well known to the politicos. If you’d like to read up, may I recommend any of the Presidential reform Commissions. The last one, I believe was in 2001. The ‘solutions’ are the same, only the numbers have changed.

(Otherwise, we start getting into politics on a non-politics thread.)

2 Likes

Wouldn’t raising minimum increase inflation, it’s like a catch 22, it never ends.

4 Likes

Minimum wage has been increasing here, and yes, inflation is now pretty high. Minimum wage was about $12 at the start of covid, and now will be $17/hr on Jan 1. Wages are up, rents are up, groceries are up…

2 Likes

RE prices here are down 2-3% compared to the previous month but are still up 5% compared to a year ago. Folks with great mortgage rates will be staying put for as long as they can…

7 Likes

Interest on the national debt is soaring along with the fed rate hikes.

https://www.washingtonpost.com/business/2022/10/13/debt-interest-rates/

Total interest payments on the government’s debt could come in at nearly $580 billion this fiscal year, up from $399 billion in recently-completed fiscal 2022.

That would bring the total interest cost in 2023 to roughly the same level as the federal government’s 2022 budget for Medicaid.

2 Likes

Weird, our retiree Cobra health care premiums went down for next year, $35 a month. I didn’t think health care premiums ever went down. Maybe so many of the older people in our group health insurance died of Covid that their costs went down? Sad, if that’s why.

As a small business owner, we can’t raise the minimum wage we pay ($15-17) and absorb supply chain issues without raising prices.

What’s laughable is that we also compete with and sell on Amazon. They are continuing to raise fees that are set as a percentage of the selling prices. What used to be a 15% fee is now a 17% fee (example) and that’s a bit of a double hit.

1 Like

Yes, it absolutely stands to reason.thwt as business expenses go up that goods and services will increase in cost. We are certainly seeing it everywhere now. It was clearly predicted that an increase in wages would lead to increased prices. Increased costs of supplies certainly does the same. Actions have consequences and sometimes they’re unintended. As you well know, being a business owner, the reality is those individuals and businesses providing goods and services have to be profitable too, otherwise why bother.

For services, their cost is mostly about labor. For most goods, the main component of their cost is also labor. The current issue with supplies is, for the most part, the result of labor shortage or the decrease in productivity. There’s no sudden shortage of raw materials, except in sectors where there’re non-market/monopolistic behaviors). The effect of war is also temporary. The increasing cost of labor, however, is permanent. It’s the primary driver of inflation.

From a report I read, general public have $1.3T more saved than before the pandemic. Until most of that much money is used up, labor shortage will persist and the inflation isn’t coming down.

Yes, it raises the cost of doing business all the way up the supply chain. To compensate, skilled labor has to raise their wages/salaries. Once everything goes up, $15 an hour is worth exactly the same as it was when it was $8 an hour. There’s your inflation.

4 Likes

Man, is butter expensive! Today was the last day for a coupon I had so I went over to the store (they were out of this coupon special butter last week). I thought I could get 4 for $1.99 each but coupon was limited to 2. Thought I’d just pick up a few non-coupon ones. Even the store brand was $4.79 and name brands were $5.50 or more.

1 Like

I imagine inflation will go back up once the SPR is bled dry in a month or two. It’ll expose our lack of oil production. The SPR is the only thing keeping prices halfway steady. Diesel stockpiles are at historic lows already. After November, hold on to your potatoes!

2 Likes

What about refineries? Isn’t there a need to expand capacity, even if domestic oil production expanded?

1 Like

Without a doubt. Oil companies have expanded capacity on existing refineries, but that has limits. Seriously, if we did that, gasoline would be a heck of a lot cheaper.

2 Likes

We’re in a global market. Increased domestic production doesn’t necessarily translate into lower prices, which are determined by global supply and demand (unless we restrict energy trading). We don’t have sufficient capacity to supply the whole world.

2 Likes

It is behind the paywall, but the title sums it up. Basically, it is hard to bring down the inflation when there’s so much money in circulation.

https://www.wsj.com/articles/cash-rich-consumers-could-mean-higher-interest-rates-for-longer-11667075614?mod=hp_lead_pos2

“Buoyed by pandemic-fueled savings, consumers and businesses are proving less sensitive to tighter credit—complicating the Fed’s job.”

1 Like