2 years ago: The three-step test for inflation

March 30, 2011, on this blog: The three-step test for inflation

Conveniently, there’s a simple three-step test to find out if inflation worries are founded or unfounded.

Step 1: March into your boss’ office. Don’t bother making an appointment, just open the door, walk in and tell him to listen up because you’re in charge here.

Step 2: Inform your boss of the substantial amount of the raise you will be receiving and that this figure is not optional.

Step 3: When your boss blinks in shock at the large figure you just quoted, remind your boss that you have plenty of options. Remind him that you could easily find another, better-paying job by late afternoon. Remind him that in this job market your boss knows very well that he would be hard-pressed to find anyone who could possibly replace you — that you have all the power in this negotiation and he has no choice but to do what you demand.

  • AnonaMiss

    Preach!

  • http://twitter.com/lesterhalfjr Chris Hadrick

    inflation doesn’t mean the economy is good. and specific costs have gone up drasticaly. Health care costs are much much higher than they were a decade ago.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    I wish it was the late 1990s again. :| Or the 1960s.

  • dxmachina

    Depression is a choice. Steve Randy Waldman: But the preferences of developed, aging polities — first Japan, now the
    United States and Europe — are obvious to a dispassionate observer.
    Their overwhelming priority is to protect the purchasing power of
    incumbent creditors. That’s it. That’s everything. All other
    considerations are secondary.
    These preferences are reflected in what
    the polities do, how they behave.

    Fear of inflation drives that choice.

  • LoneWolf343

    Inflation is an increase in the price level, which is a general measure of all prices. You can’t say “well, over here prices are increasing, therefore inflation” because inflation doesn’t work that way.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Health care costs going up =/= the generalized fall in the value of money.

  • http://againstjebelallawz.wordpress.com/ Enopoletus Harding

    I’m sure an inhabitant of Zimbabwe in 2008 would not be able to pass this test.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    I realize that. wages don’t stick to inflation either though. You can have high inflation and high unemployment, as we all know. or low inflation and rising wages. This inflation test makes no sense.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    you could have a very rich person who owes a ton of money and a very poor person who is thrifty and responsible. The idea that there is a class of creditors is silly.

  • EllieMurasaki

    Wait, so significant numbers of people to whom money is owed are poor?

  • http://twitter.com/lesterhalfjr Chris Hadrick

    there are significant numbers of poor people who do not owe money and rich people who do.

    No, there are probably not many poor people who are creditors. This whole conversation is offensive. The idea that having a stable currency is bad because it discourages borrowing is …doofy.

  • EllieMurasaki

    Either there are significant numbers of poor people to whom money is owed, or effectively all the people to whom money is owed are rich–one might say, of the creditor class.

  • Lori

    Our idea of “offensive” is clearly as ridiculous as your ideas about economics.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    No because most people do not owe great sums of money OR owe money to people.

  • EllieMurasaki

    [citation needed]

  • LoneWolf343

    Inflation has been pretty normal for the past few years, except for numbers of 4-5% in 2008 and negative inflation is 2009. See for yourself: http://inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

  • http://twitter.com/lesterhalfjr Chris Hadrick

    even if it was just one person it would be the same principle. currency isn’t a thing you raise and lower at will, it’s supposed to be a stable reliable medium of exchange.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    the past few years have been pretty absurd, monetarily. We had gas at 5 dollars a gallon in mid 08 then at under 2 dollars in late 08. So what we have now are basically normal ridiculous boom era prices. gas is like 3.75 a gallon. That would have been unheard of pre housing bubble.

  • EllieMurasaki

    That doesn’t answer the question of, who are these ‘most people’ who don’t have credit card debt and or student loan debt or mortgage debt or any debt at all?

  • http://twitter.com/lesterhalfjr Chris Hadrick

    http://research.stlouisfed.org/fred2/data/PSAVERT.txt

    savings rate used to be 10 percent. note the downward trajectory, right around the time Greeenspan began at Fed mid 80′s

  • LoneWolf343

    …Actually, there was a huge spike in gas prices just before the housing bubble popped. It lead some to argue that the high gas prices cause the bubble to pop.

    Oh, and you’re citing specific prices again. Inflation doesn’t work that way.

  • http://twitter.com/FearlessSon FearlessSon

    Heath care costs have gone up, but that does not follow that therefor inflation is the cause.

    Look at healthcare costs in relationship to everything else. All things being equal, inflation should cause costs to go up across the board relatively evenly. Instead, we see much higher costs in some areas than we do in others.

    Incidentally, part of the issue with health care is that it is a service which fundamentally does not act the way most goods and services do in a completely free market. There is not much opportunity for consumers to shop around, not much incentive to drive costs down. Some form of price-control is necessary to keep it from causing the rest of the market to stagnate because it does not play by the same rules.

  • LoneWolf343

    He is almost right. 47% of people have no wealth anymore, meaning that their debts exceed their assets.

    But, those people are the lowest section of society.

  • http://twitter.com/FearlessSon FearlessSon

    I was in high school in the late nineties. I was on track to go to college, get a computer science degree, and join the information revolution. That is what the American Dream promised me if only I applied myself.

    I got out of school and the market said “Haha, sucker, you fell for it!”

  • Lori

    currency isn’t a thing you raise and lower at will, it’s supposed to be a stable reliable medium of exchange.

    Can you demonstrate that you know what this statement even means? As far as I can tell the answer is “no”.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    those price controls have worked FABULOUSLY

  • http://twitter.com/lesterhalfjr Chris Hadrick

    oil is a pretty major specific price. all measures of inflation have flaws. The governments stats take out food and gas which are the things that have been going up the most. market forces affect all goods but gold, for example, isn’t 5 times more scarce than it was in 2000.

    prices should have been going DOWN since the 90′s not up, that’s another discussion I guess though.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    and what about senior citizens. those greedy 90 year olds on fixed incomes have no heart I guess. don’t care about the poor people who bought SUVs and houses they couldn’t afford.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Ellie- me

  • EllieMurasaki

    You. One single person. Are ‘most people’.

    Nope. Go look up the percentage of the country with credit cards, the percentage with mortgages, the percentage with student loans, the percentage with other forms of debt, and then tell me most people aren’t indebted.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    Lori you are so weird. All your responses to me are insults and yet I answer them so maybe I’m weird.

    How could I have made a statement and not known what it meant? Instead of bringing goats or wine to 7-11 people bring a thing called money to it and acquire goods that way. The money is the medium of exchange. To use a common example from history, gold was a popular medium of exchange. People wouldn’t or rather couldn’t water down the gold nor would they fix an arbitrary price to it (though governments could) This made it a stable and reliable medium of exchange. Any other questions, Hillary Rodham Clinton?

  • http://twitter.com/lesterhalfjr Chris Hadrick

    People used to save. Why don’t they anymore? Would you agree that generally speaking saving is good? I mean the squirrel demonstrates this to us with his nut hoarding habits does it not?

    We had a much better fairer economy and a much higher savings rate in the past going way back. It’s common sense. What upended common sense is our weird inflationary monetary policy. It’s happening now. How much are you making in your savings account? like a percent or something? They are trying to drive us to speculation / consumerism etc

  • EllieMurasaki

    People save money when they have excess money to save.

    Part of the reason that is not the case is that the almighty free market has uncoupled wages from productivity. Part of the reason is that the almighty free market has created a great deal of crap and a great deal of advertising and a great deal of pressure to buy the crap. Part of the reason is that the almighty free market has decreed that many of us shall not have income exceeding basic living expenses, or income AT ALL.

  • EllieMurasaki

    You didn’t come back with the percentages of who in the US is in what sort of debt. Look them up.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Must’ve hit the job market right when the dot-com crash hit. Before then I was hearing about some McD’s paying kids out of highschool $8 US an hour.

    And people were getting ridiculous wages like this one Oracle guy I knew who pulled $100k a year for a while. And all he has was some book knowledge and a venture capitalist willing to throw money at anything.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    The almighty free market created the prosperity in the first place.

    look http://research.stlouisfed.org/fred2/data/PSAVERT.txt

    There was plenty of advertising in 1974 but people saved at a rate much greater than they do now. No one FORCED anyone to buy and SUV they couldn’t afford with borrowed money. No one forces anyone to buy any “crap”. Don’t you write for a blog called trashy books for tall women or something? lecturing people on crap!

  • http://twitter.com/lesterhalfjr Chris Hadrick

    http://www.youtube.com/watch?v=kXpwAOHJsxg

    Is a college degree worth it? field study

  • P J Evans

    I think I hit *all* of the wonderful downturns.

  • P J Evans

    I still think he needs to spend quality time with ‘economics for dummies’. It’s been more than 30 years since i took econ-for-general-ed, and *I* can tell his statements are high-grade bovine excrement.

  • EllieMurasaki

    What the fuck are you even talking about.

    Does anyone know what the fuck he is even talking about? Closest I’ve got is Smart Bitches Trashy Books, for which I do not write. Which I don’t even read, as romance is not my genre of choice.

  • EllieMurasaki

    That wouldn’t necessarily help. If someone wrote an Econ 101 text from a feminist perspective, maybe.

    Actually, if anyone encounters such a text, tell me?

  • LoneWolf343

    What do you think that 47% is made of?

  • LoneWolf343

    Or, perhaps that even considering their volatility, inflation has not been affected significantly. Trying to cite these things as proof that inflation is going out of control, when the people that track it say it isn’t, is not unlike saying that a cold day disproves climate change. You CLEARLY aren’t informed enough to be in this discussion, so, start here: http://www.clevelandfed.org/forefront/2011/spring/ff_2011_spring_11.cfm

  • Lori

    Don’t you write for a blog called trashy books for tall women or something? lecturing people on crap!

    And IIRC you’re either a veterinarian or a bike messenger, depending on which story you’re telling. Lecturing people on crap!

    So what’s your point? If it’s that Ellie’s job, which you got wrong, invalidates Ellie’s statements then you are, once again, proving that you have no idea who to construct or evaluate an argument. This is beyond tiresome. Figure it out or go away.

  • LoneWolf343

    What price controls? He just said that they don’t exist, so there have been no controls to either fail or succeed in their goals.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    I thought he was implying there were

  • http://twitter.com/lesterhalfjr Chris Hadrick

    clearly someone who disagrees with you is not informed enough to dialogue with you. Look, the author of the post implied that wages were directly totally connected to inflation and they aren’t.

    I’m not saying we are currently in an inflationary crisis that is being masked somehow. We’ve exported a lot of it.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    I don’t care. The principle is the same. We shouldn’t incentivize things like stock market speculation and people taking on debt for frivolous items.

  • EllieMurasaki

    You said ‘most people’ are not in debt.

    This is false.

    You need to go look up the figures, so that next time you will not say the false thing.

  • http://twitter.com/lesterhalfjr Chris Hadrick

    “And IIRC you’re either a veterinarian or a bike messenger, depending on which story you’re telling. Lecturing people on crap!”

    that makes no sense. Her point was society creates too much crap. I pointed to what I thought was her predilection for trashy books which could easily be catagorized as crap but are not to her. and people generally don’t take out massive loans to buy them,

    “Figure it out or go away.”

    I have figured it all out and I’m never going away


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