Inflation/Gas Prices/Rising Prices in General

[iggy_oi]

Originally Posted by Mr.Coffee

The post should be on billboards and mainstream advertising in Vancouver, Montreal and Toronto. People in these cities have lost sight of what matters to most people.

They might want to take out the line about people getting used to the good life, it might confuse a lot of lower income Canadians.

[blankall]

Originally Posted by opendoor

And yet #2 Japan has the lowest inflation in the OECD.

Of course they had an effect. But it's way, way more complicated than "increase money supply = inflation". If other monetary policies are done correctly, it's totally possible to increase money supply without inducing significant inflation.

As for CERB, the OP's point was that payments supporting individuals aren't what's driving inflation and that's largely correct. Even in Canada, which had some of the most generous individual benefits, the money still mostly ended up in the hands of businesses (CEWS alone was over $100B plus whatever forgiveness there is in the tens of billions in dollars of CEBA loans).

Japan is a totally different situation. Falling population and stagnant NGDP. Places with falling population also, generally, have shrinking economies, and its not an envious position to be in. Japan has actually been struggling to increase inflation rates for several decades now.

You're correct. The money ends up in the hands of businesses....after people spend it....and at higher rates than normal....because inflation.

[Mathgod]

Originally Posted by blankall

CERB payments, other bailouts, and low interest rates most certainly had a major effect on inflation. There's just no debating that.

The combining effect of those three things together, yes, certainly have moved the needle on inflation. But there's really no evidence that payments to regular Canadians has had more of an inflationary effect than either corporate baliouts or low interest rates.

[blankall]

Originally Posted by Mathgod

The combining effect of those three things together, yes, certainly have moved the needle on inflation. But there's really no evidence that payments to regular Canadians has had more of an inflationary effect than either corporate baliouts or low interest rates.

There's no way to pinpoint the effect of any one of those things. They all definitely had an effect.

Low interest rates had essentially the same effect as providing Canadian individuals with more cash, as the primary vector for that infusion was through personal housing purchases.

Are people downplaying the effect of the CERB on inflation, because they want to make the point that if the government offered a guaranteed income it wouldn't just F over the economy? Is that what's going on here?

[calumniate]

The drought in the states isn't going to help anything I don't think:
https://www.nytimes.com/2022/06/07/c...-disaster.html
Utah is going to pay a pretty big price and faces a monumental water shortage
https://www.cbc.ca/news/business/sri...2022-1.6484372
No sriracha for you!

[Doctorfever]

Although is not a main contributing factor, the carbon tax is also boosting inflation. I believe around a half percent. Which is significant.

[Mathgod]

Originally Posted by blankall

There's no way to pinpoint the effect of any one of those things. They all definitely had an effect.

But if we can't be sure what effect each thing actually has, or how much each thing is actually to blame for inflation, it seems rather dishonest to sensationalize the issue and demonize cash payments to individuals as some kind of doomsday sky-is-falling scenario.

Low interest rates had essentially the same effect as providing Canadian individuals with more cash, as the primary vector for that infusion was through personal housing purchases.

But the money goes directly to banks as mortgage payments. Home buyers don't actually realize that "extra cash" until many years in the future when their home is paid off. In the meantime, it's just the banks getting richer.

Are people downplaying the effect of the CERB on inflation, because they want to make the point that if the government offered a guaranteed income it wouldn't just F over the economy? Is that what's going on here?

It's not downplaying if there's nothing real to downplay... if regular people struggling to get by suddenly receive more money to help with their situation, and it doesn't cause much inflation, it's not "downplaying" to point out hypocrisy of those who take the opportunity to scream "SAVE US FROM THE EVIL INFLATION" when they obviously don't give a #### when market speculation creates inflation, corporate bailouts create inflation, or low interest rates create inflation.

If people were serious about combating inflation, they would support higher taxation, especially corporate taxes and property taxes.

[Mathgod]

Originally Posted by calumniate

The drought in the states isn't going to help anything I don't think:
https://www.nytimes.com/2022/06/07/c...-disaster.html
Utah is going to pay a pretty big price and faces a monumental water shortage
https://www.cbc.ca/news/business/sri...2022-1.6484372
No sriracha for you!

Shhhhhh! Decades of rampant pollution and climate change denial isn't costing society anything!!! Don't listen to the liberal hippie hoax!!!!!

[CliffFletcher]

Originally Posted by opendoor

And yet #2 Japan has the lowest inflation in the OECD.

Of course they had an effect. But it's way, way more complicated than "increase money supply = inflation". If other monetary policies are done correctly, it's totally possible to increase money supply without inducing significant inflation.

As for CERB, the OP's point was that payments supporting individuals aren't what's driving inflation and that's largely correct. Even in Canada, which had some of the most generous individual benefits, the money still mostly ended up in the hands of businesses (CEWS alone was over $100B plus whatever forgiveness there is in the tens of billions in dollars of CEBA loans).

The fact CERB mostly ended up in the hands of businesses doesn’t mean that the CERB that ended up in the hands of individuals hasn’t played a big part in inflation in anglo countries. Households in Canada and the U.S. (including low-income households) built up record savings during the pandemic. Those savings feeding back into the economy are a driver of inflation.

[blankall]

Originally Posted by Mathgod

But if we can't be sure what effect each thing actually has, or how much each thing is actually to blame for inflation, it seems rather dishonest to sensationalize the issue and demonize cash payments to individuals as some kind of doomsday sky-is-falling scenario.



But the money goes directly to banks as mortgage payments. Home buyers don't actually realize that "extra cash" until many years in the future when their home is paid off. In the meantime, it's just the banks getting richer.



It's not downplaying if there's nothing real to downplay... if regular people struggling to get by suddenly receive more money to help with their situation, and it doesn't cause much inflation, it's not "downplaying" to point out hypocrisy of those who take the opportunity to scream "SAVE US FROM THE EVIL INFLATION" when they obviously don't give a #### when market speculation creates inflation, corporate bailouts create inflation, or low interest rates create inflation.

If people were serious about combating inflation, they would support higher taxation, especially corporate taxes and property taxes.

The risk with just taxing more is that you may end up in "stagflation", where you have a combo of a stagnant economy and inflation.

For the record, I see property taxes as a consumption tax at this point, and agree they should be raised. The government spends all sorts of cash to maintain the value of private property, yet only those who can afford homes (an ever shrinking proportion of the population) benefit. Property taxes also get all the tax cheats who are investing in the real estate market, yet skirting around the rules as they pertain to primary residence, international buyers, etc..

[PeteMoss]

The thing with CERB and other support payments - is they came at a time where people could not travel, go out to restaurants, or buy many services. So all the demand was in goods.

Companies also didn't have much inventory and when they tried to ramp up, there was a chip shortage impacting supply of the goods that many people were trying to buy - cars, electronics, etc.

Freight companies also took boats off the ocean which led to massive price increases in freight from China to North America/Europe.

Now add a war on top of it which caused gas prices to spike - and inflation stories giving companies 'permission' to increase prices - and you've got a whole bunch coming together to driving inflation.

[TheIronMaiden]

Originally Posted by iggy_oi

They might want to take out the line about people getting used to the good life, it might confuse a lot of lower income Canadians.

Well isn't it their own fault for not working hard enough when the times were good?

/s

[Mathgod]

Originally Posted by blankall

The risk with just taxing more is that you may end up in "stagflation", where you have a combo of a stagnant economy and inflation.

While that's a risk of overtaxation, I don't think we're near the point where we're taxing high enough to cause that to happen. At some point, we have to realize that the only way to do something about wealth inequality is to take some of the wealth from the haves and give it to the have nots. Continuing to let the "rising tides lift all boats" mentality drive our decision making will only cause the wealth gap to widen, while bringing about worse and worse outcomes for the environment and planet.

For the record, I see property taxes as a consumption tax at this point, and agree they should be raised. The government spends all sorts of cash to maintain the value of private property, yet only those who can afford homes (an ever shrinking proportion of the population) benefit. Property taxes also get all the tax cheats who are investing in the real estate market, yet skirting around the rules as they pertain to primary residence, international buyers, etc..

President Xi of China seems to agree. Decades of doing things the old fashioned way has led to major problems in his country, and he's now calling for a nation-wide property tax. I think we should do the same in Canada.

[opendoor]

Originally Posted by CliffFletcher

The fact CERB mostly ended up in the hands of businesses doesn’t mean that the CERB that ended up in the hands of individuals hasn’t played a big part in inflation in anglo countries. Households in Canada and the U.S. (including low-income households) built up record savings during the pandemic. Those savings feeding back into the economy are a driver of inflation.

You're connecting two largely unrelated things together. Individual CERB payments helped cover a portion of missing income that would have been earned anyway (for that vast majority of recipients, anyway), so it was unlikely to be a huge driver of increased savings vs. the counterfactual where COVID didn't exist.

The bigger factors were:

1) A huge reduction in avenues for discretionary spending (travel, restaurants, attractions, etc.) led people to spend less during the pandemic.

2) People were more cautious with money even where they could spend it because of the economic uncertainty.

3) In the absence of the normal consumables they could spend their money on, people put their money into capital assets (real estate, equities, etc.) which saw their values inflate in the the last 2 years as a result of government stimulus for businesses and their maintenance of historically low interest rates.

Those three things worked together to increase household savings. But given the demographics of CERB recipients (generally younger and low income people), it's hard to see how CERB had a significant effect on increasing household savings.

And or course, simple math bears that out. There were ~$70B in CERB payments, whereas the estimated increase in savings vs. the counterfactual in Canada was about $300B. So even if every single cent that people received in CERB went straight into savings and not towards food, rent, etc., that would still only really explain a relatively small portion of the increase. And obviously that's not the case, so its impact is even smaller.

[Northendzone]

maybe if the liberals reclassified all taxes as carbon taxes then 80% of people would get more back in "taxes" than they paid in and it would impact overall usage of government services

[nfotiu]

Originally Posted by Mathgod

But if we can't be sure what effect each thing actually has, or how much each thing is actually to blame for inflation, it seems rather dishonest to sensationalize the issue and demonize cash payments to individuals as some kind of doomsday sky-is-falling scenario.



But the money goes directly to banks as mortgage payments. Home buyers don't actually realize that "extra cash" until many years in the future when their home is paid off. In the meantime, it's just the banks getting richer.



It's not downplaying if there's nothing real to downplay... if regular people struggling to get by suddenly receive more money to help with their situation, and it doesn't cause much inflation, it's not "downplaying" to point out hypocrisy of those who take the opportunity to scream "SAVE US FROM THE EVIL INFLATION" when they obviously don't give a #### when market speculation creates inflation, corporate bailouts create inflation, or low interest rates create inflation.

If people were serious about combating inflation, they would support higher taxation, especially corporate taxes and property taxes.

I don't get where you are going with the lower interest rates money going directly to banks? Lower interest rates allow customers to either save money on their monthly mortgage payments and spend more money else where, or allows them to spend more on a house than they originally would and thus giving more money to a seller or builder. All those things can put upwards pressure on inflation.

The money given out to individuals in 3 or so one time checks was not the most efficient way to give money to the people who needed it most and was done by both presidents mostly because it was easy and free money for everyone is rather popular. There's a limit to how much money you can put back in the economy without causing inflation problems. It would have been better to put more effort into figuring out a way to get more significant money to the people financially affected by COVID than just sending a one time check to everyone up to a pretty high income limit.

A lot of the money sent to businesses was probably better spent as it did things like allow restaurants and other affected businesses to keep everyone on the payroll even when they were closed. Also the enhanced UI money was a better method of distributing it.

None of these would have caused inflation problems though if other world events didn't cumulate on top of them.

[Enoch Root]

Originally Posted by Mathgod

But if we can't be sure what effect each thing actually has, or how much each thing is actually to blame for inflation, it seems rather dishonest to sensationalize the issue and demonize cash payments to individuals as some kind of doomsday sky-is-falling scenario.



But the money goes directly to banks as mortgage payments. Home buyers don't actually realize that "extra cash" until many years in the future when their home is paid off. In the meantime, it's just the banks getting richer.



It's not downplaying if there's nothing real to downplay... if regular people struggling to get by suddenly receive more money to help with their situation, and it doesn't cause much inflation, it's not "downplaying" to point out hypocrisy of those who take the opportunity to scream "SAVE US FROM THE EVIL INFLATION" when they obviously don't give a #### when market speculation creates inflation, corporate bailouts create inflation, or low interest rates create inflation.

If people were serious about combating inflation, they would support higher taxation, especially corporate taxes and property taxes.

Higher corporate taxes cause more inflation (the cost is passed on to the consumer)

Higher property taxes won't help inflation, it will just give everyone less to spend, making the effects of inflation feel worse.

Your (attempted) answer to all problems is wealth redistribution.

[BlackArcher101]

Household savings from being unable to spend during the pandemic, HELOC's pulled out from super high house values, crypto, very large stock market gains.... and we blame CERB for adding too much spending money?

[Torture]

Originally Posted by BlackArcher101

Household savings from being unable to spend during the pandemic, HELOC's pulled out from super high house values, crypto, very large stock market gains.... and we blame CERB for adding too much spending money?

Those damn people getting a whopping $2,000 (taxable) a month just added too much to the economy! I mean, that's $24,000 a year, think about what somebody could do with all that money!

[CorsiHockeyLeague]

Originally Posted by PepsiFree

You’re right, it’s definitely not different people with different views and desire fluctuating in their loudness. It’s just all the same people who can’t figure out what they want!

Sarcasm aside, I think even most people who are happy to see gas rise to prices rise to levels that make people think twice about their vehicles realise this isn’t exactly the ideal state. Jacking it up so that it ####s up poor people and makes the rich richer is really never a winning formula for public opinion

I'm not sure who's really getting richer here, aside from the people who are going to get richer no matter what happens in the world.

But, look, if your opinion is, "we shouldn't do anything about climate change", whether that's because you don't think there's anything we feasibly can do or because you don't think it's worth doing what would be required in terms of the sacrifices we would all have to make... well, that's just fine, you can be upset about rising gas prices without being a hypocrite.

Similarly, if you're someone who thinks climate change is such an important priority that we must do whatever we can to mitigate its effects and hope beyond hope that those mitigating efforts give us a chance to solve the problem before irreversible damage is done, and you see higher gas prices and think, "good, there will be fewer emissions if emitting is more expensive", that's also just fine. No hypocrisy.

But if you talk a big game about combating climate change, and vote accordingly, and complain about oil companies as evildoers destroying the planet, and are now complaining that it costs more money to fill up your Corolla, you are simply a total ####ing idiot. This is what taking the necessary steps looks like. Only much, much more disruptive. There's no fence-sitting option that makes any logical sense.