[late]

In Feb of 2017, I bought a 1070 video card for about $350. If you wanted to buy a *used* 1070 right now, it would cost you $900.

The new 3070 cards are over a grand. In the normal course of events, they would cost half what they do now, and more likely even less than that.

If you look at the chip business, it's almost larger than life. Billions thrown around, lead times can be measured in years. The recovery time is going to be years, 2 or 3, maybe even longer.

And it's not just chips, I was reading yesterday how Covid had created problems for bike makers, manufacturers used to plan years ahead. Now they can't, their suppliers (not all of them) are dealing with a variety of problems.

The underling situation is actually good news, there is demand, and that's what you want to see. But it makes me wonder if inflation won't last longer than guys like Krugman expected.

Not saying it will, these things have a way of getting worked out, companies want to stay in business, suppliers want to keep manufacturers happy.

I did take away this tidbit.. Rotor makes the same components Shimano does. They are a small company almost no one had even heard of. But they do everything in their own country, and they don't have half the headaches Shimano does. This is their moment to shine.

[wat0n]

I think we have to wait until the chip industry adjusts to the post-pandemic demand. It can indeed take a while, but I don't think this is a reason for assuming there will be structurally higher inflation.

And, well, if that happens the Fed will probably act and hike rates.

[late]

I think we have to wait until the chip industry adjusts to the post-pandemic demand. It can indeed take a while, but I don't think this is a reason for assuming there will be structurally higher inflation.

And, well, if that happens the Fed will probably act and hike rates.

I agree, but it's something to keep an eye on.

[Steve_American]

Right-Wing Lies on Pandemic Inflation DEBUNKED because of disruptions in the international supply chains are leading to shortages.
The Young Turks
12.6 min.

"Republicans and business media have been freaking out about inflation and pandemic-related shortages - but what actually caused it? Ana Kasparian discusses on The Young Turks."

Read more HERE: https://www.nytimes.com/2021/06/01/bu...

"In the story of how the modern world was constructed, Toyota stands out as the mastermind of a monumental advance in industrial efficiency. The Japanese automaker pioneered so-called Just In Time manufacturing, in which parts are delivered to factories right as they are required, minimizing the need to stockpile them."

She does a bettr job than I did explaining jusy how the pandemic disrupted the economy, which will and had led to some price raises. Like used cars because of a shortage of computer chips to put in new cars being made, so buyers need to buy good used cars. Buyers, like rental car comp., that sold some of their fleet for cash to survive the lean times.
.

[B0ycey]

Right-Wing Lies on Pandemic Inflation DEBUNKED because of disruptions in the international supply chains are leading to shortages.
The Young Turks
12.6 min.

"Republicans and business media have been freaking out about inflation and pandemic-related shortages - but what actually caused it? Ana Kasparian discusses on The Young Turks."

Read more HERE: https://www.nytimes.com/2021/06/01/bu...

"In the story of how the modern world was constructed, Toyota stands out as the mastermind of a monumental advance in industrial efficiency. The Japanese automaker pioneered so-called Just In Time manufacturing, in which parts are delivered to factories right as they are required, minimizing the need to stockpile them."

She does a bettr job than I did explaining jusy how the pandemic disrupted the economy, which will and had led to some price raises. Like used cars because of a shortage of computer chips to put in new cars being made, so buyers need to buy good used cars. Buyers, like rental car comp., that sold some of their fleet for cash to survive the lean times.
.

This is an unusual argument considering it implies that the pandemic inflation fears are debunked but then says there is a supply issue which have been caused by the pandemic disrupting the economy. Or in laymen terms nothing had been debunked as the cause for inflation is indeed the pandemic which is exactly what the OP says. Also, it shouldn't be a surprise to anyone that if excess money is in the economy people will bid up prices in a low supply economy. It is basically the cause for the rise in house prices for the past few decades after all.

I would say the question isn't whether we will see inflation but how high it will be for how long and what damage it will cause to the economy.

[Steve_American]

This is an unusual argument considering it implies that the pandemic inflation fears are debunked but then says there is a supply issue which have been caused by the pandemic disrupting the economy. Or in laymen terms nothing had been debunked as the cause for inflation is indeed the pandemic which is exactly what the OP says. Also, it shouldn't be a surprise to anyone that if excess money is in the economy people will bid up prices in a low supply economy. It is basically the cause for the rise in house prices for the past few decades after all.

I would say the question isn't whether we will see inflation but how high it will be for how long and what damage it will cause to the economy.

Sir, the MS economists were claiming that the inflation will result from too much money in the economy. Not so much that there are going to be shortages. I never saw an inflation prediction following the pandemic, that said the cause would be shortages. It was always too much Gov. spending.

The video points to shortages of stuff like computer chips or that saw mills were caught off guard and had not reduced enough trees into lumber. I have seen reports that a big part of the 3% increase in prices averaged over many things, was a 10% increase in used car prices. They said that a big part of this was rental car comp. needing to buy cars to rebuild their fleet of cars to rent. [It seems they didn't keep their cars for a year, so maybe they sold some off, expecting there to be nice new cars to buy. However, the new cars can't be built because of a shortage of comp. chips to put in them, maybe 100 per car.] So, the comp. made an error. If they intended to buy new cars, then it follows that they planned for this and therefore, had the cash to buy the more expensive new cars.
. . . Surely, some of the public is also buying used cars. Again some of them would rather buy a new car, so the Gov. money didn't effect them much. OTOH, some of the public is buying an expensive used car ( & not waiting) because they did get Gov. money. I, therefore, conclude that the size of the Gov. spending had almost nothing to do with the increase in used car prices.

So, the MS economists have a reason to complain about any sign of inflation. They have been making this prediction for decades. It is standard procedure for them. So, I'm not listening to them, yet. Maybe later I'll change if new facts come to light.
So, MS economists failed to give the correct reason for the 'inflation', so again they were less than totally right.
So, the 'inflation' is being caused by dislocations in the economy caused by the recession that was caused by the lockdowns, that were caused by the Gov. letting covid run wild and get too big a headstart. The lockdowns were necessary, but that doesn't matter to the question at hand; i.e., which is,is the 'inflation' we see now caused by the large Gov. spendig over the last 15 months?
So, it may be too early to be sure, but IMO, so far, the evidence is that it is almost totally a result of shortages (and would have happend anyway, even if the Gov. had spent half as much).
.

[B0ycey]

@Steve_American

I don't think you realise that most MSc economists, national banks governors, governments and Wall Street analysts all predict that inflation is nothing to worry about right now - in other words are singing your tune. The people who are saying inflation maybe a problem are actually highlighting the current supply issues and that increased currency in the market will allow people to bid up prices which is something the OP picked up on when it came to components. That is something I have picked up on and something Buffett had picked up on and something that is only down to the pandemic. You can say that was unavoidable but that isn't true. Lockdowns are a national decision choice and many have chosen to ignore them altogether.

[late]

This is an unusual argument considering it implies that the pandemic inflation fears are debunked but then says there is a supply issue which have been caused by the pandemic disrupting the economy. Or in laymen terms nothing had been debunked as the cause for inflation is indeed the pandemic which is exactly what the OP says. Also, it shouldn't be a surprise to anyone that if excess money is in the economy people will bid up prices in a low supply economy. It is basically the cause for the rise in house prices for the past few decades after all.

I would say the question isn't whether we will see inflation but how high it will be for how long and what damage it will cause to the economy.

Your last sentence is the state of play.

Mainstream economists think it will be temporary. But while economists worry a lot more about deflation, inflation freaks some people out.

The worry is the creation of inflationary expectations. I'd call it inflationary habits. One of those habits is people pushing for regular pay raises. Problem is, the lower half (who get paid by the hour) are so badly underpaid that a push to increase their wages would be good for the economy.

Having lived through the inflation of the late 70s, I just don't see it. It's not that it is impossible, but this is a very different economy.

[Steve_American]

@Steve_American

I don't think you realise that most MSc economists, national banks governors, governments and Wall Street analysts all predict that inflation is nothing to worry about right now - in other words are singing your tune. The people who are saying inflation maybe a problem are actually highlighting the current supply issues and that increased currency in the market will allow people to bid up prices which is something the OP picked up on when it came to components. That is something I have picked up on and something Buffett had picked up on and something that is only down to the pandemic. You can say that was unavoidable but that isn't true. Lockdowns are a national decision choice and many have chosen to ignore them altogether.

Sir, in the law there is the concept of "a fools choice". That a contract can be nullified by the fact that someone held a gun to you son's head and said sign this or else.

So, yes, the Gov. could have not had lockdowns say in June 2020. However, IMO this would have tripled the death count in Amrerica from then until now. So, iinstead of 600+K deathes we would have had about 2M deaths. Again, IMO this was a fools choice. The lockdowns were NECESSARY after the Trump Gov. did nothingto start contact tracing and isolating sick and just exposed people. YMMV and I'm pretty sure it does.
.

[B0ycey]

The lockdowns were NECESSARY after the Trump Gov. did nothingto start contact tracing and isolating sick and just exposed people. YMMV and I'm pretty sure it does.
.

I doubt we will ever know the necessity of lockdown given to compare their worth you would have also have to do nothing and see the difference which is impossible. The best we have today is average death rates but given we have excess deaths anyway the question still remains - how many lives did we save with lockdowns given all models to predict deaths by using them were really fucking wrong to say it mildly? Also I haven't seen anything from lockdown figures to suggest that any lives have been saved given places like Brazil that have done the bare minimum to save lives are on the same territory as the US in terms of deaths. If anything lockdowns have slowed the rate but for every restriction you lighten, evolution catches up and the deaths just move down the road. So lockdowns have never been necessary IMHO, or if they were they should have been used to build up hospital capacity in order to retain the economy output which no Western government did - or not on the scale needed in any case. Not to shut down the economy which has built up demand causing inflation you see today. So no, the West is responsible for inflation and we will have to see if the Fed are correct in their assessment that this is short term or whether we will see stagnation and economic damage long term. I am still fence sitting as it happens. I just won't be surprised if we see double digit inflation figures given the recent inflation figures for the past few months and if you know anything about this I would perhaps reserve your confidence that everything is going to be OK.

[late]

I doubt we will ever know the necessity of lockdown given to compare their worth you would have also have to do nothing and see the difference which is impossible.

We know now.

[wat0n]

It seems that much of the rise in core inflation is being driven by items whose prices fell throughout the 2020 phase of the pandemic (i.e. they are "COVID-sensitive"):