B0ycey wrote:Rancid is spot on AGAIN! The value of land is always worth more than the house that is upon it. There are Ghost Towns that once held huge property upon its borders that are worth hardly anything now because the land (or demand for that land) isn't worth anything. This is simple supply and demand economics. As for the price of lumber, that may well effect the property developers profit margins but I doubt it will have a huge impact on price for the consumer considering people buy on location more than whether the house is new or not. If lumber has gone up (and it has), I would say that is due to the production issues (so supply) rather than demand issues anyway. Just because the government has given you Covid cheques, doesn't mean America has been very productive last year. It just means we haven't seen the impact of inflation yet as people have yet to begin spending to pre Covid levels yet. Let's see what happens once we start spending again shall we. Lumber prices should be an indicator for what we can expect actually.
MMTers define 'inflation' as an ongoing increase in prices generally accross the economy.
The US & world has suffered supply shocks and a drop in demand for many things because of covid. I will not be surprised if there is a period of price changes (mostly up) as a result.
The test of inflation is 'is it ongoing'? MMTers say that it is a question of how much resource & labor is being used compared to the demand.
I know that mainstream economists want to explain inflation without reguard to reality. It is so much easiier to claim they can ignore reality (is in, how much resources & labor that are there are not yet being used), than to have to actually look at the real economy. MMTers claim that economists must look at the resources & labor being used and not being used, before they can accurately predict inflation.
I keep going on about this because most of you have not groked the MMT theory. In particular, almost none of you have replied to me about why MS economists predictions have been so lacking in accuracy for many decades, maybe even, forever.
1] They failed to accurately predict what would happen in Japan starting about 1992.
2] They failed to predict the effect that NAFTA would have on small towns across the US.
3] They applauded Clinton's surplus and didn't predict the resultiong recession (dot com bubble).
4] In Europe they totally failed to predict the effects of the EU's and EZ's economic rules would have as soon as the 1st downturn happened. They predicted that austerity would increase spending because buyers would know that their future taxes would not increase. All these predictions were wrong. [They have admitted as much by NOW saying that it is OK for EU & EZ nations to sell bonds (indirectly) to the ECB so they can deficit spend in this crisis.]
5] They failed to predict the GFC/2008. They were predicting the opposite.
6] They failed to predict the slow recovery (slow because the Gov. of US and EU nations didn't deficit spend enough).
7] They failed to explain why they needed to adjust the "full employment" percentage of unemployment to such high levels (in some EZ nations as high as 10% or even more, IIRC). Again, IIRC, Japan has been a counter example since 1992. It has had low unemployment, low inflation, & low bond yeilds, [b]along with *huge* yearly deficits and large amounts of bonds being bought by the BoJ
[/b] since 1992. It didn't need to raise its unemployment rate to control inflation.
With all due respect, what did they correctly predict since 1992?