Buying with monopoly money

[SD Realtor]

The manager at ralphs will simply pass on his expenses. It is pretty easy to follow the commodity trail. Start at the cost of water and fuel. People who grow everything from fruits/vegetables to feed for cattle/pigs etc incur higher prices. Increasing fuel prices also impact them and the transporters who are needed for the supply chain. Cotton and other things that are grown for textiles and clothing are affected. Pretty much everything at the base is affected and as you move up the manufacturing chain additional costs are added.

The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.

The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche. I guess personally I am more skeptical. I don’t believe the unemployment stats and I don’t believe the inflation stats. I simply look back on my on ledger for what I spend on food and clothing over the past few years and the increase is noticeable. Same with my electric and gas bills for the same home. Much more then the 1 or 2% I am being told by the govt.

[Anonymous]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.

[quote]The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.[/quote]

Of course he has something to do with it. He is part of the chain – part of the economy. Continue with that logic and one could claim that nobody has anything to do with it.

The root cause of inflation is individuals choosing to raise prices. That’s what my original question was all about: Why will any individual, selling anything, choose to raise prices? (and why would other individuals be willing to accept those prices?)

[quote]The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche.[/quote]

I’d have to say my own personal anecdotal evidence is pretty consistent with government stats. It’s hard to really tell because my life situation changes over the years (kids, living in new locations, etc.) So personal stories are of limited value.

But I do know individual perceptions of inflation can be dead wrong. A classic example is gas prices. Walk into any bar and start a conversation about gas prices. I guarantee you’ll hear plenty of “I remember when…” stories. The reality is, that over the long term, gas prices have not risen faster than anything else. But most people believe they’ve increased astronomically.

I’ve been hearing the “government is lying to us about inflation” claim for many years. It doesn’t jive. There’s no possible way that they could have kept it up for this long. The numbers aren’t perfect, but they do essentially capture what they are meant to measure.

[Anonymous]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.

[quote]The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.[/quote]

Of course he has something to do with it. He is part of the chain – part of the economy. Continue with that logic and one could claim that nobody has anything to do with it.

The root cause of inflation is individuals choosing to raise prices. That’s what my original question was all about: Why will any individual, selling anything, choose to raise prices? (and why would other individuals be willing to accept those prices?)

[quote]The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche.[/quote]

I’d have to say my own personal anecdotal evidence is pretty consistent with government stats. It’s hard to really tell because my life situation changes over the years (kids, living in new locations, etc.) So personal stories are of limited value.

But I do know individual perceptions of inflation can be dead wrong. A classic example is gas prices. Walk into any bar and start a conversation about gas prices. I guarantee you’ll hear plenty of “I remember when…” stories. The reality is, that over the long term, gas prices have not risen faster than anything else. But most people believe they’ve increased astronomically.

I’ve been hearing the “government is lying to us about inflation” claim for many years. It doesn’t jive. There’s no possible way that they could have kept it up for this long. The numbers aren’t perfect, but they do essentially capture what they are meant to measure.

[Anonymous]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.

[quote]The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.[/quote]

Of course he has something to do with it. He is part of the chain – part of the economy. Continue with that logic and one could claim that nobody has anything to do with it.

The root cause of inflation is individuals choosing to raise prices. That’s what my original question was all about: Why will any individual, selling anything, choose to raise prices? (and why would other individuals be willing to accept those prices?)

[quote]The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche.[/quote]

I’d have to say my own personal anecdotal evidence is pretty consistent with government stats. It’s hard to really tell because my life situation changes over the years (kids, living in new locations, etc.) So personal stories are of limited value.

But I do know individual perceptions of inflation can be dead wrong. A classic example is gas prices. Walk into any bar and start a conversation about gas prices. I guarantee you’ll hear plenty of “I remember when…” stories. The reality is, that over the long term, gas prices have not risen faster than anything else. But most people believe they’ve increased astronomically.

I’ve been hearing the “government is lying to us about inflation” claim for many years. It doesn’t jive. There’s no possible way that they could have kept it up for this long. The numbers aren’t perfect, but they do essentially capture what they are meant to measure.

[Anonymous]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.

[quote]The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.[/quote]

Of course he has something to do with it. He is part of the chain – part of the economy. Continue with that logic and one could claim that nobody has anything to do with it.

The root cause of inflation is individuals choosing to raise prices. That’s what my original question was all about: Why will any individual, selling anything, choose to raise prices? (and why would other individuals be willing to accept those prices?)

[quote]The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche.[/quote]

I’d have to say my own personal anecdotal evidence is pretty consistent with government stats. It’s hard to really tell because my life situation changes over the years (kids, living in new locations, etc.) So personal stories are of limited value.

But I do know individual perceptions of inflation can be dead wrong. A classic example is gas prices. Walk into any bar and start a conversation about gas prices. I guarantee you’ll hear plenty of “I remember when…” stories. The reality is, that over the long term, gas prices have not risen faster than anything else. But most people believe they’ve increased astronomically.

I’ve been hearing the “government is lying to us about inflation” claim for many years. It doesn’t jive. There’s no possible way that they could have kept it up for this long. The numbers aren’t perfect, but they do essentially capture what they are meant to measure.

[Anonymous]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.

[quote]The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.[/quote]

Of course he has something to do with it. He is part of the chain – part of the economy. Continue with that logic and one could claim that nobody has anything to do with it.

The root cause of inflation is individuals choosing to raise prices. That’s what my original question was all about: Why will any individual, selling anything, choose to raise prices? (and why would other individuals be willing to accept those prices?)

[quote]The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche.[/quote]

I’d have to say my own personal anecdotal evidence is pretty consistent with government stats. It’s hard to really tell because my life situation changes over the years (kids, living in new locations, etc.) So personal stories are of limited value.

But I do know individual perceptions of inflation can be dead wrong. A classic example is gas prices. Walk into any bar and start a conversation about gas prices. I guarantee you’ll hear plenty of “I remember when…” stories. The reality is, that over the long term, gas prices have not risen faster than anything else. But most people believe they’ve increased astronomically.

I’ve been hearing the “government is lying to us about inflation” claim for many years. It doesn’t jive. There’s no possible way that they could have kept it up for this long. The numbers aren’t perfect, but they do essentially capture what they are meant to measure.

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[Rich Toscano]

[quote=pri_dk][quote=SD Realtor]The manager at ralphs will simply pass on his expenses.[/quote]

Ok, but why will will his expenses go up? Still no explanation.
[/quote]

Actually I put up a pretty long explanation of possible reasons this could happen. Your response was that there were a lot of hypotheticals in it, but, it was a hypothetical question, no?

[SD Realtor]

I thought Rich explained it very well so I will try to augment his theory..

3. As a result of foreign currency pegs, QE here leads to looser monetary policy and thus higher demand in foreign countries. This leads to increased competition for commodities and many other items that could feed into our own domestic prices, regardless of our unemployment rate.

**This one hurts. China and the USA want to buy some oil. China has a huge appetite for oil right now and is holding treasuries and getting paid in dollars which are continuing to depreciate. China will pay more for the oil and thus we will be forced to as well. They have a ton of useless dollars and would rather get something for them now, then less of something for them later when they are more useless.

4. If #3 gets bad enough, foreign countries could let their currencies rise, which would lead to an increase in prices of items we import.

**We already have problems with the way China pegs their currency. As #3 above happens this will only get worse. Other countries will follow suit.

5. Commodity prices in specific could increase due to #1 (more money flowing into risk assets) or #3 (higher demand in foreign countries). They could also rise as foreign countries try to redeploy their excess dollar reserves. Commodity price increases do feed into inflation over time.

**My example above was only for oil however many people do not have a clue about how much we actually import. We import everything from oil to drywall to metal screws. You guys think Walmarts are Targets are the only big imports? Go to your Home Depot or Lowes as well. The issue at hand is commodities are the root of everything. As commodity prices rise everything follows suit. It takes time but it happens.

**Honestly I think the bigger issue at hand over the misunderstanding is the lack of the experience. If you are under 40 you have no clue of this sort of stuff. You were a child at best in the late 70s and early 80s and you didn’t see it. You don’t know what a gas line is, you didn’t witness any of this stuff so it is surreal to you. Asking me for a concrete example of how prices go up when it has been explained seems to validate that. If your costs have only gone up 1 or 2% this year then that is what it is, mine have gone up more. This stuff doesnt take 1 year to happen. It happens over a decade. Believe me we are just barely starting the cycle.

[SD Realtor]

I thought Rich explained it very well so I will try to augment his theory..

3. As a result of foreign currency pegs, QE here leads to looser monetary policy and thus higher demand in foreign countries. This leads to increased competition for commodities and many other items that could feed into our own domestic prices, regardless of our unemployment rate.

**This one hurts. China and the USA want to buy some oil. China has a huge appetite for oil right now and is holding treasuries and getting paid in dollars which are continuing to depreciate. China will pay more for the oil and thus we will be forced to as well. They have a ton of useless dollars and would rather get something for them now, then less of something for them later when they are more useless.

4. If #3 gets bad enough, foreign countries could let their currencies rise, which would lead to an increase in prices of items we import.

**We already have problems with the way China pegs their currency. As #3 above happens this will only get worse. Other countries will follow suit.

5. Commodity prices in specific could increase due to #1 (more money flowing into risk assets) or #3 (higher demand in foreign countries). They could also rise as foreign countries try to redeploy their excess dollar reserves. Commodity price increases do feed into inflation over time.

**My example above was only for oil however many people do not have a clue about how much we actually import. We import everything from oil to drywall to metal screws. You guys think Walmarts are Targets are the only big imports? Go to your Home Depot or Lowes as well. The issue at hand is commodities are the root of everything. As commodity prices rise everything follows suit. It takes time but it happens.

**Honestly I think the bigger issue at hand over the misunderstanding is the lack of the experience. If you are under 40 you have no clue of this sort of stuff. You were a child at best in the late 70s and early 80s and you didn’t see it. You don’t know what a gas line is, you didn’t witness any of this stuff so it is surreal to you. Asking me for a concrete example of how prices go up when it has been explained seems to validate that. If your costs have only gone up 1 or 2% this year then that is what it is, mine have gone up more. This stuff doesnt take 1 year to happen. It happens over a decade. Believe me we are just barely starting the cycle.

[SD Realtor]

I thought Rich explained it very well so I will try to augment his theory..

3. As a result of foreign currency pegs, QE here leads to looser monetary policy and thus higher demand in foreign countries. This leads to increased competition for commodities and many other items that could feed into our own domestic prices, regardless of our unemployment rate.

**This one hurts. China and the USA want to buy some oil. China has a huge appetite for oil right now and is holding treasuries and getting paid in dollars which are continuing to depreciate. China will pay more for the oil and thus we will be forced to as well. They have a ton of useless dollars and would rather get something for them now, then less of something for them later when they are more useless.

4. If #3 gets bad enough, foreign countries could let their currencies rise, which would lead to an increase in prices of items we import.

**We already have problems with the way China pegs their currency. As #3 above happens this will only get worse. Other countries will follow suit.

5. Commodity prices in specific could increase due to #1 (more money flowing into risk assets) or #3 (higher demand in foreign countries). They could also rise as foreign countries try to redeploy their excess dollar reserves. Commodity price increases do feed into inflation over time.

**My example above was only for oil however many people do not have a clue about how much we actually import. We import everything from oil to drywall to metal screws. You guys think Walmarts are Targets are the only big imports? Go to your Home Depot or Lowes as well. The issue at hand is commodities are the root of everything. As commodity prices rise everything follows suit. It takes time but it happens.

**Honestly I think the bigger issue at hand over the misunderstanding is the lack of the experience. If you are under 40 you have no clue of this sort of stuff. You were a child at best in the late 70s and early 80s and you didn’t see it. You don’t know what a gas line is, you didn’t witness any of this stuff so it is surreal to you. Asking me for a concrete example of how prices go up when it has been explained seems to validate that. If your costs have only gone up 1 or 2% this year then that is what it is, mine have gone up more. This stuff doesnt take 1 year to happen. It happens over a decade. Believe me we are just barely starting the cycle.

[SD Realtor]

I thought Rich explained it very well so I will try to augment his theory..

3. As a result of foreign currency pegs, QE here leads to looser monetary policy and thus higher demand in foreign countries. This leads to increased competition for commodities and many other items that could feed into our own domestic prices, regardless of our unemployment rate.

**This one hurts. China and the USA want to buy some oil. China has a huge appetite for oil right now and is holding treasuries and getting paid in dollars which are continuing to depreciate. China will pay more for the oil and thus we will be forced to as well. They have a ton of useless dollars and would rather get something for them now, then less of something for them later when they are more useless.

4. If #3 gets bad enough, foreign countries could let their currencies rise, which would lead to an increase in prices of items we import.

**We already have problems with the way China pegs their currency. As #3 above happens this will only get worse. Other countries will follow suit.

5. Commodity prices in specific could increase due to #1 (more money flowing into risk assets) or #3 (higher demand in foreign countries). They could also rise as foreign countries try to redeploy their excess dollar reserves. Commodity price increases do feed into inflation over time.

**My example above was only for oil however many people do not have a clue about how much we actually import. We import everything from oil to drywall to metal screws. You guys think Walmarts are Targets are the only big imports? Go to your Home Depot or Lowes as well. The issue at hand is commodities are the root of everything. As commodity prices rise everything follows suit. It takes time but it happens.

**Honestly I think the bigger issue at hand over the misunderstanding is the lack of the experience. If you are under 40 you have no clue of this sort of stuff. You were a child at best in the late 70s and early 80s and you didn’t see it. You don’t know what a gas line is, you didn’t witness any of this stuff so it is surreal to you. Asking me for a concrete example of how prices go up when it has been explained seems to validate that. If your costs have only gone up 1 or 2% this year then that is what it is, mine have gone up more. This stuff doesnt take 1 year to happen. It happens over a decade. Believe me we are just barely starting the cycle.

[Author]

Posts