Econ heads come explain inflation to me

[Domingo Halliburton]

Well, it isn't my "neat little model"... I didn't create the Money and banking system

I think you are referring to the "Nominal" interest rate, which is at like .5% or something like that. Ben Bernake created the "Zero Interest Rate Policy" back in 2008, which kept it low...

The Nominal Interest rate is the rate taken without inflation/deflation. However, the "Real Interest Rate" is the rate that is directly affected by inflation and deflation.

Real Rate= Nominal Rate- Inflation Rate

In general Deflation or "low inflation" leads to low Nominal rates, but higher Real rates...



Yeah no doubt... There are other situations like Stagflation and hyperflation, that should be accounted for as well. I was just giving a general idea of the model...

you just started taking econ in college, didn't you?

 

[YouMadd?]

you just started taking econ in college, didn't you?

Nope... I do have a BS in Economics though

 

[VerbalIntercourse]

monetarist theory.


MV=PY. money * velocity = price level * output

play around with that identity and you'll begin to understand inflation.

 

[Black smoke and cac jokes]

Wages have been kind of stagnant for the most part, wouldn't you agree?

Minimum Wage Would Be $21.72 If It Kept Pace With Increases In Productivity: Study

The Incredible Shrinking Pay Raise: Wages Can't Keep Up With Inflation

Facts | Raise The Minimum Wage

So if the cost of goods\services\education keeps going up but not wages, doesn't that hurt most of the working class?

Ok first of all, minimum wages does not allow the economy to adjust to their potential outputs and therefore hinders the economy to be in full optimization level where the inflation's increase correlates with increase in wages. Let's get that out the way.

Secondly, inflation is really low now so there haven't been a market demand for increase in wages/prices, this is solely companies adjusting to higher oil prices/lower productivity/less efficient workforce or any other bullsh!t explanation they make.

Regarding education, the tuition increase is solely based on the restrict budget each state has and comes from the decrease in government spending. States feel the need to allocate their resources on other shyt which I personally think is fukked up.

You said it benefits a small segment, are u saying that the top 1% (I'm guessing you mean them) are benefiting from higher prices?

 

[Black smoke and cac jokes]

Yeah no doubt... There are other situations like Stagflation and hyperflation, that should be accounted for as well. I was just giving a general idea of the model...

you just started taking econ in college, didn't you?

 

[VerbalIntercourse]

Regarding education, the tuition increase is solely based on the restrict budget each state has and comes from the decrease in government spending. States feel the need to allocate their resources on other shyt which I personally think is fukked up.

You said it benefits a small segment, are u saying that the top 1% (I'm guessing you mean them) are benefiting from higher prices?

You're so conerned with macro, that you forgot fundemental micro economics. That's very common.

 

[DEAD7]

Ok first of all, minimum wages does not allow the economy to adjust to their potential outputs and therefore hinders the economy to be in full optimization level where the inflation's increase correlates with increase in wages. Let's get that out the way.

Regarding education, the tuition increase is solely based on the restrict budget each state has and comes from the decrease in government spending. States feel the need to allocate their resources on other shyt which I personally think is fukked up.

The state state itself is why tuition is high... but thats another conversation.

 

[Black smoke and cac jokes]

You're so conerned with macro, that you forgot fundemental micro economics. That's very common.

like?

The state state itself is why tuition is high... but thats another conversation.

Yea, just wanted him to understand that the inflation rate has nothing (or very little) to do with the high tuition.