Biden’s tweet isn’t a matter of correct or not in our discussion, our discussion was whether it was a failure of some internal quality control - that was your point, not mine. I didn’t take a stand if it was the right or wrong move in today’s conditions.
These statements about transitory inflation are bs, it is INFLATION!
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Biden’s tweet isn’t a matter of correct or not in our discussion, our discussion was whether it was a failure of some internal quality control - that was your point, not mine. I didn’t take a stand if it was the right or wrong move in today’s conditions.
It can only be a failure of some internal quality control if it is wrong. If it is right, then there is no failure of quality control.
So you say you didn't take a stand if it was wrong or right, but your comments did. All I'm asking for is for you to clarify your comments:
"Raising taxes is a legitimate means to dampen demand which will combat inflation."
"And there is nothing unsound about Biden’s statement because in economics it’s totally legitimate way to remove money from circulation."
"And there is nothing unsound about Biden’s statement because in economics it’s totally legitimate way to remove money from circulation."
Well it’s about context right? My point has been consistent, that raising taxes is no different than raising interest rates as a means to combat inflation. Here is the full context of what you’re quoting:
I must have said this to you 10 times exactly the same way but you can’t let my comment stand on its own. Stop doing this.
I just want to know if you believe Biden's statement was correct or not. Can you at least answer that?
Does raising taxes on corporations help inflation? Because if we can't agree on this concept then we should continue to discuss it. I am interested in why you believe it helps inflation (assuming that is what you believe). Do you believe that corporations won't pass on increased tax cost to consumers?
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Technically, I do believe it has merit and could be as helpful as raising interest rates. Is it the right thing to do today, it’s a tough call. I’m against the Fed moving with these big rate hikes so theoretically I should be against raising taxes. But on the other hand it is more targeted than Fed rates and corporations are in a better position to absorb higher costs than consumers are to absorb higher prices. So I guess if I had to choose it is probably the better of the two.
To give some context, I am not against the Fed raising rates, my concern is too much too quickly will be too much of a jolt and cause disruption instead of a smooth landing. This Fed does not seem to be concerned about causing a recession though so I just outright disagree with their approach.
I will agree that corporations are in a better position to absorb higher costs. But this is only because they can absorb some and pass on others. The relief valve is they pass those on. As someone who manages the P&L and balance sheet of a ~$900M company, I assure you the first place we go when we have regulatory, raw material or additional taxes is to our customers. They eat more of it than we do. This leads to higher prices (because they pass them on to consumers).
Higher taxes - higher regulatory costs - higher input costs of any kind lead to higher inflation. You can only make the argument that this impacts inflation through demand destruction - but that is a delayed response, and not always what happens because it depends on the price elasticity of the item/service in question (for example, fuel inflation is much more inelastic than inflation on vacation prices, but more elastic than food inflation).
Agree or disagree?
Higher taxes - higher regulatory costs - higher input costs of any kind lead to higher inflation. You can only make the argument that this impacts inflation through demand destruction - but that is a delayed response, and not always what happens because it depends on the price elasticity of the item/service in question (for example, fuel inflation is much more inelastic than inflation on vacation prices, but more elastic than food inflation).
Agree or disagree?
Ok, I'm going to assume your thumbs up was your agreement unless you tell me otherwise. Thank you.
So let's talk M2, or rather the Velocity of M2 Money Stock as you posted it. If I understood your argument, you are saying that because this indicator has been declining, the amount of cash in circulation has been actually decreasing. Therefore, the cause of inflation from too much cash being pumped into the economy via fiscal stimulus is not a correct theory.
Did I state this correctly? Feel free to clarify.
I agree with a lot of it. Yes. Higher inputs don’t always mean higher prices. That will depend on market conditions. Price equals where supply and demand meet.
Unless it is cost-push inflation, which is entirely about input costs and not demand. Like how we saw for the last ten years prior to COVID. But lets stick with M2.
No. Not necessarily that. Looking at savings rates and credit card balances, money has not been moving hence the low velocity. However, that is changing but as a result of inflation not money stock.