[throwaway2037]

I am confused by this comment. "[M]any trillion dollars of money printed recently" -- are you talking about the US Federal Reserve? That isn't money printing; it is quantitative easing -- now also practiced by European Central Bank, Bank of Japan, and Bank of England. It does not cause inflation. If anything, weirdly, it appears to cause deflation. Money printing is Weimar Republic (~1920s) or Zimbabwe (2000-2010). If there was out of control "money printing", we would see unprecedented inflation. Do we see that? No. Please correct me if I misunderstand your comment.

"0 CNY" -- Do you not consider expansion of credit by state-owned commercial banks equivalent to "printing money"? I do. It causes inflation through rising housing costs. (All major central banks now include housing costs in their inflation figures.)

The more likely scenario of the future of "cheap manufacturing" is (near) total automation in highly developed countries with (near) zero-cost green energy. That means their carbon intensity will be very low. Thus, carbon (import/export) taxes will be very low. Why sew socks in a country with very low labour costs, but coal-generated electricity? A machine/robot can sew the same socks using green energy in a factory located 100km outside a major city in a highly developed country. As an example: Look at Fast Retailing (Uniqlo, etc.), headquartered in Japan, but truly global as a retail brand. They are a world leader in highly automated manuf. of clothes. (Same for Zara.) I can imagine they will be one of the first to aggressively "on-shore" from developing countries to Japan, where clothes will be (near) 100% robot-made. I have heard much the same about Adidas and re-shoring shoe manuf. to Germany with (near) 100% automation.

[RhodoGSA]

Yes - we do and are seeing rapid inflation.

We see rapid asset inflation across the board. Check recent commodity prices across copper, lumber, food, water etc. Everything has been rising dramatically during the period that the world has been practicing what you call 'Quantitative easing'. Inflation isn't just related to Forex if all the worlds currency's are inflating, albet just maybe faster than the USD. And the only reason the US is not inflating faster than the rest of the world is because the IMF is based in USD.

[dragonwriter]

> Yes - we do and are seeing rapid inflation.

No, we aren’t.

> We see rapid asset inflation across the board.

“Inflation”, without modifiers, refers to consumer price inflation (final goods and services). Asset inflation is a different thing, as is monetary inflation. Monetary inflation can contribute to both asset inflation and consumer price inflation, but those two outcomes are somewhat in tension; asset inflation isn’t pent up potential for consumer price inflation, but an explanation for why consumer price inflation isn’t happening and isn’t likely to happen without change in the fundamental economic processes.

Specifically, monetary inflation driving asset inflation but not consumer price inflation is a sign that the money is going to people is marginal use of additional access to money is to invest rather than spend, absent changing the distribution, the outcomes aren’t going to change.

[totalZero]

Consumer price inflation measurement lags because the basket composition changes. True inflation is likely far higher than CPI inflation because of this market basket recomposition problem. BLS doesn't update the market basket instantaneously; it lags by about two or three years. Thus, when discontinuous shifts in consumer behavior aggressively drive spending out of certain areas (eg airfare, tuition, elective surgery, rent) and into other areas (eg autos, fuel, new construction, computers), those shifts are underrepresented because deflation of the former is weighted more heavily than inflation of the latter.

Any time there is price dispersion within the goods and services of the market basket, it's likely that the basket composition itself is changing too. CPI has no way of responding quickly to this change.

[RhodoGSA]

Well, yes - You're right. Consumer price inflation does lag behind raw material prices by a couple years since most companies have pricing agreements in place. Just because this lag isn't happening yet, doesn't meant it's not happening and will continue to happen in the future.

[rllearneratwork]

have you seen the prices of housing, healthcare, childcare, education and retirement for over the last 5 years?

[dragonwriter]

> have you seen the prices of housing, healthcare, childcare, education and retirement for over the last 5 years?

“retirement” isn’t a good or service.

Childcare has inflated slightly faster than general inflation over the last 5 yeara (2.22%/yr vs. 1.86%/yr).

Healthcare has inflated a bit faster (medical care @ 2.46%/yr, hospital and related services @ 3.89%); health insurance, has been notably higher (in large parts due to the federal government failure to follow the law on the ACA) @ 5.98%/yr.

Education has inflated much more rapidly than general inflation, @ 29.15%/yr.

So, what? That’s how aggregates work. Obviously, we could just as easily find a list of consumer goods and services where inflation is lower than general inflation. That wouldn’t prove that inflation is even lower than reported, and neither does higher inflation in some sectors prove that inflation is higher than reported.

[throwaway2037]

To be clear, you wrote "rapid asset inflation". For middle class and below, that can only mean buying a house. There are no other economically significant assets they own. (Cars are a stretch!) For all other items, is there significant inflation? No.

"IMF is based in USD" -- Are you not familiar with special drawing rights (SDR)? Please explain if I do not understand your comment.

[RhodoGSA]

Although the middle class may not own futures for metals, plastics, lumber, etc they do own consumer goods. These are the inputs for consumer goods and thus my argument was that consumer goods inflation is soon to follow.

>Are you not familiar with special drawing rights (SDR)

Not really to be honest? but i don't get your point in bringing it up. I know the US has the highest SPR weight by far and that the IMF was created by the united states after we got off the gold standard. My point was that the US has a massive influence on a standard thats supposed to be 'International' and thus controls the Forex and thus 'relative' Inflation. (Our inflation in regards to other currencies as opposed to some real meaning of the word inflation)

[throwaway2037]

"consumer goods inflation is soon to follow" -- Review this comment in a year (or more). Inflation Bears have been wrong for more than thirty years now. They are forever talking about "inflating is coming soon", yet it never does. Show me inflation (CPI) figures in any highly developed economy that demonstrates serious inflation in the last five years. It does not exist.

To be clear about SDR: US has 42%, EU has 31%, China has 11%, Japan has 8%, and UK has 8%. Is 42% > 31% "highest SPR weight by far"... ? All the non-US majors combined... US does not looks so big. It has been falling for decades as the world economy re-balances.

[RhodoGSA]

I can't really articulate it myself why i think you're wrong in such a short format but I found two long form articles below that are relevant to our discussions.

https://www.lynalden.com/global-dollar-short-squeeze/

https://www.lynalden.com/inflation/

[rllearneratwork]

This. peoples see that the prices of a dozen of eggs or meals don't go up and say: "No inflation! See!". All this while all assets are getting more expensive, the prices of housing, healthcare, education, retirement and even top of the line electronics (flagship iPhone price now vs 10 years ago) are getting more expensive.

[throwaway2037]

But entry-point Xiaomi and Huawei phones are much cheaper than 10 years ago. How do you explain that? That feels like deflation. Using the Apple iPhone as a proxy of inflation felt by middle class (and below) is dubious. That product is essentially a Veblen good (Wiki says: "a type of luxury good for which the demand for a good increases as the price increases, in apparent contradiction of the law of demand"). Look at the price of desktop computers, laptops, Raspberry Pi-equivalents, and flat-screen TVs: It is shocking how much prices have fallen (vis-a-vis price/performance) over the last 10 years.

"The price of eggs." What next: Will you talk about low interest rates "punishes savers"? What portion of wages do highly developed countries spend on food? (Exclude [South] Korea and Japan, which are extreme outliers.) The answer: Vanishingly small amounts. And, it continues to fall each decade.

"[P]rices of housing, healthcare, education, retirement" -- is this true in socialist market economies in Continental Europe, like Germany, France, Italy, Austria, Switzerland, Netherlands, Belgium, Spain, Portugal, Sweden, Finland, Denmark? No, it is not. I will admit: Life for middle class (and below) in the UK is surely worse in the last decade for all of the above that you mention.

[fguerraz]

Don't be confused, yes QE is virtual is money printing, yes it will cause either:

* Inflation.

* Re-evaluation of the exchange rates

* Supply issues if the above two do not happen

Time will tell :-) But the main reason it hasn't happened yet is because the money that has been printed (or whatever) has not made its way to the real economy yet, it has mostly gone to the financial markets. When people will try to use that money for real, that's when sh* will hit the fan