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A comment on The ballooning money supply may be the key to unlocking inflation in the U.S.. Parent comment

Re:The ballooning money supply may be the key to unlocking i... by lotsofpulp on Tuesday October 13, 2020 @03:07PM (#24769017)
The missing something in CPI is the volatility or perception of volatility of income, which makes everything more expensive if you have to act more conservatively than people did in decades past.

You feel certain regions of the country are far outpacing others in economic growth and high paying jobs, you feel healthcare costs can and will cause issues for you in the future, you feel automation could come after you. So you bid up housing in areas you feel have higher probabilities of economic growth so you have access to more jobs, in case you get laid off, and you save more since if you get laid off, you have to spend a lot more for healthcare.

You delay having kids because maybe before it felt like things would fall into place, but now you have access to data and decide it's wiser to wait to gather more resources before trying for relationships/kids, so it feels more "expensive" to start a family than in decades past.

But it's probably impossible to reflect all of that in a number.

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Re:The ballooning money supply may be the key to unlocking i... by rory on Tuesday October 13, 2020 @05:31PM (#24770558)
This is insightful. My speculative impression is that the phenomenon you describe does have an impact on the real economy and that the difference is primarily one of perception and information.

People in the past were also at great risk of job automation, regional economic decline, etc. etc., but didn't seem to stress them and try to hedge for them as much. I could be wrong though.

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Re:The ballooning money supply may be the key to unlocking i... by lotsofpulp on Tuesday October 13, 2020 @05:42PM (#24770650)
I also wonder how much fear is simply due to having access to more data, and how much is kind of a feedback loop due to actions stemming from that fear causing even more fear.

But 2 parameters that are different than the past:

1) The rate of change of job destruction from automation and outsourcing to up and coming countries may not be the same over all time periods. If it happens slowly enough, then it may not be perceived by people and it may only have a negligible economic effect if the obviated people are able to be put to use elsewhere.

But with computers and mobile high speed internet and GPS, you can roll out products that obviate entire fields within years if not months. Email/Calendars/Online Shopping/Travel Search/Reviews/Search Engines/Online Auctions/Craigslist/Real Estate/low cost index funds have all laid waste to enormous numbers of people's professions or lowered the barrier to entry heavily. The younger generation has no or much lower demand for travel agents, secretaries, stock brokers, real estate agents, journalists, etc.

2) The birthrate in the past pretty much guaranteed growth. If many people have 3 and 4 children, then growing demand and hence growing growth is basically built into the system. But what happens if people start having 0, 1, and 2 children? And they're all utilizing databases and internet connections to cut out numerous middlemen that their numerous parents and grandparents needed to use?

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