Is Inflation Finally Coming To an End? | Economics Explained
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- čas přidán 1. 06. 2024
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Inflation has been perhaps the single biggest issue facing the global economy over the past year and has proven far more persistent than most people originally assumed. But with central banks around the world all raising interest rates, will we finally see inflation go back down to more normal levels?
0:00 - 2:00 Intro
2:01 - 3:03 Rocket Money
3:04 - 4:25 Raisin interest rates
4:26 - 6:22 Stimulative effect of inflation
6:23 - 7:55 Cost of inflation
7:56 - 9:50 Price stickiness
9:51 Slow reduction of inflation
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there are no more tricks, just fed coin
@@cece3194 just buy Bitcoin and problem solved . No more worries of inflation
Can you please do an explanation on the last 4 weeks of the Ghanaian currency, the Cedi....it's gone from the worst performing to best performing currency in the world in the space of a month. What triggered this, why the rapid turnaround and what effect will such a strengthening have on the country's inflation rate? (Currently 50%). Thank you 😊
it is what it is.
Did you ever do a video when the yield curve inverted?
If I remember right that was when all the analysts from MSNBC to Fox Business to The Hill started saying a recession was nigh.
Since Biden took office, there seem to have been more unfavorable results in America. These results include effects on the markets, such as price declines and sharp increases in inflation, as well as bank failures. I wonder if the sudden increase in interest rates will help value investors or if it would be wiser to stay away from the stock and financial markets for the time being.
To "buy the dip" It will be profitable in the long run. However, investors should be wary of the bull run. It is advisable to connect with a skilled adviser to fulfill your growth objectives and prevent mistakes. High interest rates typically result in lower stock prices.
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That's fascinating. How can I contact your Asset-coach as my portfolio is dwindling?
Natalie Lynn Fisk, is the coach that guides me, you probably might have come across her before I found her through a Newsweek report. She's quite known in her field, look her up online.
She appears to be well-educated and well-read. I ran a Google search on her name and came across her website… thank you for sharing.
Individuals set aside cash when they think we are going towards a downturn, which mean less cash circumventing the economy, which really can prompt a downturn or exacerbate it.
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According to the owner of the company I work for, this single quarter has been more profitable than the last 6 combined, all thanks to "inflation." Which is to say, he heard there was inflation and jacked our prices by 25%, then blamed inflation. I have to assume this is not uncommon.
Starting early is the best way of getting ahead to build wealth, Investing remains the priority. the stock market has plenty opportunity to have a decent payouts with the right skills and proper understanding on how the market works.
@@michaelkalon1025 You're right, but the euphoria of the impending crash has really scared new investor like me, I'd like to start but would appreciate a guide from a professional.
@@michaelkalon1025 think I’ve come across her on Tv or somewhere…Anyhoo thanks for sharing.
I'm an auditor and my clients are passing on their increased costs with varying degrees of success. I've yet to encounter a business which is actually more profitable as a result although I wouldn't be at all surprised if this was the case
Trickle down economics is this belief to build a luxury resort just so the slaves have a job. And the employees at that resort can't be union members with benefits.
Let your boss overpay himself and underpay the working-class all so he takes the vacation. Just so you have a job. AKA slavery.
Trickle down economics is this belief without the slave owner needing his bed made ~ the slave would have no job. ~ then no economy.
Inflation is a slave owner doesn't want to make his own bed, but wants to treat his slave nice for making his bed.
Say a union bed maker with benefits, because he wants a vacation too. will cause ×2 inflation.
Inflation is happening because someone is doing passive income to avoid working.
The slave owner using passive income is make a currency a slave tool. Say the passive income is renting an apartment to his slave.
The slave owner is making zero beds and is causing inflation, and the slave is making two beds. To make up for the one bed his slave owner refuses to make himself. One bed is his own and the second bed he is making is his slave owner's.
Now the slave owner rents a apartment to the slave to come up with the money to pay for the one service of bed making.
And now the slave is paying double in rent. Two prices of a service of bed making. A inflation in rent prices. Home prices going up from passive income, because someone doesn't want to make their own bed.
Trickle down economics is this belief without the slave owner needing his bed made ~ the slave would have no job. ~ then no economy.
In reality; the slave is receiving one bed making service and paying for two. AKA inflation.
The problem with the idea of "People will spend more if they expect inflation" is that it only really applies to luxuries and discretionary spending. If I expect the price of a car or iPhone to increase then sure, I'll buy them ASAP - but if I'm expecting food and energy increases then I'm going to keep hold of as much cash as possible to pay for those necessities
Some food you can store
Store cash to buy less food later?
@@gavasiarobinssson5108 they mean fresh I guess.
@@gavasiarobinssson5108 sure, but not all food does. Then you also have to have the space to store the food.
@@carlosandleon store cash you’d spend on non-essentials so you can buy the same amount of food for more money later
The real question is will the next lego star wars account for all this inflation and cap beyond 4 billion?
One Aussie King recognising another
4 billion is the unsigned 32 bit integer limit, so... No.
Been watching summoning salt?
I think it all depends on the market instability which naturally drives people to buy Lego Star Wars as an escapist mechanism into simpler blocky reality that allows you to earn studs by breaking things. That further compounded by the rising interest rates that Disney will capitalize on with extra dlc. But no one can predict the future, least of all economists.
@@jpheitman1 Time to go 64bit yo!
We are already in the big crash, Inflation is a
catastrophe. This CPI report is a colossal failure. To bring the housing market to a halt, the FED will have to pull all the stops. The unfortunate issue is that other markets are being decimated.If you want to stay green, you have to rely on a lot of diversification. Currently up 14% and being careful. Still a better deal than leaving it in a savings or checking account yielding 0-1 percent interest.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
How can I contact this adviser of yours? because I'm seeking for a more effective investment approach How good is this person at portfolio diversification, particularly with regard to digital assets?
@Bonnie Robertson All of that is true, but it kinda requires you to have money left over.
Most people right now have not. The winter in Europe is harder than usual and the war made all that even more difficult, so its really F'ing poor people over now and middleclass people are cancelling all luxury faster than a speeding train atm.
@@barath4545 You're talking to bots
Inflation may come down, problem is the cost of living won't.
Once these giant corporations get their prices up… they don’t reduce them again..
“Record profits” when most are suffering shouldn’t be happening… especially when they claim they are putting up their prices to “cope with the changes” and then don’t reduce afterwards.😊
For cost of living to come down, we need deflation. That's not going to happen.
@@mordsythe Yea, businesses charge whatever price they can get away with charging, they always have. In other news, water is wet and murder is bad. Want prices to go down? Stop buying.
@@randommonacur2151 can’t do that for inelastic goods which are what comprise cost of living
Windfall tax
"Businesses and landlords are less likely to adjust prices downward than upward unless there's competition in their market...which there currently isn't."
That's just the nice way to say that price gouging is rampant.
Simpleton ✌🏿
Looming recessions are kinda paradoxical - If people except things to take a turn, then they will take steps to prepare themselves, but by doing so they improve conditions in the market
Businesses preparing for recessions can actually make it happen or worse sometimes. Businesses gearing up for recessions cause layoffs (which is happening not, but fortunately isolated sectors) which can cause recessions as everyone stops spending money and consumer confidence falls and creates a viscous cycle.
accept*
@@PhysiKarlzor perhaps expect?
People save money when they think we are heading towards a recession, which mean less money going around the economy, which actually can lead to a recession or make it worse.
Prices ‘should’ fall soon but there’s a global lack of supply so food, fertiliser, gas and grain are always going to cost more until the war in Europe ends and even then it will take years to recover.
There is no war in Europe. Russia and Ukraine are fighting and it'd used as an scapegoat for world inflation
Prices are unlikely to fall based on J Powell's explanation on transitory inflation... where lower inflation just means that the increases in price will decrease YoY but it doesn't mean that prices will reverse/fall.
It's not the war, it's the sanctions, but we're not supposed to say that as we're not supposed to recognise these effects as being a choice that is actually ours (whichever way you think that choice should be made). The sanctions aren't being tied to the war, with many politicians of The West(tm) stating that using the lifting of the sanctions as part of an incentive package for a peace settlement isn't on the table (as Europe doesn't want peace with Russia, no steps will be taken towards creating it) making the sanctions an independent policy decision. Economic actions against Russia preceded military actions, as we are seeing with China, which we are following basically the exact same path with... the first step to things getting better is to stop them from getting worse, and we're not even ready to take this step.
it's not that big of war to cause inflation globally in every product segment. but it is a convenient excuse for governments to avoid responsibility and for corporations to increase prices.
@@annolokiFound the Tankie
The corporate expectation of enhanced profit is an awful strong headwind against reducing inflation .
What do you think on the inflation situation in eastern europe? War aside, do you think there's hope for some relief with how well the US is doing? Kinda tired of the >20% and watching food prices climbing. You haven't done a UA/RU video in a while, and i think the general eastern europe situation merits attention.
Definitely sounds like an interesting topic to study, I'd also like to see a video on that
The interesting point is that Inflation in the EU - and especially in eastern EU - has completly different reasons than inflation in the US.
The reason for inflation in Eastern Europe is the massive amounts of money lost in the infinite swamps of corruption that plagues Eastern Europe and all Post Soviet countries.
The US has been exporting its inflation via the dollar global reserve currency. Other countries have felt the affects of this more because they need more dollars to buy the goods, strengthening the dollar. The US just prints them. Take a look at the size of US imports over the last few years
Yes, it's interesting topic. I would like to hear EE's comment on policy of National Bank of Poland that keeps low interest rates, claiming that the inflation is caused mainly by energy prices and that it's temporary.
So, we're looking at a potential globally controlled deflation? In an attempt to beat out a recession? (I have monkey brain and I am trying to learn)
Also, if you do read this, thanks for putting out these videos, you and a few other YT economists have helped me understand things. I think. I'm still learning. It's ashame that this availability to information and analysis wasn't available when I was at highschool 20 years ago. I might have passed my economics class if it was.
It's actually the opposite. Deflation is actually the normal course of action. However, we are currently in a globally controlled inflation. And what the government try to do was to stop these things from happened and let the price goes down like it's supposed to
@@dieptrieu6564 Ty, I'm still trying to get to grips with the subject. Thanks (:
@@TheSmokingCheddar Yeah, all i can say is that companies suck, lol
Nah, they still want infinite & indefinite inflation... just at a lower rate of inflation.
Highschool economic class is way more basic and simple than this
Well if "sticky prices" are an issue than higher-than-optimal inflation is even stickier.
So either central banks will have to maintain elevated interest rates for the next couple years or they're going to need to keep inching rates higher if they want to tame inflation faster which might put us into a mild recession starting late next year or 2024-2025.
The Fed will pivot in 2024 as it is an election year and thus support the incumbent president.
Maybe but not necessarily. Sticky prices mean that prices tend to stay where they are absent significant outside pressure while inflation indicates actively increasing prices... So inflation is very likely to slow while *decreasing* prices back to reasonable levels would be a tougher nut to crack. The latter requires a dramatic downward force which will likely end in a recession.
@@ceesjhay Yeah, I don't see it likely that we'll get .30$ burgers back from the 1970s any time soon, let alone the 1$ 2L cokes from the 2010s... CPI inflation sticks because corporations *never accept less profits in the absence of competition* and it's been more than a century since the US made any efforts to break up their monopolies...
@@bodaciouschad Well, yeah, but that's not unexpected. Economists tend to expect companies to charge so much so as to maximize revenue. The ideal is that reducing the money supply would shift down that point of revenue maximization so as to decrease prices, but especially after bouts of inflation, prices are arguably stickier to downward rather than upward movement, so price decreases are especially unlikely.
wouldn't be a problem if we started enforcing antitrust to force price competition. Too bad chuck Schumer took bribes to stop it.
Such a strong channel - mega informative. Bias opinion that more content like this be released :D
This was very informative. Thank you for not going the doom and gloom route. You were very reasonable in your presentation
How is he reasonable? Did we just go to "pandemic never happened" mode? What about all the businesses it killed? Most of them never ressurected. This is another video on youtube which is making terrible forcast on inflation going down. Long term conclusions here are drawn based on last two months downward ticks on inflation chart. He contradicts himself by saying that holiday season will increase spending and somehow he suggests it will decrease inflation? This is ridicullus. Also the stock prices are not falling because money appreciation. This is oversimplified. Companies are being eaten up by expenses which went out of control due to inflation. You know what is incoming instead of deflation? Lay offs. Waves of lay off-s. Next year will make you all yearn for 2022. I will combe back in half a year to this comment section to see how this "optimistic overview" holds up.
I hope you are wrong but time will tell. Everything is very much up in the air. Let’s hope the fed knows what they are doing this time
Happy to hear that - thanks!
Thank you for not stooping down to fear mongering and/or only reporting bad news.
I'm very glad to learn that we're beating inflation faster than anticipated. Keep these kind of videos coming!
Amazing! Let's get our hopes up.
Great video! Could you tackle the potential economic impact of AI in a future video?
Thanks for the awesome content and great video!!
"People are still willing to pay them"
People have no option in Australia for a myriad of reasons, but the income levels and people's willingness to pay them is not it. A choice between homelessness or not is hardly a choice.
Couldn't people sell the real estate and start to rent? Not nice at all, but also not homelessness.
Loved the video brother, thanks for highlighting the good stuff that is happening around us, easy to cover doom and gloom but as you said, it’s just as important to appreciate what we do have
Happy to hear that - thanks!
The fact that you don’t make sensationalist pessimistic CZcams pieces is the reason it’ll always find your CZcams to see what trends and patterns are arising. Keep up the honest videos 🤘
Well done mate! A sponsor that helps people! So glad you dropped Masterworks.
Every day we have a new problem. It's the new normal. At first we thought it was a crisis, now we know it's a new normal and we have to adapt. 2023 will be a year of severe economic pain all over the nation.. what steps can we take to generate more income during quantitative adjustment?I can't afford my hard-earned $80,000 savings to turn to dust
@@stevensmiddlemass2072 >>I agree, having a portfolio-advisor for investing is genius! Not long ago amidst the pandemic crash in March 2020, I was really having investing nightmare prior touching base with a license portfolio-advisor. In a nutshell, i've accrued over $550k with the help of my advisor from an initial $120k investment thus far.
@@anthonyrussell5718 Sharon Louise Count is the brokerage-adviser. She has been of great help and her tutelage has brought me to a higher understanding of profit generation. You can look up her name on the net for her page and reach out. She Understands the job perfectly.
I think it's because we have social media and instant access to the news. So, we're constantly surrounded by bad news. Whereas before it was just on the TV for half an hour a night or when reading the morning paper
@@geraldantonio3160 normally yes, but the hedgefunds are trying to force out retail investors and thus keep driving the prices lower.
That's why our politicians and all our industry establishments hated trump. He brought back the middle class. Biden brought us back to worse than the Obama era within a few months. And anyone who doesn't think this is "normal" is a threat and must be cancelled.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered" - Thomas Jefferson
I like the quote but it's spurious
You know currency is not issued by private banks, right? It is issued by central monetary institutions like ECB and Fed. So the quote is not really relevant here.
@@Zenedoboz While you are right, there's something you're missing out on. It's that banks have a lot of power since they can do many things with the funds deposited by their customers. They have influence and their sole purpose is profit, they are obliged to protect funds but they only do so because they're obliged to, we're talking about companies here, I am not a socialist but this is very true.
@@Zenedoboz Oh I only posted it because I liked the quote. Wasn't trying to imply it was totally relevant.
The private banks may not issue currency, but they create debt.
Inflation only benefits who spend and hope for returns, like stocks. It never ends up benefiting the common person. The higher the inflation, the higher the desire to not save money. It used to be considered a good thing to save money for future expenses. Honestly, we need around 1 to 2% deflation for a few decades. Will it hurt stocks? Technically yes. Will it mean you can buy more with less? Also yes.
Always love your videos mate because they aren't all doom n gloom for the views like most.
As always very well spoken and simple enough to understand.
Iv noticed Diesel prices dropping in the last few weeks. I was paying $2.05 in Injinoo Cape York (Very top of Australia) this time last year ( NOT CHEAP at the time!!!) yet just a few months ago I paid a whopping $2.42 on the gold coast and that was the cheapest around! Staggering difference in price given 1 is very close to civilisation and 1 not so much.
The most I paid for diesel was $2.18 at Bramwell idk about Petrol but partner would since her rig is a petty.) We were then lucky to be paying $2.25 in Atherton/Cairns area before the fuel tax cut just a short few months later.
Diesel has only just dropped below $2 a L where I am in Vic and hopefully continues to drop.
LOL the forklift hit the rack with the pallet 🤣😂
Inflation really is a brilliant concept for venture capitalists. Privatize the gains, socialize the losses.
That is wrong, inflation hurts those who have stocks and bonds the most, while those who are indebted will profit.
Great video, would be great to see one on the development of BRICS and the feasibility of it rising in prominence.
I always appreciate your level headed take on things! I’d love to see your take on the rolling blackouts in South Africa (loadshedding, as we call it here).
Also there is no "healthy" level of inflation. Deflation is normal because we keep becoming more efficient. Money printing is preventing the falling of prices.
Finally, I was literally waiting for your video 😄
yeah, me too
Joe Blogs addressed this same issue today as well. I think his take is much more realistic. Inflation is now a feature, not a bug.
At 7:26 forklift crashes into the storage rack. Great stock video.
Thank you for making this and your other great dry humor videos.
Bro love from Texas, USA!
With markets tumbling, inflation soaring, the Fed imposing large interest-rate hike, while treasury yields are rising rapidly-which means more red ink for portfolios this quarter. How can I profit from the current volatile market, I'm still at a crossroads deciding if to liquidate my $125k bond/stock portfolio.
I always found the idea of using spreadsheets very time consuming and unnecessary. I just dump a bunch of money into my savings accounts each month and keep my spending money in a separate account and try to spend as little as possible.
You should not liquidate your assets, especially during a recession, this is a time for great wealth to be created, if you know what to look for. Pulling all the money out will only allow inflation to eat away at it.There are actually a lot of ways to make high yields in a crisis, but such trades are best done under the supervision of Financial advisor.
Right, I've been in constant touch with a fiinancial-analyst since covid . You know these days it's really easy to buy into trending stock`s, but the task is determining when to buy or sell . My advisor decides entry and exit commands on my portfolio, I've accrued over $550k from an initially stagnant reserve of $150K.
@@advancetotabletop5030 Please can you leave the info of your investment advisor here? I’m in dire need for one.
@@kozovski6628 .Credits to 'Donna Lorraine Judge' she has a web presence, so you can simply just search her.
No, home prices aren't down. They are flatlining. A house's price last year is the same price for this year.
Depends on the market. For example in West Virginia the prices are still falling (and have been for a while).
Happy holidays mate
Good Job!
I remember when they thought they had tamed inflation back in the Paul Volker days he also did baby steps thinking he killed inflation, he later realized he needed to raise interest rates to or above the true rate of inflation, with the bogus CPI numbers they use today inflation will be around much longer, in the meantime they will destroy many that carry debt which was influenced by very low interest, IMO we are headed for some very extremely ruff times
Yes sir, this channel botches economic reality.
Yes sir, this channel botches economic reality.
Every time I see a car charging station with one company's name on it, I say, "How stupid, who's the idiot who came up with the parallel infrastructure". And on top of that, a free communist infrastructure.
We couldn't aggree on one infrastructure. Owned and operated by the government. Because it's a monopoly.
The government deficit spending on building a infrastructure, all so, many years down the road, that project will turn a profit to repay that deficit spending, for a return on investment. On a balanced budget. Causing no inflation.
Do politicians not understand their job. They are government lap dogs. Not a private company's lap dog.
And that private company is after our free tax giveaways. Not on a balanced budget, causing inflation
Bogus CPI? LOL, enlighten us on how you know better than experts who study this stuff for a living, I'm sure whatever RWG RWG has to say on the field of economics will be the most profound thing we've ever read.
@@randommonacur2151 Calm down, kid
The part that bothers me is companies making record profits and the cost of rent. The record profits just feel like price gouging. I haven't rented since 2019 but how are people supposed to build equity and have a stable life with the cost of rent. I work at a college and almost none of the students see a path to home ownership. This is a big issue to me. My mortgage is the same as my rent was in 2019 and that includes 17 acres of forest.
So here in the UK the share of people using Aldi (the cheapest Supermarket) have risen by 25%. If the other Supermarkets want to win their customers back they will have to start lowering prices to bring people back. This might take a while but it should be a natural market force of competition. In terms of rent/home ownership, it really is a worldwide issue that unfortunately no government seems to want to solve, this is why is younger people need to get out there and vote for change!
@@Foogle6594 ahh so easy, just go vote and everything will be ok. So, wich one of the two awful options should we vote for? Maybe in the UK one is better than the other... i don't think so tough. Specially with how well they both have been doing lately...
Here in Spain all the major parties are composed wholly by idiots, thieves, or idiot thieves. I literally have never heard them talking about one of the real issues the country is facing. Just whatever they think can get them elected. Like: raising wages amid a global inflation crisis... yeah, just like that...
The standard capitalist mantra is charge whatever the market will bear.
Unless it's labor. Then you raise interest rates to "cool down" an overheated economy.
@@catnadas definitely not easy my friend, encouraging us younger generations to vote en masse is one of the most difficult undertakings, but getting enough engagement will mean our voices can't be ignored.
Just look at America where the Republicans were shocked by the amount of youngsters showing up and some politicians even wanted to increase the age of voting because of it.
@@quintessenceSL not a typical capitalist economic tool but i think the government should do more profit capping. Suppliers of the military are profit capped because of their close relationship with the government. This should be extended to oil and gas companies.
good video, thank you
quality video as always :)
Thanks for another great video. I never would have thought economics could be so interesting.
ᴛʜᴀɴᴋs ғᴏʀ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️ᴡʜᴀᴛśᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
Looking at inflation without considering central bank debt is like measuring car performance without tyres.
Thanks for this reporting. Like you said at the end of your video: it might not get thr most likes because of its positivity, but it's the information we need as players in a global market. Cheers!
Thanks!
I've started to see some items go down in price but a little bit. Not everything, but I think this inflation is NOT generalized, it's a little bit psychological because brands try to protect themselves from inflation by raising prices... lol. But not everything has gone up and I've actually seen some products keep their prices and some even lowered them. Anyways just my thoughts.
Yeah but what about the size of those products? Prices stay the same but they trick you by lowering the amount of product. “Shrinkflation”
I wonder if Stoic Finance will do a similar episode to Economics Explained this week as they did last week?
There is no winning when it comes to money. It's only a question of how little you can lose.
Man I love this videos
In the UK, with the very recent increase in interest rates, it's predicted that linflation likely stay that way for some time while the poor are getting poorer
Inflation dropped from 11.1% to 10.7%
@@Lando-kx6so my mistake, I meant interest rates :)
The government printed 400bn quid here and we've had rock bottom interest rates since 08. Something had to snap and the worst is yet to come here in the uk as everything from second hand cars to homes are over valued by the monopoly money we handed out for 2 years for no change in how efficient or good anything is. This will bite people who ignore pri contracts in the public sector all yhe way yo banging pots and pans for our economic death.
its not made any better by the abysmal wages in the uk either
Not really. In the UK economists are predicting that inflation has peaked at 11% now and will drop to 4-5% over the course of 2023. Then continue dropping in 2024 and 2025.
MAYBE govts and central banks can take this as a lesson about pumping tons of money into the economy and how not seeing immediate collapse doesn't mean problems don't exist or won't crop up. But people's pension for remembering economic crises seems to only last as long as it directly affects them.
lol no chance. Look at how most people are responding to the inflation crisis. It's all just politics in their minds. Whichever party is not in control in any given country is saying the problem is being caused by the party that is, even though its happening everywhere.
Nobody will dare blame the stimulus checks, they were extremely popular.
Hah. You said "pension."
(The word is "penchant," btw)
The alternative - no stimulus, no measures to help people out during times of crisis - is almost always worse.
The lesson: No consequences for actions, just like in 2008.
@@efovex that's not true. And I think you're too smart, or at least I hope you're too smart to actually think like that.
I cant name anything where the price ever came back down
Only happens to commodities ie gold, silver, lumber, etc
@@drtyhay I mean commodities are entirely detached from their end product. Drop in oil isn’t passed on at pumps, wheat, lumbar etc. Those downward changes never affect the consumer but some how the upward changes always do
Gasoline came back down after Biden was term limited.
The prices of consumer goods are coming down, but inflation is still high because non discretionary expenses are still seeing inflation. This inflation is driven mostly by sectors where even if consumers aren't willing to pay the prices, they will because they have no choice. So prices are unlikely to fall in these markets, like food and housing costs.
ᴛʜᴀɴᴋs ғᴏʀ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️ᴡʜᴀᴛᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
Everything is releted to energy prices, if energy prices falls significantly then inflation will go away within months
Are Australian mortgages not typically fixed rate? Or is there a good mix of variable rate? If not, I'm confused why the rate increase affects those with mortgages. Or are you referring to people not being able to refi other debt into the house or taking on mortgages they can't afford?
Yeah I'm totally confused by this. He doesn't even mentioned the concept of fixed vs. variable rare. 🤷♀️ How could a highly developed economy like Australia function with that level of risk? 30 years is far, far too long to accept a variable rate, because in that time, rates are bound to...vary.
Variable rate mortgages are, it seems to me, only for investors who plan to improve a property and re-sell it on a much shorter time horizon.
Most countries outside the US have max of 3 years fixed after which you move to a variable rate
@@sammorrissey9094 ouch! That sucks, I didn't know that.
@@rickyal9810 the USA reply I have ever seen! You guys are the only ones with 30 yrs fixed. Everywhere is Max 5 years high level fixed rest is variable!
Oh the joy of next chapter: deflation- and then hyperstagflation
In the US wholesale car prices (what car dealerships pay) have been decreasing for around 6 months, but retail prices (what consumers pay) have been slightly creeping upwards.
"...Landlords are able to charge these prices, and people are still willing to pay them."
Bro what? Large corporate landlords are holding buildings empty while charging more for the ones they aren't. It's artificial. And if there aren't any reasonably priced apartments near me, what am I supposed to do? Just live in my car?
My point is with housing is people aren't willing to pay them--they have to.
Rents are hard to force down because landlords are keen to raise them and not so keen to lower them. Tenants have little bargaining power unless they are willing to relocate to another house, which is unbelievably inconvenient and has a cost attached so the other rent has to be significantly lower than their current rent to be worth doing, and landlords know it. So while there's a shortage of rental properties, and mortgages are expensive, good luck seeing rents go lower
Rents are a function of supply and demand and act independently of interest rates, inflation or owners wants.
@@xXramblertoo14Xx Supply and demand are very deeply intertwined with interest rates, inflation, and the owner's wants. Like, who do you think declares prices?
@@xXramblertoo14Xx like many markets the reality is actually more complicated than the pure economics model you learn in school
@@GBiv78 Do you know what a model is? Models arent supposed to reflect every nuance of a system, they're supposed to simplify it to the point where it becomes readable and predictable. Like a map. It not reflecting all the complications of reality is hardly an argument for it being less accurate that wahtever it is you're proposing.
@@xXramblertoo14Xx In my city the average net salary is 1000€/month and the cheapest one-bedroom apartments cost 800€/month. How is that a function of supply and demand? Do you see anyone willing to spend 80% of their salary on rent?
People arnt willing to pay, they essentially have to
Employers chose to boost costs while not increasing wages accordingly.
Very topical topic 🤓 (So much so, my first CZcams vid is also about inflation, although through an Aussie lens) I had no idea CPI inflation had already started declining in the US, reason for cautious optimism indeed!
Coming to an end? I was under the impression that it hadn't even really got started yet considering all the changes the world is undergoing.
ᴛʜᴀɴᴋs ғᴏʀ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️ᴡʜᴀᴛśᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
Then you haven’t been paying attention
@@Yuvraj. or maybe you haven't.
@@CM02997 I know I have been.
Iam not sure if we reached the end of it,
normally inflation comes in waves.
I think they will stick around.
Thanks
If too much money means the real impact is inflated prices on goods, and the expectation is for good prices to fall back to 'old normal'... wouldn't that require a deflationary environment? All the central bank press releases I've seen are targeting their good ol' 2% inflation... which would mean that the CPI basket would still be going up. In my personal view, the major lag is in rebalancing the economic ecosystem; which is presently cannibalizing the debt driven aspects of capitalist systems... not in the stickiness of pricing.
Always appreciate the content. Cheers.
ᴛʜᴀɴᴋs ғᴏʀ⬆️ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️⬆️ᴡʜᴀᴛśᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
Prices will never fall prices can only go up. As long as companies can make the consumers accept the status quo there is absolutely no reason for them to lower their prices save for outside intervention. Even traditional Supply-Demand would dictate it so. So cost of living won't be going down, only consumer income may rise (as unlikely as it is in modern capitalism) but rising income will only create more inflation and we are back where we started. It is practically a dead end scenario.
Only if they have a monopoly on a necessity. Prices do fall. Just like investors that don't want to sell stocks that dropped, at some point they realize things aren't going back up and they cut their losses. Sure they'll downsize and prices will go back towards normal. Real price decreases only come when technology makes things cheaper to create. Businesses need to make a minimum return so they can cut prices to razor thin margins for a bit but unless they can bring down the price to produce, it won't stick around.
Remember when a 50" LCD TV was $3,000?
Raising interest rates doesn't hurt the wealthy or corporations. They can afford to drop $250-500k on a house up front while the rest of us are stuck paying that increased rate.
That leads to the rich and corps owning even more of the houses and profiting off of them.
I'm buying a house, the sticker price is $250,000. The builder is nickel and diming me for every little thing so in the end it'll be closer to $300k, but that's nothing. The loan will cost $600k over its life if interest rates don't drop. I'm paying more for the 'privilege'' of borrowing money than I am for a house.
It will effect them in that the main tax dodge strategy for the ultra wealthy and corporations involves taking out loans. Not that I'm all that sympathetic
What? Corporate scale loans are why bigger than a house. Many a corporation have gotten is serious trouble for being over leveraged.
In the graph @0:11 inflation has gone from 9% to 7.5%, so much for "taming the dragon"
An interesting metric to consider when looking at how companies increase profit margins with inflation is that it's better for the margins to be the lowest high price than the highest low price. In either metric people default to the lowest cost for the good/service so for maximum profits they would aim to be the least expensive expensive option
Markets Are Confusing A Collapse In Demand With An Improvement In Supply
Prices for most goods will never get reduced. That would result in deflation. They just won't be jumping as drastically if we are lucky
Love you EE
In the US, growth has caught up to inflation. Since wages are the largest expense for most companies, it will be difficult for them to cut prices unless layoffs occur.
inflation is not the increase in prices it's the increase in money supply, the effect of which is the raising prices.
* increase of money supply in relation to produced goods
When theres productive credit creation you wont see any significant inflation
A quick note about rent, while it has increased in the last 12 months, it has only just recovered its peak of 2017/2018. When we factor in inflation this gap is even larger, rents would need to hit $655 to match the peaks of 2018. These are the numbers from an Australian real-estate site, in this case Domain for Sydney up to 2020 and Selectra for 2021 and 2022.
Sydney median weekly house rent 2022: $600.
Sydney median weekly house rent 2021: $546.
Sydney median weekly house rent 2020: $540.
Sydney median weekly house rent 2019: $525.
Sydney median weekly house rent 2018: $600.
Sydney median weekly house rent 2017: $600.
Sydney median weekly house rent 2016: $540.
An average rent of $655? What fantasy world is that one?
@@JoaoSantos-ur1gg I must admit compared with Frankfurt at 868.91€ per month its expensive. But you do not get much for 868.91€ in Frankfurt for that price, a studio most likely. I am uncertain how much a 2 bedroom apartment would cost, but it would be very expensive. You get even less in London for £1,832 a month, I have no idea how anyone can afford rents in London.
@@peterfmodel Oh, I'm sorry, I didn't notice the weekly part because in most places rent is monthly. Then that's indeed expensive, though I don't know if wages make up for it. Frankfurt is actually cheap considering the purchasing power. From what I checked the average net monthly salary is 3,361.63€ so rent is like 25% of your salary. The worst scenario I know of is Lisbon, in Portugal, where I live. The average net monthly salary is 1,082.05€ and the average one-bedroom apartment costs 812.77€ per month, meaning it costs 75% of the average salary and one has 269.28€ left.
@@JoaoSantos-ur1gg I admit I get confused as well with Australia; I am not sure why they use a weekly metric rather than monthly. As for price, I have visited friends in rented apartments in Sydney, which is considered as expensive, and you get a very nice two bedroom apartment with 2 bathrooms. I am not sure such a thing even exists in Frankfurt; one bedroom studio is more typical. I consider rent in Sydney as being very reasonable compared with Europe.
However nothing beats renting in Hong Kong, my apartment was lucky to be 40sqm and cost me about $1,000 US a month in 2000, I suspect its about $5000 per month today.
I had no idea it was so expensive in Lisbon, you need to move to Germany, which I admit is not as nice to live in as Portugal, but perhaps Sydney has similar weather and is a better option.
@@peterfmodel Of course there are two-bedroom apartments in Frankfurt, they're just more expensive than one-bedroom apartments. And migrating isn't as easy as it sounds otherwise everybody would be doing it.
Wow a hopeful video for once? Breath of fresh air.
I think the main thing behind the RBA’s massive rate hikes is the thinking that this inflation problem is short term, and that soon (critically before all the bargain basement fixed rates the flood of first home buyers took out in 2021 expire) rates will not only stop rising but may even fall again.
This is the only rationale I can see to explain this seemingly suicidal amount of rate increases given the fixed rate loan problem mentioned above, which could see people with negative equity having rates triple overnight. Hardly a good thing for the economy…
I'm intrigued by those endorsing the basic premise that keeping cash is a faulty strategy. Certainly, you are losing to inflation. But a good high yield savings account will get you at least 3%. Conversely, you could have invested in an S&P index fund last year and lost nearly 20%. Either way, you are losing to inflation but its obvious the "cash is trash" mantra has been proven to be bad advice.
And if we had a gold standard people could keep cash and it not be devalued from inflation. That’s why the federal reserve was created, to cause inflation and make people put their money into central systems controlled (moral over time) by the government.
Long term stocks and shares will nearly always beat cash. But we're talking horizons of decades, not years. Sure, you'll lose 20% on the S&P now compared to a savings account, but over decades you'll see growth of 300% or more, compared to a high interest savings account which would probably only see 50-100% or so over the same timeframe.
@@Croz89 Agreed! I should have clarified that keeping cash in this high inflation, verge-of-recession, sky high asset price environment has proven to be a reasonable short-term strategy. Those who went all-in on equities lost 19% this year in an effort to avoid losing 4% purchasing power on their cash :)
@@gormanthomas8135 Problem there is you're trying to time the market, and you could easily make the wrong decision if your predictions don't materialise.
@@Croz89 I don't disagree. My original statement stands: Those preaching the "cash is trash" mantra were proven wrong. You can take that to the bank.
It's always save a high amount of money for me. Because the future is uncertain, your employer will drop you the second anything bad happens or your performance stops increasing, and even with that savings buying a home, condos included, are too expensive. So nothing to spend your money on in that last point, unless you have the time to spend money, but you don't because you aren't anywhere near retirement.
Are fixed rates not as common outside the US. I am locked in at 3.5 percent, so the higher inflation and wages go, the better for me.
It’s February. US numbers for Jan aren’t out yet but inflation in Dec 2022 was 6.5%, down from peak 9.1% in June. It’s a slow decline but it’s been declining. It was 7.1% in Nov and 7. 7% in Oct so that’s an average of 0.6% drop per month last two months
it says "Raisin interest rates" for the third chapter, and honestly that's pretty funny imagine people lending raisins instead of money to each other as a new form of currency
ᴛʜᴀɴᴋs ғᴏʀ⬆️ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️⬆️ᴡʜᴀᴛśᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
at least we can eat raisins
Every time i learn more about inflation, it reinforces the thought that essential items (basic food staples or fresh items etc) should have a government intervention such as capped profit margins. Look at the kickback costco is getting from wallstreet because they decided to absorb some cost of inflation rather than passing it along to consumers. The greedy shareholders complained about a .5% decrease in profit margins and said that people were "happy" to pay the extra. NO DUDE, not happy! When it is an essential product you deal with the extra cost by cutting fun things.
That greedy top-down thinking you're describing will drive this entire economy into the ground if we don't take steps to curb the sociopathic decisionmaking of large public firms.
This sounds like socialist state
That type of market intervention sounds like a short cut to the type of shortages and long queues for basic consumables found in eastern Europe before 1990 and recently in Venezuela.
I see someone really wants to have breadlines.
Let’s not forgot who is the primary cause of inflation, the government printing money with zero accountability.
The problem is zero accountability and perverse incentives occurring near concentrated seats of power regardless of if the market or the government is doing it... The whole communism vs capitalism thing is really just asking "how do you want your corruption, public sector or private sector?"
I have never changed my spending habits in regards to changing inflation.
Greedy businesses and landlord keeping margins high on purpose is one of the main reasons government needs to keep consumers from spending under control.
Isn't recession about to happen?
We are in recession now brother.
@@bonete8780 no, if gdp is positive how we can ?
@@georgiopasca2720 GDP will go down as interest rates go up to the moon to crush inflation. Trust me, the poorest in society are getting crushed right now, as people lose their jobs, everyone will agree it is a recession
@@ArchesBro yeah, they are killing demand, if they overkill demand then recession is coming
@@georgiopasca2720 You look back on recessions. We are probably in one now, but won't know until we get the results in a few quarters
Hi, can you please do a video on seigniorage. It baffles me and how it works with inflation. How did the Aus govt go from usually making around 60 million a year in profits to around a billion during the pandemic?
"What comes Up, must come down". Argentina in this moment: HOLD MY BEER!
Love the skewed chart in the beginning. The starting point should be 2% (i.e. normal inflation).
Inflation is not normal, it is the product of fiat currency.
@@matthew8153 you can have high prices without a fiat currency too, it doesnt really matter
@@chaddy2409
High prices with a gold backed currency are the result of limited supply relative to demand. Inflation in a fiat currency is caused by central banks running the money printers.
5:01 my focus was actually on getting rid of debts I had already incurred. Thanks to a long stint of under employment.
I've made a lot of progress, and in retrospect it was definitely the smart decision, but I'm also uncomfortably far away from being out of the woods.
I think government through history experiencing inflation and knowing how to help end it has helped in slowing inflation down
are you gonna talk about the major problem of a global dollar shortage and how this will disrupt banks?
If something manmade is defeated did man win or lose
If that was mistake then win
“Inflation is taxation without legislation”
- Milton Friedman
“By this means the government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”
- John Maynard Keynes
“The arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her saving in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation. Either way, she is 'taxed' in a manner that leave her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120 percent income tax, but doesn't seem to notice that 5 percent inflation is the economic equivalent.”
- Warren Buffett
"The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.
-Vladimir Lenin
ᴛʜᴀɴᴋs ғᴏʀ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️ᴡʜᴀᴛśᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
@5:12 "and markets people had convinced themselves were assets" with a screenshot of cryptos. 🤣🤣🤣 That's a nice jab and I agree 💯
ᴛʜᴀɴᴋs ғᴏʀ⬆️ ᴄᴏᴍᴍᴇɴᴛɪɴɢ ⬆️⬆️ᴡʜᴀᴛśᴀ́ᴘ ᴍᴇ ɴᴏᴡ ғᴏ̀ʀ ᴍᴏ̈ʀᴇ́ ɪɴғᴏʀᴍᴀᴛɪᴏɴ ᴀɴᴅ ɪɴsɪɢʜᴛ
ROCKETMoney you say???
I trust your recommendation.