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Hadlock posted:Sorry am I posting in the wrong reality again? God damnit i realize being obtuse is like your gimmick or something, but i'm not even sure what this means in response to what i posted. my original post is about how inflation has cooled significantly from the spike you reference, while simultaneously labor has stayed tight. my response to senor p was to highlight the lack of explanation for the mismatch from basic theory, not to suggest that inflation didn't actually happen or whatever vague point you're driving at here Bar Ran Dun posted:Add the supply chain crisis and the reaction of a new trend of supply chains starting to move to be more regional and in country rather than global. my naive theory is that the ira/chips act and at least some of the lingering effect of covid stimulus is driving non-inflationary growth. but that's probably only because it matches my priors
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Dec 30, 2023 07:10
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GhostofJohnMuir posted:my original post is about how inflation has cooled significantly from the spike you reference, while simultaneously labor has stayed tight. Inflation is the outcome of basic market forces. At the start of covid we pumped a ton of money both directly into the economy via literal covid stimulus checks, covid payroll loans (many/most of which were immediately forgiven). Plus borrowing money was free. M2 money supply If you have more money (demand) than supply then prices will go up. We had more money + reduced supply due to covid, prices rose. Corporate profits in 2022 were some of the highest ever. Then they stopped QE, supply caught up, and Bar Ran Dun posted:demand destruction. Seems like a cooling of inflation to me Yeah labor has been tight, eating out costs about double what it did in 2018. I don't think I've paid less than $17 for a cheeseburger all this year outside of the drive though. Used to pay $10. Even with those prices food service is a shell of it's former self, like half of all small restaurants failed during/after covid Inflation went to the moon (for our generation at least) and after prices adjusted... Of course it would soften, demand weakened due to higher prices, and we stopped pumping extra money into the economy
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Dec 30, 2023 07:26
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hypnophant posted:Not quite! Inflation peaked at 8% last June, and has since fallen back to 2%. The price index since January 2021 has risen from 262 to 307, a change of 17% or about 6% a year. Sorry; 10% over three years meaning cumulative inflation 2020-2023
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Dec 30, 2023 07:30
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hypnophant posted:, though I haven’t seen any academic papers on changing trade patterns yet. Sigh. One sees things on the waterfront well before any papers. I see less than I used now that I’m on the claims / insurers side rather loss prevention / regulatory on the carriers side. But I’m still going to see it years before any paper. I’m rather literally paid to go watch it, in person. hypnophant posted:I don’t really understand what point you’re trying to make about a feed back loop, but globalization has been petering off as far back as 2010, and has little to do with the pandemic supply chain problems. Actually the Great Recession accelerated a bunch of JIT trends it even as it knocked the overall trade volume down. A vitally important thing increased, inventory (and not finished goods in supply chain inventory) moved from warehouses to in transit on containerships, facilitated by extremely low carrier rates. But one wouldn’t have seen that just looking the total amount of trade. And it laid the ground work for the supply chain crisis. Any way that trend bit everybody in manufacturing in the rear end during the pandemic when rates shot up and delays got excessive. GhostofJohnMuir posted:my naive theory is that the ira/chips act and at least some of the lingering effect of covid stimulus is driving non-inflationary growth. but that's probably only because it matches my priors I’m not sure people get the size of the facilities opening up between chips and ira. The news is talking about things like GM drawing back. But these auto battery facilities are huge 40-50 fully chartered multipurpose vessels of machinery for each one and all that logistics is already done. The poo poo is mostly here already and installed. The chips stuff was stunningly fast too.
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Dec 30, 2023 07:42
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we're going in circles
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Dec 30, 2023 07:45
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Hadlock posted:Inflation is the outcome of basic market forces. At the start of covid we pumped a ton of money both directly into the economy via literal covid stimulus checks, covid payroll loans (many/most of which were immediately forgiven). Plus borrowing money was free. M2 money supply yes, but if demand has weakened enough to bring down prices, why are companies still hiring? domestic consumer spending hasn't slackened this year, real wages are up, this is not what volcker shock looked like in the 1980's, and mainstream monetary theory was that some level of pain was necessary to cool rapidly spiking inflation. how can you have demand destruction when the economy is seeing quarters of annualized growth approaching 5%?
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Dec 30, 2023 07:56
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Leperflesh posted:we're going in circles new thread title GhostofJohnMuir posted:yes, but if demand has weakened enough to bring down prices, why are companies still hiring? domestic consumer spending hasn't slackened this year, real wages are up, this is not what volcker shock looked like in the 1980's, and mainstream monetary theory was that some level of pain was necessary to cool rapidly spiking inflation. how can you have demand destruction when the economy is seeing quarters of annualized growth approaching 5%? To quote an IRL person, the crisis is over, rates are coming down, and all the deals that have been postponed, most of those still need to happen eventually. There's a lot of anticipated growth/business as usual expected over the next 18 months. If you look at Junior level hiring it's still an absolute blood bath; they're hiring seniors still to make sure they're staffed to handle anticipated demand Mortgage rates going to 8% was in no way a volcker shock. Painful yes but they boiled the frog so slowly it gave companies a chance to shed costs early Demand destruction on global level. I
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Dec 30, 2023 08:05
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Leperflesh posted:we're going in circles in the name of continuing the conversation i'll throw out a few random (mostly contradictory) guesses that have been raddling around my brain, though of course i have no way of knowing: -the inflation spike was almost entirely supply side, it really was transitory. once the covid delays were sorted out and the energy shock from russia's invasion of ukraine faded, it didn't matter that demand never fell, because that wasn't the real driver (doesn't fully explain significant inflation in services which at times exceeded good) -companies had a period where they felt comfortable pumping up their margins, but shifts in market realities have made them hesitant to continue that trend -both supply and demand play a secondary role to expectations and the fed did a great job managing expectations to the point of an almost mass hypnosis Hadlock posted:Mortgage rates going to 8% was in no way a volcker shock. Painful yes but they boiled the frog so slowly it gave companies a chance to shed costs early companies didn't shed costs though, outside of tech they didn't shed employees at all. this is the weird thing about inflation coming down. the pace of capital expenditures slowed, but stayed positive. the lesson of the 1980's was that you probably needed to have some kind of recession to halt rampant inflation, and that didn't happen this time around
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Dec 30, 2023 08:21
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Hadlock posted:Sorry am I posting in the wrong reality again? God damnit Someone’s been reading the peripheral.
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Dec 30, 2023 14:12
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Bar Ran Dun posted:Sigh. One sees things on the waterfront well before any papers. I see less than I used now that I’m on the claims / insurers side rather loss prevention / regulatory on the carriers side. But I’m still going to see it years before any paper. you can't seriously believe you're seeing the whole pattern of global trade from one location. quote:Actually the Great Recession accelerated a bunch of JIT trends it even as it knocked the overall trade volume down. A vitally important thing increased, inventory (and not finished goods in supply chain inventory) moved from warehouses to in transit on containerships, facilitated by extremely low carrier rates. But one wouldn’t have seen that just looking the total amount of trade. And it laid the ground work for the supply chain crisis. JIT is a management practice which is separate from the question of globalization. You can do globalization without JIT (source: the period 1870-1913) and you can do JIT without globalization. In fact JIT is usually regarded as having been invented by Toyota in the 70s, and so must have been popularized after the end of the second wave of globalization in 1973. GhostofJohnMuir posted:in the name of continuing the conversation i'll throw out a few random (mostly contradictory) guesses that have been raddling around my brain, though of course i have no way of knowing: my guess, having written all these words over the last few go arounds of this conversation, is that the classical monetary theory link between unemployment and inflation has just never been as strong as it was hypothesized. If it was we should never have had stagflation, and we shouldn't now be seeing disinflation despite unemployment remaining very low. The question that remains to be answered, then, is not so much why inflation is dropping now but why it spiked in the first place; how did a basically transient spike in supply chain lag cause prices to leap up almost ten percent in a year? How has the Fed managed to pull off a soft landing when a majority of economists predicted we'd have a recession in 2023? Maybe even more important - what happened from 2008 to 2020 that we had so little inflation despite such easy monetary policy? And what are the long-term effects of QE - is it, as Bernanke seems to claim, simply a logical and effective extension of monetary policy below the zero lower bound, or did it do something else which we're now feeling the effects of?
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Dec 30, 2023 16:44
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hypnophant posted:you can't seriously believe you're seeing the whole pattern of global trade from one location. Not all of it but a very large portion of it, I’m also a phone call away from other people at other ports who are either colleagues or people I’ve trained and I ask what they see. In several categories of vessel, containership, bulk carrier, and handy sized multipurpose I’ve boarded about 20ish % of the world’s fleet in those categories. I can glean an awful lot of information even just at a glance. I know where to look to get future vessel schedules. I can estimate how much cargo a vessel is carrying just by looking at it. I know if those thousands of containers on deck are empty or loaded by looking at the ships draft. By looking at the container ships I can even know their routes. I see the cargo manifests , bills of lading, and stow plans But yes, I rather can know a great deal about trade volumes just by looking at a vessel running an Asia - US - Europe.
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Dec 30, 2023 17:46
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I think the general outcome of the latest crisis is we do not understand macroeconomics nearly well enough to make scientific statements of cause and effect, even with the most basic principles. And that monetary policy cannot control nearly as much as economists think it can, without fiscal policy backing it. Raising interest rates hasn't destroyed nearly as much demand as expected because the links between bank central rates and immediate growth are much lower than 1980s.
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Dec 30, 2023 19:43
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Everyone always thinks they have a unique and thorough viewpoint of the world. It's how our animal brain functions.hypnophant posted:what happened from 2008 to 2020 that we had so little inflation despite such easy monetary policy? Personally, I think this is the real question. I think we're probably not as far off on the whys as we think we are, but I do think we have no idea how these changes ripple out and what causes things to lurch and jump instead of smoothing out. Like, you go back 10 years and average out inflation given the inputs and it actually seems fine, but as you get closer why did things happen when they happened and not happen when they didn't happen and it seems to make no sense.
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Dec 30, 2023 19:51
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Nothingtoseehere posted:I think the general outcome of the latest crisis is we do not understand macroeconomics nearly well enough to make scientific statements of cause and effect, even with the most basic principles. I think we should look at global trade with stock and flow modeling instead of the models of macroeconomics. Systems thinking to build models instead of statistics and the assumptions of neoclassical economics.
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Dec 30, 2023 19:53
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Lockback posted:Like, you go back 10 years and average out inflation given the inputs and it actually seems fine, but as you get closer why did things happen when they happened and not happen when they didn't happen and it seems to make no sense. This is what confuses me as well. I look at things like the demographic transition in european and asian countries and draw the conclusion that we had a global savings glut, but that doesn’t explain the post-gfc era on its own, and is even less helpful for understanding the pandemic effects Bar Ran Dun posted:But yes, I rather can know a great deal about trade volumes just by looking at a vessel running an Asia - US - Europe. Bar Ran Dun posted:I think we should look at global trade with stock and flow modeling instead of the models of macroeconomics. Systems thinking to build models instead of statistics and the assumptions of neoclassical economics. Given your perspective, I would really love to hear your thoughts on the below: hypnophant posted:how did a basically transient spike in supply chain lag cause prices to leap up almost ten percent in a year? How has the Fed managed to pull off a soft landing when a majority of economists predicted we'd have a recession in 2023?
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Dec 30, 2023 20:30
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hypnophant posted:how did a basically transient spike in supply chain lag cause prices to leap up almost ten percent in a year? because the supply chain issues were only part of inflation. keep in mind the price of oil doubled from 2019 to 2022, and that affects the cost of nearly everything
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Dec 30, 2023 21:03
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Hypnophant I wrote a response but awful has eaten it and I’m not sure where it posted. I’ll get to redoing it later probably this evening.
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Dec 30, 2023 21:07
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drk posted:because the supply chain issues were only part of inflation. keep in mind the price of oil doubled from 2019 to 2022, and that affects the cost of nearly everything Doesn’t work as an explanation. The price of oil fluctuates all the time without leading to significant changes in inflation, which is the whole reason energy and food inflation aren’t considered when setting policy. Keep in mind the supply chain question is a follow-up to “what triggered inflation to rise” - inflation is by definition broad-based price increases so of course it’s going to consist of more than just intermediate goods
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Dec 30, 2023 21:15
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Economics and current events: engineer brains quoting Econ 101
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Dec 30, 2023 21:30
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Yes but the availability of oil changed for the first time since the oil crunch in the 70s. Usually when oil prices change it's due to self inflicted production quotas. Or a brief flash in the pan due to some regional event/conflict. Over a period of about three weeks Europe went from lots of availability to very little oil and gas and had to import it by sea. Modern day supply train from literal over seas. Availability changed so much that we quietly cancelled the oil embargo from Venezuela.
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Dec 30, 2023 21:58
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Borscht posted:Someone’s been reading the peripheral. I think this is just coming out of the whole "Trump is running for reelection and using covid denial as a major plank of his election platform while the whole world struggles with covid - we live in the worst possible timeline" type comments
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Dec 30, 2023 22:19
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In Canada, I think we did have wild inflation between 2008 and 2020, but in a way that was not captured by monetary policy. Housing costs tripled or quadrupled over that period of time but were not considered in the calculation of inflation.
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Dec 31, 2023 00:08
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hypnophant posted:
Because we backed off JIT (not completely but a fair bit) and how supply chains work incorporated more warehousing and carried inventory costs money. I wrote this several years ago: “” posted:
Any way after that I posted a good deal about the the health of the containership lines at the time and predicted what would eventually happen in the supply chain crisis. Though I did not realize they would cartel up and voluntarily reduce capacity together ( because that’s human behavior and lol autism). But to what’s going on now, so after the supply chain crisis firms started holding more inventory to have more stable supply chains. This means warehousing and diversified sourcing some portion of which is more local. That’s less efficient but more stable. So it costs more to make poo poo as a consequence. Good analysis that I’ve seen of how much more have it at being 15% to 25 % of the inflation that happened. So is not a sole factor but it’s a big portion. Bar Ran Dun fucked around with this message at 00:33 on Dec 31, 2023 |
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Dec 31, 2023 00:27
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We go a few years and supply chain starts getting cut again, because reducing inventory and sole sourcing is an easy place to find money. Then something breaks, and building in redundancy and safety stock is a priority again. Pendulum swing back and forth. This was a pretty big thing that broke though, across all industries!
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Dec 31, 2023 00:43
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Baddog posted:We go a few years and supply chain starts getting cut again, because reducing inventory and sole sourcing is an easy place to find money. But for certain goods (semiconductors, batteries) we’ve decided to not do that and to move some production back to on shore or regional (Canada / Mexico), and that’s a large part of what the IRA and CHIPs is intentionally doing. The other part is that a gasoline to electric transition means accelerating the trend of the US as a net exporter of oil. And this stuff means jobs and also more inflation.
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Dec 31, 2023 00:53
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And yet, US oil imports have been on a steady decline. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M Fracking and other new technologies developed in the 00s and 2010s have increased US oil production so much that the US is producing more oil per year than any one country has does so before, ever. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M
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Dec 31, 2023 01:42
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Right and if we transition to electric we drop our demand on top of that. 9 states have banned the sale of new gasoline powered cars by 2035.
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Dec 31, 2023 02:32
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Bar Ran Dun posted:Because we backed off JIT (not completely but a fair bit) and how supply chains work incorporated more warehousing and carried inventory costs money. sounds like you want a leontief model, a cool thing which, so far as I can tell, economists have not yet figured out a practical application for. Maybe somewhere in the bowels of RAND or McKinsey or the BEA these get put to use; maybe you can find something interesting to do with them. Bar Ran Dun posted:But for certain goods (semiconductors, batteries) we’ve decided to not do that and to move some production back to on shore or regional (Canada / Mexico), and that’s a large part of what the IRA and CHIPs is intentionally doing. europe is not an energy exporter, and has so far failed to come up with a competing industrial policy of their own, but they've suffered even worse inflation than we have here; does that fit your theory?
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Dec 31, 2023 04:51
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actual operations research peeps fight with mixed-integer programming monstrosities: well into NP computationally, not the spherical cow leontieff crap
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Dec 31, 2023 05:41
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I skipped optimization to fit in real analysis 1 in my last semester so I don’t actually know that much linear algebra let alone what goes on in OR
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Dec 31, 2023 05:53
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hypnophant posted:maybe you can find something interesting to do with them. They make money with stock and flow models. These are real models of systems that use differential equations and control theory not linear programming matrix operations. You know like what Tim Cook at Apple does (that he picked up at IBM.) hypnophant posted:
Yes is not an energy exporter Yes Europe has so far failed to come up with a competing industrial policy. Yes that means then their inflation is going to be worse. All this supply chain stuff affects them more than the US too. Their international trade is affected more by this change and new post pandemic conditions. The US benefits in a relative way (but not an absolute way ) from a world that is more regional and less global. That’s part of the reason why we are doing better than everybody else.
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Dec 31, 2023 06:51
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https://www.reuters.com/technology/openai-annualized-revenue-tops-16-billion-information-2023-12-30/ Reuters reporting OpenAI, inventors of "ChatGPT" cleared $1.6 billion USD in revenue in 2023 Tangentially, I installed "chatgpt4all" on my laptop with the "orca2" open source LLM from Microsoft and for simple tasks it's 85-92% as good as ChatGPT That said, I think AI is not a flash in the pan, seems like people find enough value in the product they're willing to pay for it. I was really surprised at how many people really struggle with writing emails, over half the people I talked to say they use it for writing emails
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Dec 31, 2023 17:09
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Bar Ran Dun posted:But for certain goods (semiconductors, batteries) we’ve decided to not do that and to move some production back to on shore or regional (Canada / Mexico), and that’s a large part of what the IRA and CHIPs is intentionally doing. Bar Ran Dun posted:Yes is not an energy exporter It seems as though you're saying doing onshoring and being an energy exporter means more jobs and more inflation, and not having an industrial policy and being an energy importer also means more inflation. Am I misreading you here? Hadlock posted:https://www.reuters.com/technology/openai-annualized-revenue-tops-16-billion-information-2023-12-30/ that's 1.6billion annualized in december, so they didn't actually make 1.6 billion in revenue in 2023. I also wonder how well the value proposition is going to hold up after the hype dies down - LLMs are extremely expensive to train and run and it seems like a stretch to believe enough corporations will pay for a fancy email generator. I think the product is probably here to stay but i'll wait a little while to see if it lives up to the promise hypnophant fucked around with this message at 17:19 on Dec 31, 2023 |
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Dec 31, 2023 17:10
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hypnophant posted:Am I misreading you here? Yes. You’re missing the part that matters because of the way you think about the question. A general trend to carry move inventory in warehouses and to source regionally and onshore rather than source from giant single factories will make everything cost cost more to make. A failure to have a coherent industrial policy that accounts for this trend change for critical goods will be more inflationary. Energy self sufficiency is less efficient, because it generally costs more to get it out of the ground here rather than overseas and is thus inflationary. Not being energy self sufficient is inflationary because there are wars occurring and certain sources are sanctioned (Russia) and other sources have their logistics threatened (any tracker transits through the Red Sea) All of these things are inflationary, because it all makes making goods harder and less efficient. But these changes also move production around and relative to other countries than movement benefits the United States.
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Dec 31, 2023 18:41
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Bar Ran Dun posted:Yes. You’re missing the part that matters because of the way you think about the question. What you are saying here contradicts basic economics. If the US is overpaying to produce its own oil and manufactured goods, that will lower, not raise, prices of the output of the lowest-cost producers for countries that are not doing that. This is 101-level supply and demand; if supply goes up, cost goes down for any given level of demand. I also disagree that energy self sufficiency in the US is any driver of inflation - I actually think it's a major contributor to the US having a relatively easy time restraining inflation - but even accepting your premises, your conclusion does not make sense.
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Dec 31, 2023 18:59
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Hadlock posted:https://www.reuters.com/technology/openai-annualized-revenue-tops-16-billion-information-2023-12-30/ I think LLM's have some economic value, it's just nowhere near the hype it generates. And while they are expensive to train, once one is trained you can bootstrap another off it fairly easily so there's no competitive advantage in the space. So it's not going to lead to uneven windfall profits like Google or Facebook do. They are only expensive to run in comparison to searchs and with a baseline price of "free" - when it comes to enterprise pricing they'll fit fairly well into annual sofrware licensing budgets for specific models which don't leak corporate data back to the cloud, which is one of the major problems with current corporate implementations.
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Dec 31, 2023 19:16
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hypnophant posted:What you are saying here contradicts basic economics. If the US is overpaying to produce its own oil and manufactured goods, that will lower, not raise, prices of the output of the lowest-cost producers for countries that are not doing that. This is 101-level supply and demand; if supply goes up, cost goes down for any given level of demand. All supply chains are carrying more inventory and diversifying to more regional and in country suppliers. That’s happening in Europe too, they just don’t have a coherent economic policy addressing it. A large part of international trade is within the manufacturing process, not in finished goods. What happens to supply chains when containerships divert around the horn from the Red Sea with shoes that just had the soles glued on in China, but still need to be finished in Europe? Econ 101 supply and demand? Nonsense! Most international trade is within the supply chain. A term for this is “work-in-progress” goods. It’s hard to get percentages on it but in 2013 it was 80% of international trade by valuation. https://unctad.org/press-material/80-trade-takes-place-value-chains-linked-transnational-corporations-unctad-report My conclusions don’t make sense to you because there are many things you just don’t know.
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Dec 31, 2023 23:23
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I think you say a ton of words but don't explicitly tie it to inflation or employment, except for when you just declare that a thing is or isn't inflationary without an actual explanation for how. I think you are a domain expert but are really struggling to present a coherent, clear argument for why we see inflation falling off without an loss of jobs.
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Dec 31, 2023 23:43
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Leperflesh posted:I think you are a domain expert but are really struggling to present a coherent, clear argument for why we see inflation falling off without an loss of jobs. I'm kind of shocked no one has mentioned "productivity gains" in the last few pages, because that would be the easiest way to square that circle. Problem is, it's hard enough to measure it well in the US (particularly since the pandemic threw a lot of stats out of whack) and totally impossible in, for instance, China.
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Dec 31, 2023 23:54
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Leperflesh posted:I think you say a ton of words but don't explicitly tie it to inflation or employment, except for when you just declare that a thing is or isn't inflationary without an actual explanation for how. Goods just costing more to make is inflation! Monetary policy caused inflation isn’t the only type of inflation.
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Dec 31, 2023 23:55
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