How Worried Should We Be About Inflation? - TLDR News

Countries around the world are currently experiencing record levels of inflation, with COVID recovery plans significantly impacting global finances. So in this video, we unpick what's happening with inflation, what countries are trying to do and if we even ought to care.

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[filipepinto]

OMG, huge inflation: 4.0% y/y

While, Brazil on the background: 9% y/y inflation just chilling

[DragonCaptain]

Please do more technical videos like this. VERY informative thanks TLDR!

[TheValecnik]

Meanwhile in Turkey: 19.25% inflation
And this is according to government. Reality is so much worse.

[vaivsvata]

Me, from Argentina, laughing at your 3% and crying over our 45%

[kevincronk]

Note about demand-pull and cost-push inflation: generally in economics demand-pull is seen as good or not an issue, while cost-push is seen as bad. This is because demand-pull is generally due to either temporary increases in demand which are not permanent issues, or it is due to actual growth of the economy. Cost-push is due to prices of items being higher, not actual growth in the economy. This also means that cost-push inflation (when talking about the whole economy not a single industry) can potentially lead to hyperinflation.

[peteradaniel]

Interest rates have been artificially low since the 2008 crisis. Asset inflation has been around for at least the last five years, which is why house prices are insanely high and the stock market doesn’t reflect the real economy.

[alexm]

I have quite a few wealthy friends, almost all off them are increasing their debt to buy assets, just look at the prices of houses! for example, my Dr friend was showing me his new house and said "didnt want this house wanted to save and get a better one, but my accountant told me to get as much debt and by now". My other friend told me 2008 will look like a party

[benchippy]

No point sugar coating it. The economy will collapse, the rich will get richer and a techno-feudal society will emerge, cheered on by the fearful masses

[teelo]

I sold my Pokemon cards a couple months ago and couldn't believe how much someone was willing to pay for them. They weren't even rare or in good condition.

[jpbd]

4.1% in Canada is a lie. Groceries are about 40% more pricey and the middle class is now incapable of finding proper housing. It is very hard to find an apartment in a large city that is affordable, and almost impossible to find any real estate. The prices are way too high for the average salary.

[generalZee]

You missed one of the most major sources (if not THE major source) of current inflation: Financial inflation. During the pandemic millions of bored people with excess cash poured it into the stock market causing the prices on the market to inflate thanks to demand pull. But now companies are in a bad situation: they haven't earned a lot in the past 2 years because people are staying at home, but they're valued significantly higher than they were. There's a stock market number called PE (Price/Earnings) and this is useful to see how much a company is worth compared to its industry. Over 2020, however, average PE doubled, meaning companies increased their prices and decreased their earnings in unison to nearly half the earnings per cost of their stocks.

So what does that mean? Well, in order to justify their new, higher prices the companies will need to earn more. Given that they can't magically increase demand to double what it was pre-pandemic the companies will have no choice but to increase their prices to meet market expectations. When you combine this with the other things that are going on, specifically the increased price of labor, and yeah things are going to start inflating VERY quickly once we actually solve this.

[ichbinueber]

you also have a 3rd cause. Inflation expectations. Where inflation comes because people think it is at a set value, so people and companies increase their prices for this percentage and workers also demand this percentage as higher wages. This is completely decoupled from supply and demand.

[casteretpollux]

The idea that we could close down the world economy and fill the gap simply by printing billions was always for the birds. More cash without more production = inflation.

[gavinmurray]

Its times like this that I'm especially grateful for TLDRs pages! I understand political and sociological issues pretty well but economics has always somewhat befuddled me, so thank you tldr! More of these "technical" videos please!

[oliver.mayes]

I’ve gotta say we’re not looking good in the U.K., I was trying to get petrol this morning and it was a 1 hour wait and now I’m back 6 hours later…..all of the stations I drove past was closed because we ran out, the shops haven’t got enough food and money is tight… pray for us

[greentoad-gk]

That feeleing when inflation in your country has never been as low as those "record-breaking" numbers...

[joshuadoran]

The rich are getting richer. The poor are getting poorer. I am disabled, I cannot work. All my bill are getting higher and higher. I am having to choose food, heat or paying for care. It is not fair.

[rgd]

"Inflation is always and everywhere a monetary phenomenonin the sense that it is and can be produced only by a more rapid increase in the quantity of money that in output"
- Milton Friedman
The "definition" of inflation presented in the video is variation of supply and demand, which is not inflation, it is the normal adjustment of price based on that principle. If you have more money to spend on anything, the problem is the increase in the amount of money, not the increase in demand for things with that money.

[juice]

The economy in a nutshell: spending is good, but also bad, but also debt is bad...but also good. Inflation is bad but good and trade deficits are bad but good too.

[Mr.Nichan]

I wish people would specify that things are yearly or yearly changes instead of just assuming you know which things usually are.