Yep, man’s a cretin

Supply chain issues are very largely impacting durable goods. They are where prices are hiking, especially in the US as people react to shortages.

But shortages will not last. And people are simply deferring purchases as a result of their innate understanding that this is a temporary phenomenon.

If people are deferring purchases because they know this is all temporary supply issues then where are the price rises from supply issues coming from?

9 thoughts on “Yep, man’s a cretin”

  1. Prices are offers, not transactions. Entirely possible retailers are putting up prices anticipating a shortage of supply to demand but not actually selling at those prices because buyers are deferring purchases.

  2. Bloke in North Dorset

    If we understand such complex issues innately we don’t need a fat controller managing the economy and telling us how to live our live.

    And define temporary, sum none neo liberals eg the ECB are now saying it could be 18 months befor inflation comes down again.

    I presume his wibble is to avoid the need for tax rises now we have measurable and undeniable inflation?

  3. It’s the same as the previous post. Property prices have tripled since 2000 due to the availability of credit. And it’s almost meaningless. The only people able to take advantage of it are those either downsizing or getting out of property altogether. The State gets a benefit out of CGT’s & enhanced IHT’s. Or using property as security on other loans. But it’s trivial. Most property transactions are selling property to buy other property. A net zero.
    He could certainly change the incentives with his usual desire to tax everything in sight. He taxes the notional gains & owners of property would have to liquidate the asset to pay the taxes. Selling into a market with no buyers. Property prices would go into free fall. Wouldn’t raise any tax.
    Much the same’s true of changing planning. You increase the supply, property looks less like an “investment”. That’s going to take a lot of buyers out of the market. It falls below the obliged to sell number & property becomes a bear market. Free fall, again.
    Once you’re up on the tiger, it’s not easy to get off.

  4. Perhaps people are deferring purchases because of the shortages? If there’s no telly on the shelves to buy, you have no choice but to defer your purchase, no?

  5. Incidentally, I see US inflation was at 6.2% in October. Highest annual rate since 1990. Retailers may well be anticipating producer price rises coming down the pipe & thinking about restocking costs. Margins aren’t much better than that on a lot of stuff.

  6. Back in March, Spud was certain inflation wasn’t a risk at all. In a long turgid post complete with graphs he explained why not….

    “One is that there is going to be excess demand after coronavirus. The other is that there will be a shortage of supply of goods and services in the economy to meet that demand. My argument in this thread is that neither is likely.”

  7. Andrew C, I remember that post very well!! His certainty made me laugh then, but his ability now to motor onwards as of he never said it infuriates me.

    It seems the greatest quality you can possess in the day and age of a complete lack of embarrassment.

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