Comment by TheGRS
11 hours ago
My general impression with most discourse about the economy and statements like "Inflation to my mind supposes that we have to have perpetual growth" is that it looks at transactions within the economy as zero-sum. And that is a false assumption. It grows and shrinks for myriad of reasons that aren't directly related to monetary policy. The monetary policy is there to attempt to keep things stable and predicable, that is all.
> If we grow 3 times the amount of corn that we need this year, do we need to plan to grow 3.1 times next year? Or decrease the cost by 2%? If all the inputs stay the same, where do you get the gains from(assuming that the process is as efficient and automated as possible)?
I think I get what you're driving at, but let me ask this question. Do you believe the price of corn in 1976 reflects the same market forces as the price of corn in 2026? Not the inflationary number alone, but why that corn costs what it does today versus 50 years ago?
There are microeconomic changes for sure, different farming techniques and maybe a different way of buying and selling surplus corn. But the life of a farm hand has likely changed, the average background of them has likely changed, the ownership model of the farm may have changed. The downstream buyers of corn have likely changed from mostly canned good manufacturers to fresh produce providers. And the macroeconomic forces surrounding everything has absolutely changed.
I know that it is not a zero sum game and I get there are changes but I am not talking about 1976 to 2026. I am talking about 2025 to 2026. Or 2024 to 2025.
My premise was that input costs are stable and as automated as possible.
We still expect a 1 to 2% increase YOY.
I am not sure how ownership structure cange would give you growth or reduce cost.
Downstream buyers shouldn't affect it much either as we started out producing 3 times as much as is used. Unless someone suddenly found a use for all the excess.
Let me try again with a different example. Let's say that I run a bottle water company, I have an automated production line and I bottle as much water as I am allowed to pump. I sell all my product so there is no waste, this also means that I have all the customers that I need. I would still be expected to show growth YoY. How? Reduce material used in bottles? At some point the bottles are as thin as possible.
My point is, there is a lower limit to how much you can reduce things or how much you can grow. Not everything is there, in fact most things are probably not. But in our strive to grow or become more efficient we are also throwing away the ability to be resilient.
By moving to lean JIT we shutdown when a shipment is delayed. But we had less cash tied up in inventory!
Now we are applying those same practices to hospitals.
You can't fit 1~2% more chickens in the same cage, nor can you feed them less. So where does it come from? Is it worth the growth to spray the chicken down with bleach? Ship it to China to be slaughtered and back? Take the entrails, centerfuge them into pink slime?
What is the stopping point? That is my question.