German inflation hits fresh 13-year high in August

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13 years? That’s an interesting number, what global event took place 13 years ago that we might be heading towards again? I wonder if some interesting economic phenomena was happening in 2008 and if we should be concerned for something similar in our current environment. The world may never know


Inflation predicted to return to 1.5% next year and no evidence of a wage price spiral. Yet on the other hand the ECD is talking of tapering QE. It’s as if the ECB wants to be stuck at the lower bound of interest rates indefinitely.


“13-year high” in 2021 = 13th anniversary of the fluke spike in oil prices in 2008 that everyone but me has completely forgotten about: right down the memory hole. I wouldn’t remember it myself except I’d just started a job that included tracking gas and diesel bill payments, and we and all our internal customers ran out of budget to pay them, so the vendor freaked out and made a literal federal case out of it. Anyway, that oil spike was, AFAIK, totally unrelated to the over-leveraging and bad debt and real-estate bubble that popped right at the same time. I don’t remember seeing any good explanation for the oil spike–it might have involved attempts to manipulate the market that were tangentially related to the larger bubble–dunno. But it passed even quicker than most oil spikes, leaving as its main artifact a high-water (or high-oil, more aptly) mark to measure future spikes against, so as the years go by it sounds more and more alarming to say the latest spike is the biggest in T-2008 years. To clarify: I’m not saying the current inflation has much to do with oil (except to the extent it’s measured against the even-more-panicky oil *drop* of spring 2020: ‘member when producers had to *pay* folks to store their unsold oil?). Nor am I denying any possibility of sustained inflation. Just making the point that it’s useful to ask what it is that’s being measured against.


At a bread and butter level, this makes a lot of sense. Last year we were near deflation and people were hoarding money having more money than they could spend, people flooded it into the stock markets and grew their earnings. This year people are spending a lot more money. That’s creating shortages that are driving up prices. At the more macro level you have a global logistics shortage that has been on-going since the pandemic began. The demand (and mobilization) of moving medical supplies around has created bottlenecks across the world. Products are just not being made which is created very real supply/demand issues. And then you get to the main reason why inflation is skyrocketing. The price of oil last year was insane. It started at $53/barrel. And then went down to $16.50/barrel. Oil hadn’t been that low since the 90s. The price of oil crashed and nations began storing oil. Oil production shut down across the world. Today oil is at $80.40…. which is over 5 times higher than what it was last year and an all time high price for oil. Oil is used in everything and so if oil is so high and there are less producers… it’s going to keep getting higher while companies empty their storage. The price of oil likely relates to 80% of the inflation.


For the people who believe that US inflation is up because “of all the money government is giving to people”, how does this reconcile against inflation in Germany? Coincidence? Consequence?