Is it an advise to fight inflation by stacking toilet paper again as they did in the early days of covid?
I have increased inventory of toilet paper, paper towels and beverages not to fight inflation but don’t want to get caught in a supply chain constrain again.
The last time inflation was this high, using recent data and not annualizing it, Paul Volcker raised rates to 18%.
Three rate hikes from where we are now is a joke as far as inflation is concerned. But yes, it could crash markets held up by nothing but free money.
If 3 rate hikes is insignificant to control inflation, but would crash the stock market, then would it make more sense for the Fed to not bother raising rates and instead let the free market deal with inflation on its own? Maybe the dollar gets devalued, but what’s the big deal as long as enough dollars are printed and wages (for workers) and social security (for retirees) go up commensurate with inflation?
Creating FED was the biggest mistake in American History seconded only by creation of IRS. The money and interest rates are best left to market forces. The market volatility has only become more violent since creation of FED, and even more violent since decoupling the dollars with gold standards. The problem with allowing inflation is that it moves purchasing power from the hands of poor to wealthy. Something you explained nicely a few days ago and it gives advantage to borrowers and credit seekers at the cost of savers.
Very true. Inflation benefits the rich (those with assets) over the poor (those without assets). But as long as workers get increments in their income which keeps up with inflation, they will at least break even. They may not be able to move from poor to rich by buying assets that appreciate, but at least they won’t get poorer. So, if Fed does not want to wreck the economy by raising interest rates aggressively, they can just let the dollar devalue. Nothing fundamentally wrong in that.
For instance, I won’t complain about inflation provided I get a decent raise - 5-6% - next year.
@erth why are you so disillusioned with the Fed? Let them do their thing, they are quite harmless
That would be the best option but we’re so far down the rabbit hole that we really don’t have a free market anymore. Regulations and mandates are making it increasingly difficult to even move goods around. The free market would normally increase supply to meet demand but that’s getting harder and harder. Add to that massive money printing and you have a scenario in which increasing rates is ineffective and the free market no longer exerts enough influence to self-correct. So we’re stuck with inflation for the foreseeable future.
Inflation, based on the latest data, is running about 10% a year. A 6% raise, after taxes and withholding, is maybe 4%. You have to also account for all the fudging of the inflation numbers themselves, e.g “hedonic adjustment” and such.
For the past 20 years, the average raise has been 2-3%. I doubt very much that companies will be so generous as to give 10% raises in 2022, no matter what the inflation number is.
Given the tight job market and the headlines about inflation, my hope is that companies will feel compelled to give somewhat higher raises this year, at least 5-6%.
But if one wants 10+% raise, one has to switch employers… companies are never too generous with loyal employees. They only give out big salaries in tight job markets to attract new workers
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True in SG too. But why didn’t you switch?
One should also switch to keep current changes in job specs.
Few different reasons why I have stayed with same employer for over a decade:
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Good culture, colleagues are collaborative, politics is manageable. Having experienced previous jobs where this was not the case, I do consider this a plus in my current job.
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The nature of my job is that I have been able to gain exposure to different areas/fields - I.e., am gaining a variety of experience and not pigeonholed into doing the same thing for years on end. The work is inherently interesting - I do advanced R&D in the same field as I received my education and degrees in.
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At this stage, I am considered as an experienced veteran who has seen it all (or at least seen many things). I have been getting good performance ratings as an individual contributor, though the attendant raises are in that 2-3% range. I get assigned to work on some of the best projects that come to our group.
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The company is a fairly stable multinational conglomerate that makes billions in annual profits and has tens of thousands of employees. Not a hire-fire culture, though they don’t give stock to rank and file employees like me. Only a salary and bonus.
So, while I might get a 15-20% one time salary hike and some RSUs (or Pre IPO stock) if I were to jump to another company or role (especially if I move out of R&D and into a business Dev type role), I may lose some of the good things listed above. So, overall I choose not to rock the boat for a few tens of thousands of dollars more.
You realize equity is a huge part of total comp, right?
I’ve noticed this over the last 10 years:
VP base pay is stagnant and the major variance between companies is RSU grants
Director base pay is stagnant while some outside sr director hires make more than long-tenured VP
Manager base pay is stagnant and top ICs hires make more than long-tenured managers
Sr IC pay is up 10-15%
College grad pay is up 50%
Companies are resorting to over-leveling roles compared to levels 10 years ago. Smaller companies don’t even have managers unless they are promoting from within. The first level of people managers are usually directors. VP is more comparable in scale/scope to what a director used to be.
It’s interesting the pay compression that’s happening where entry-level pay is increasing quickly but the top pay is not. It’s becoming less and less worth the hassle of moving up.
How much of that is equity vs. base pay? I think 70% of the comp is equity.
This is a key insight. Think of your career graph as annual salary or compensation on y axis vs time (in years) on x axis.
Area under this curve is what is important because that is your total career compensation. Better still, the longer one is working and earning a salary, the longer one can let one’s investments compound.
So, better to sustain one’s career longer at a medium level than try to climb the Corp ladder aggressively and burn out within few years…
While this might be true for this particular individual, I was informed on this forum that 85% of FB employees/engineers have 4-5 years of work experience.
Point is, this individual’s compensation is not typical in FB.