Inflation
Comments
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This guy had an interesting take on it...don't agree everything he says (his oil take is way off...say what you want about shale destroying capital and my God has it...if oil gets back to $60 a BBL everyone will be throwing money at it because interest rates are artificially low and everyone has cash and is looking for some way to get a return on it).
https://www.zerohedge.com/markets/huge-reversal-louis-gave-warns-inflation-will-come-back-vengeance -
The annual inflation rate for 2020 will be about 1.2%.
Not panic time. -
The other side of inflation was that CDs were paying high interest. I think that is where I got confused on the 18%. As a newly minted management asshole the owner told me he could make 18% doing nothing so I had to out preform that to make it worth the risk. No pressure
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And we were much closer to losing that than people know in 2009. I’ve been told that as long as you’re under the 125% debt to GDP ratio, you’re still good.YellowSnow said:
We? have to maintain the world's reserve currency status. The day that ends is the day we are FUBAR.creepycoug said:
Thanks. Good post.Tequilla said:I may view inflation differently than others
1) I view the leading indicators more as an early warning system vs an absolute measure
2) Supply and Demand still are big drivers
3) I tend to lean more into the conditions that have driven prior events and look for takeaways
The last big major area of major inflation took place in the late 70s ... what were some of the conditions then?
Government chaos exiting Watergate
Oil shortages/rationing with OPEC
Effectively the collapse of the steel mills, etc
Inflation to me happens when you start having supply shortages (whether in specific goods/services ... in particular energy) or people start hoarding cash reducing supply because they are worried about tomorrow.
Recent political situation is worth monitoring and in particular actions from fully Dem led system that has the ability to put in some policies that could create inflationary pressures.
The one that I’m most interested in paying attention to is energy because while adoption of more green energy is coming (and in some respects way faster than people think), we also need to be very careful at going too fast too quick, forcing the switch at high cost points, etc
Rates will almost assuredly increase over the next 5-10 years but not to crazy levels but more back to standard normalized levels
But do those individual sector/product/commodity scenarios portend overall inflation? I think the inflation people talk about when this comes up ( @UW_Doog_Bot and @godawgst ) is more systemic inflation. That is, the dollar itself loses value, so everything costs more. The ultimate boogie man being post WWI Germany and having to dip into life savings to eat.
Also, connect the dots for me on hoarding cash and inflation. Isn't that taking dollars out of the system and hence reducing supply? I didn't quite understand that one.
Agree with you about rates. This just doesn't seem sustainable, but I can't back that up, and I freely admit it is not consistent with my waiting-for-Godot view on inflation.
I was also told that there would be no maff as well. So here we are. -
What's so fucked up right now is the real interest rate on cash on the bank. Even if inflation is forecast at 1% the best case scenario is your green backs not losing value.RaceBannon said:The other side of inflation was that CDs were paying high interest. I think that is where I got confused on the 18%. As a newly minted management asshole the owner told me he could make 18% doing nothing so I had to out preform that to make it worth the risk. No pressure
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PurpleThrobber said:
If you haven't been to your local grocery store lately, you should. There are shortages aplenty. Shelves aren't quite 3rd world country decimated (yet) but it ain't every shelf full and faced up. Big holes on lots of items.Tequilla said:I may view inflation differently than others
1) I view the leading indicators more as an early warning system vs an absolute measure
2) Supply and Demand still are big drivers
3) I tend to lean more into the conditions that have driven prior events and look for takeaways
The last big major area of major inflation took place in the late 70s ... what were some of the conditions then?
Government chaos exiting Watergate
Oil shortages/rationing with OPEC
Effectively the collapse of the steel mills, etc
Inflation to me happens when you start having supply shortages (whether in specific goods/services ... in particular energy) or people start hoarding cash reducing supply because they are worried about tomorrow.
Recent political situation is worth monitoring and in particular actions from fully Dem led system that has the ability to put in some policies that could create inflationary pressures.
The one that I’m most interested in paying attention to is energy because while adoption of more green energy is coming (and in some respects way faster than people think), we also need to be very careful at going too fast too quick, forcing the switch at high cost points, etc
Rates will almost assuredly increase over the next 5-10 years but not to crazy levels but more back to standard normalized levels
And prices have jumped on most everything 15-20%. Dairy being the exception. -
The Fed cutting interest rates in 2019 was extremely short sighted. Fuck those guys for caving so easily. That combined with the fact that a majority of the stimulus + tax cuts + Fed moves directly contributed to the boom in equities and housing that is making things feel very strange.
Full transparency, I think most inflation hawks are completely full of shit. You always start hearing it the second a Democrat prez is elected, but hasn't come to fruition since Carter. The world was a bit different then. If the Dems controlled the senate like 60-40 and the house like 250-160 I might be worried, but a nearly 50/50 split in both houses means we're going to see plenty of centrist spending bills, and the AOC wing of the party isn't going to get any of their shit passed that would actually make me worry about inflation.
@YellowSnow is right about needing to keep the dollar the world's currency reserve. Cutting the federal budget a bit would help solidify that, and maybe the GOP will remember after 4 years of outrageous spending that they are supposed to be fiscal hawks. -
The "Carter" inflation was oil plain and simple
I bought gas at 30 cents or so a gallon in high school. It jumped to 70 cents. Doesn't sound like all that much it is a double. Then a boycott and shortage. And more hikes
Lot of folks like to blame deficit spending for Vietnam and the Great Society but I think it was oil
Goldwater ran on curbing spending in 1964. Been kind of a quadrennial event ever since -
What was the role of Nixon talking us? off the gold standard? That was before the 1973 war in the ME if I recall.RaceBannon said:The "Carter" inflation was oil plain and simple
I bought gas at 30 cents or so a gallon in high school. It jumped to 70 cents. Doesn't sound like all that much it is a double. Then a boycott and shortage. And more hikes
Lot of folks like to blame deficit spending for Vietnam and the Great Society but I think it was oil
Goldwater ran on curbing spending in 1964. Been kind of a quadrennial event ever since -
Energy costs can really take the wind out of an economy's sails. Ass, gas, or grass - nobody rides for free.RaceBannon said:The "Carter" inflation was oil plain and simple
I bought gas at 30 cents or so a gallon in high school. It jumped to 70 cents. Doesn't sound like all that much it is a double. Then a boycott and shortage. And more hikes
Lot of folks like to blame deficit spending for Vietnam and the Great Society but I think it was oil
Goldwater ran on curbing spending in 1964. Been kind of a quadrennial event ever since
