Inflation.......... ?

#1,151
The possibilities are endless.... Stores well, transports easily.
www.lewrockwell.com

Iconic Canned Meat Smashing Sales - LewRockwell

Sales of the world-famous canned pork product, Spam, have smashed another record, with the US and South Korea proving to be its most popular markets. Hormel, the firm behind the iconic brand, announced record sales of $3.5 billion in the three months to the end of October, which is a 43%...
www.lewrockwell.com www.lewrockwell.com
 
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#1,153
Mohamed El-Erian, chief economic adviser for Allianz, went on the CBS program “Face the Nation” on Sunday and stuck the proverbial dagger in.


“The characterization of inflation as transitory, is probably the worst inflation call in the history of the Federal Reserve. And it results in a high probability of a policy mistake. So, the Fed must quickly, starting this week regain control of the inflation narrative and regain its own credibility. Otherwise, it will become a driver of higher inflation expectations that feed onto themselves.”
Click to expand...
 
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#1,155
BW64 said:
Wife came home with some fillets yesterday at $29.50 a pound. Last week price was 13.75. UGH!! Back to chicken & that's not cheap either!!
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With every posting by an individual we know............ It validates our suspicion that "Official Government Numbers" are nothing more than a fabrication of propaganda......

I'm just waiting for "The Fed" to start using the term...... "A SOFT LANDING"...... Snug up your financial safety belt.
 

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#1,156
Should you / we just bite the bullet and pay, what we call, inflated prices ?.... Some rumblings from the financial world that inflation could go on for 2 more years. The name Paul Volcker seems to be coming up more in articles and conversation...

Paul Volcker, Federal Reserve Chair from 1979-1987, raised fed funds rate to a record 20% to end inflation.

www.cnbc.com

Wholesale prices measure rose 9.6% in November from a year ago, the fastest pace on record

The Labor Department's producer price index was expected to rise 9.2% in November from a year ago, according to FactSet.
www.cnbc.com www.cnbc.com
 
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#1,162
Hobo Hilton said:
I would be cautious about buying anything right now. The best place to spend, currently, is on maintaining what you have.... Any extra cash should pay off debt....
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Paying off debt I always agree with.

However, I am not putting off any purchases. Started doing this in 2020, and many of the items I bought are anywhere from 25% to over 100% more than I paid for them just a year ago.
 
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#1,163
Bigfatcock said:
Paying off debt I always agree with.

However, I am not putting off any purchases. Started doing this in 2020, and many of the items I bought are anywhere from 25% to over 100% more than I paid for them just a year ago.
Click to expand...
Again, if you are on a variable rate, sure. But if you on on a fixed rate loan, and you are assuming that a dollar today will cost fifty cents tomorrow, why spend today's dollar? Everybody realizes that inflation penalizes savers, because savers are, by default, lenders. It's zero sum. If you penalize lenders, you are helping borrowers, so rationally you should take advantage of that help. It is the moral hazard of inflation that it penalizes the wrong behaviors, but it is not very smart not to take advantage of being on the right side of that penalty.
 
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#1,164
Choid said:
Again, if you are on a variable rate, sure. But if you on on a fixed rate loan, and you are assuming that a dollar today will cost fifty cents tomorrow, why spend today's dollar? Everybody realizes that inflation penalizes savers, because savers are, by default, lenders. It's zero sum. If you penalize lenders, you are helping borrowers, so rationally you should take advantage of that help. It is the moral hazard of inflation that it penalizes the wrong behaviors, but it is not very smart not to take advantage of being on the right side of that penalty.
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I understand what you’re saying, and if I could be guaranteed wage increases to match inflation then I would be locking in a ton of loans at very low rates.

But I’m not guaranteed, and debt isn’t something I like to hold.
 
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#1,165
Bigfatcock said:
Paying off debt I always agree with.

However, I am not putting off any purchases. Started doing this in 2020, and many of the items I bought are anywhere from 25% to over 100% more than I paid for them just a year ago.
Click to expand...
Understood... I have done the same thing.... My Dad had a saying - "A man can go broke taking advantage of good deals"... In this environment, good deals are few and far between.
 
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#1,166
Bigfatcock said:
I understand what you’re saying, and if I could be guaranteed wage increases to match inflation then I would be locking in a ton of loans at very low rates.

But I’m not guaranteed, and debt isn’t something I like to hold.
Click to expand...
Yeah, I don't carry any debt either. I hate the stuff. But if I had to carry fixed debt, inflationary times are when I would like to do so.
 
#1,167
Choid said:
Yeah, I don't carry any debt either. I hate the stuff. But if I had to carry fixed debt, inflationary times are when I would like to do so.
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I agree.

I am however looking to purchase a few properties, and will probably take a low interest mortgage on them. It’s hard not to at the current interest rate. I figure I can double the rent within 5-10 years and pay the notes off in under 15. Well, the renters will pay them off, lol.
 
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#1,169
Bigfatcock said:
I agree.

I am however looking to purchase a few properties, and will probably take a low interest mortgage on them. It’s hard not to at the current interest rate. I figure I can double the rent within 5-10 years and pay the notes off in under 15. Well, the renters will pay them off, lol.
Click to expand...

Until the next time uncle sugar tells your renters they get to stay for free in your property. I've been pretty gunshy about rentals after the clownfuckery of the last 2 years.

Granted there are always options here I realize...
 
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#1,170
rlarsen462 said:
Until the next time uncle sugar tells your renters they get to stay for free in your property. I've been pretty gunshy about rentals after the clownfuckery of the last 2 years.

Granted there are always options here I realize...
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I got lucky and my renters paid the whole time, but you bring up a valid point.

That’s why I prefer to buy homes outright. Doesn’t hurt me if no one pays, but the most concerning part was the eviction moratorium. I can see it being used more often. I can deal with non payers if I can boot them, but with the moratorium some land lords went a year without getting paid.
 
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#1,173
Bigfatcock said:
Looking at some properties today. Nothing really jumping out at me. I try to buy in nice, established neighborhoods with good schools. Single family homes in good condition are still a bit high. Not looking for any fixer uppers.
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........ nice, established neighborhoods with good schools. Single family homes in good condition............

With a shopping list like that, those properties are drawing a premium price.......... What is your secret to beating out the other buyer's ?
 
#1,174
Hobo Hilton said:
........ nice, established neighborhoods with good schools. Single family homes in good condition............

With a shopping list like that, those properties are drawing a premium price.......... What is your secret to beating out the other buyer's ?
Click to expand...
No secret really. I’ll put an offer in, and that’s it.

Homes like I want have always drawn higher prices, but totally worth it. Higher rent, and higher quality tenants with stable jobs. I want long term renters with low turnover.
 
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#1,175
Hobo Hilton said:
Should you / we just bite the bullet and pay, what we call, inflated prices ?.... Some rumblings from the financial world that inflation could go on for 2 more years. The name Paul Volcker seems to be coming up more in articles and conversation...

Paul Volcker, Federal Reserve Chair from 1979-1987, raised fed funds rate to a record 20% to end inflation.

www.cnbc.com

Wholesale prices measure rose 9.6% in November from a year ago, the fastest pace on record

The Labor Department's producer price index was expected to rise 9.2% in November from a year ago, according to FactSet.
www.cnbc.com www.cnbc.com
Click to expand...
I've been wondering if we're in for another Volker Shock.
 
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#1,177
Bigfatcock said:
Hopefully CD rates go up.
Click to expand...
I was running my own business during the Volcker years.... I could take my "Account's Receivable" invoices to my bank and they would loan me money for that amount. I would turn right around and buy a CD (Certificate of Deposit) at my bank and let them hold it as collateral. I was making way more interest than the bank was charging me. Came out good when the smoke cleared.... LOL

__________________________

The highest CD rates in modern history are decades behind us — around the start of the 1980s. A three-month CD in December 1980 earned 18.65%, according to data from the Federal Reserve Bank of St. Louis.
 
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#1,178
Hobo Hilton said:
I was running my own business during the Volcker years.... I could take my "Account's Receivable" invoices to my bank and they would loan me money for that amount. I would turn right around and buy a CD (Certificate of Deposit) at my bank and let them hold it as collateral. I was making way more interest than the bank was charging me. Came out good when the smoke cleared.... LOL

__________________________

The highest CD rates in modern history are decades behind us — around the start of the 1980s. A three-month CD in December 1980 earned 18.65%, according to data from the Federal Reserve Bank of St. Louis.
Click to expand...
I’d like to see CD’s hit double digits on %. We’re in a pretty weird spot right now. Aside from pursuing real estate, I’m kind of just watching to see where things go.
 
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#1,179
@Hobo Hilton

In 1980 when Vockler raised the interest rate to 20% we were about 908 Billion in Debt which was about 32% of or GDP. These days we are 28Trillion in Debt. 125% of our GDP and everyone is going along like we don't have a spending problem. I would love to see interest rates come back up to 20%. I would have money ready and waiting to drop into bonds etc. That being said, I don't see how the fed can increase the interest rate with our debt being what it is. Maybe they will but I don't see them wanting to pay out that much in interest.

Kind of interesting to scroll down and look at the debt.

www.thebalance.com

U.S. National Debt by Year

The U.S. national debt grew to a record $34 trillion by the end of 2023. It was just $16 billion in 1930.
www.thebalance.com www.thebalance.com
 
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#1,180
SouthFork said:
@Hobo Hilton

In 1980 when Vockler raised the interest rate to 20% we were about 908 Billion in Debt which was about 32% of or GDP. These days we are 28Trillion in Debt. 125% of our GDP and everyone is going along like we don't have a spending problem. I would love to see interest rates come back up to 20%. I would have money ready and waiting to drop into bonds etc. That being said, I don't see how the fed can increase the interest rate with our debt being what it is. Maybe they will but I don't see them wanting to pay out that much in interest.

Kind of interesting to scroll down and look at the debt.

www.thebalance.com

U.S. National Debt by Year

The U.S. national debt grew to a record $34 trillion by the end of 2023. It was just $16 billion in 1930.
www.thebalance.com www.thebalance.com
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I am in agreement with you.... What you just said has been repeated many times over the past several years.
Now, with that understanding....... Today, at this moment, what is our best financial hedge ? What is our best hedge (of anything not financial) ?

Over the past few months, due to volatility, my only guide looking into the future is the commodity of copper..... It level's out the peaks and valley's of volatility. It held it's own for a while but the price is trending down. When the world wide consumers of copper start slowing down... The rest will follow suit.
 
#1,181
Hobo Hilton said:
I am in agreement with you.... What you just said has been repeated many times over the past several years.
Now, with that understanding....... Today, at this moment, what is our best financial hedge ? What is our best hedge (of anything not financial) ?

Over the past few months, due to volatility, my only guide looking into the future is the commodity of copper..... It level's out the peaks and valley's of volatility. It held it's own for a while but the price is trending down. When the world wide consumers of copper start slowing down... The rest will follow suit.
Click to expand...
The best financial hedge in inflationary times is to own stock in companies with extremely good pricing power. Or you could pretend to be a commodities maven, use all of the leverage you need in that game, and remain a poor, or poorer, at the end.
 
Last edited:
#1,183
Hobo Hilton said:
I am in agreement with you.... What you just said has been repeated many times over the past several years.
Now, with that understanding....... Today, at this moment, what is our best financial hedge ? What is our best hedge (of anything not financial) ?

Over the past few months, due to volatility, my only guide looking into the future is the commodity of copper..... It level's out the peaks and valley's of volatility. It held it's own for a while but the price is trending down. When the world wide consumers of copper start slowing down... The rest will follow suit.
Click to expand...
Copper is always in need. With the rates of inflation you think people would be putting money into gold and silver but silver is dropping again today. Lots of money is getting into crypto but as a long term hedge is very volatile and while I understand it, Its a waste of resources. I still like land, but you need to have some money to throw at it. People are dumping money into the market to hedge inflation. I have been looking into rare earth metals. I see a demand for some of them in the future and could be worth holding.
 
#1,184
SouthFork said:
Copper is always in need. With the rates of inflation you think people would be putting money into gold and silver but silver is dropping again today. Lots of money is getting into crypto but as a long term hedge is very volatile and while I understand it, Its a waste of resources. I still like land, but you need to have some money to throw at it. People are dumping money into the market to hedge inflation. I have been looking into rare earth metals. I see a demand for some of them in the future and could be worth holding.
Click to expand...
Crypto will eventually become "taxed"....... It can't be hidden. Silver and gold, even today, are being manipulated by "Paper gold and Paper Silver"... Going to take massive amounts of copper to build a grid of electric vehicle charging stations, solar and wind farms, transformer stations, data centers (The Cloud), etc... Even at $4.25 / pound (up 22% from a year ago) commerce won't flinch at the cost. I'm not invested in it, just using it as an indicator of things to come.
 
#1,185
SouthFork said:
Copper is always in need. With the rates of inflation you think people would be putting money into gold and silver but silver is dropping again today. Lots of money is getting into crypto but as a long term hedge is very volatile and while I understand it, Its a waste of resources. I still like land, but you need to have some money to throw at it. People are dumping money into the market to hedge inflation. I have been looking into rare earth metals. I see a demand for some of them in the future and could be worth holding.
Click to expand...

Copper futures fell to below $4.2 per pound, the lowest in near ten weeks amid growing inventories and as investors reduce risk exposure on expectations the US Fed would announce a faster end to its bond-buying programme. On-warrant LME inventories increased to 82,850 tons in certified warehouses, the highest levels in over two months. On the demand side, concerns over a slowdown in China’s property sector remain after data showed home prices, sales, investment and construction all fell in November amid weak demand and a cash crunch among developers.​

 
#1,189
The Fake US Inflation Data

Ever since the early 1970s when President Nixon asked his pal, Arthur Burns, then head of the Federal Reserve, to find a way to get rid of politically damaging consumer inflation monthly data that reflected soaring oil prices along with grain, the Fed has used what they called “core inflation” which means consumer price rises MINUS energy and food. At the time energy made up a significant 11% of inflation data. Food had a weight of 25%. Presto by 1975 a 400% OPEC rise in oil prices and a 300% global grain price rise owing to harvest failures in the Soviet region, “core inflation” fell significantly. This, despite the fact that American consumers had to pay far more for gasoline and bread. Very few real people can live without energy or food. Core inflation is a scam.
 
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#1,190
Over the years, the methodology used to calculate the CPI has undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket.2 The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI as a purposeful manipulation that allows the U.S. government to report a lower CPI.
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www.investopedia.com

Why Is the Consumer Price Index Controversial?

The Consumer Price Index is a widely quoted measure of inflation in the United States, but the methodology used to calculate it generates controversy among economists.
www.investopedia.com www.investopedia.com
 
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#1,191
I think the world wide markets have factored in the virus's (Covid, Omicron, etc) well into the future. What the market's are now attempting to factor in is the "Lack of faith / trust in the United States"..... After all, that is the only thing backing the USD.... The down turn will continue until America re-builds the faith other countries put in it.
 
#1,193
One thing I can say with confidence is that the government will not act. It will do too little, too late. There isn’t the courage left in our political class to make hard decisions. There are no more Jimmy Carters. We have to begin thinking about what comes next.

amgreatness.com

The Dying Dollar › American Greatness

I was in a seaside resort town in Brazil a few years ago. While there, I developed a rapport with a former fashion model, with many interesting stories, who happened to own the bed and breakfast where…
amgreatness.com amgreatness.com
 
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#1,194
Hobo Hilton said:
One thing I can say with confidence is that the government will not act. It will do too little, too late. There isn’t the courage left in our political class to make hard decisions. There are no more Jimmy Carters. We have to begin thinking about what comes next.

amgreatness.com

The Dying Dollar › American Greatness

I was in a seaside resort town in Brazil a few years ago. While there, I developed a rapport with a former fashion model, with many interesting stories, who happened to own the bed and breakfast where…
amgreatness.com amgreatness.com
Click to expand...
Good post, thanks.
 
#1,195
What is the interest rate that can slow inflation and not bankrupt the government?
3%? 5%? In my opinion 5% will cause the crash. They tried raising the rate to hurt the Trump economy and it backfired because they couldn't afford to service the debt and rapidly dropped it back to nothing. With the housing boom of the last couple years any rate increase is going to crash that and it'll look like '07-08 in a short time.
 
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#1,196
DarnYankeeUSMC said:
What is the interest rate that can slow inflation and not bankrupt the government?
3%? 5%? In my opinion 5% will cause the crash. They tried raising the rate to hurt the Trump economy and it backfired because they couldn't afford to service the debt and rapidly dropped it back to nothing. With the housing boom of the last couple years any rate increase is going to crash that and it'll look like '07-08 in a short time.
Click to expand...
That is a very timely question... I am following opinions from the man on the street, to the FED governors, to the largest fund managers (Blackrock), to the CEO's of world wide Corporations.....It seems as if they think the Magic Fairy will appear and wave her magic wand and the collapse will be avoided. Large corporations have "bought back" their own stock, spun off their non-core manufacturing products and shored themselves up to ride out the collapse.

The Federal Reserve board led by Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981.

A 5% interest rate will not encourage people to buy CD's and draw that amount of interest. We all have to ask ourselves what interest rate will pull us back to buying CD's ?

Perhaps "not servicing the debt" will become the next Boogey Man and allow this administration to do some creative financing.... IDK
 
#1,198
DarnYankeeUSMC said:
What is the interest rate that can slow inflation and not bankrupt the government?
3%? 5%? In my opinion 5% will cause the crash. They tried raising the rate to hurt the Trump economy and it backfired because they couldn't afford to service the debt and rapidly dropped it back to nothing. With the housing boom of the last couple years any rate increase is going to crash that and it'll look like '07-08 in a short time.
Click to expand...
That's just it. That's why energy prices are so critical too. The fed can't raise the rate much, or we can't pay our debt. Once they poofed all that money into existence, the ensured our demise. We had a slim possibility prior to that, of growing our way out of this man made debt disaster, but that's long gone now. It's simply a question of how long the sugar high will last. I feel in hand gold and silver is a good thing to have, and other hard assets, but its pretty hard to say exactly how this will all go. Trump had us on a glide path and was doing some things that had to be done at the same time. Energy price control is absolutely critical. Now we are in real serious trouble and the fed can't even do anything if they knew how and wanted to.
 
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#1,199
Hobo Hilton said:
That is a very timely question... I am following opinions from the man on the street, to the FED governors, to the largest fund managers (Blackrock), to the CEO's of world wide Corporations.....It seems as if they think the Magic Fairy will appear and wave her magic wand and the collapse will be avoided. Large corporations have "bought back" their own stock, spun off their non-core manufacturing products and shored themselves up to ride out the collapse.

The Federal Reserve board led by Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981.

A 5% interest rate will not encourage people to buy CD's and draw that amount of interest. We all have to ask ourselves what interest rate will pull us back to buying CD's ?

Perhaps "not servicing the debt" will become the next Boogey Man and allow this administration to do some creative financing.... IDK
Click to expand...
Not servicing the debt?
I have thought about that. Servicing foreign owned debt and putting another IOU on the taxpayers? Something like that is sure to collapse the dollar and a turn to digital currency. Everyone will get amnesty to turn in your hidden cash for digital currency. Probably to include gold, silver and crypto.
 
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