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Inflation.......... ?
- Thread starter Hobo Hilton
- Start date
I wish we could see a light at the end of this tunnel.... With inflation, consumer spending could be up, just to keep a roof over our head and buy groceries. I'd think the FED Reserve / Powell will give some sort of guidance tomorrow. The markets are getting inpatient.
I think they knew there was no turning back after the markets threw that little tantrum back in Q4 2018. Combine that with Trump's constant dragging of Jerome (remember that he begged for lower rates), and it was probably all too easy for everyone involved to say fuck it, let's ram this iceberg with the throttle pinned.
But this might be an example of mistaking malice for stupidity.
Just imagine the clusterfuck that'd occur with a combination of 8% mortgage rates, 10% new-car loans, and the Dow hovering in the high teens or low 20s. And since rates will go up much faster than prices will drop, this could happen against a backdrop of $10/lb ground beef.
Futures are up 1% early this morning, so clearly I'm more pessimistic than the market.
“We might be on the cusp of the Fed raising rates at the same time there is a minus sign in front of GDP,” wrote Peter Boockvar, chief investment officer of Bleakley Advisory Group. “What an awful position to be in, but until inflation falls sharply, they have no choice but to carry on.”
www.cnbc.com
Forecasters see growing chance of a recession as Fed hikes rates this year to fight inflation
The probability of recession in the U.S. was raised to 33% in the next 12 months, up 10 percentage points from the Feb. 1 survey.
This is how we get royally screwed. Price Inflation this time around is a result of monetary inflation, the increasing rarity of goods and a shit ton of welfare programs that cause artificial demand. The only thing that raising the interest rate will immediately affect is the artificial demand, but it can be very well argued that the price of oil and other commodities is already doing this. Raising the interest rate, while definitely needed to some degree, is the thing that will fuck up everything, guaranteed. Powell knows this. He may be using the demand destruction by higher prices from monetary inflation that hasn't reached the paycheck (thus making the paycheck not able to keep up with monetary inflation) and the additional increase in prices caused by no goods on the shelf as a way to bring the prices into stability. Rate hikes will be needed as means to curb the rest of the transactional velocity, but the fact remains that inflation ceasing doesn't mean that we will have prices go down. We are stuck with these high prices unless Powell totally screws up and causes deflation through loan and therefore bank defaults. I do not want his job. But face it: the politicians through flagrant spending have given you at a minimum a pay cut from your wages and your retirement plan. This is a minimum. It may be yet that they pushed us over the edge of a serious recession.“We might be on the cusp of the Fed raising rates at the same time there is a minus sign in front of GDP,” wrote Peter Boockvar, chief investment officer of Bleakley Advisory Group. “What an awful position to be in, but until inflation falls sharply, they have no choice but to carry on.”
Forecasters see growing chance of a recession as Fed hikes rates this year to fight inflation
The probability of recession in the U.S. was raised to 33% in the next 12 months, up 10 percentage points from the Feb. 1 survey.
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I posted this in another thread, but it seems more appropriate here...
Tide detergent 107 loads---- up about $4 (now about $22)
L'il Jacs Dog treats 450 count------- up about $3 (now about $14)
300 count uncoated paper plates- up about $2 (now about $11)
Magnum XLs---- Priceless
Tide detergent 107 loads---- up about $4 (now about $22)
L'il Jacs Dog treats 450 count------- up about $3 (now about $14)
300 count uncoated paper plates- up about $2 (now about $11)
Magnum XLs---- Priceless
NEW YORK (AP) — After beginning the year in a buying mood, Americans slowed their spending in February as prices for food, gasoline, toothpaste and just about everything else continue to rise.
Retail sales rose a seasonally adjusted 0.3% in February compared with January
The back-to-back increases in import prices are the largest in 11 years.
Retail sales rose a seasonally adjusted 0.3% in February compared with January
The back-to-back increases in import prices are the largest in 11 years.
I have a feeling we might just be seeing the tip of the iceberg that sunk the titanic.
A lot of “ potentially big events “ have taken place lately.
Airline giant Delta warns oil increases mean higher ticket prices
The jump in oil prices since Russia invaded Ukraine is set to lead to higher airfares.
www.bbc.com
Too little, too late......... 2022 recession is upon us. Plan accordingly.
finance.yahoo.com
Fed's Bullard, explaining dissent, says rates should top 3% this year
WASHINGTON (Reuters) -St. Louis Federal Reserve president James Bullard on Friday called for a dramatic increase in the Fed's overnight lending rate to more than 3% this year, a step he feels is needed to catch up with inflation posing a "particularly heavy" burden on families. In a released...
Soaring Prices for Everything Used to Make Food Brings More Inflation
(Bloomberg) -- Most Read from BloombergUkraine Update: Russia Denies Cosmonauts’ Colors Signal SupportRussia Says It Used Hypersonic ‘Kinzhal’ Missiles to AttackBiden Warned Xi of ‘Consequences’ for Backing Russia in WarUkraine Update: Zelenskiy Says Talks Are Russia’s ‘Only Chance’Biden Team...
/cloudfront-us-east-2.images.arcpublishing.com/reuters/O44PSQJQ6ZOJ7FJNJA4FTZ3Y6E.jpg)
War could halt crop exports from Ukraine, says presidential adviser
Ukraine may not produce enough crops to export if this year's sowing campaigns are disrupted by Russia's invasion, presidential adviser Oleh Ustenko said in a televised interview on Saturday.
www.reuters.com
I thought I would drop the note here.
“ Due to rapid expansion of urban centers, “95 percent of the world’s population growth will occur in developing nations” by 2035. The UN Food and Agriculture Organization (FAO) estimates that “the world will need to produce 60% more food by 2050”. Urbanization will increase global demand levels for meat which are forecasted to almost double in 2030 to from 2015 demand levels. Feed demand increase for animals will drive crop production to use genetically engineered crops that have had resistance in smaller scale agriculture production regions of the world. “
Take a minute and reflect on how the last few years have been. Now imagine there was 60% more demand.
“ Due to rapid expansion of urban centers, “95 percent of the world’s population growth will occur in developing nations” by 2035. The UN Food and Agriculture Organization (FAO) estimates that “the world will need to produce 60% more food by 2050”. Urbanization will increase global demand levels for meat which are forecasted to almost double in 2030 to from 2015 demand levels. Feed demand increase for animals will drive crop production to use genetically engineered crops that have had resistance in smaller scale agriculture production regions of the world. “
Take a minute and reflect on how the last few years have been. Now imagine there was 60% more demand.
It did not take me a whole minute to ponder this...
Bigger tractors
Sub soiling deeper
Farm land turning into suburbs
Shortages of fertilizer
More drought conditions
Difficulty getting crops to the processing plants
Mega farms cornering the markets like in the meat packing industry.
Inflation hitting every segment of "food production".
The misconception here in America is that people can grow a garden and feed themselves.
How Much Land Does It Take To Feed One Person - Online Calculator
How much land does it take to feed one person? About 5-6 acres. How much land to feed a family? Use our free online calculator to find out; and more
permaculturism.com
Good article about the land needed to obtain our own food, and the challenges.
We have 3 acres, but it is Florida “soil”, worthless dry sand, won’t hold water, only weeds and Bahia grass.
We tried vegetable gardening years ago, the bugs & critters won.
Thought about a small greenhouse, but after reading the article, I realize the greenhouse would not be good for much.
Could do chickens & ducks like the neighbors, they have had some losses to Coyotes, Foxes and Eagles, but not too bad.
We have 3 acres, but it is Florida “soil”, worthless dry sand, won’t hold water, only weeds and Bahia grass.
We tried vegetable gardening years ago, the bugs & critters won.
Thought about a small greenhouse, but after reading the article, I realize the greenhouse would not be good for much.
Could do chickens & ducks like the neighbors, they have had some losses to Coyotes, Foxes and Eagles, but not too bad.
Shit, just plant two squash plants and I swear you could feed the whole planet.
There was an old joke about people locking their car door at church in the summer so they didn’t come out and find a grocery sack full of squash in the floorboard. It’s only halfway a joke.
Lol. I wish everything I grew produced as well as squash.
You’re fucked. Better buy some canning jars.
A friend was trying to get rid of a couple of horses. No one wanted them and after taking them to three auctions someone finally bought them. He was very relieved until he went back to his truck. Someone had put two other horses in his trailer.
squash and pumpkins are great learning crops. But jars are definitely needed.
You people are all spelling recession wrong, it's spelled ...
Depression.
BTW, with everything included, cattle, sheep, pigs, chicken, veggies, fruits, even mushrooms, I could easily feed 20 people for a year on those 5 acres.
I've had a very large garden for the last 5-6 years running when I saw this whole mess getting started.
It's not rocket surgery or brain science, but it is a lot of work.
Depression.
BTW, with everything included, cattle, sheep, pigs, chicken, veggies, fruits, even mushrooms, I could easily feed 20 people for a year on those 5 acres.
I've had a very large garden for the last 5-6 years running when I saw this whole mess getting started.
It's not rocket surgery or brain science, but it is a lot of work.
Sets of high quality chisels have gone up quite a bit.
Anyone looking to get into hand tool wood working might as well just start out with all Lie Nielsen tools since used tool prices have risen so much as well.
Actually, that kind of goes for all quality tools. Used costs have gone up so much that it’s actually better to just buy new with a warranty. Cost savings isn’t worth it anymore. That will probably change in the next 6 months to a year though.
Anyone looking to get into hand tool wood working might as well just start out with all Lie Nielsen tools since used tool prices have risen so much as well.
Actually, that kind of goes for all quality tools. Used costs have gone up so much that it’s actually better to just buy new with a warranty. Cost savings isn’t worth it anymore. That will probably change in the next 6 months to a year though.
Honest quality chisels have always been insanely high priced
Take, for instance, two cherries brand.
The price might be 15-20% higher than it was 30 years ago.
I find that acceptable.
This is right from the factory though, I have no ideas what individual stores are charging.
Mind you, these are maybe not the very best, but they are right there on the bleeding edge of quality.
twocherriesusa.com
Take, for instance, two cherries brand.
The price might be 15-20% higher than it was 30 years ago.
I find that acceptable.
This is right from the factory though, I have no ideas what individual stores are charging.
Mind you, these are maybe not the very best, but they are right there on the bleeding edge of quality.
Bevel Edge Chisels Archives - Two Cherries USA
Two Cherries forged bevel edge chisels. Hand forged German chisels. Quality steel, plastic or wood handles. Made in Germany.
twocherriesusa.com
Lie Nielsen 3/4 bevel edge socket chisel was $55 on June 3rd, 2021.
The same chisel is $85 today.
The same chisel is $85 today.
If you can avoid the vine borers. Those things are just evil. One day you have 5 plants cooking along, then bam, all squash dead and gone.
Potatoes, sweet potatoes, dent corn, peas, and beans. There are lot of crops that store without jars or freezers. .
I am genuinely concerned about food availability next year. Not just not having my favorite brand, but having none.Zerohedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zerowww.zerohedge.com
I’ve put in a lot of dry goods in the last month. It has been a very expensive last 1 1/2 months for me.
$600 for a set of four brake rotors for my 14-year-old HD pickup from the local retailer of Chinese auto parts. Needless to say, I'm attempting to find a local shop that still has a brake lathe and someone who knows how to use it.
Oddly enough, pads are still the usual price.
Oddly enough, pads are still the usual price.
I don't often recommend that anyone go to Twitter, but in the case the comments are worth it:
BTW, the article is even worse than the cringe promo post would suggest.
The lesson from Venezuela is to spend your money on goods as soon as you get it. Buying in bulk has always been the high IQ thing to do.
The challenge in getting rotor's turned is the specification that auto makers have instilled in the industry. When a rotor slightly wears and requires a skim cut to just knock the glaze off that cut puts the rotor thickness "below the established industry standard"... They deem it as a "Safety Hazard"....
Wheat, up 65% for the past 12 months
10:28:00 AM
MI Indication
/cloudfront-us-east-2.images.arcpublishing.com/reuters/CON5Z3JTRFJUFKNTINR5XXATRA.jpg)
www.reuters.com
Wheat Commodity
377.00+15.00+4.14%10:28:00 AM
MI Indication
Insight: Wheat prices soar on Ukraine fears, but U.S. growers can't cash in
After Russia's invasion of Ukraine sent global wheat futures soaring, U.S. farmer Vance Ehmke was eager to sell his grain.
www.reuters.com
Check on scamazon.
Same cheap chinese shit, but a few less middlemen.
Rockauto used to be good but their shipping costs kill any benefit of low prices.
*Should* be able to get all 4 less than $250'ish, shipped.
This is an ignorant and nieve view. What was the cost to Service the debt in the 80s vs today?There is only one way to get inflation under control. The FED Reserve MUST raise interest rates expeditiously. Paul Volcker tamed inflation. This is not a theory, it has been proven. Jerome Powell continues to hedge away from raising interest rates. His failure will bring pandemonium to the markets, economy and to the American people.
______________
Quote:
The reduction in inflation that occurred in the early 1980s, when the Federal Reserve was
headed by Paul Volcker, is arguably the most widely discussed and visible macroeconomic
event of the last 50 years of U.S. history.
The Federal Reserve is expected to raise rates, but unique challenges could slow its pace
The Fed is expected to raise interest rates by a quarter point, a major step in reversing the easing it put in place to help the economy through the pandemic.www.cnbc.com
The Government CANNOT raise interest rates without defaulting on interest payments. Its a mathematic certainty.
If they do the USD will collapse followed by some follow on currency, which may be the plan after all.
There is no good solution. Inflation will keep going because its the only solution. You have to print more, which results in more debt service. Eventually someone will stop buying but the US treasury is still the safest place.
This is old data, its much worse today:
How High Are Federal Interest Payments? | Committee for a Responsible Federal Budget
This year, the federal government will spend $300 billion on interest payments on the national debt.
Its why these dickheads are talking about New World Orders and Great Reset and about to start WW3 and kill half the planet. Its their solution. Only way they stay in power is to control everything. Your vote means nothing, your voice means nothing and you will have no choice.
So make your choices now while you still can. If you aren't buying physical gold, silver, food preps, medical, ect you are going to be in for a rough ride.
I imagine they are just going to ride inflation to the midterms. The alternative would be implosion of the system right now. They always seem prone to kicking the can down the road, so why would now be any different?
Powell says 'inflation is much too high' and the Fed will take 'necessary steps' to address
Federal Reserve Chairman Jerome Powell vowed tough action on inflation, which he said jeopardizes an otherwise strong recovery.
www.cnbc.com
Actually, they can't afford to pay the interest on the debt.
I found the following description very helpful, I was searching for an answer to the question "How does inflation reduce debt?":
Inflation is the political savior of an overspending country that finds itself deep in debt, as the U.S. is today.
A country has four tools to retire its debt: raise taxes, cut spending, declare bankruptcy, or debase the currency through inflation.
Of these options, bankruptcy is the most unpalatable.
It would most likely mean the country goes through a gut-wrenching depression and is unable to borrow for the foreseeable future.
Almost as unpalatable to politicians are spending cuts of any kind.
Taking away something the electorate views as a “right” or an “entitlement” is akin to ending your political career.
Raising taxes is somewhat more appealing, especially in countries where the majority of the voters don’t pay taxes or the increases apply primarily to those the electorate perceives as “the rich.”
The risk here is that if taxes increase too much it reduces the incentive to work and the whole economy crashes.
This means gross tax revenues fall, which in the end actually increases the country’s debt problem as the government must increase borrowing to keep from making any spending cuts.
That leaves inflation.
A slow, chronic inflation is the most politically palatable way of reducing the debt in a manner that is somewhat unnoticeable to the electorate.
How Does Inflation Reduce Debt?
With inflation, the losers are the people and institutions that own the debt, because the currency shrinks in value.
For example, say you loan the government money by buying a $1000 U.S. government bond that matures in ten years.
At the time you buy it, you could buy a fully loaded laptop or a round trip ticket to London for $1000.
Now, let’s say the U.S. inflates its currency at a 7% rate for the next ten years, which would be about twice the “normal” inflation rate of 3.3% for the past 80 years.
At the end of that time the bond matures and you get your $1000 back.
You go to buy a laptop; they now sell for $2000.
That trip to London costs $2000, too.
Many people in this situation will think that the prices of laptops and airline tickets have gone up.
Actually, in real dollars (which are dollars adjusted for inflation), the cost of these items hasn’t gone up a dime.
It’s the value of the dollar that’s gone down, in this case, by 50% over ten years.
The big winner here is the U.S. government, because its multi trillion-dollar debt has been chopped in half (again in real dollar terms) in ten short years.
They accomplished this without raising taxes or cutting spending, which is intoxicatingly appealing to politicians.
If the country slides into chronic deflation, similar to Japan which has seen consumer prices fall up to 2% a year for 15 years, government revenues will fall while the real value of its massive debt will grow, further stagnating future growth.
It becomes a vicious cycle which politicians have few, if any tools, to combat.
That is why gradual inflation is the preferred medicine.
When it’s done well, citizens become like the proverbial frog that is cooked slowly in a pan of water where the temperature is gradually increased, rather than being frozen to death by deflation.
In the end, of course, neither outcome is good for the frog.
Inflation is the political savior of an overspending country that finds itself deep in debt, as the U.S. is today.
A country has four tools to retire its debt: raise taxes, cut spending, declare bankruptcy, or debase the currency through inflation.
Of these options, bankruptcy is the most unpalatable.
It would most likely mean the country goes through a gut-wrenching depression and is unable to borrow for the foreseeable future.
Almost as unpalatable to politicians are spending cuts of any kind.
Taking away something the electorate views as a “right” or an “entitlement” is akin to ending your political career.
Raising taxes is somewhat more appealing, especially in countries where the majority of the voters don’t pay taxes or the increases apply primarily to those the electorate perceives as “the rich.”
The risk here is that if taxes increase too much it reduces the incentive to work and the whole economy crashes.
This means gross tax revenues fall, which in the end actually increases the country’s debt problem as the government must increase borrowing to keep from making any spending cuts.
That leaves inflation.
A slow, chronic inflation is the most politically palatable way of reducing the debt in a manner that is somewhat unnoticeable to the electorate.
How Does Inflation Reduce Debt?
With inflation, the losers are the people and institutions that own the debt, because the currency shrinks in value.
For example, say you loan the government money by buying a $1000 U.S. government bond that matures in ten years.
At the time you buy it, you could buy a fully loaded laptop or a round trip ticket to London for $1000.
Now, let’s say the U.S. inflates its currency at a 7% rate for the next ten years, which would be about twice the “normal” inflation rate of 3.3% for the past 80 years.
At the end of that time the bond matures and you get your $1000 back.
You go to buy a laptop; they now sell for $2000.
That trip to London costs $2000, too.
Many people in this situation will think that the prices of laptops and airline tickets have gone up.
Actually, in real dollars (which are dollars adjusted for inflation), the cost of these items hasn’t gone up a dime.
It’s the value of the dollar that’s gone down, in this case, by 50% over ten years.
The big winner here is the U.S. government, because its multi trillion-dollar debt has been chopped in half (again in real dollar terms) in ten short years.
They accomplished this without raising taxes or cutting spending, which is intoxicatingly appealing to politicians.
If the country slides into chronic deflation, similar to Japan which has seen consumer prices fall up to 2% a year for 15 years, government revenues will fall while the real value of its massive debt will grow, further stagnating future growth.
It becomes a vicious cycle which politicians have few, if any tools, to combat.
That is why gradual inflation is the preferred medicine.
When it’s done well, citizens become like the proverbial frog that is cooked slowly in a pan of water where the temperature is gradually increased, rather than being frozen to death by deflation.
In the end, of course, neither outcome is good for the frog.
The article is thought provoking....
When uncertain consumers and investors are not spending in a depression, where should the money come from to pump up “effective demand”? Keynes answered that government should take on this role.
Well, Keynes theory was applied during the pandemic.... And, now, here we are.
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