Why's Everything So Expensive?

[casa_mugrienta]

Ridiculous. And yet no action by the Fed or Biden. They could call an emergency meeting but they won't. Does anyone think the gov't is for the people at this point?

There's nothing the Fed can do to fix this (problem of their creation) other than a serious interest rate hike...and the economy will not tolerate a serious interest rate hike.

This is a junkie economy that's been mainlining low interest rates.

The people in charge will not do what needs to be done because no one wants to be the guy who crashed the economy.

They'll just pretend to take action and as things get worse point the finger at scapegoats...Putin, Big Oil, etc.

 

[Sharkbiscuit]

There's nothing the Fed can do to fix this (problem of their creation) other than a serious interest rate hike...and the economy will not tolerate a serious interest rate hike.

The people in charge will not do what needs to be done because no one wants to be the guy who crashed the economy.

IMHO the Fed is at best half the problem. Other than a couple years in the late 90s and a couple years in the mid-teens the deficit has been going the wrong way.

We had QE for years without this kind of inflation. Then the Covid stimulus and everyone getting back to work.

I blame fiscal looseness at least as much as the Fed. YMMV.

 

[Muscles]

The gov't is stuck between a rock and a hard place. No one wants to crash the economy. But letting inflation spiral out of control is also going to crash the economy. In my opinion, real inflation for the average household or business is already much more than 8%. Business owners and households will be affected to the point that the cost of goods will cause an economic slowdown on its own.

Does anyone think your average household can sustain a 100% increase in food and utility costs? How about restaurants? They can't just double their menu prices and think revenue will remain the same. The same applies for retailers and every other business.

 

[casa_mugrienta]

IMHO the Fed is at best half the problem. Other than a couple years in the late 90s and a couple years in the mid-teens the deficit has been going the wrong way.

We had QE for years without this kind of inflation. Then the Covid stimulus and everyone getting back to work.

I blame fiscal looseness at least as much as the Fed. YMMV.

I wanted to avoid the whole debt accumulation/monetization topic because it has received poor reception here. "FUD".

 

[Sharkbiscuit]

The gov't is stuck between a rock and a hard place. No one wants to crash the economy. But letting inflation spiral out of control is also going to crash the economy. In my opinion, real inflation for the average household or business is already much more than 8%. Business owners and households will be affected to the point that the cost of goods will cause an economic slowdown on its own.

Does anyone think your average household can sustain a 100% increase in food and utility costs? How about restaurants? They can't just double their menu prices and think revenue will remain the same. The same applies for retailers and every other business.

Then inflation can take the blame vs it being the direct fault of a person or entity.

Personally I'm not seeing anything close to a 100% increase and my salary is being increased - with zero request from me - at a higher rate than headline inflation.

I think people are just complaining because sh!t costs more and they think their houses and income went up for some other reason than inflation.

YMMV.

I wanted to avoid the whole debt accumulation/monetization topic because it has received poor reception here. "FUD".

I thought that was Grapeboi over in the Bitcoin thread? I'll have a look back through this one tonight and see if his dick (or any dicks belonging to his ilk) needs kicking in.

 

[PRCD]

The gov't is stuck between a rock and a hard place. No one wants to crash the economy. But letting inflation spiral out of control is also going to crash the economy. In my opinion, real inflation for the average household or business is already much more than 8%. Business owners and households will be affected to the point that the cost of goods will cause an economic slowdown on its own.

Does anyone think your average household can sustain a 100% increase in food and utility costs? How about restaurants? They can't just double their menu prices and think revenue will remain the same. The same applies for retailers and every other business.

What is "the economy?" Is this what you and I experience or does the government have some definition unrelated to reality?

 

[grapedrink]

I thought that was Grapeboi over in the Bitcoin thread? I'll have a look back through this one tonight and see if his dick (or any dicks belonging to his ilk) needs kicking in.

I said that in this thread in response to Casa's list of reasons why the crash is imminent. I called it FUD, because that's exactly what it is, especially when those bullet points lack the full context of the other confounding factors and are framed in a 100% negative light. In addition to being the same exact talking points that goldbug doomsayers have been saying for the last 20+ years.

Which doesn't mean that they aren't true, however a lot of things are not unique to this era either, such as credit card/household debt.

 

[Muscles]

Then inflation can take the blame vs it being the direct fault of a person or entity.

If only there was a government run system in place to stabilize price increases to prevent rapid increases in inflation and the subsequent fall out.

 

[Sharkbiscuit]

I said that in this thread in response to Casa's list of reasons why the crash is imminent. I called it FUD, because that's exactly what it is, especially when those bullet points lack the full context of the other confounding factors and are framed in a 100% negative light. In addition to being the same exact talking points that goldbug doomsayers have been saying for the last 20+ years.

Which doesn't mean that they aren't true, however a lot of things are not unique to this era either, such as credit card/household debt.

You posted it in the "Water is about to get more crowded" thread. I copied the points below and rated them.

Unemployment will be high (Leading off with speculation? It's not high right now - Grapeboi 1 MoogZ 0)
Household debt is massive (1-all)
Interest rates up up up (MoogZ 2 Grapeboi 1)
Low rates have meant this country is leveraged out the wazoo in all aspects. (MoogZ 3 Grapeboi 1)
Boomers dying (I think this is good for younger indebted people MoogZ 3 Grapeboi 2)
Inflation (MoogZ 4 Grapeboi 2)
How many people can pay their mortgage(s) if their spouse is unemployed? (MoogZ 5 Grapeboi 2)
How many people can pay their mortgage and the taxes or mortgage on their dead parents property? (They can sell it for a massive windfall, point Grapeboi)

I tally MoogZ 5 Grapeboi 3.

I think Casa stands a decent chance of being correct. It's a question of what effect will the next recession have on asset prices and will that pop a debt bubble. YMMV

If only there was a government run system in place to stabilize price increases to prevent rapid increases in inflation and the subsequent fall out.

Well we have a government-run system in place to stabilize price increases to prevent rapid increases in inflation and the subsequent fall out AND to stabilize the unemployment rate.

The Fed has a dual mandate. They have 2.5 full years to try to raise rates before it'll be a political non-starter.

Personally I'd rather have people earning and spending lots of money vs 8-10% U5 unemployment.

 

[grapedrink]

You posted it in the "Water is about to get more crowded" thread. I copied the points below and rated them.

Ok yes. Too many threads crossing over.

Unemployment will be high (Leading off with speculation? It's not high right now - Grapeboi 1 MoogZ 0)
Household debt is massive (1-all)
Interest rates up up up (MoogZ 2 Grapeboi 1)
Low rates have meant this country is leveraged out the wazoo in all aspects. (MoogZ 3 Grapeboi 1)
Boomers dying (I think this is good for younger indebted people MoogZ 3 Grapeboi 2)
Inflation (MoogZ 4 Grapeboi 2)
How many people can pay their mortgage(s) if their spouse is unemployed? (MoogZ 5 Grapeboi 2)
How many people can pay their mortgage and the taxes or mortgage on their dead parents property? (They can sell it for a massive windfall, point Grapeboi)

I tally MoogZ 5 Grapeboi 3.

I think Casa stands a decent chance of being correct. It's a question of what effect will the next recession have on asset prices and will that pop a debt bubble. YMMV

I never said he was wrong, and I do agree that we are likely overheating. What I think is that he is ignoring the confounding factors. At least with real estate, inventory is still low and will remain low for at least a few more years. Plus you have a lot of homeowners who bought and refi’d into super low rates and are likely to not sell because if it. Many of them are in better shape than their renter counterparts.

Aside from that and his comments about boomers dying and passing on their assets being a bad thing (any day now), I agree with everything else he said.

 

[casa_mugrienta]

Ok yes. Too many threads crossing over.


I never said he was wrong, and I do agree that we are likely overheating. What I think is that he is ignoring the confounding factors. At least with real estate, inventory is still low and will remain low for at least a few more years. Plus you have a lot of homeowners who bought and refi’d into super low rates and are likely to not sell because if it. Many of them are in better shape than their renter counterparts.

Aside from that and his comments about boomers dying and passing on their assets being a bad thing (any day now), I agree with everything else he said.

RE: constrained supply - I posted a similar scenario as a possibility some weeks ago so I don't think your wrong.

What remains to be seen is whether the market can tolerate the overwhelming factors of what seems to be an approaching storm.

I just googled 1980's Fed interest rate .

It was 20%.

20 fvcking percent.

Now factor in the fact inflation is likely double what they're claiming (likely 17% vs 1980's 15%.)

Now think about the fact we're still basically at 0% and the Fed is expanding it's balance weekly while moving .25% on rates.

Take that info and imagine where this is going (I'm thinking we're eventually heading back to zero, more QE, more stimulus, and more inflation once the markets dump)

By the time this is all over everyone on this forum will likely be a millionaire...the question is who will be the erBB's first billionaire?

 

[SurfFuerteventura]

So, as a trained ecoconomist, and ex-banker, my rhetorical question is the following....

What good is being a billionaire, or even trillionaire, as the value of printed currency evaporates?



They're not even painted pieces of paper anymore, just 1's and 0's in the metaverse.

 

[SurfFuerteventura]

RE: constrained supply - I posted a similar scenario as a possibility some weeks ago so I don't think your wrong.

What remains to be seen is whether the market can tolerate the overwhelming factors of what seems to be an approaching storm.

I just googled 1980's Fed interest rate .

It was 20%.

20 fvcking percent.

Now factor in the fact inflation is likely double what they're claiming (likely 17% vs 1980's 15%.)

Now think about the fact we're still basically at 0% and the Fed is expanding it's balance weekly while moving .25% on rates.

Take that info and imagine where this is going (I'm thinking we're eventually heading back to zero, more QE, more stimulus, and more inflation once the markets dump)

By the time this is all over everyone on this forum will likely be a millionaire...the question is who will be the erBB's first billionaire?

Twas so much fun being a banker in the 80's. Like a rock star, but with way more leeway!

 

[bird.LA]

By the time this is all over everyone on this forum will likely be a millionaire...the question is who will be the erBB's first billionaire?

Probably someone who has a place near the beach.

 

[casa_mugrienta]

What good is being a billionaire, or even trillionaire, as the value of printed currency evaporates?

Bragging rights?

There's nothing like opening your wallet on a first date and flashing one of these...

 

[PRCD]

Fatal Dependency

America's increasing reliance on foreigners to lend us money could crater the dollar.

americanmind.org

But everyone said we don't need to borrow, we can just print.

 

[Mr Doof]

I just googled 1980's Fed interest rate .

It was 20%.

20 fvcking percent.

And when you could get a CD at the local bank, you were locked in around 17%.

That late 70s economy is what gave us Ron Reagan for President, turned lots of hippies to Yuppie, and the stock market boomed.

Of course, along came Newt Gingrich and Karen Finley and more daydreaming about nuclear annihilation.

 

[casa_mugrienta]

Climate change: New Zealand's plan to tax cow and sheep burps

It would make it the first country to charge farmers for the methane emissions from their animals.

www.bbc.com

 

[grapedrink]

Climate change: New Zealand's plan to tax cow and sheep burps

It would make it the first country to charge farmers for the methane emissions from their animals.

www.bbc.com

California will soon follow suit

 

[Mr Doof]

I just googled 1980's Fed interest rate .

It was 20%.

20 fvcking percent.

And when you could get a CD at the local bank, you were locked in around 17%.

That late 70s economy is what gave us Ron Reagan for President, turned lots of hippies to Yuppie, and the stock market boomed.

Of course, along came Newt Gingrich and Karen Finley and more daydreaming about nuclear annihilation.

Took me a bit, but found what I was looking for.....we were joking about this back in the day...well, 1991.