I'll go by the standard definition of inflation as consumer prices rising. If you have to invent some new definition that deviates far from that so that you can count some investment's rise as inflationary, then you know you're losing the argument. The economy's not close to overheating with just 266,000 new jobs last month. Inflationary pressures won't be that strong until the demand side is far, far stronger.
It does seem a bit like 2006, but worse (or better) depending on your viewpoint.
Real Estate is at all time highs, stock market at/near all time highs, crypto at all time highs. Luxury goods are in extreme demand outpacing supply. You can’t get a new Sport Rolex, Porsche has waiting lists for the 911, yachts are back ordered. I’m not sure how much is pent up demand from COVID lockdowns, and how much is people playing with their home equity. The used car market is crazy right now.
If rates go up, real estate will plummet, and if the stock market falls along with it, the next he’s years may be ugly. However, I’m this boom could last several more years so I’m riding it out but keeping some dry powder.
It is not all times highs. The dollar is at an all time low and will not return while democrats hold office. Cryptos have been steadily exploding since the day Biden was elected. The Biden presidency is going to be the end of America as we know it. We will not recover. Get out of the dollar asap any way you can.
Discount Rate & Overnight Fed Funds Rate were about 20% after Inflation Hawk Paul Volcker took office as Fed Chairman, circa 1978. Look up current Discount Rate and current Overnight Fed Funds Rate before you rant about hyperinflation. Mid-to-late 1970's U.S. was not even hyperinflation. Today certainly is not hyperinflation.
Many or most on this thread are voicing their politics. None who think U.S. economy is about to go over a cliff bothered to look up current Overnight Fed Funds Rate. Current Overnight Fed Funds Rate is a target of 0.25%. What does Federal Reserve do to curtail inflation? Increase Overnight Fed Funds Rate, possibly increase Discount Rate, intentionally slowing down U.S. economy and intentionally causing a recession if necessary. BTW, historic average of O.F.F. Rate is 4.5% to 4.75%. If Federal Reserve raised Overnight Fed Funds Rate to 3.75% immediately to make Republicans on Letsrun happy, posters would blame Biden & Pelosi for a recession.
A sheet of plywood has gone from $9 pre-pandemic to $35 now. I talked to two foresters about it last week. Timber prices are about the same. The problem is with the mills.
When the pandemic hit, mills had to shut down because there was no demand and a few mills closed. Now that building is skyrocketing, mills are the bottleneck. Landowners like me are swamping mills with more timber than they can handle, but the mills have learned their lesson and aren't expanding. They are getting timber cheap because the supply is there and selling it at a premium to retailers like Lowes, Home Depot, etc. because builders desperately need boards and plywood now.
Regulation has made it hard to start a sawmill. Basically, capitalism isn't working properly because of government interference.
Gasoline at my nearby country store has gone from $1.79 on November 4 to $2.59 yesterday, but I expect it to hit $3 this week as the gasoline panic sets in where I live.
I just sold three vehicles. In each case, I got my asking price in less than 24 hours. The used car market is crazy.
Wow. This is just a spectacularly wrong claim. According to the CPI, there was 3% inflation over the spectacularly disruptive period of March 2020 to March 2021. A dollar as of March 2020 is worth $1.03 in March 2021. You can actually go back 40 years and only see the 1981 dollar worth present day $3.04. Inflation has been under control for a long, long time, under 2% for much of that period. Even under Ford-Carter, where inflation was up because Nixon broke down the old currency standard and OPEC increased oil prices markedly (and for a while there was low double digit inflation), there was never anything even approaching hyperinflation. I was in Bolivia in 1986 when it cost $1.3 million pesos to see a movie and there were $2 million pesos to the dollar. They had hyperinflation. We have never had hyperinflation in the history of our country.
Yes. 10% inflation is not 10000% inflation. Restaurants aren't writing prices on their menus in pencil yet (a common practice in inflation-ridden Argentina). Just a question of whether the Fed will need to create a recession like in the early 1980s to break inflation.
If Series I (inflation) Bonds, those issued in late 00's or later are greater than 12 1/2%, Biden is going to have to make decisions:
1) Ask J. Powell to be Paul Volcker 2.0 and attack inflation even it means recession (IMO J. Powell isn't P. Volcker);
2) Quietly ask J. Powell to resign in order to put in an inflation hawk;
3) Publicly shame J. Powell and attempt to force J. Powell out of office in order for Biden to put in an inflation hawk.
Biden does not want to cause a recession. Biden knows if he causes a recession, re-election would be more challenging. If inflation is greater than 12 1/2%, decisions will have to be made.
If Series I (inflation) Bonds, those issued in late 00's or later are greater than 12 1/2%, Biden is going to have to make decisions:
1) Ask J. Powell to be Paul Volcker 2.0 and attack inflation even it means recession (IMO J. Powell isn't P. Volcker);
2) Quietly ask J. Powell to resign in order to put in an inflation hawk;
3) Publicly shame J. Powell and attempt to force J. Powell out of office in order for Biden to put in an inflation hawk.
Biden does not want to cause a recession. Biden knows if he causes a recession, re-election would be more challenging. If inflation is greater than 12 1/2%, decisions will have to be made.
I think Biden loses re-election anyway at this point. He barely beat loony tunes Trump, no matter who the GOP puts up - someone more moderate or even Trump coming back for a rematch - I think at this point everyone is feeling the pain of high housing prices, high gas prices, high grocery prices, etc. and he loses. The mid terms will be a blood bath. Honestly the only thing that could salvage the Dems is Roe v Wade being over tuned and the Dems responding with record turnout. That's the only thing.
But to your J Powell point - I'm curious to see how long it takes for these rate hikes to take effect. It's already starting to cool down the housing market which is a good thing. But there is a very clear connection there due to mortgage rates, I don't know how long it will take to see an impact on other markets. Not sure the Fed's tool kit will impact gas prices when the war is still going on. All very interesting.
I have disclosed before and I will state again, as a young man, a worked for U.S. Department of Labor, Bureau of Labor Statistics. I worked on Consumer Price Index, rent sector. I no longer have access to raw data but I believe any slowing in housing is a coincidence. I don't see a couple 25 basis point increases in O.F.F. slowing housing in U.S. U.S. housing was booming in the 00's when mortgages were 7% to 8%. Back in the 00's cashiers & cocktail waitresses were buying two or three homes at a time. Buying & flipping real estate. I can't see people today choosing to continue to rent because mortgages have gone up 50 basis points.
If Series I (inflation) Bonds, those issued in late 00's or later are greater than 12 1/2%, Biden is going to have to make decisions:
1) Ask J. Powell to be Paul Volcker 2.0 and attack inflation even it means recession (IMO J. Powell isn't P. Volcker);
2) Quietly ask J. Powell to resign in order to put in an inflation hawk;
3) Publicly shame J. Powell and attempt to force J. Powell out of office in order for Biden to put in an inflation hawk.
Biden does not want to cause a recession. Biden knows if he causes a recession, re-election would be more challenging. If inflation is greater than 12 1/2%, decisions will have to be made.
There is no way for the fed to stop this inflation without the US government defaulting and causing not a recession but a depression. The levels of debt, public and private, are historically high and exist based on suppressed interest rates. If interest rates were to rise near the rate of inflation literally everyone goes insolvent and asset values collapse. That is why the FED is pretend fighting inflation. .75% with 8% plus inflation, what a joke.
If Series I (inflation) Bonds, those issued in late 00's or later are greater than 12 1/2%, Biden is going to have to make decisions:
1) Ask J. Powell to be Paul Volcker 2.0 and attack inflation even it means recession (IMO J. Powell isn't P. Volcker);
2) Quietly ask J. Powell to resign in order to put in an inflation hawk;
3) Publicly shame J. Powell and attempt to force J. Powell out of office in order for Biden to put in an inflation hawk.
Biden does not want to cause a recession. Biden knows if he causes a recession, re-election would be more challenging. If inflation is greater than 12 1/2%, decisions will have to be made.
I think Biden loses re-election anyway at this point. He barely beat loony tunes Trump, no matter who the GOP puts up - someone more moderate or even Trump coming back for a rematch - I think at this point everyone is feeling the pain of high housing prices, high gas prices, high grocery prices, etc. and he loses. The mid terms will be a blood bath. Honestly the only thing that could salvage the Dems is Roe v Wade being over tuned and the Dems responding with record turnout. That's the only thing.
But to your J Powell point - I'm curious to see how long it takes for these rate hikes to take effect. It's already starting to cool down the housing market which is a good thing. But there is a very clear connection there due to mortgage rates, I don't know how long it will take to see an impact on other markets. Not sure the Fed's tool kit will impact gas prices when the war is still going on. All very interesting.
Biden won’t run again. He would be a disaster for a second term and Dems know it. The only worse option is Trump. He’ll tear the US apart.
Desantis vs O’Rourke
Desantis wins (unless overturning Roe V Wade is perceived as the disaster it is)
I have disclosed before and I will state again, as a young man, a worked for U.S. Department of Labor, Bureau of Labor Statistics. I worked on Consumer Price Index, rent sector. I no longer have access to raw data but I believe any slowing in housing is a coincidence. I don't see a couple 25 basis point increases in O.F.F. slowing housing in U.S. U.S. housing was booming in the 00's when mortgages were 7% to 8%. Back in the 00's cashiers & cocktail waitresses were buying two or three homes at a time. Buying & flipping real estate. I can't see people today choosing to continue to rent because mortgages have gone up 50 basis points.
Well according to the big short your story check out so I'm sure we're all clear.....
Another one you horrendous economics posts. I'm running to short the housing market right now. Given the you worked for BLS and CPI it makes sense that you aren't good at math. Interest rates on the most popular consumer housing loan have already risen 3% this year. The breaking point is coming.