Economy GOP back to Inflation worries. "Hyperinflation" (Update: 2022 Inflation Highest in 40 Years)

[HOLA]

Nobody ever questions the Federal Reserve which controls your country. You had one president who tried to free the United States from its grip, which ended up costing him his life.

Wow this is some vintage Sherdog conspiracy posting here. I haven't read a "the Fed killed JFK" post in a long time.

Complete bullshit, of course.

 

[Ophydian]

I dont recall Bow Tie or Fox giving ANY attention to it


Any estimate on possible inflation rate we are looking at?



What would you estimate to be a possible BAD inflation scenario?

And how long to last before the Fed stabilizes it. Also what about scenarios were the $USD would lose its status as preferred world currency in most denominated transactions?

Inflation as it isnt doesnt seem out of control to me. $1 million dollars in 1990 is now worth
$2,012,348.89 Cumulative rate of inflation: 101.2%


That does NOT seem bad to me at all given all other trends economically in the world its been 3 decades. 30 years!!!!

www.usinflationcalculator.com

And $1 million is STILL a lot of money. If you put it in a bank and didnt touch it, sure it wouldnt have apprrciated much at all especially in recent decade with very low interest rates. However, you would still be FAR better off than all of the worlds 99% and the masses of Americans.

Fox ran a Debt clock on the daily during the Obama term. The debt clock disappeared once Trump took office.

 

[djacobox372]

Everyone is surprised that the cost of mcdonald's seems high and lumber and houses and rent and sports cards and... And... Maybe it's the buying power of the dollar that's changed?

You forgot to consider scarcity into your thinking... all your examples have recently been subject to massive shortages or increases in demand.

 

[Jack V Savage]

You forgot to consider scarcity into your thinking... all your examples have recently
been subject to massive shortages or increases in demand.

If you only look at things that have seen above-average amounts of price gains, price gains are higher than official measures show. Still need someone to bring up Shadowstats (which shows that if you add 500 bps to the CPI, you get a number that is 500 bps higher than the CPI--and they charge for that!).

 

[CantCucktheTuck]

so you are admitting hypocrisy by republicans?

Um...of course I am. That's not a hard thing for me to do since I don't always shill for one party.

 

[badascan]

What are any of those things worth if the USD is worth nothing?

Are you going to trade your basketball cards for handfuls of cockroaches?

you think i support those out of touch, virtue signaling, hypocrites?

You forgot to consider scarcity into your thinking... all your examples have recently been subject to massive shortages or increases in demand.

no i didn't...

 

[Denter]

Anyone want to bet on whether this guy did any research at all before making this post? Like even looking up cash holdings by people with "any wealth at all" (needs a definition for that) over time? Pushing past that, you're talking about investments that people expect to make more money than nothing. Even if people are expecting deflation, they're still going to invest in different assets. You're not seeing anyone talking about hyperinflation actually positioning themselves to benefit from it. You can just go to FRED and look up inflation expectations from the market. I'll do it for you, since the idea of looking stuff up rather than just appealing to hackery is alien to you guys:

We actually do see a rise in inflation expectations! All the way up to 2.36%! Scary. Is it possible that the collective expectation set by bond investors is wrong? Sure. Probably is, in one direction or the other. But is it a much better guess than one made by an anonymous message-board poster with no relevant knowledge, no significant skin in the game, poor thinking skills, and who regularly makes bold claims without bothering to do any research? Definitely.

What would be the best way to track how the market thinks inflation is going to go? Interest rate on corporate bonds?

Genuinely asking.

 

[Jack V Savage]

What would be the best way to track how the market thinks inflation is going to go? Interest rate on corporate bonds?

Genuinely asking.

I think the 10-year breakevens are the way to go (comparing inflation-indexed to regular bonds). If people see a mispricing there, there's an opportunity to profit. A lot of money involved in the market, too. So like I said, it's unlikely to be precisely right, but I think that if it's wrong, it's probably in unpredictable ways. Or at least if someone is claiming it's wrong, you should ask them why they know better than the market and why we should believe them (maybe they've studied it and found something that isn't widely known + they have a track record of making big, successful investments). But if they're just totally sure with no real reasoning beyond what you can see on any crank blog, it's a good bet that if they're right, it's pure luck.

If anyone ITT who expects a lot more inflation than the market does wants to bet on it, I'm game. We could put it in the bet thread.

 

[Denter]

I think the 10-year breakevens are the way to go (comparing inflation-indexed to regular bonds). If people see a mispricing there, there's an opportunity to profit. A lot of money involved in the market, too. So like I said, it's unlikely to be precisely right, but I think that if it's wrong, it's probably in unpredictable ways. Or at least if someone is claiming it's wrong, you should ask them why they know better than the market and why we should believe them (maybe they've studied it and found something that isn't widely known + they have a track record of making big, successful investments). But if they're just totally sure with no real reasoning beyond what you can see on any crank blog, it's a good bet that if they're right, it's pure luck.

If anyone ITT who expects a lot more inflation than the market does wants to bet on it, I'm game. We could put it in the bet thread.

It seems like the debt market would price in expected inflation pretty well, no one wants to lose money over the note term plus add risk of default. I asked because, while I am by no means an expert, it seems like Treasury bonds aren't the way to go because it seems like security is part of the deal there. I agree that having skin in the game is the best predictor of the right answer here; with real money involved people will actually turn their brains on when putting it at risk.

 

[djacobox372]

Inflation is great for those that hold debt and bad for those that hold assest. The best thing that could happen to the house-poor middle class is to see 1970's like inflation.

 

[Denter]

Inflation is great for those that hold debt and bad for those that hold assest. The best thing that could happen to the house-poor middle class is to see 1970's like inflation.

Wouldn't house prices go down as interest rates go up, ie, you could afford less house because the interest rate is now 10% or whatever?

 

[Jack V Savage]

It seems like the debt market would price in expected inflation pretty well, no one wants to lose money over the note term plus add risk of default. I asked because, while I am by no means an expert, it seems like Treasury bonds aren't the way to go because it seems like security is part of the deal there. I agree that having skin in the game is the best predictor of the right answer here; with real money involved people will actually turn their brains on when putting it at risk.

Well, those are debt markets. If you mean like corporate debt, I'm not aware of inflation-indexed securities. You could probably tease something out that way, but you'd have to be careful about other factors.

 

[Jack V Savage]

That's fine regarding the JFK piece.

But continue to ignore the Federal Reserve's grip on your economy, now that's stupidity.

I don't think anyone denies that the Fed plays an important role in regulating demand in the economy, though it's less effective at times like this.

 

[Prefect]

Anyone want to bet on whether this guy did any research at all before making this post? Like even looking up cash holdings by people with "any wealth at all" (needs a definition for that) over time? Pushing past that, you're talking about investments that people expect to make more money than nothing. Even if people are expecting deflation, they're still going to invest in different assets. You're not seeing anyone talking about hyperinflation actually positioning themselves to benefit from it. You can just go to FRED and look up inflation expectations from the market. I'll do it for you, since the idea of looking stuff up rather than just appealing to hackery is alien to you guys:

We actually do see a rise in inflation expectations! All the way up to 2.36%! Scary. Is it possible that the collective expectation set by bond investors is wrong? Sure. Probably is, in one direction or the other. But is it a much better guess than one made by an anonymous message-board poster with no relevant knowledge, no significant skin in the game, poor thinking skills, and who regularly makes bold claims without bothering to do any research? Definitely.

You say this as if things make sense. There is no rational reason for the stock market to be hitting record numbers during an economic crisis. People don't bet against the economy due to the fact that there is no precedent. The housing bubble was something everyone thought was coming but very few bet on it because it was hard to imagine it happening and everyone being wrong. The fact that people aren't betting on a once in a few hundred years event to happen is not unusual. The effects of systemic problems are hard to suss out because very few have a good macro understanding of the economy and the irrational behavior of investors. Maybe no one does. Real fear of the of inflation is enough to cause inflation. No matter what a graph or mathematical proof says to irrational investors.

 

[Jack V Savage]

You say this as if things make sense. There is no rational reason for the stock market to be hitting record numbers during an economic crisis.

Sure there is. We're on target for extremely strong growth for the foreseeable future.

People don't bet against the economy due to the fact that there is no precedent. The housing bubble was something everyone thought was coming but very few bet on it because it was hard to imagine it happening and everyone being wrong. The fact that people aren't betting on a once in a few hundred years event to happen is not unusual. The effects of systemic problems are hard to suss out because very few have a good macro understanding of the economy and the irrational behavior of investors. Maybe no one does. Real fear of the of inflation is enough to cause inflation. No matter what a graph or mathematical proof says to irrational investors.

What the graph shows is that market is expecting a small uptick in inflation. The irrational folks are the people who think that they're smarter than the market with no history of demonstrating that or any reason to think it. The fact that it's hard to predict this stuff is a reason for added humility and deferral to the collective expectations as reflected by markets rather than a reason to think that you can just reflect on the issue for a few seconds and make predictions that are better than all investors.

 

[Prefect]

Sure there is. We're on target for extremely strong growth for the foreseeable future.



What the graph shows is that market is expecting a small uptick in inflation. The irrational folks are the people who think that they're smarter than the market with no history of demonstrating that or any reason to think it. The fact that it's hard to predict this stuff is a reason for added humility and deferral to the collective expectations as reflected by markets rather than a reason to think that you can just reflect on the issue for a few seconds and make predictions that are better than all investors.

You are not taking into account the market no longer makes sense and people like Warren Buffett are pivoting to investments that protect him from inflation. People are changing their investments to hedge against inflation. The money supply has been drastically increased and people like yourself are saying everything is ok due to the effects of this not being felt strongly yet but I think that even you would admit that there will be an impact.

 

[djacobox372]

Wouldn't house prices go down as interest rates go up, ie, you could afford less house because the interest rate is now 10% or whatever?

Your correct that interest rates will go up to counter future inflation, but that won't cause prices to go down... they just might not keep up with inflation. Wages will go up with to counter inflation which makes the mortgage, which is fixed easier to pay.

 

[Prefect]

Your correct that interest rates will go up to counter future inflation, but that won't cause prices to go down... they just might not keep up with inflation. Wages will go up with to counter inflation which makes the mortgage, which is fixed easier to pay.

Wages lag real inflation. CPI is artificially low intentionally.

 

[PEB]

Inflation happens when you have a good economy what is happening now hardly points towards spending. Stronger economy people increase spending price increase.

When you give everyone 1400 dollars most of that will spend in the economy and growth in spending. That money drives growth. The infrastructure plan is over a decade look at it this way its 290 billion a year vs 730 billion a year on defense.

 

[Jack V Savage]

Wages lag real inflation. CPI is artificially low intentionally.

You mean high. It intentionally overshoots.