Stoneworker
Footballguy
Lol.
Monetary inflation has absolutely nothing to do with creating $1.9 trillion out of thin air in the same quarter that U.S. GDP grew at a rate of 6.4%, coming off a previous quarter of 4%?
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The INFLATION Thread, aka “The Putin Price Hike” (3 Viewers)
- Thread starter ekbeats
- Start date
Monetary inflation has absolutely nothing to do with creating $1.9 trillion out of thin air in the same quarter that U.S. GDP grew at a rate of 6.4%, coming off a previous quarter of 4%?
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Insoxicated
It has to do with BOTH Biden and Trump's approach to let the Reserve's printers going Brrrrrrrrr
It's almost like this is the first time we realized when you massively increase the supply of something, it's value goes down.
Max Power
Footballguy
Sure we can scale back the meat and in all likelihood we are about to. If Americans start changing their eating habits, it's not a good sign for the sit-down food industry.
Taking my family of 6 out to a decent chain restaurant currently runs me $80 before a tip. This isn't sustainable for most families. We've reduced it to generally only eating out on date nights when its just the wife and I. If costs of goods continue to rise, these luxuries are the first things middle class families are going to cut. It's not good for the industry.
There's high inflation in Europe, China and even Japan. It's a world-wide phenomenon.
Max Power
Footballguy
Bullet prices are coming down.
Increases aren't broad based?
Okay.... Let's list 5 legit categories that AREN'T inflating...
Stoneworker
Footballguy
Do some research and then we'll talk. At this point you're just posting random circumstantial factoids.
Sand
Footballguy
Germany, Brazil, China, Canada and more are experiencing inflation as part of the COVID recovery. It's time to tighten monetary policy. It's a balancing act. If interest rates go up too fast we're going into a stagflation period.
I remember Trump asking for negative interest rates. Remember that the growth tool of cutting taxes is off the table thanks to the tax cuts passed under Trump during a long but slow recovery period.
Sand
Footballguy
Yeah, that was asinine, as well. As much as the proclamation that we're experiencing transient inflation.
Desert_Power
Footballguy
Yep. And it's largely a supply-side issue coming out of the bullwhip of the pandemic instead of being demand-driven from government policies. That is one reason it is happening globally. Ironic that your post would be called "random circumstantial factoids" when I would argue that is the vast majority of posts about inflation in here. Ten years ago I had the energy to try dispel these type of monetary misunderstandings (replete with the same claims that inflation stats are being faked), but I'll just leave it there for now.
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Shula-holic
Footballguy
If you think it's bad now just wait if this reconciliation bill passes. I'm trying to find hard assets for cash each and every day right now. If you have cash in the bank it's now evaporating at a rate greater than 6%, yikes.
Stoneworker
Footballguy
Let's stay focused on Biden. You said his policies have "little to do" with inflation. $2 trillion in fiscal stimulus and Janet Yellen shouting "Go Big!" during a period of strong GDP growth is evidence to the contrary.
But then I supposed you believe Biden's statement from July about the next spending blowout?
Our two multi-trillion dollar spending bills will "reduce inflation, reduce inflation, reduce inflation?"
Stoneworker
Footballguy
Dude. You got it. Forget when the spending actually occurs. Markets will front run it. Passage of that bill alone will further fuel the self-fulfilling inflationary belief spiral.
Over-allocating to hard assets and commodities has been the place to be for the past year. Gold as an inflation hedge is vastly overrated (more correlated to negative real interest rates) but that's still the common perception. Up over $25/oz just on today's news.
Stoneworker
Footballguy
Please show us some credentials as solid as Milton Friedman.
"Inflation is always and everywhere a monetary phenomenon."
-Milton Friedman
Money is pouring into real estate like crazy, especially in South Florida, but all over with easy money. There are 60+ story condos going up or announced all over in downtown Miami and they're selling out in months, with substantial non-refundable deposits required. A lot of it is internationals, which may only increase as the border opens. It's also money from rich people in NY, Chicago and California who see Miami as a good bet. Waterfront mansions are being flipped in many cases.
Isn't real estate the traditional inflation hedge? Condos do have more risk, but the ease of maintenance and security are attractions. The Surfside condo collapse has not reduced the appetite for newer condos.
Stoneworker
Footballguy
Completely agree with most of this. It's really going to be interesting how this plays out.
Some would even argue we're already in a stagflationary period. And that the longer the Fed waits to react the more we're at risk they will go too far, too fast.
Stoneworker
Footballguy
Yes (depending on local supply/demand factors). Because rents tend to go up with inflation. Especially short-term leases like apartments that turn over annually and can quickly adjust.
It's the first time many of us will be living through a period like this. But lots of historical similarities And as you point out it's the confluence of many factors over many years and many administrations.
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tonysmiles
Footballguy
Rents have skyrocketed in South Florida a 3/2 about 1400 sq ft was renting for about 2100 in Coral Springs in June now the rent is 2600 for the same place.
Nugget
Footballguy
Increasing spending on the supply side would probably lower inflation. We can graph it if you like.
Stoneworker
Footballguy
Gopher State
Footballguy
Inflation at highest rate in 30 years. Waiting for Biden to have a presser on this cricket.
Snotbubbles
Footballguy
SoBeDad said:
Real Estate is where money launderers put their dirty money.
No question that lots of drug and foreign government laundering is occurring in Miami real-estate and elsewhere. But there is also a lot of legit money pouring in with interest rates so low and no where else to put it. A recipe for stagflation when rates go up.
Snotbubbles
Footballguy
JerseyToughGuys
Tough Guy
Mixing fiscal policy and monetary policy gets tricky. I'd point to the latter, rather than the former, as the primary driver of inflation, at least right now. Related: the fiscal side doesn't "print," the monetary side does.Stoneworker said:
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You can cut back on food expenses and buy fewer holiday gifts, but you need to have some place to live. More income inequality is coming. Bad for everyone, even those who are rolling in dough now.tonysmiles said:
>>According to data from Zillow, in August the average rent in the Miami/Fort Lauderdale metro was up 20% when compared to the previous year.
“I have not seen any jump like that ever, not only since I am an adult and working in real estate, but also looking at the data historically,” Dr. Eli Beracha said.
Beracha is the director of the Hollo School of Real Estate at Florida International University. He says the spike in rent prices is tied to the spike in home prices, and this could be an indicator the higher prices are here to stay.
They take whatever the market gives them, so as long as the consumer is able to pay more, they will charge more,” Beracha said.
The higher housing costs equal less money renters have to pay other bills.
“Rising rent prices take a major chunk out of people’s paychecks,” Zillow Senior Economist Jeff Tucker said. “A common metric is around 30 percent or a third of your income, but we see a lot of renters flying past that benchmark.”
An analysis by Zillow found Latino households have 41% of their income going to rent. Black households had about 40% of their income going to rent. This is compared to 35% for white households.<<
https://www.nbcmiami.com/responds/rising-rent-in-south-florida-creates-even-tighter-budgets-for-black-latino-households/2612892/?amp
rustycolts
Footballguy
Man I was hoping I would never have to live through this nonsense again. At least mortgage rates aren't sky high yet. Right after I got out of the Army at the end of 79 I bought my first home. Interest rate was 12% and that was a VA loan.
Shula-holic
Footballguy
From my personal perspective I don't have a problem with the spending to improve our ports and harbors, or other hard infrastructure such as roads and bridges. When the economic case is made for that, I understand the benefits even if the exact size of the package or what should be included can be debated.Nugget said:
The issue is the entitlements we are getting ready to try and kick off in the reconciliation package which will ramp up demand, and I'd argue will further constrict labor supply as we get more people reliant on the government. There's not a whole lot I can remember from all my economics classes in college and time in the business world that would lead me to believe that is going to do anything but create even a more inflationary environment.
We also need to roll back some of the temporary measures we took to get through this rough period, not make them permanent. In a normal environment, these are inflationary and as we are starting to see can be quite damaging. It's like taking a steroid to help cure an illness but if you keep taking it long term it can do a whole lot of damage.
Sparky Big Time
Footballguy
I think the paradigm is shifting a bit. If we look at CGE and consider that the deflationary influence of China over the last 20 years is ebbing, I think we can see more clearly that the US monetary policy has been flawed for some time.
The infusion of money in to the system to offset bad policies predicated on ignorant social justice actions led to some really bad outcomes, of course. Then the government tried to paint over them, was being helped out by China, and that is no longer the case.
I can see this inflationary status being longer term.
The infusion of money in to the system to offset bad policies predicated on ignorant social justice actions led to some really bad outcomes, of course. Then the government tried to paint over them, was being helped out by China, and that is no longer the case.
I can see this inflationary status being longer term.
djmich
Footballguy
Nugget
Footballguy
Can you link to your model? I feel like you are cutting and pasting words without context. CGE of what?
Sparky Big Time
Footballguy
I do not understand the request. What CGE "model" are you asserting might exist for use?
Nugget
Footballguy
In 1983, I assumed a 9.5% loan which was a great deal. Those assumable loans don't exist anymore. The owner sold the house he had bought a few years earlier at a net loss after commissions. We could be entering a similar period as each successive generation has bought fewer homes and at a later age. Home ownership is the primary way for most people to generate wealth. If rates go up, there won't be any more 20% year to year gains in home prices, and very likely could be declining prices in many regions. There will also be more pressure to move to cheaper & smaller cities for those who decide to buy a house. Weather and affordability are the primary reasons people have moved to Florida from the northeast for decades.
Godsbrother
Footballguy
Variable rate loans was one way to make housing more affordable but with added risk.
According to the graph below, 30-year mortgage rates peaked at just under 19% in 1981. And didn't go below 9% until 1991. And below 5% until 2009. What matters is mortgage payments which are increasing too rapidly per Schiller's index.
https://images.app.goo.gl/1ErUFGwbTuWxk46X6
Nugget
Footballguy
I lost $86K on my first home (PHX 2007-2013) and then my second home to my ex wife (2017-). I’m not excited about jumping back in.
Sparky Big Time
Footballguy
Apologies. In CGE I am speaking toward Computable General Equilibrium and referring to the framework, one of many of course, used for financial analysis. Though it has some roots going back in time it is also true that this framework is under update and economists see the paradigm changing in a manner to force a rethinking.
Nugget
Footballguy
Thanks. So it is a technique used to build economic models like I said. Do you have a link to the model you were referring to when discussing the deflationary impact of China masking the monetary policy of the United States?
I wonder if this has anything to do with rejecting the power lines from Quebec, which included payments to reduce rates.
Shula-holic
Footballguy
As an aside I didn't think they existed either. But I sold my parents house to a young couple earlier this year and when at closing the closing attorney notified them one of the features of their loan is someone could assume it and their rate. The catch was they'd have to pay all the equity in to assume the note at that point. I wasn't aware anything like that was still around.
Sparky Big Time
Footballguy
IMHO the best place to start the exploration is HERE
To really delve into the Chinese deflationary history I would start with these, and I think it is just fascinating and I highly recommend these.
China: Exporting More Deflation, by Yam, Denise in 2002 at the Morgan Stanley Global Economic Forum, September 16
Is China the Root Cause of Global Deflation? by Hu, Angang in 2003 in China and the WorldEconomy, No. 3, November
Nugget
Footballguy
Thanks. I'm going to bow out of this conversation now. I don't think you understand what you are posting. Have a great evening.
Gopher State
Footballguy
Great speach by Joe this week on inflation, he was sorry it was happening, but had no answers on how to stop it. A warm fuzzy moment.
Sparky Big Time
Footballguy
Stoneworker
Footballguy
WhiffI can't speak for "inflation deniers" whatever those are. Those of us who said that if we should see inflation, it would be temporary, we seem to be right on track
The Commish
Footballguy
Keep reading....make sure you read carefully and slowly the posts saying it was going to get much worse before it got better and wed likely not see meaningful relief until the end of the year. Looks like it may take until 1Q next year, but hardly the "wiff" you want it to be on a set of comments made in July.
I do applaud the incredible amount of time you spend trying to get the gotchas though. Grade A shtick.
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Stoneworker
Footballguy
Sorry. This one is just wrong. Hard to take someone seriously in an inflation thread who doesn't even understand the definition of inflation.
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