Inflation?
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wrote on 28 Aug 2020, 14:21 last edited by
There is a ton of money on the sidelines. What does that do for inflation?
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wrote on 28 Aug 2020, 14:53 last edited by
Maybe someone smart in economics can give me an history lesson.
My understanding is that for hundreds of years and up until maybe 1850 or even after, inflation did not really exist.
Why would we want to have inflation? I would think that in the US and also more developed countries, the population is aging. With the aging population, many of these people maybe have an income not link to inflation. For them, inflation is bad. And this percentage of people will only increase.
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wrote on 28 Aug 2020, 15:42 last edited by
@Loki said in Inflation?:
There is a ton of money on the sidelines. What does that do for inflation?
What does inflation do to it would be the important consideration for those who own that money.
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Every year for the last two decades some economists have warned about inflation, but so far it hasn't happened. Their warnings have been wrong so many times that nobody listens to the warnings anymore.
I have a vague gut feeling that "inflation" might be the big buzzword of 2021.
What do you think?
If it does come, the consequences will be devastating. The central banks have basically lost the instruments to do anything about it.
wrote on 28 Aug 2020, 16:22 last edited by@Klaus said in Inflation?:
What do you think?
I think I'm on my fourth cup of green tea and so therefore I'm feeling groovy.
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wrote on 28 Aug 2020, 16:31 last edited by
When you're on a fixed income, you notice price creep.
With the exception of gas, most everything has been going up for a couple of years.
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wrote on 28 Aug 2020, 16:38 last edited by
My bigger concern is not traditional inflation slowly eroding the value of the dollar but a sudden loss of confidence that sinks the dollar overnight. I think by the time it started happening it would be too late to hedge it.
The risk may not be large, but the outcome would be catastrophic enough that it’s worth being a bit concerned about.
All of my treasurys are inflation linked. I do have a lot of NY munis but I’m shrinking it over time.
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My bigger concern is not traditional inflation slowly eroding the value of the dollar but a sudden loss of confidence that sinks the dollar overnight. I think by the time it started happening it would be too late to hedge it.
The risk may not be large, but the outcome would be catastrophic enough that it’s worth being a bit concerned about.
All of my treasurys are inflation linked. I do have a lot of NY munis but I’m shrinking it over time.
wrote on 28 Aug 2020, 16:47 last edited by@jon-nyc said in Inflation?:
My bigger concern is not traditional inflation slowly eroding the value of the dollar but a sudden loss of confidence that sinks the dollar overnight. I think by the time it started happening it would be too late to hedge it.
+1. I have the same thought when I hear the news that the Federal Reserve signaled that they are willing to let inflation run higher than 2% per year to "make up" for the very low inflation rates in the last few years. Not that there is anything fundamentally wrong with that policy stance itself, but the market/people can overreact and the overreaction can spiral out of control.
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wrote on 28 Aug 2020, 17:07 last edited by
I'm wondering a bit about the effect of the international market moving away from USD as the dominant reserve currency, a goal of Putin and others.
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wrote on 28 Aug 2020, 17:07 last edited by
My teenaged son is making $11.50 an hour working 30 hours a week at a Walmart. This is a job that a few short years ago started at $7.50 an hour. Their competitor, Target, just raised their starting pay to $15 per hour across the nation. How does this not lead to inflation?
Housing prices are rising everywhere - https://www.globalpropertyguide.com/North-America/United-States/Price-History. My house has increased 35% in 5 years. How does this not lead to inflation?
Groceries skyrocketed thanks to COVID, and now that the supply lines have stabilized, the prices haven’t dropped (at least not as much as they should have). How does this not result in inflation?
There are already new trade agreements in place designed to bring more manufacturing back to the US. I think you will see the same around the world. Many countries are going to want to be less reliant on China for their goods. How does this not result in inflation? Especially in the US where wages are skyrocketing, but quality of manufacturing is generally a little sub par meaning we will be paying more for goods that will ultimately cost more in maintenance and replenishment. How does this not result in inflation?
The only major things that have kept inflation relatively in check has been the price of oil, and the trend of technology to both improve AND get cheaper. I don’t think those two things alone can hold back the storm with what’s coming.
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wrote on 28 Aug 2020, 17:15 last edited by
@jon-nyc Were you in Brasil during hyper inflation?
A friend was there at the Taiwan economic cooperation office, and told me stories where he could not pay anything with a credit card, because in the 30 days it would take to process the charges, the hotel or other vendors would get only approx half of the value of the goods and services!
The office had to have huge amounts of cash on hand to run the office!
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wrote on 28 Aug 2020, 17:44 last edited by
I wasn’t there for the hyperinflation but there was a major devaluation in late 98 (the so-called Real crisis) which actually precipitated my departure. I was based in NY and billed in dollars. So overnight my billing rate almost doubled. I tried to double my productivity but wasn’t able to pull it off. lol
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I wasn’t there for the hyperinflation but there was a major devaluation in late 98 (the so-called Real crisis) which actually precipitated my departure. I was based in NY and billed in dollars. So overnight my billing rate almost doubled. I tried to double my productivity but wasn’t able to pull it off. lol
wrote on 28 Aug 2020, 17:47 last edited by@jon-nyc said in Inflation?:
I tried to double my productivity but wasn’t able to pull it off. lol
5555 Only able to get to 198%!!!!
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wrote on 28 Aug 2020, 20:24 last edited by
2 x 0 still = 0