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chicken or the egg, questionQuote:
Originally Posted by ThePenIsMightier
By that same argument, the stock market must be soaring as well - because some people in some states have been locked down
https://www.pwccmarketplace.com/mark...er=&index=2500
A lot of what you're seeing in price increases IS inflation happening before our eyes. If the government prints as much money as what is already in circulation, they just devalued the dollar by 50%. If a dollar has less value, but an assets value has not changed, then the price of the asset has to increase to make up for the decrease in dollar value.Quote:
Originally Posted by revelations
Gold and Crypto are not going to tank. I don't know of anybody saying that. Except maybe Peter Schiff who has a large personal interest in protecting his gold hedge fund, so he keeps spreading misinformation about bitcoin to try and get people to focus on gold instead.
Mmmmmm, no...Quote:
Originally Posted by revelations
One is a market of securities influenced by trillions of dollars and the other is... Fucking. Hockey. Cards.
It doesn't matter why the inflation is occurring, the banks can't raise rates before wages and profits catch-up to allow households and businesses to cover their debt-service costs. The entire point is that Central banks are trying to create the inflation to monetize their debts while maintaining GDP growth and employment - they have a lot less interest in controlling real-world inflation than you would think. They just want to keep their jobs and ensure people are wage slaves that rely on big government support.Quote:
Originally Posted by suntan
The BoC also doesn't give a shit if the CAD tanks - in fact, they probably want it to tank to help get manufacturing in Onterrible and Quebec going again after Trump's tariffs. Further, as markets rotate back into a bull commodity cycle, that should be CAD positive (though Canada's fiscal imbalance and debt-load make it difficult to be bullish on the loonie unless the BoC does raise rates before the Fed).
There is. Keynesians think inflation results from economic pressures like production cost increases (cost-push) or increases in demand (demand-pull). Monetarists (Friedman/Schwartz) think inflation comes from money supply (you may have seen M*V=P*T before).Quote:
Originally Posted by Misterman
My view is that inflation will come from both. There was a supply disruption for a lot of goods and commodity prices have increased a lot (cost-push), there's a lot of pent-up demand from a year of restrictions and there remains little point in saving given low interest rates (demand-pull), and the money supply around the world has been expanded (though not in the way most people think).
The truth is, Central Banks don't expand money supply as much as private banks do. Private banks aren't multiplying money like they used to since no matter how low rates are, people and businesses generally don't need to take on more debt since they've been maxing their balance sheets at progressively lower rates for the last decade. Further, a lot less capital is required for asset investment in the world of growth/tech companies compared to traditional industry.
My view is that we'll continue to see inflation in basic needs like food, fuel, housing, etc. and deflation in consumer goods like electronics, clothing, furniture, autos, etc. as the competence of the developing world continues to increase with respect to manufacturing, labour is replaced by machinery, and quality of materials continues to decline (i.e. shittier but cheaper - like how my Grandfather's tools run laps around what is currently available or furniture progressively devolves from real wood to chip board to plastic/fibre bricks).
I didn't argue what causes inflation. I said there is different ways inflation occurs, and they have different economic effects. We are not in a scenario now where inflation is a good thing. We aren't going to see interest rates rise because everyone is making bank and they need to cool things down. Interest rates are going to rise so the government can pay its debts, at a time when people are already broke from a shit economy. If you devalue currency, raise taxes, and raise interest rates, that is a trifecta for hyperinflation. The government gives zero fucks if people default on their personal debts, that is the banks problem. And under this current regime I would almost argue that they are purposely trying to get consumers to default on debt. They have proven they want to be a totalitarian ruler, and that is a great way to make the shift. Force inflation and interest rate rise so nobody can afford to live without the government, and devalue currency so that nobody can even afford to flee the country.Quote:
Originally Posted by davidI
So yes, it actually does matter quite a bit why inflation is happening.
^You're even more cynical than me.
I'm not sure why the BoC or Liberals would purposely want consumers to default on debt. That would be bad for the BoC's mandate and bank/price stability and terrible for Turdeau's chance of getting re-elected. Canadians are dumb but not so dumb to understand that the party in power the last 6 years has bankrupted them.
I don't expect hyperinflation but definitely 2%+ inflation for the next decade so the government can worm its way out of its debts. Hyperinflation means seriously drastic inflation - thousands of % YoY. The 70s/80s were just very high inflatioin - and I don't expect we'll even get to those levels given the counter disflationary forces.
Who knows, maybe we can stave off hyperinflation despite all the predictors we are seeing for it. At the least it appears we are set up for the same thing that happened under daddy Trudeau. Which means 20% interest rates. Fingers crossed that you are right on this one. Part of me thinks they couldn't be stupid enough to repeat those mistakes, but I'm not sure what levers they have at this point to change direction? If interest rates stay low, the only other lever is massive taxation increases, which is just more hidden uncalculated inflation. Either way, I'm positioning myself to be somewhat protected if it turns out all these predictive factors are correct. I wouldn't say I'm cynical, I'm just wanting to be realistic enough to prepare. Plan for the worst, hope for the best.Quote:
Originally Posted by davidI
We probably agree more than I understood - your definition of "hyperinflation" is just drastically different.
I certainly wouldn't bet against 5-10% annual inflation over the next few years by actual personal expenditures (not the CPI basket bullshit).
I don't expect 20% inflation but even if it occurs it's not "hyperinflation" by common definitions, which would be more like a minimum of 50%/month. If your definition of hyperinflation means ~20%/year then I agree the BoC would be forced to do something, but they'd be walking a fine rope between subduing inflation and bankrupting households, businesses, and municipalities and my guess is they'd err on the side of letting inflation run hot.
No I'm saying the indicators are there for hyperinflation, perhaps a tad hyperbolic, but not by much. But best I feel we can hope for is a repeat of the 80's with 20% interest rates. For the most part I'm sure we are fairly in agreeance.Quote:
Originally Posted by davidI
Every time I think the Canadian electorate can't be more naive... I'm proven to be naive. https://www.bloomberg.com/news/artic...-election-odds
You're correct. That is naive of you. lolQuote:
Originally Posted by davidI
The average Canadian can't even keep their own household finances in order... you think they have a darn clue on a much larger scale?Quote:
Originally Posted by davidI
I have friends who don't understand how it is possible to carry no debt outside of mortgage (lines of credit, credit card bills, car payments, etc.). It is because one year I decided it was a stupid way to live so I made changes to correct it and then maintained it. It's not because I am "wealthy", I make a good decent living but am not "rich" I just stopped being a complete idiot with my finances at some point in time (well, not a complete idiot I still waste money like it's going out of style).Quote:
Originally Posted by vengie
That just doesn't compute with people and while I find that shocking I also don't, but that explains the state of our Country.....
Yeah, I used to blow peoples minds when they found out I had no vehicle payments. Like it seemed literally impossible to them. Of course now I do have a payment again on that fancy truck of mine.Quote:
Originally Posted by JRSC00LUDE
Exactly. They think he's doing a great fiscal job, because he's treating the countries budget exactly as most Canadians are treating their household budget.Quote:
Originally Posted by vengie
To admit he's doing a shitty job is admitting they themselves are as well. After all, a household budget just balances itself.
It makes people REAL uncomfortable to point out that having a car payment is discretionary.Quote:
Originally Posted by ExtraSlow
it's crazy how much cash flow can be tied up in car payments.
Anyone who doesn't make 6 figures and wants to retire comfortably, should never have a car payment.Quote:
Originally Posted by dirtsniffer
Man people get really worked up over car payments.
What if you can afford to pay off the car in full, but choose to allocate the money to an investment where the return outpaces the cost of borrowing?Quote:
Originally Posted by Tik-Tok
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