Inflation MEGATHREAD

[Misterman]

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I love how there is a new stonks doomsday every few months that never really materializes

It's materializing before our eyes right now. Fed cut their QE in half, and suddenly the stock market starts selling off. We will definitely see another surge when people are allowed out again, and they can spend all this money they have been sitting on. But just wait for more announcements on interest rate hikes, which is 100% inevitable unless they are just going to print the USD into hyperinflation and sink the country.

I'm still pissed I missed out on 2008, so I will be sitting on the sidelines waiting to scoop up assets after corrections hit.

It's interesting that anyone is actually discussing if inflation is happening or not. They have printed 40% of the worlds dollars in the last year and a half. New money creation IS the very basics of inflation. With the US CPI now showing inflation rates of around 7.2%, the question is more along the lines of how bad is the inflation going to get before they do something about it by raising interest rates.

[Buster]

a normalization of interest rates will create a fiscal crisis. The CBs are boxed into a corner.

[Misterman]

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a normalization of interest rates will create a fiscal crisis. The CBs are boxed into a corner.

Raising interest rates is a crisis that can be recovered from. Continuing to try and print your way out of the problem cannot. It's not a matter of IF rates go up, it's a matter of when. No leader wants it happening on their watch, but hands will be forced at a certain point. Unless you have a conspiracy you subscribe to about why they would purposely turn North America into Venezuela?

It is an interesting conundrum. I was looking at houses in Kelowna in the 800-900k range about 6 months ago. But with the obvious bubble we are in, I wanted to hold off. Those same houses are now 1.3mil. Even if there is a 30% correction today, I still wouldn't be under water if I had bought 6 months ago. But with how bad of a bubble this is, I am worried there will be a much worse correction than that when it finally hits.

[Buster]

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Raising interest rates is a crisis that can be recovered from. Continuing to try and print your way out of the problem cannot. It's not a matter of IF rates go up, it's a matter of when. No leader wants it happening on their watch, but hands will be forced at a certain point. Unless you have a conspiracy you subscribe to about why they would purposely turn North America into Venezuela?

It is an interesting conundrum. I was looking at houses in Kelowna in the 800-900k range about 6 months ago. But with the obvious bubble we are in, I wanted to hold off. Those same houses are now 1.3mil. Even if there is a 30% correction today, I still wouldn't be under water if I had bought 6 months ago. But with how bad of a bubble this is, I am worried there will be a much worse correction than that when it finally hits.

policy makers need to choose between a fiscal crisis and a monetary crisis. I wish them well.

[ZenOps]

https://www.wsj.com/articles/jpmorga...es-11620898206

No credit? No problem. Just go to any foundational US bank and get yer free money regardless of "worthyness".

Sounds like a plan to me. I always thought FICO was a little bit racist. I mean, if they base it on income from a job at NASA, then if they ban you from entering NASA - does that mean you never get to borrow money and put it on GME for 10,000% gains?

[ZenOps]

If it is all a ponzi scheme, then the first thing you do is ponzi other nations - like Venezuela. When they are broke, then you start ponzi-ing the only people who have anything left - which would be the people at the bottom of the pyramid in your own nation. So you could say, its a natural progression.

[ZenOps]

I got no problems being paid in nickels. Although the real play was to be paid in 2x4's or sheets of plywood last year.

Technically, although the Canadian dollar is related to crude - there is the argument that it is stronger than the USA dollar in a collapse scenario. If you believe in a petrodollar, what you are actually doing when passing around a $100 canadian bill is transferring the wealth of 700 to 2,000 pounds of oil. Of which, if you are a commodities guy - the nickel is a ridiculously more dense and practical store of value unless you own an abandoned salt mine.

Nickel to oil is roughly 200:1 and is of primary importance to the British Monarchy and Elon making high density batteries.

How many years will a single barrel of oil last if you convert to electricity and run in a 1/3rd horsepower motor to scoot at 30 km/hour? That is the question.

https://en.wikipedia.org/wiki/Loonie#Composition

[Kobe]

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It's materializing before our eyes right now. Fed cut their QE in half, and suddenly the stock market starts selling off. We will definitely see another surge when people are allowed out again, and they can spend all this money they have been sitting on. But just wait for more announcements on interest rate hikes, which is 100% inevitable unless they are just going to print the USD into hyperinflation and sink the country.

I'm still pissed I missed out on 2008, so I will be sitting on the sidelines waiting to scoop up assets after corrections hit.

It's interesting that anyone is actually discussing if inflation is happening or not. They have printed 40% of the worlds dollars in the last year and a half. New money creation IS the very basics of inflation. With the US CPI now showing inflation rates of around 7.2%, the question is more along the lines of how bad is the inflation going to get before they do something about it by raising interest rates.

For inflation to happen the money has to be put into households of people not markets.

I really don't see inflation happening in the long-term and if it happens it's becuase of a weak USD not from spending.

But I think short-term we will see more inflation, homes and lumber, stonks how they skyrocketed, 0% interest rates all caused this, but now the Fed can't lower interest rates, they will have to go up, which will reduce borrowing and prices will go down.

I think this financial crisis is also different then 2008 since in 2008 they were able to lower interest rates to stimulate the economy, this time not so much..... 10Y bonds already going up which in itself is another problem for the Fed.

I'm mixed when I think about it still actually, I see the possibility of Inflation but that would consist of people spending money, rates will go up reducing it, I think the only way to actually get inflation is to get a Fed digital coin and put money directly into peoples banks so they spend it, I'm sure the FED is working as quick as possible to get this done though and save themselves and this debt bubble to be reduced.

I don't see inflation any other way though currently other then in the stocks and that crash when Fed prints to keep interest rates low. It's not if they do it but when.

I did the math recently with world debt and how much Gold should actually be worth to cover the debt (281 trillion) If no other fiat money in the world (Obv we have tons)

$281 Trillion
244millKG Gold every discovered
$1,151.639 Per 1 KG of Gold.

Not exactly sustainable considering if the Dollar was still pegged to USD it should be $1,234.59 per KG of gold...

[Misterman]

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For inflation to happen the money has to be put into households of people not markets.

I really don't see inflation happening in the long-term and if it happens it's becuase of a weak USD not from spending.

But I think short-term we will see more inflation, homes and lumber, stonks how they skyrocketed, 0% interest rates all caused this, but now the Fed can't lower interest rates, they will have to go up, which will reduce borrowing and prices will go down.

I think this financial crisis is also different then 2008 since in 2008 they were able to lower interest rates to stimulate the economy, this time not so much..... 10Y bonds already going up which in itself is another problem for the Fed.

I'm mixed when I think about it still actually, I see the possibility of Inflation but that would consist of people spending money, rates will go up reducing it, I think the only way to actually get inflation is to get a Fed digital coin and put money directly into peoples banks so they spend it, I'm sure the FED is working as quick as possible to get this done though and save themselves and this debt bubble to be reduced.

I don't see inflation any other way though currently other then in the stocks and that crash when Fed prints to keep interest rates low. It's not if they do it but when.

I did the math recently with world debt and how much Gold should actually be worth to cover the debt (281 trillion) If no other fiat money in the world (Obv we have tons)

$281 Trillion
244millKG Gold every discovered
$1,151.639 Per 1 KG of Gold.

Not exactly sustainable considering if the Dollar was still pegged to USD it should be $1,234.59 per KG of gold...

Inflation is not solely caused by excessive consumer spending due to a hot economy. This is a very common mistake in thinking people tend to make, but I would agree 100% that a hot economy will certainly not be causing the current inflation.

You say you don't see us having long term inflation, but I'm not sure what you mean? We already have inflation, period. It's here long term unless interest rates go up to counter act it and reverse things. You think any government is going to increase interest rates enough to curb the current inflation we are seeing? Our current inflation when you look at CPI is around 4%, and if you take the true number when factoring in housing, food, taxes, etc. It's more like 15%. An interest rate increase of even 2% is going to trigger a wave of insolvencies. But no government seems keen to raise rates anyway.

[ZenOps]

The USD is not the only currency. There are Euros, and Yen and Yuan as well as a hundred other currencies you must weigh against a single commodity, as well as "imaginary" money borrowed into existance as credit. Why is a 1996 penny worth 3 cents and a 1977 penny worth 4 cents? it has very little to do with the Canadian dollar and more to do with its value on a global scale.

[Kobe]

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Inflation is not solely caused by excessive consumer spending due to a hot economy. This is a very common mistake in thinking people tend to make, but I would agree 100% that a hot economy will certainly not be causing the current inflation.

You say you don't see us having long term inflation, but I'm not sure what you mean? We already have inflation, period. It's here long term unless interest rates go up to counter act it and reverse things. You think any government is going to increase interest rates enough to curb the current inflation we are seeing? Our current inflation when you look at CPI is around 4%, and if you take the true number when factoring in housing, food, taxes, etc. It's more like 15%. An interest rate increase of even 2% is going to trigger a wave of insolvencies. But no government seems keen to raise rates anyway.

I agree and we are seeing it now for a few reasons in the housing markets.
1. 0% INTEREST Rates (well its 0.25% for bank lending rates) people can finally afford mortgages that they couldn't before, since the payments are now lower per month.
2. Fear of Inflation, people are now scared prices will never go down (Deflation) and it's better to buy it now than for more money afterwards.

We will always have inflation i guess said it wrong, but the fear now is of A LOT of inflation (10-100%) which i don't see happening in the long term because of cause and effect.

The government currently can't increase rates but they will, they will have to to reduce inflation that happens from money printing and the current inflation rates, when this happens it's going to be a different ball game IMO. They will have to increase rates sooner or later.

Yes 2% will trigger insolvencies, it will create tons of people who can't afford mortgages and companies who are whoever leveraged with debt will start to fail.

Which will in return cause a larger supply of homes on the markets causing prices to drop (More supply than Demand) and with interest rates going up it will not allow as many people to get that mortgage which will remove buyers because they won't be able to afford the mortgage as well..

All of this with overleveraged companies going under because of the increase in interest rates and removing more jobs creating even less Demand for mortgages.

If the government decides to keep rates at where they stand, it going to continue to create this inflation and people are going to struggle and reduce spending on things that are wants and only spend on "needs" (Food/shelter)

This is how I see it in the upcoming future, inflation will currently be short-term.

Again let's go back to why this is happening?

Lets look at CPI


» Click image for larger version

We can see it starts to take off in the 1970s.

Now let's look at the last 100years
https://www.minneapolisfed.org/about...ce-index-1913-


1921 -10.9%
1930 -2.7%
1931 -7.9%
1933 - -5.2%

Only time in the last 50 years we had deflation was 2009 where it went -0.04%


» Click image for larger version

We just have to look at it from a bigger perspective not just the last 20-40 years we have mostly all been around only.

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The USD is not the only currency. There are Euros, and Yen and Yuan as well as a hundred other currencies you must weigh against a single commodity, as well as "imaginary" money borrowed into existance as credit. Why is a 1996 penny worth 3 cents and a 1977 penny worth 4 cents? it has very little to do with the Canadian dollar and more to do with its value on a global scale.

And each one of those currencies is pegged to the USD, as is CAD, AUD and every other currency you can mention.

USD = WORLD Reserve Currency not NORTH AMERICA Reserve Currency.

This is very important to understand, if u want to buy goods in China you use the USD to purchase them.

CAD exchanged for USD
USD Used to purchase the goods.
USD Converted to YUAN.

This is every single transaction.

[Buster]

So prices go up if supply is down but demand is up?

[killramos]

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So prices go up if supply is down but demand is up?

I don’t think you used nearly enough wall of text in that analysis

[Disoblige]

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I don’t think you used nearly enough wall of text in that analysis

Mitsu can help with that.

[Misterman]

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I agree and we are seeing it now for a few reasons in the housing markets.
1. 0% INTEREST Rates (well its 0.25% for bank lending rates) people can finally afford mortgages that they couldn't before, since the payments are now lower per month.
2. Fear of Inflation, people are now scared prices will never go down (Deflation) and it's better to buy it now than for more money afterwards.

We will always have inflation i guess said it wrong, but the fear now is of A LOT of inflation (10-100%) which i don't see happening in the long term because of cause and effect.

The government currently can't increase rates but they will, they will have to to reduce inflation that happens from money printing and the current inflation rates, when this happens it's going to be a different ball game IMO. They will have to increase rates sooner or later.

Yes 2% will trigger insolvencies, it will create tons of people who can't afford mortgages and companies who are whoever leveraged with debt will start to fail.

Which will in return cause a larger supply of homes on the markets causing prices to drop (More supply than Demand) and with interest rates going up it will not allow as many people to get that mortgage which will remove buyers because they won't be able to afford the mortgage as well..

All of this with overleveraged companies going under because of the increase in interest rates and removing more jobs creating even less Demand for mortgages.

If the government decides to keep rates at where they stand, it going to continue to create this inflation and people are going to struggle and reduce spending on things that are wants and only spend on "needs" (Food/shelter)

This is how I see it in the upcoming future, inflation will currently be short-term.

Again let's go back to why this is happening?

Lets look at CPI


» Click image for larger version

We can see it starts to take off in the 1970s.

Now let's look at the last 100years
https://www.minneapolisfed.org/about...ce-index-1913-


1921 -10.9%
1930 -2.7%
1931 -7.9%
1933 - -5.2%

Only time in the last 50 years we had deflation was 2009 where it went -0.04%


» Click image for larger version

We just have to look at it from a bigger perspective not just the last 20-40 years we have mostly all been around only.





And each one of those currencies is pegged to the USD, as is CAD, AUD and every other currency you can mention.

USD = WORLD Reserve Currency not NORTH AMERICA Reserve Currency.

This is very important to understand, if u want to buy goods in China you use the USD to purchase them.

CAD exchanged for USD
USD Used to purchase the goods.
USD Converted to YUAN.

This is every single transaction.

Mortgages alone is a fairly small and narrow view of the situation. But either way, we both agree that interest rate hikes is what will be required to get this under control. You just seem much more trusting in a government actually doing that and decimating the economy worse than it is right now under their regime. Whereas I am acknowledging how clear they have made it that they do not want to raise rates. Combined with the fact the government gives very little fucks about anyones ability to afford food or shelter, compared to the governments ability to pay it's bills. Leaves me quite a bit more pessimistic that they will do what needs to be done. Especially when our head cheese is completely bought into MMT.

Fortunately BTC has created a real nice opportunity to start acquiring more.

[Kobe]

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Mortgages alone is a fairly small and narrow view of the situation. But either way, we both agree that interest rate hikes is what will be required to get this under control. You just seem much more trusting in a government actually doing that and decimating the economy worse than it is right now under their regime. Whereas I am acknowledging how clear they have made it that they do not want to raise rates. Combined with the fact the government gives very little fucks about anyones ability to afford food or shelter, compared to the governments ability to pay it's bills. Leaves me quite a bit more pessimistic that they will do what needs to be done. Especially when our head cheese is completely bought into MMT.

Fortunately BTC has created a real nice opportunity to start acquiring more.

Agree with mortgage rates it's just a drop in the bucket of water, all the companies that are just breaking even though employing hundreds of thousands of employees would be a much larger issue for interest rates.


I'm by no means pro government, I think Liberals, Conservatives, Republicans, Democrats are all looking at it wrong which obv makes it hard to discuss with people since everyone has a political side.

I'm very for the way you think how we reduce government and they do way to much damage I just continue to see 1 MAJOR problem with this..

PSYCHOLOGY OF THE HUMAN BAIN

People have proven time and time again we want power and control (Just like governments) people would do the same thing so as much as I'd love to be a libertarian I don't see it working either, I think we need some sort of government but it has to be reduced. I thought about this a lot in the last year.

I cant grasp why I'm optimistic but something makes me want to believe there is hope for this to work. I can give my thoughts which I think everyone would agree with, but agreeing doesn't mean it happen, we all would have to put a little bit of effort into it.

I also believe this has been done in the past and it succeeded we just don't realize it becuase we aren't told about it, it's all "Coincidences" all 50 examples i'd prob be able to give.

I think the issue is not government, the issue is elites vs people and control and power, we have a huge divide (mostly religion) for that exact reason. It's the truth. Political parties are all just a divide right now too, so we spend time looking at things that are irrelevant in the big picture and spend time arguing amongst that (For example Covid right now, vaccines, who created it/was it randomness/do masks work) etc it's all playing on the same narrative to me.

[ZenOps]

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I agree and we are seeing it now for a few reasons in the housing markets.
1. 0% INTEREST Rates (well its 0.25% for bank lending rates) people can finally afford mortgages that they couldn't before, since the payments are now lower per month.
2. Fear of Inflation, people are now scared prices will never go down (Deflation) and it's better to buy it now than for more money afterwards.

We will always have inflation i guess said it wrong, but the fear now is of A LOT of inflation (10-100%) which i don't see happening in the long term because of cause and effect.

The government currently can't increase rates but they will, they will have to to reduce inflation that happens from money printing and the current inflation rates, when this happens it's going to be a different ball game IMO. They will have to increase rates sooner or later.

Yes 2% will trigger insolvencies, it will create tons of people who can't afford mortgages and companies who are whoever leveraged with debt will start to fail.

Which will in return cause a larger supply of homes on the markets causing prices to drop (More supply than Demand) and with interest rates going up it will not allow as many people to get that mortgage which will remove buyers because they won't be able to afford the mortgage as well..

All of this with overleveraged companies going under because of the increase in interest rates and removing more jobs creating even less Demand for mortgages.

If the government decides to keep rates at where they stand, it going to continue to create this inflation and people are going to struggle and reduce spending on things that are wants and only spend on "needs" (Food/shelter)

This is how I see it in the upcoming future, inflation will currently be short-term.

Again let's go back to why this is happening?

Lets look at CPI



We can see it starts to take off in the 1970s.

Now let's look at the last 100years
https://www.minneapolisfed.org/about...ce-index-1913-


1921 -10.9%
1930 -2.7%
1931 -7.9%
1933 - -5.2%

Only time in the last 50 years we had deflation was 2009 where it went -0.04%



We just have to look at it from a bigger perspective not just the last 20-40 years we have mostly all been around only.





And each one of those currencies is pegged to the USD, as is CAD, AUD and every other currency you can mention.

USD = WORLD Reserve Currency not NORTH AMERICA Reserve Currency.

This is very important to understand, if u want to buy goods in China you use the USD to purchase them.

CAD exchanged for USD
USD Used to purchase the goods.
USD Converted to YUAN.

This is every single transaction.

Pegged to, but every nation can print as much as they want. If they want to print 1 million venezuelan to 1 USD dollars, that is Venezuelas choice. There is no law or rule to say otherwise. Peg at 1 million to 1 - is not really a peg, its more like a paintbrush.

Many would argue that the reason the USD has historically been strong is because its a dollar based on debt bondage (some would say debt slavery). If you own a US dollar what you really own is a promise of future productivity. The Venezuelan Bolivar is not based on slavery, it is a socialist dollar, which makes it less valuable.

Enslaving the future of the USA was the preferred means of productivity. But it seems the USA no longer wants it that way. If future "rich" generations in the USA find debt slavery to be distasteful, they may find solace in alternate forms of currency, like crypto which cannot be borrowed or lorded over others as debt.

China is massively winning with a weak currency. Race to the bottom is an idea that is a big advantage if you know how to do it. Wuling Hongguang EV might be prefferred to Telsa, Amazon Fire tablet might be preferred to Ipad.

If you ask me, the reason that the USD is maintaining strength does have a role with the penny and nickel. You can't devalue by a factor of 10x to 1,000,000x while the penny and nickel still exist. Psychologically, "seeing is believeing" and if you see someone transfer 100 copper pennies for $1 USD that is what you frame in your mind as relative value. Nowadays $100 is being imprinted as being equivalent value to a single sheet of glued together woodchips - a single sheet of plywood.

To sell a single sheet of plywood for 20 pounds of nickels equivalent value is literally insane. The amount of effort and relative value has never been more skewed, show me the nickels!

[ZenOps]

Well. Dollarama just ran out of Holiday luncheon meat (my personal superior taste compared to SPAM)

One thing about inflation, is that it sucks when prices go up - but it becomes a real problem when you can't get what you want at all.

[Buster]

RIP inflation megathread

[BavarianBeast]

The steakhouse I frequent bumped their tenderloin from $42 to $52 yesterday.

The inflation is real.