Inflation is here

[slo town]

Inflation is the government's best friend. Inflation causes increased taxes across the board; property taxes, sales taxes, income taxes, etc. Inflation is being created on purpose so the government can pay back previous debt with cheaper dollars. The government has been playing this game for decades, but now it's in overdrive. It works until it doesn't.

And on a related note, "monetizing debt" like the Federal Reserve does is nothing more than legal counterfeiting. That's been happening for decades as well.

Scott

 

[CharlesInCharge]

Well it's never going to be completely accurate and will never fit each persons personal outlays. There's a few things in food that have stayed the same though, the rotisserie chicken at Costco is still $5 along with their $1.50 hot dog, been like that for years. And while gas is up, I haven't been driving as much and as a percentage of monthly outlays probably about the same or maybe a little higher, don't really pay that much attention. And for the record, I don't think anyone actually makes 7 figures in a government position, even the President only makes 400k a year. I think only one person makes more and he's the director of the NIAID and he's been there for 35+ years.

There's a difference in "not completely accurate" versus "entirely incorrect and not even close to accurate." Don't pee on me and tell me it's raining. lol. We cannot discuss true inflation, if we are not factoring critical items people need and use like food and energy, which are NOT in the government's equation.

And if you think swampers in DC only make 6 figures you're not paying attention. Most are there less than 20, but let's say in a 20 years stint, their $250,000 annual official salary would amount to $5 million. Yet the long-term critters are worth gazillions of dollars. On top of all the perks, excellent healthcare, free travel, free housing, security, and more, most barely work, endless vacations, and it's likely most get huge financial kickbacks and favors well concealed in many fashion. Most arrive in DC with modest net worth and leave nearly billionaires doing short government stints. The corporate and private sector revolving doors are sickening. This part is on point b/c these people tend to cause the problems in all walks of life but rarely do they directly suffer. Someone with $50,000,000 does not suffer anything when 20% is eroded from inflation they caused. That's not even a lifestyle adjustment.

 

[Wolf359]

There's a difference in "not completely accurate" versus "entirely incorrect and not even close to accurate." Don't pee on me and tell me it's raining. lol. We cannot discuss true inflation, if we are not factoring critical items people need and use like food and energy, which are NOT in the government's equation.

And if you think swampers in DC only make 6 figures you're not paying attention. Most are there less than 20, but let's say in a 20 years stint, their $250,000 annual official salary would amount to $5 million. Yet the long-term critters are worth gazillions of dollars. On top of all the perks, excellent healthcare, free travel, free housing, security, and more, most barely work, endless vacations, and it's likely most get huge financial kickbacks and favors well concealed in many fashion. Most arrive in DC with modest net worth and leave nearly billionaires doing short government stints. The corporate and private sector revolving doors are sickening. This part is on point b/c these people tend to cause the problems in all walks of life but rarely do they directly suffer. Someone with $50,000,000 does not suffer anything when 20% is eroded from inflation they caused. That's not even a lifestyle adjustment.

Basically your rant isn't really rooted in reality. Yeah, most people who work regular jobs can be millionaires eventually too, read The Millionaire Next Door. But your original claim was that the paper pushers in DC were making 7 figures and I just pointed out that government workers don't make 7 figures. When they leave government and get hired as lobbyists or if they're congress people, yeah they can make lots of money in the private sector. Also the top net worth of people in Congress is around 250 million, that's a good sum, but I wouldn't call that nearly a billionaire. That's Mitt Romney and I think he made most of his money before he got into politics not after. And yeah, someone with 50 million probably saw their stock portfolio increase in the last couple years due to the stock market. Nancy Pelosi went from 41 million in 2004 to 115 million.

I mean your rants are fun, but they're not rooted in facts. Your personal inflation rate is never going to jibe with the official number. That's what people don't seem to get when complaining about the number. There's a certain methodology that's used and it's the best that's available, sure you can try to be more accurate but it's never going to be completely on target for every individual.

 

[Rmay635703]

botttom line what was the price of fuel this time last year

$0.99 nothing like pennies for a gallon, last time that happened was 1999 for Diesel fuel

That said paying too low of a price is just as bad as too high since one leads to the other.

 

[JeffKeryk]

The economy and related inflation are like a huge ship out on the ocean.
It cannot turn on a dime and there are many factors.
We did not get here overnight and will not change overnight.

You wanna hedge against inflation? Save and invest for the long term.
Don't buy lottery tickets.

 

[wpod]

I can say, anecdotally but factually, I have personally observed:
On or just prior to November 2020,
* gas was $2 per gallon, now it's almost $4 for the same fuel at same locations
* guns were about 30% cheaper.
* ammo was about 50% cheaper
* lumber was about 30-50% cheaper
* housing has gone up by about 30-50%
* grocery bill up about 10%
* lots of shortages in electronics and car parts, steel products, and much more. The car stereo I want it out of stock everywhere and has been for months. The steel shelving I want is out of stock and I'm lucky to find it in the used classifieds. Tires have been difficult to find in the size/brand I want.
* everything I want, the useful stuff, on the use market is 50% more expensive, car parts, electronics, steel items, etc.
* new cars, much higher and scarce inventory.
* used cars, the prices are obscene.

But I suppose that's just a big coincidence... lol ....

There seems to be no shortage of buyers.

 

[jrvn]

$0.99 nothing like pennies for a gallon, last time that happened was 1999 for Diesel fuel

That said paying too low of a price is just as bad as too high since one leads to the other.

makes no sense, the high inflation and fuel prices are here because of incompetance in government, you can only shoot yourself so many times and eventually you bleed to death

 

[jrvn]

You know you have to compare with this time in 2019 for a more accurate comparison.

Or look at this time each year for the last 10 years.

Cherry picking one year to make a point is disingenuous at best.

lets cherry pick, when was the last time the USA was Energy independent ? the rest does'nt matter

 

[M56959]

On second thought I'll unlock this topic. Be aware that being coy and using code words to rant about politics fools no one, and will get this locked again should it continue.

 

[BMWTurboDzl]

There's a difference in "not completely accurate" versus "entirely incorrect and not even close to accurate." Don't pee on me and tell me it's raining. lol. We cannot discuss true inflation, if we are not factoring critical items people need and use like food and energy, which are NOT in the government's equation.

And if you think swampers in DC only make 6 figures you're not paying attention. Most are there less than 20, but let's say in a 20 years stint, their $250,000 annual official salary would amount to $5 million. Yet the long-term critters are worth gazillions of dollars. On top of all the perks, excellent healthcare, free travel, free housing, security, and more, most barely work, endless vacations, and it's likely most get huge financial kickbacks and favors well concealed in many fashion. Most arrive in DC with modest net worth and leave nearly billionaires doing short government stints. The corporate and private sector revolving doors are sickening. This part is on point b/c these people tend to cause the problems in all walks of life but rarely do they directly suffer. Someone with $50,000,000 does not suffer anything when 20% is eroded from inflation they caused. That's not even a lifestyle adjustment.

Food is included. Energy is not due to the volatility however the US has some of the cheapest energy in the developed world. Anyways here you can see how the price of gasoline has been dropping on an inflation adjusted basis.

Link

 

[BMWTurboDzl]

when was the last time the USA was Energy independent ?

What does that even mean?

 

[javacontour]

lets cherry pick, when was the last time the USA was Energy independent ? the rest does'nt matter

We buy and sell energy in a global marketplace. Some of the oil we drill in the US ends up going to foreign buyers. Just like we import oil as well>

It's a commodity, just like corn, soy beans, hogs, etc. It's sold on an exchange. The price is set by the trading of contracts.

Remember spring of 2020 when oil went negative? Someone would PAY you to take oil.

If the game was rigged, would those who rig the game allow that to happen?

 

[CharlesInCharge]

Food is included. Energy is not due to the volatility however the US has some of the cheapest energy in the developed world. Anyways here you can see how the price of gasoline has been dropping on an inflation adjusted basis.

Link

Not according to the Federal Reserve.

https://www.federalreserve.gov/faqs/economy_14419.htm

"policymakers examine a variety of "core" inflation measures to help identify inflation trends. The most common type of core inflation measures excludes items that tend to go up and down in price dramatically or often, like food and energy items. For those items, a large price change in one period does not necessarily tend to be followed by another large change in the same direction in the following period. Although food and energy make up an important part of the budget for most households--and policymakers ultimately seek to stabilize overall consumer prices--core inflation measures that leave out items with volatile prices can be useful in assessing inflation trends."

 

[dareo]

Gasoline/oil price is still being manipulated by the production cuts. They know we have been buying up EVs and working from home. They still want to restrict the production just enough to keep the price up. Really oil should be like $25 or less if every producer went full bore.

 

[CharlesInCharge]

We buy and sell energy in a global marketplace. Some of the oil we drill in the US ends up going to foreign buyers. Just like we import oil as well>

It's a commodity, just like corn, soy beans, hogs, etc. It's sold on an exchange. The price is set by the trading of contracts.

Remember spring of 2020 when oil went negative? Someone would PAY you to take oil.

If the game was rigged, would those who rig the game allow that to happen?

If they could profit, then yes. The main reason it went negative was because there was too much surplus at that moment in time and not enough demand/buyers due to unprecedented drops in travel (air, car, ships, trains, etc.). This was compounded by futures contracts and complex finances forcing people to buy or sell (calls and puts) oil at certain prices or pay huge penalties (huge meaning millions of dollars). Simple theoretical example:

I am a market middle man and move oil from A to B. I move 1 billion barrels daily based on plotted demand. Demand falls off unexpectedly and contracts are canceled or not renewed to buy my oil. I have tankers full of oil sitting somewhere. But one cannot just 'shut down' production so the oil is still being pumped and delivered. I have contracts to buy more oil but I have nowhere to store it. In my purchase contracts I pay penalties if I don't buy it. The penalties might be enormous so much that it might make me "give away" the oil I have to make room for more. In the aggregate we saw much of this happening in 2020. That is a very simple example for why oil went 'negative' briefly. Too much surplus, contracts to buy more, and nowhere to store it.

I think President Trump tried to buy a lot, fill US reserves, at that time. I don't recall if he was able to capitalize on it.

 

[CharlesInCharge]

Gasoline/oil price is still being manipulated by the production cuts. They know we have been buying up EVs and working from home. They still want to restrict the production just enough to keep the price up. Really oil should be like $25 or less if every producer went full bore.

There are price points too low to make it profitable. In late 2019, OPEC attempted to artificially drop oil prices so low to crush small competitors into shutting down. TOO low, and oil producers cannot operate at a profit and have to close. And once closed, operations are very expensive to re-start.

 

[dareo]

There are price points too low to make it profitable. In late 2019, OPEC attempted to artificially drop oil prices so low to crush small competitors into shutting down. TOO low, and oil producers cannot operate at a profit and have to close. And once closed, operations are very expensive to re-start.

Yeah you cannot frack shale at $25 but Russia, middle east, ect could still pump it out under $30. It's not always about being profitable, breaking even is not losing. They will bring it down again ($40 is my guess) to stop the US Shale production. They are just pumping money out of the ground with little sign of it ending in the short term. I don't know why they are all agreeing to just pump less money out but consider it unsustainable.

 

[CharlesInCharge]

Yeah you cannot frack shale at $25 but Russia, middle east, ect could still pump it out under $30. It's not always about being profitable, breaking even is not losing. They will bring it down again ($40 is my guess) to stop the US Shale production. They are just pumping money out of the ground with little sign of it ending in the short term. I don't know why they are all agreeing to just pump less money out but consider it unsustainable.

Very few capitalists are interested in investing money, time, and labor to just break even. The lower labor rates/standards in other nations make their entry points lower than for the US, which is why it's hard for the US to compete in many industries.

 

[ArrestMeRedZ]

On second thought I'll unlock this topic. Be aware that being coy and using code words to rant about politics fools no one, and will get this locked again should it continue.

So much for my idea of using pig Latin to rail about a particular political party! Guess I'll have to pretend to be even handed.

Fiscal restraint has not been a hallmark of very many politicians of either party lately. Spending patterns seem to be an order of magnitude worse than the ones in the 70s that led to high inflation; however we don't have the massive spike (yet) in energy prices that contributed to said inflation. There are pandemic, supply chain and political problems that will antedotically raise prices of specific categories (lumber, ammo, etc.) that can't be reasonably used to cite general inflation, but I believe that high inflation is here to stay. Someone a lot smarter than me would be needed to make the call whether or not current fiscal policy will lead to hyperinflation, but I think it is a possibility.

Having been through a high inflationary period previously, there are a few things you can do to prepare yourself. Stocking up on consumables won't hurt, but it also won't help much. Based upon the last period of high inflation I would say to:
1. Own your own house. Have a fixed rate mortgage. I am a fan of 15 year mortgages, but in inflationary times, 30 year ones can make sense. Expect increased cost in insurance, maintenance and real estate taxes, but that increase will be nominal compared to increased rents.
2. Don't have any variable rate loans. That includes credit card debt.
3. Don't loan money at fixed rates. Don't take back notes if you sell real estate. Avoid holding bonds (fixed rate) without a very short maturity date.
3. Avoid annuities like the plague.
4. If you are suited for it, and can afford it, rental real estate can make a lot of sense. If your payments are fixed, and inflation shoots your collected rents (and property values) way up, it doesn't take a rocket scientist to see you are in a good position. Trouble is, a lot of people who get into rental real estate aren't suited to it and do not do well. Make sure you can afford unforseen circumstances before you dive into that pool.

 

[dareo]

Very few capitalists are interested in investing money, time, and labor to just break even. The lower labor rates/standards in other nations make their entry points lower than for the US, which is why it's hard for the US to compete in many industries.

Sunk Cost. If you already have a big oil field, you've already paid for it and continue to bleed money every day. If / when oil drops, and IMO it will correct a lot, you will have new projects being cancelled and delayed. You likely won't stop producing at a loss if your getting more revenue than just pulling the plug on existing operations.