I'm not quite Dave Hess. The crash may not be real soon, or even near BUT the FED needed the head room, JIC.
Investing Strategies. What is your move?
- Thread starter PimTac
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Absolutely, i’m actually glad they are able to get them back up to a more normal level
You talking about the "economic relief" money paid to $75K or less earners of ~$3000 over 2 years? If so, that didn't cause this inflation. That money was spent long before people broke out of their caves and started eating out, doing entertainment, flying and driving all over, and buying big item stuff like crazy.
All of a sudden like a light switch coming on, the demand was way higher than supply, which caused rapid inflation, and people just bought up everything anyway, which just fed inflation. And I think many companies jumped on the "inflation train" to take a ride to reap more profits even if their wholesale or production costs weren't that effected. Just look at some of the record profits made by some during record inflation.
Some people will never listen because "all the free money did it" fits the narrative they want to believe. Yeah....$3K over two years doesn't cover my take out. Then people go on about PPP/ERTC and while there were some abuses that money, at least in my case, went to paying actual losses due to being shutdown for 3 months and restricted in how many people we could see for the next few years. That did not go towards a second home. I suspect high home values and low interest rates contributed more to inflation as people around here were doing cash out refis like crazy and that can generate multiple six-figures. Add this to being shut down and then opened backup with supply chain issues and it all comes together to produce what we see today.
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Ok, I am, just going to do the once and not spend any more time on this subject.
Both your numbers are not close to being correct, all this is available on line.
The Stimulus plan pumped upwards of 6 TRILLION dollars of free money into the economy. Repeat 6 trillion dollars in free money borrowed and trillions more borrowed to a nation debt over 32 trillion dollars. Not close to 3k over two years. Whenever money like that is freely given away people do not suffer.
So what happens then? This part you are correct after the pandemic people went on a spending spree. But do you know why? Because they had all kinds of money and credit to spend because 6 trillion dollars was given way for a couple years.
IF the money wasn't given away, they would not have had money to spend like crazy after the pandemic. Meaning they didn't have to use all their money during the pandemic and either did companies and corporations large and small.
Ok, point two, where are you guys getting your numbers from? Not even close to correct
1 First Stimulus = $1,200 to each person and $500 to each child
2 Second stimulus = $600 to each person and $600 to each child
3 Third stimulus = $1,400 to each person and $1,400 to each child
The above even though is a lot, MUCH more = Trillions and trillions given away to companies and corporations to stay in business AND keep people employed who should not have been kept in employed.
Total spent/given away = six trillion dollars
($6,000,000,000,000.00)
The bottom line is people never had to suffer like they should have suffered because an artificial economy on borrowed money was created to make everyones life easier. Now it's time to pay it back in the sense we suffer the consequences of borrowing money and spending. Then the FED has the job of trying to bring it all under control. But they were part of it too. They artificially lowered interest rates to the lowest in history and got involved in buying mortgage securities to force lower rates on homes.
It was one big field day for inflation to come back.
Over and out... (and this is not in anyway political please let's keep it that way!
)^^^ So why didn't inflation start 2-1/2 years ago when all this money was being pumped into the economy and everyone was suddenly "rich"? Lots of people who's jobs, income and businesses were impacted had to use that money to keep from going down the tubes. They weren't out buying everything like they are now. If the economic relief money was just a "free rise in income" to most people, you'd think there would have been wild spending and an inflation kick-off 2-1/2 years ago.
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My only thoughts are: 1.) The worldwide pandemic did not come with any cookbook instructions on handling it. and 2.) In early 1970's high school economics we were taught that recession was a natural part of our type of economy. I'm not sure why we are talking about it as some strange, new phenomenon that blame/fixes can be make it not happen.
Your analysis is missing one HUGE factor - $6T went out to cover LOSSES. What were the economic losses due to CV-19? Health care, hospitality, travel, etc? It was HUGE! Your analysis would be correct IF that $6T was really just "extra" money being pumped into the economy but it wasn't. It was money being pumped into an economy that had already incurred huge losses. There were plenty of people who were out of jobs for which unemployment did not make them whole and neither did those economic impact payments. My own business received PPP but that was after I incurred HUGE losses and PPP did not make my business whole. I received ERTC because I kept employees on the payroll even while I was talking a loss on my $130K per month payroll. None of the money I received was "extra" being used to buy things that drives inflation. Did 100% of it go towards losses? Absolutely not, but let's stop pretending all $6T went into buying stuff off Amazon.Ok, I am, just going to do the once and not spend any more time on this subject.
Both your numbers are not close to being correct, all this is available on line.
The Stimulus plan pumped upwards of 6 TRILLION dollars of free money into the economy. Repeat 6 trillion dollars in free money borrowed and trillions more borrowed to a nation debt over 32 trillion dollars. Not close to 3k over two years. Whenever money like that is freely given away people do not suffer.
So what happens then? This part you are correct after the pandemic people went on a spending spree. But do you know why? Because they had all kinds of money and credit to spend because 6 trillion dollars was given way for a couple years.
IF the money wasn't given away, they would not have had money to spend like crazy after the pandemic. Meaning they didn't have to use all their money during the pandemic and either did companies and corporations large and small.
Ok, point two, where are you guys getting your numbers from? Not even close to correct
1 First Stimulus = $1,200 to each person and $500 to each child
2 Second stimulus = $600 to each person and $600 to each child
3 Third stimulus = $1,400 to each person and $1,400 to each child
The above even though is a lot, MUCH more = Trillions and trillions given away to companies and corporations to stay in business AND keep people employed who should not have been kept in employed.
Total spent/given away = six trillion dollars
($6,000,000,000,000.00)
The bottom line is people never had to suffer like they should have suffered because an artificial economy on borrowed money was created to make everyones life easier. Now it's time to pay it back in the sense we suffer the consequences of borrowing money and spending. Then the FED has the job of trying to bring it all under control. But they were part of it too. They artificially lowered interest rates to the lowest in history and got involved in buying mortgage securities to force lower rates on homes.
It was one big field day for inflation to come back.
Over and out... (and this is not in anyway political please let's keep it that way!
I'm not arguing this money had no impact - I'm arguing it's all people tend to harp on as the seemingly sole driver of inflation and that is a very specific narrative that has been pushed when the fact is it's one of MANY factors that did/are contributing to inflation. We are seeing both cost-push and demand-pull...that's just a fact.
Before I'm labeled a Fed-sympathizer, the Fed's inability to control inflation now is mostly its own doing. Too many fixed-rate loans at ridiculously low interest rate = reduced impact of rate hikes on economic activity. Rates were too low for too long and it was a free-money orgy that looked good on paper but in hindsight it is now a huge a problem.
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Not just a normal part of the economy - a REQUIRED part of a healthy economic cycle.
Over the past few decades Americans have come to expect perfect lives. People get bothered and irate when something doesn’t go their way. Life was never perfect. If you lived during hard times then you gained experience and knowledge on how to deal with it the next time it happens. Nobody wants difficulty but there is a lesson to be learned on how to adapt.
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Well, there was a lot more than "$3000". Wasn't it $1200 to each person a couple of times, then some $500 payments thrown in here and there?
Then there was NO RENT REQUIRED for millions of renters.
There was FREE THIS, FREE THAT. EBT cards got booosted, all sorts of government "programs" were increased.
Then there were the PPP loans of various varieties. PPP Loans that didn't have to be paid back as long as you didn't lay anyone off after April 2020 until 2021. Then there's the PPP Loans where the interest rate is what, 2%? You had corrupt people taking out these loans, buying cars, boats, lake houses, whatever. Taking out $1M+ loans at 2%.
Last time I checked, 1200 + 1200 + 600 = 3000.
That's a whole different thing going on compared to lots of people who lost their incomes (because of all the shutdowns) spending their "massive" $3000 over a 2 year period. All those corrupt people (criminals) that stole that money need to be prosecuted and thrown in jail.
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Did a review today.
My investments with UBS, My pittance of an IRA is up 3% from 5 years ago today.
My overall portfolio (Minus their righteous 2.5% of portfolio fees of course). The total, down 27% from this time last year. and Down 41% from the peak. Nice going....
Adjusted for CPI based inflation, add in the fees and over the last 5 years, that's A SOLID loss.
What do you want from a Chinese owned company?
My investments with UBS, My pittance of an IRA is up 3% from 5 years ago today.
My overall portfolio (Minus their righteous 2.5% of portfolio fees of course). The total, down 27% from this time last year. and Down 41% from the peak. Nice going....
Adjusted for CPI based inflation, add in the fees and over the last 5 years, that's A SOLID loss.
What do you want from a Chinese owned company?
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You're not counting actual and real losses that people and businesses experienced during this time. No, 100% of this money did not get used as "bonus spending money" and lots of people and businesses used this money to make up losses they had already or were going to incur. Again, did this have SOME effect on inflation? Yes! Am I tired of people ONLY talking about this when there are lots of other factors contributing to inflation? Yes!
2.5% fees? Up 3% from 5 years ago?
If you put $10,000 into a no fee IRA at Fidelity and invested in a low fee total market index fund 5 years ago you'd have $15792 today or be up 37%.
What are you/UBS doing?
Bank of America preferred GG series. If this goes below, $24, BUY
BACPRB
This: https://digital.fidelity.com/prgw/digital/research/quote/dashboard/summary?symbol=BACPRB
BACPRB
This: https://digital.fidelity.com/prgw/digital/research/quote/dashboard/summary?symbol=BACPRB
Majority of people spent the "big 2 year payoffs" to keep a roof over their heads and and food in the fridge ... not out buying new cars and boats because they were suddenly "filthy rich". The "sammers" were filthy rich, but not honest people who needed something due to the impact of the shutdowns, etc.
www.census.gov
Majority Who Received Stimulus Payments Spending Most of It on Household Expenses
The majority of adults who received a stimulus payment are spending it on household expenses (70.1%), and 15.7% to pay off debt; only 14.1% plan to save it.
www.census.gov
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