Is Inflation Going To Cripple The Economy ?

[gathermewool]

There is nothing to be ashamed of living at home. You just have to pay rent and help out the parents. The worse would be to live off debt that you can never pay off in order to live with roommates in an apartment. Imagine your parents are broke and you are broke, instead of living together to help each other out.

Beside, the main reason to move out of your parents is to live close to work and find better jobs away from home. If you can work from home anyways why wouldn't you live at home and help out (pay rent, do dishes, etc).

I wish I had shipped out and lived with my parents for longer. I shipped out for only 71 straight days (12-14 hrs/day, 7 days/week) before finding a shore-side job and spending most of my income just living. My buddy shipped out for around five straight years, living with his parents during his off time, and made out like a bandit. He basically gave up his early 20s for it, but he’s now got it made in the shade with lemonade compared to a lot of people our age.

My wife stays at home with the two kids and while I make good money we still have to budget for everyday purchases these days. We actually joined Costco recently to try to reduce our overall expenditures. I’m also trying to refinance our house now that it’s worth $100k more than I paid for it four years ago. If rates are low enough we might even consider an equity loan to invest in upgrades. Hopefully the housing bubble doesn’t burst before then.

Speaking of luck, I have had some of it, but also severely bad luck. I was lucky enough to be accepted into one of the military academies (nominated by Senator Biden, no less) through no effort on my part, I’m sure. I did well there and, while my initial pay was crap, I worked hard and make good money now. Also pure luck, I guess. I also selected a job that offered a pension. Luck again, I Suppose. I don’t live in Silicon Valley (bad luck for me!!!) Can you imagine if I did!? I could go on, but I think you get the point. Some luck can be earned, IME. You’ve got to be flexible and willing to move around or on.

 

[JeffKeryk]

My wife stays at home with the two kids and while I make good money we still have to budget for everyday purchases these days. We actually joined Costco recently to try to reduce our overall expenditures. I’m also trying to refinance our house now that it’s worth $100k more than I paid for it four years ago. If rates are low enough we might even consider an equity loan to invest in upgrades. Hopefully the housing bubble doesn’t burst before then.

I love Costco, but you go in for 2 things and walk out with $145 worth of stuff you can't live without because it is too nice and such a good price!
If I were you, I would be very strict about dipping into your equity. One thing I can tell you FOR SURE is, having a home free and clear is one of the best feelings in the world. There are so many people around here who used their home like their piggy bank. I have no payment, and boy do I love it!
Good luck. Financial responsibility will pay off when you need it most.

 

[PandaBear]

I love Costco, but you go in for 2 things and walk out with $145 worth of stuff you can't live without because it is too nice and such a good price!
If I were you, I would be very strict about dipping into your equity. One thing I can tell you FOR SURE is, having a home free and clear is one of the best feelings in the world. There are so many people around here who used their home like their piggy bank. I have no payment, and boy do I love it!
Good luck. Financial responsibility will pay off when you need it most.

This and every Costco trip is like 1.5 hr minimum. My wife doesn't have a Costco membership and she only uses their gift card purchased by friends, and we therefore only buy the absolute necessities like frozen broccoli and pizza slice, every time takes a long time to go through the line and parking. Oh, many of the fellow shoppers there despite being upper middle class, are not more polite than the lowest income folks in Walmart.

I wish I had shipped out and lived with my parents for longer. I shipped out for only 71 straight days (12-14 hrs/day, 7 days/week) before finding a shore-side job and spending most of my income just living. My buddy shipped out for around five straight years, living with his parents during his off time, and made out like a bandit. He basically gave up his early 20s for it, but he’s now got it made in the shade with lemonade compared to a lot of people our age.

My wife stays at home with the two kids and while I make good money we still have to budget for everyday purchases these days. We actually joined Costco recently to try to reduce our overall expenditures. I’m also trying to refinance our house now that it’s worth $100k more than I paid for it four years ago. If rates are low enough we might even consider an equity loan to invest in upgrades. Hopefully the housing bubble doesn’t burst before then.

Speaking of luck, I have had some of it, but also severely bad luck. I was lucky enough to be accepted into one of the military academies (nominated by Senator Biden, no less) through no effort on my part, I’m sure. I did well there and, while my initial pay was crap, I worked hard and make good money now. Also pure luck, I guess. I also selected a job that offered a pension. Luck again, I Suppose. I don’t live in Silicon Valley (bad luck for me!!!) Can you imagine if I did!? I could go on, but I think you get the point. Some luck can be earned, IME. You’ve got to be flexible and willing to move around or on.

Luck is what you cannot control. I am lucky but not a lottery winner, so I would say a lot of what I got isn't going to work out the same if I try to do it again. Sometimes I wonder what I could do differently in life to get to the top but I know along the way my luck won't be there every time or I will screw up somewhere and make it worse, it is really a roll of dice.

 

[CharlesInCharge]

@CharlesInCharge it seems as if you need to move to Silicon Valley and quit complaining..considering how magically lucky you make it out to be.

In the last ~10 years, the government has invested heavily in Silicon valley and similar while also attacking or trying to destroy or destroying the coal and oil industries. Similarly, computer industries have faced almost zero regulation, particularly the online types that generate soaring revenues while other industries are buried in burdensome regulations. One is a unlimited pathway to growth often with government $$$ backing (Solendra, for instance), while other industries are stifled by taxes and regulations. Do the math. There's nothing any individual can do when the macro-economic forces are for or against a particular industry.

 

[CharlesInCharge]

Luck is what you cannot control. I am lucky but not a lottery winner, so I would say a lot of what I got isn't going to work out the same if I try to do it again. Sometimes I wonder what I could do differently in life to get to the top but I know along the way my luck won't be there every time or I will screw up somewhere and make it worse, it is really a roll of dice.

Bingo. I've had some great luck and fortunes, and some bad ones, including devastating bad luck that consumes years of my life to get past. Others seem to be at the right place, right career, right industry, meet the right person, and never have any real setbacks.

No amount of "hard work" can introduce you to your wonderful spouse, or have healthy kids instead of a miscarriage, or prevent the loss of your parents in a car accident, or lose your best friend to cancer at 20 years old, or introduce you to your new job at an infancy company called "Google," or cause you to randomly buy bitcoin stock at $5 per share, or cause you to be born healthy in America versus crippled in some 3rd world nation, or whatever. Most of life is luck. We each contribute our own "work" to a degree to capitalize on the cards we are dealt.

As for inflation, the poor and middle classes are going to be devoured by it. Brace for impact.

 

[PWMDMD]

There is nothing to be ashamed of living at home. You just have to pay rent and help out the parents. The worse would be to live off debt that you can never pay off in order to live with roommates in an apartment. Imagine your parents are broke and you are broke, instead of living together to help each other out.

Beside, the main reason to move out of your parents is to live close to work and find better jobs away from home. If you can work from home anyways why wouldn't you live at home and help out (pay rent, do dishes, etc).

It's not a matter of being ashamed but I tell my kids all the time (11, 14, and 16) that my job is to grow them up into self-sufficient adults who will sooner or later be asked to GTFO and take care of themselves. This gravy train does come to an end at some point. With every advantage in the world including two loving, educated, caring, and supportive parents who are self-sufficient enough to give their children just about anything they need to be successful - well there is an expectation that they do what they need to do to take care of themselves. I can see short stints at home during transitions but once the last kid is out my wife and are downsizing and there won't be much room at the Inn.

 

[JHZR2]

You forgot 25+ year olds are moving back home to live with their parents. USA ... the new country where 2 and 3 generations now live together.

Yet there are towns where you can buy a home for $25-50k. Depressed areas, sure. But you can.

 

[M56959]

Final warning. The next post deleted for violating the rules will get the poster a vacation and this locked.

 

[PandaBear]

It's not a matter of being ashamed but I tell my kids all the time (11, 14, and 16) that my job is to grow them up into self-sufficient adults who will sooner or later be asked to GTFO and take care of themselves. This gravy train does come to an end at some point. With every advantage in the world including two loving, educated, caring, and supportive parents who are self-sufficient enough to give their children just about anything they need to be successful - well there is an expectation that they do what they need to do to take care of themselves. I can see short stints at home during transitions but once the last kid is out my wife and are downsizing and there won't be much room at the Inn.

I still think you miss what I was trying to say. Adult children living at home should be like tenants and roommates instead of loafers in the basement. What do you do if you are empty nesters and you have roommates? You have the same expectation when your adult children "rent" a room from you. You need them to pay rent or get evicted, of course.

You don't provide free room to your tenant or pick up their dirty socks, and you don't tell them to eat their vegetables or be home for dinner at 7pm.

 

[PandaBear]

No amount of "hard work" can introduce you to your wonderful spouse, or have healthy kids instead of a miscarriage, or prevent the loss of your parents in a car accident, or lose your best friend to cancer at 20 years old, or introduce you to your new job at an infancy company called "Google," or cause you to randomly buy bitcoin stock at $5 per share, or cause you to be born healthy in America versus crippled in some 3rd world nation, or whatever. Most of life is luck. We each contribute our own "work" to a degree to capitalize on the cards we are dealt.

I do disagree on that. I actually spend a lot of effort in "meeting" my spouse (all those casual encounters we had were actually articulately engineered), I end up flunking one course to focus on "meeting" her. (meeting someone is the easy part, building the relationship later and maintaining it is the hard one).

Healthy children, miscarriage, etc. No guarantee but you can increase the odd to your favor by living a healthy lifestyle and screen your genes before conceiving.

Same for car accidents: you do your best to drive safely, buy a safe car, live in safe neighborhood, etc. No guarantee but improve your odd.

The part about Google though, it is a luck of draw if you want pre-IPO but if you join later you still get high pay, and getting in means working hard in other places or schools prior to prove yourself. Like all things in life if it is all by luck you would get fired in your dream job if you never can sustain the workload and stress to begin with.

There are many things in life we can control, I am grateful for being lucky but that doesn't means we should not work hard, just try not to think of it being all "hard work", it is important but it is not the only thing that matters.

 

[doublebase]

It certainly could eventually. The problem is going to self-regulate itself as we come out of COVID though and the supply chain gets moving again. The inflation is all due to the supply chain issues.
The problem isnt increased wages and benefits because its been long overdue. Wages have not kept up with inflation over the last 50 years. Thats why the boomers were able to afford the American dream back in the day but people nowdays need to have both parents work and sometimes work more than 1 job and are still just barely able to afford to scrape by.

Yeah I tend to agree with this, and I’ll also add the billions that have been added into the economy through stimulus relief over the past two years will/does effect inflation.

But I don’t think minimum wage has done much with inflation. People think every state is now paying $12-$15 bucks an hour, seriously you talk to people and they think that’s the case, it’s not. There’s still an equal, or more, amount of states paying $5-$7 dollars an hour! And there is also a number of states paying under $10 dollars an hour...yet the states that are paying less are charging the same for that gallon of gas or cheeseburger at McDonalds.

I think It’s supply chain issues and corporations knowing they can charge what they want with supply and demand. And they’ll keep this up for as long as they can, maybe longer.

I’ll tell you what, having your kid make $15 dollars an hour in high school sure helps a parent out a little bit - you don’t have to give them gas money or pay for their insurance, cell phone, whatever - as much as you used to. And then those parents can go out and spend money because they have more of it. In theory.

Truth is, these are strange times and lots of people have inadvertently actually benefited a little bit here and there...and some a lot. No one wants to talk about that, heck, I know far too many people that double dipped like crazy during covid. Getting $700 a week while continuing to do their job under the table. Or, collecting unemployment while owning their own business...and actually buying other businesses while collecting and receiving the government business aid! and then this year they received a reimbursement for the taxes they paid towards their stimulus assistance. These people laughed and gladly accepted more of it, and they are the same people loudly talking about inflation and handouts. Then they went on four $10,000 dollar vacations last year during covid. I’m serious.

My point is, I just find it disingenuous when the same people that go out to dinner 7 days a week, and Took every handout (which I don’t blame them), and continued to live life during covid “just like they did before”, are now complaining about people making $12 bucks an hour in states where the average house price is untouchable for Most people. These are the same people that told me “we were all going to lose our jobs”, and now complain “no one wants to work”. The same people that bragged to me two years ago about how their investments were going up up and up, and now (while they’re still go up up and up), don’t even mention IT anymore, but talk about inflation. The same people who’s house value increased by $200,000 over the last two years, don‘t brag about it anymore. Instead it’s the extra $40 dollars a month they spend on gas. There’s just a little too much fear mongering going on in some circles right now.

 

[PWMDMD]

I still think you miss what I was trying to say. Adult children living at home should be like tenants and roommates instead of loafers in the basement. What do you do if you are empty nesters and you have roommates? You have the same expectation when your adult children "rent" a room from you. You need them to pay rent or get evicted, of course.

You don't provide free room to your tenant or pick up their dirty socks, and you don't tell them to eat their vegetables or be home for dinner at 7pm.

I get what you are saying and I totally agree - if you're living at home as an adult it ain't gonna be like when you were 14. I know of several 30-something-year-olds who are "chronically down and out" and living at home with their parents and living like they were when they were 14. The parents feed into it and they aren't doing their kids any favors. The expectation for our children should be that they get to a point in their lives where they can take care of themselves. Some of my friends don't see it that way...

 

[PandaBear]

Yeah I tend to agree with this, and I’ll also add the billions that have been added into the economy through stimulus relief over the past two years will/does effect inflation.

But I don’t think minimum wage has done much with inflation. People think every state is now paying $12-$15 bucks an hour, seriously you talk to people and they think that’s the case, it’s not. There’s still an equal, or more, amount of states paying $5-$7 dollars an hour! And there is also a number of states paying under $10 dollars an hour...yet the states that are paying less are charging the same for that gallon of gas or cheeseburger at McDonalds.

I think It’s supply chain issues and corporations knowing they can charge what they want with supply and demand. And they’ll keep this up for as long as they can, maybe longer.

I’ll tell you what, having your kid make $15 dollars an hour in high school sure helps a parent out a little bit - you don’t have to give them gas money or pay for their insurance, cell phone, whatever - as much as you used to. And then those parents can go out and spend money because they have more of it. In theory.

Truth is, these are strange times and lots of people have inadvertently actually benefited a little bit here and there...and some a lot. No one wants to talk about that, heck, I know far too many people that double dipped like crazy during covid. Getting $700 a week while continuing to do their job under the table. Or, collecting unemployment while owning their own business...and actually buying other businesses while collecting and receiving the government business aid! and then this year they received a reimbursement for the taxes they paid towards their stimulus assistance. These people laughed and gladly accepted more of it, and they are the same people loudly talking about inflation and handouts. Then they went on four $10,000 dollar vacations last year during covid. I’m serious.

My point is, I just find it disingenuous when the same people that go out to dinner 7 days a week, and Took every handout (which I don’t blame them), and continued to live life during covid “just like they did before”, are now complaining about people making $12 bucks an hour in states where the average house price is untouchable for Most people. These are the same people that told me “we were all going to lose our jobs”, and now complain “no one wants to work”. The same people that bragged to me two years ago about how their investments were going up up and up, and now (while they’re still go up up and up), don’t even mention IT anymore, but talk about inflation. The same people who’s house value increased by $200,000 over the last two years, don‘t brag about it anymore. Instead it’s the extra $40 dollars a month they spend on gas. There’s just a little too much fear mongering going on in some circles right now.

It is human nature to justify everything 'we' did as right and everything else that isn't good for us as 'wrong'. I would take a grain of salt on everything out there until after a while and see what is going on.

This is why the only truth in the world is competition. If you have a monopoly you will never know what the fair market price of something is, and you will never know what the fair wage is if all you have is union labor. Even back in Soviet-era there is black markets and smugglers. It is something that will never change in human civilization just like "the oldest profession".

Personally, I don't care what people do with their own money, taking vacations, etc. I do care what they do for me lately and whether what I pay is getting accepted (i.e. do people quit because they find my pay too low, do restaurants stop selling something because they are losing money, is another guy doing something just as good for a better price, etc). I will try to help when people are carrying their own weight trying to get out of poverty, or hardship of other kinds to a certain extent, but beyond that, you cannot fight human nature.

 

[CharlesInCharge]

As prices soar, I think one way to try to hedge against inflation is to aggressively try to find deals for tangible goods and turn cash into stuff you will ultimately need or that will hold value or increase in value. And bartering. I've done well bartering away oil from the Hurricane Walmart deal, and have traded favorably into electronics, locally raised beef that's now in my freezer, ammunition, a revolver, and other things.

Cash is losing badly right now and it makes me nervous sitting on cash.

 

[Silver]

If you are in supply chain, you've been seeing some raw materials double in price every 4-5 months. Now, new pricing is coming out on some things triple what it was a year ago. Right now we're seeing finished products being marked up solely due to demand and greed. In a few months I think we are going to see inflation based on insane rising costs of raw materials and it will be as much if not more than what we've already seen. There seems to be a lot of inflation hidden, working its way through the system that we haven't seen yet.

I've always been frugal but I'm about to go full minimalist on these freaks.

 

[CharlesInCharge]

There seems to be a lot of inflation hidden

Agreed with your entire post, and will note that the hidden inflation is another back breaker. Someone upthread commented on shrinking packaging plus increased prices. It's a hidden double whammy. Reduce package or otherwise dilute the product by 10%, increase price by 10%, and there's 20% inflation.

 

[Wolf359]

As prices soar, I think one way to try to hedge against inflation is to aggressively try to find deals for tangible goods and turn cash into stuff you will ultimately need or that will hold value or increase in value. And bartering. I've done well bartering away oil from the Hurricane Walmart deal, and have traded favorably into electronics, locally raised beef that's now in my freezer, ammunition, a revolver, and other things.

Cash is losing badly right now and it makes me nervous sitting on cash.

You can only do so much though. I've got all the cash in my brokerage account invested in the stock market and the rest is real estate holdings. No cash just sitting around aside from some small pocket change in checking accounts. I know some other people waiting for a stock market correction but meanwhile the S&P 500 is up over 24% year to date. While waiting for a 10-20% correction, they missed out on a 24% gain.

Inflation has been higher in the past so there's lots of panic in this thread. The sky is still blue and birds fly through it.

 

[02SE]

I know some other people waiting for a stock market correction but meanwhile the S&P 500 is up over 24% year to date. While waiting for a 10-20% correction, they missed out on a 24% gain.

They would likely say that hindsight is 20/20.

Asset management firms are required by law to tell potential investors that 'Past performance is no guarantee of future results' or words to that effect...

 

[Silver]

They would likely say that hindsight is 20/20.

Asset management firms are required by law to tell potential investors that 'Past performance is no guarantee of future results' or words to that effect...

I've been waiting on a correction for 5 years.

 

[PandaBear]

As prices soar, I think one way to try to hedge against inflation is to aggressively try to find deals for tangible goods and turn cash into stuff you will ultimately need or that will hold value or increase in value. And bartering. I've done well bartering away oil from the Hurricane Walmart deal, and have traded favorably into electronics, locally raised beef that's now in my freezer, ammunition, a revolver, and other things.

Cash is losing badly right now and it makes me nervous sitting on cash.

The problem with bartering is you can only do so much of it and you need to trust people you barter with (say your ammos don't work or your beef is rotten, that's too bad when you use it later). This is the whole reason why money is invented back then (seashells).

I like the idea of buying things that will hold value and is tangible goods. This is why investors are buying homes and converting them into rentals. They trust people will want to buy homes eventually, and the Fed can't print houses like they print money. The future price is now today's price. Not a good deal anymore but if you have a lot of everything already, you don't want to overpay and push the price up too much. There are only so many things you can buy with all the printed money, and houses are big-ticket items that they can buy pretty quickly.