Is Inflation Going To Cripple The Economy ?

[PandaBear]

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.

Greeds compete with other greeds on both buying and selling sides, and when they finally agree on the deal it is the market price. The only way you can make it work is to have multiple buyers and sellers, otherwise it is a monopoly and regardless of good and bad times it would be overpriced or priced too low and sellers go out of business.

There is no way around it. Every attempt in human civilization to regulate and prevent monopoly and corruption has failed miserably.

 

[Wolf359]

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...

Yeah, but I've played this game before. They said the same thing back in 1996, kept going up for 4 years and then finally crashed in 2000 and they said it was going to crash all the time leading up to 2000. But guess what? It never crashed back down to 1996 levels and we are pretty far from that now.

 

[odie]

Is likely , many people are overextending their finances . Less money to put back into the economy .

 

[javacontour]

Is likely , many people are overextending their finances . Less money to put back into the economy .

How so?

Consumers paid down credit over the past 18 months.

I just read an article that retirements are about 2x what they should have been given the demographics during that period. Folks took the money and paid down loans, etc. They are taking their gains in the market, or selling higher priced homes and moving to their retirement place with a stack of cash.


Likewise, Social Security benefits applications are LOWER than expected as many of these retirees are delaying taking Social Security. They have enough assets to wait. I believe it's not just lower for the number who did retire, but lower numbers from the lower expected to retire based on demographics numbers.

Does that describe everyone? No, but it describes enough people for it to put a dent in the numbers of those filing for SS benefits.

And before you say a bunch of folks died, the odds are most of them were already on benefits as 85% of the deaths were in the 65 and older co-hort, so they were probably already collecting benefits.

So is the "many people" indicative of the normative situation? There doesn't seem to be a stampede of people returning to work. In fact, it seems to be the other direction. Are they overextended, or are they (do they believe) they are set for now and don't have to work.

The same question for both those retiring and others who are not returning to the workplace.

I don't believe it's all rainbows and unicorns. But I don't see it as all doom and gloom either. Just another in an endless series of adjustments and things change.

 

[Silver]

Greeds compete with other greeds on both buying and selling sides, and when they finally agree on the deal it is the market price. The only way you can make it work is to have multiple buyers and sellers, otherwise it is a monopoly and regardless of good and bad times it would be overpriced or priced too low and sellers go out of business.

There is no way around it. Every attempt in human civilization to regulate and prevent monopoly and corruption has failed miserably.

There isn't enough supply at any stage in the product life so every seller can name their price. Suppliers are telling customers to go to other suppliers. Not a monopoly, but pricing looks like one. Only cash healthy companies can afford these prices.

 

[CharlesInCharge]

How so?

Consumers paid down credit over the past 18 months.

I just read an article that retirements are about 2x what they should have been given the demographics during that period. Folks took the money and paid down loans, etc. They are taking their gains in the market, or selling higher priced homes and moving to their retirement place with a stack of cash.


Likewise, Social Security benefits applications are LOWER than expected as many of these retirees are delaying taking Social Security. They have enough assets to wait. I believe it's not just lower for the number who did retire, but lower numbers from the lower expected to retire based on demographics numbers.

Does that describe everyone? No, but it describes enough people for it to put a dent in the numbers of those filing for SS benefits.

And before you say a bunch of folks died, the odds are most of them were already on benefits as 85% of the deaths were in the 65 and older co-hort, so they were probably already collecting benefits.

So is the "many people" indicative of the normative situation? There doesn't seem to be a stampede of people returning to work. In fact, it seems to be the other direction. Are they overextended, or are they (do they believe) they are set for now and don't have to work.

The same question for both those retiring and others who are not returning to the workplace.

I don't believe it's all rainbows and unicorns. But I don't see it as all doom and gloom either. Just another in an endless series of adjustments and things change.

For a variety of reasons, there are massive migratory movements going on in this nation. Inflation is actually PART of the cause, as people indeed sell wildly overpriced properties in certain areas, and flee to cheaper and more hospitable areas. There are both economic and non-economic reasons why we are seeing droves of people retiring early as well. Many industries are short staffed, and cannot pay enough to attract workers - and that is due in part to inflation. People are choosing to live and enjoy life, versus going to work only to make 25% less this year because inflation has gouged their incomes. It is also demoralizing watching people be paid to stay home, while others go to work.

In short there are a lot of micro and macro economic events, causing huge ripple effects in the economy. There are no doubt winners and losers as this shakes out; but the winners are typically the wealthy who leapt forward, and the losers typically the poor who have their savings eaten away by large amounts this year.

 

[Leo99]

For a variety of reasons, there are massive migratory movements going on in this nation. Inflation is actually PART of the cause, as people indeed sell wildly overpriced properties in certain areas, and flee to cheaper and more hospitable areas. There are both economic and non-economic reasons why we are seeing droves of people retiring early as well. Many industries are short staffed, and cannot pay enough to attract workers - and that is due in part to inflation. People are choosing to live and enjoy life, versus going to work only to make 25% less this year because inflation has gouged their incomes. It is also demoralizing watching people be paid to stay home, while others go to work.

In short there are a lot of micro and macro economic events, causing huge ripple effects in the economy. There are no doubt winners and losers as this shakes out; but the winners are typically the wealthy who leapt forward, and the losers typically the poor who have their savings eaten away by large amounts this year.

Interesting you say that some real estate is wildly overpriced. I believe the real estate market to be as close to a perfect market and real estate is as perfectly priced as you can get. My house in Kansas will cost $250k and cost $2.5M in San Francisco. That's because of location. There are certainly people at my company selling their houses in expensive areas and moving to less expensive areas now that proximity to our office is not needed for working from home. The market will adjust. Prices will temper is NYC while they will rise is various popular areas elsewhere.

 

[53' Stude]

Thank God I’m a saver money wise and responsible. Some of my “irresponsible decision maker coworkers” are now finding how hard inflation can bite them.


I live one day at a time and pay it forward when I can. I’m pretty well off also and responsible.

 

[Wolf359]

It is also demoralizing watching people be paid to stay home, while others go to work.

What are you talking about? The extra bonus for the unemployed ended in September and many states ended it early. The ones at home collecting unemployment now only get 50% or less of their working wage. That set up has been going on for decades.

 

[CharlesInCharge]

What are you talking about? The extra bonus for the unemployed ended in September and many states ended it early. The ones at home collecting unemployment now only get 50% or less of their working wage. That set up has been going on for decades.

I think you've answered your own questions.

 

[Wolf359]

I think you've answered your own questions.

You basically make no sense. It's unemployment insurance. Employers pay into a fund in case they have to lay people off. When unemployment is high, the state or federal government kicks in extra money otherwise the state would have to jack up the rate on employers. You find that demoralizing? You're easily demoralized.

 

[92saturnsl2]

My observation is that your area is a place with obnoxious prices on housing. Taxed quite a bit, high cost of living.

ahem.. like New Jersey?

 

[Dave Hess]

I wonder how many BITOG members help their adult kids get by ?

 

[eljefino]

A bunch of people have a bunch of money they didn't spend in 2020 on "frivolities" like vacations and dinners out.

Now there are supply chain problems, and people just said, meh, I'll pay more to be sure I get what I want.

Then you've got people earning more money at their primary jobs so they're quitting secondary jobs, and the creators of those (lousy) secondary jobs are flailing around wondering why people don't want to be waitstaff at their ass-slapping restaurant.

 

[CharlesInCharge]

You basically make no sense. It's unemployment insurance. Employers pay into a fund in case they have to lay people off. When unemployment is high, the state or federal government kicks in extra money otherwise the state would have to jack up the rate on employers. You find that demoralizing? You're easily demoralized.

Good grief. https://usdebtclock.org/

 

[Wolf359]

Good grief. https://usdebtclock.org/

Like I said, easily demoralized. Other countries have gone even higher as a percentage of GDP.

S&P 500 is now up over 24.5% now.

There's been inflation before in the 4-6% range and the world/economy didn't end.

https://www.usinflationcalculator.com/inflation/historical-inflation-rates/

 

[doublebase]

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.

Anything in cash usually loses me money. I don’t even know why I bother anymore? Years and years and years I’ll always carry a bond fund or two, and year after year they drag me down.

I usually go pretty heavy with index funds 90% index and 10% bonds. For years I played it “safe” and was 70% indexes and 30% conservative. And I always had myself dragged down by the conservative. And during the bad years, I still lost anyway. But I do worry about a serious downturn because I just can’t see how this can keep sustaining like this.

 

[Wolf359]

Good grief. https://usdebtclock.org/

https://quotefancy.com/quote/123252...nsense-Space-is-blue-and-birds-fly-through-it

 

[Wolf359]

Anything in cash usually loses me money. I don’t even know why I bother anymore? Years and years and years I’ll always carry a bond fund or two, and year after year they drag me down.

I usually go pretty heavy with index funds 90% index and 10% bonds. For years I played it “safe” and was 70% indexes and 30% conservative. And I always had myself dragged down by the conservative. And during the bad years, I still lost anyway. But I do worry about a serious downturn because I just can’t see how this can keep sustaining like this.

I got rid of bond funds a long time ago. They used to say keep money in bonds as it'll do the opposite of stocks, when stocks are down, bonds will be up and vice versa, But lately they're in lock step so why bother locking in a lower rate of return. I've basically pared my holdings down to a large chunk of the S&P 500 and the rest in funds that tend to track the Nasdaq more. I guess we'll see what happens and as the saying goes from a guy falling out of a window before hitting ground, so far so good...

 

[CharlesInCharge]

Like I said, easily demoralized. Other countries have gone even higher as a percentage of GDP.

S&P 500 is now up over 24.5% now.

There's been inflation before in the 4-6% range and the world/economy didn't end.

https://www.usinflationcalculator.com/inflation/historical-inflation-rates/

Nobody who is paying attention thinks it's below 20% inflation.