Still a lot of flowing USD everywhere

[c502cid]

I agree with every one of your points with the exception of the clubs. I was a member of the United Club for 18 years (I started when it was called the Red Carpet Club) and the Admirals club for 12. They started letting everyone in years ago, and it's just gotten worse with every credit card offer. Neither club membership team called me when I quit to even ask why. I see the lines to get in them and wonder how much worse they must be now.

The crowds at the local restaurants boggle my mind too!

 

[GMFan]

Here the restaurants and bars are ghost towns. Sure, the wealthy are doing great and spending money traveling. Many business owners were handed PPP loans that went to their pockets. The upper class benefited the most over the past couple years while middle class and working class not so much. I have some family that struggles every week to buy food.

 

[CKN]

Here the restaurants and bars are ghost towns. Sure, the wealthy are doing great and spending money traveling. Many business owners were handed PPP loans that went to their pockets. The upper class benefited the most over the past couple years while middle class and working class not so much.

If you are middle class and owned real estate chances are you benefited-at least on paper.

 

[Dave Hess]

This. On the other hand, car repossessions are going way up. The stats are quite interesting.

Yep. Lots of folks living on credit cards and a wave of defaults, vehicle repos, foreclosures and evictions are on the horizon. Inflation made things worse. People are now using Buy Now Pay Later apps like Affirm just to buy groceries !!!! They stopped buying big screen TVs and electronics, they are now needing Affirm to buy food.

Verizon and AT&T even said a few weeks ago that some Americans can’t pay their $100 phone bill on time.

Sure, there’s still wealthy folks spending big money….. but they are the minority of consumer spending.

How consumers use buy now, pay later apps to pay for food, gas and other basics

More shoppers are using apps like Klarna, Afterpay and Affirm to buy now and pay later for necessities as rising prices stretch budgets to the limit.

www.nbcnews.com

The guy on TV says everything is sunshine and rose, ignore the economy is in shambles and bad news headed our way.
.

 

[alarmguy]

If a recession is coming- it has not hit the consumer as of yesterday.

Agree and I dont think we will see one in the near future of a year or more, production on many items cant catch up with demand and once it does I think prices will level out.
Heck, I posted in here someplace my wife and I cant even go out to dinner much past 5Pm on weekends if we dont want an hour or more wait at the dozen restaurants around here.
... and as you know, we are building a new home and signed contracts just a month ago in an awesome place, had to act quick as the other homes we were looking at were being sold as fast as the builder was releasing them for sale, we snoozed and lost on those, not at all concerned about selling ours, in fact word of mouth has us a serious buyer without going to a MLS listing.

 

[dishdude]

My experience mirrors the OP's. My company (a large manufacturer) had our biggest sales month in August - ever. Everything is packed with consumers; the airports, stores, restaurants. Yet some are claiming we're in a recession...yeah, okay.

 

[Owen Lucas]

People are now using Buy Now Pay Later apps like Affirm just to buy groceries !!!! They stopped buying big screen TVs and electronics, they are now needing Affirm to buy food.

That's insane. If even a small portion of society continues to go this way, there could be major financial consequences that even massive stimulus / loan forgiveness / bailouts won't fix.

There would have to be a paradigm shift in the economy like universal basic income to combat this or people going into massive debt and staying poor longer, either way no solution will be easy. Hard, productive workers like I presume frequent this forum will end up paying the bill.

Maybe this is part of the plan? Digitize the dollar into a centrally backed digital currency and have easier control of spreading the wealth, seems un-American to me though.

 

[spackard]

To understand inflation, several factors must be taken into account: how money enters the economy, starting with the central bank and the lending activities of commercial banks in response to credit demand by the government, businesses, and households. Another factor is the rate of change in the circulation of the money supply. This so-called velocity of circulation depends on the actions of economic agents. Transactions increase or decrease depending on how quickly people, firms, and government agencies spend their money. The more money moves from hand to hand, the higher the so-called money velocity. Therefore, the velocity of circulation must not be regarded as a purely statistical concept by dividing the nominal national income by the respective monetary aggregate. Velocity is a concept of human action.

An increase in money prices means a reduced purchasing power. Because human action takes place from moment to moment, from decision point to decision point, expectations change with the circumstances. If an individual expects rising prices for the goods he plans to purchase, he will increase the speed of his spending, and when falling prices are expected, his transaction frequency will tend to fall. This creates a self-reinforcing loop: existing price inflation tends to accelerate because people want to turn their money into goods as quickly as possible. In contrast, price deflation will deepen when people prefer to wait on spending because they expect that prices will fall further.

If prices continue to rise, the transaction speed increases, and the inflation feeds itself. Similarly, the expectation of price decreases encourages hoarding.
...
A new chapter opened toward the end of 2021. The free fall of the velocity ratio has stopped. At the same time, price inflation took off and accelerated in early 2022. A reversal of the velocity trend imminent. Even more extreme price rises will follow when inflationary expectations take hold. In this case, the velocity of circulation will shoot up, and the Fed will be able to do nothing to stop it.

Source: https://mises.org/wire/fed-gets-it-wrong-money-velocity-too
04-May-22

 

[alarmguy]

Yep. Lots of folks living on credit cards and a wave of defaults, vehicle repos, foreclosures and evictions are on the horizon. Inflation made things worse. People are now using Buy Now Pay Later apps like Affirm just to buy groceries !!!! They stopped buying big screen TVs and electronics, they are now needing Affirm to buy food.

Verizon and AT&T even said a few weeks ago that some Americans can’t pay their $100 phone bill on time.

Sure, there’s still wealthy folks spending big money….. but they are the minority of consumer spending.

How consumers use buy now, pay later apps to pay for food, gas and other basics

More shoppers are using apps like Klarna, Afterpay and Affirm to buy now and pay later for necessities as rising prices stretch budgets to the limit.

www.nbcnews.com

The guy on TV says everything is sunshine and rose, ignore the economy is in shambles and bad news headed our way.
.

I can’t say I disagree with you, not at all but I do wonder when that day will actually come, it could be tomorrow but I think we still may have another 10 years of debt building until it all falls down.
Post Covid people have a lot of room on their credit cards, a lot of equity in their homes, car loans have been paid down due to lack of cars available.
Now on the horizon we may have car loans approaching 10 years, home loans approaching 45 years And last but not least as pointed out anything you buy in a store can now be made in payments.

Again I agree, and again as you might know I expected this House of cards to fall a long time ago, but I’m always surprised about the new and innovative ways people get themselves into debt, throw in what the federal government is doing and that is why I think maybe we have another decade to go.
One day the straw that breaks the camels back will happen and it will happen big.
I’m personally prepared for it and I think maybe my kids are but I am concerned about them because as well as I taught them they are still too young to see the ramifications of what is taking place.

 

[Owen Lucas]

In this case, the velocity of circulation will shoot up, and the Fed will be able to do nothing to stop it.

Isn't the fed starting quantitative tightening by removing, IIRC, $50 Billion from the monetary supply every month?

If an individual expects rising prices for the goods he plans to purchase, he will increase the speed of his spending, and when falling prices are expected, his transaction frequency will tend to fall. This creates a self-reinforcing loop: existing price inflation tends to accelerate because people want to turn their money into goods as quickly as possible. In contrast, price deflation will deepen when people prefer to wait on spending because they expect that prices will fall further.

Very well explained, I've heard JPow refer to this briefly as the concept of inflation being a self fulfilling prophecy. These purchasers you mention buy high and sell low, emotional investing and that makes sense that it carries on into every day purchasing.

Many of my friends and family are not buying into stocks now thinking they will go lower. I emphasized they are all on sale, nicely discounted, and ride the dip. "You guys aren't retiring any time soon so invest your money". Many people were used to the market going to the moon thinking it would continue to shoot past into infinity. Now is the time to pay.

 

[alarmguy]

Here you go and why I feel we have up to another 10 years before the house of cards falls down, who knows?
I’m not claiming to know anything just my reason as to why I feel this way in my other post before this one.

I just read this, they plan on 21 states to start.
We aren’t done handing out money and loans freely =

“Putting together a down payment on a
home can be a huge hurdle for some
buyers.
Bank of America aims to help by
launching a mortgage that doesn't
require upfront payment.
It doesn't require a minimum credit
score but considers factors like rent
and insurance payments.”

 

[Dave Hess]

Here you go and why I feel we have up to another 10 years before the house of cards falls down, who knows?
I’m not claiming to know anything just my reason as to why I feel this way in my other post before this one.

I just read this, they plan on 21 states to start.
We aren’t done handing out money and lians do freely =

“Putting together a down payment on a
home can be a huge hurdle for some
buyers.
Bank of America aims to help by
launching a mortgage that doesn't
require upfront payment.
It doesn't require a minimum credit
score but considers factors like rent
and insurance payments.”

Very bad idea if these people can’t put down a down payment….

How will they pay their property taxes, insurance, HOA, etc… ?

 

[dlundblad]

The credit cards aren't maxed out yet.

I’m betting there’s a lot of truth to this statement.

 

[dlundblad]

Here the restaurants and bars are ghost towns. Sure, the wealthy are doing great and spending money traveling. Many business owners were handed PPP loans that went to their pockets. The upper class benefited the most over the past couple years while middle class and working class not so much. I have some family that struggles every week to buy food.

I thought PPP loans were to be given to the employees and to the owner for their salary and overhead.

I also thought businesses who received the PPP loans while remaining open weren’t supposed to lay off regardless of sales.

 

[jeepman3071]

About 3 years Ago I would help my friend pocking up food 2 days a week for a food bank . It was fun and I did it for a little more than a year. One Saturday I went to watch the food given out. Most of the people had nicer vehicles than I did , smoked or were tatted up and dressed nicely. I stopped helping at the food bank.

Yep, it's quite interesting. A few years ago I was working with one of my company's school district clients. We were handing out laptops at the start of the pandemic to families who couldn't afford to purchase one for their kid. Many of these kids were on the state free lunch plan. The parents were rolling up in brand new Mercedes SUVs, Denalis, etc.

 

[Vil_Riker]

Somebody described our economic system as "imaginary wealth". Living off of credit which is created out of nothing.

Doesn't get any better than that.

 

[Vil_Riker]

I thought PPP loans were to be given to the employees and to the owner for their salary and overhead.

I also thought businesses who received the PPP loans while remaining open weren’t supposed to lay off regardless of sales.

There were two tracks, and there were strings attached. You are correct about your statement.

 

[UncleDave]

Somebody described our economic system as "imaginary wealth". Living off of credit which is created out of nothing.

Doesn't get any better than that.

It isn't just "our" system, every fractional reserve banking system is basically imaginary wealth created out of thin air based on a small amount of actual currency.

 

[UncleDave]

I thought PPP loans were to be given to the employees and to the owner for their salary and overhead.

I also thought businesses who received the PPP loans while remaining open weren’t supposed to lay off regardless of sales.

It was pretty rigorous from what I recall.

There was a % you had to retain, and whether it became a loan, or was forgiven, was based on what % you retained at what salary, and what your financial performance was like during the period.

I can attest to it doing exactly what was intended for in our case. We would have laid off hard and early otherwise because no one knew how long and deep this would go.

Now we are in a position where we dont know how long we can operate without getting parts. There is seemingly no end in sight to the shortages. We've had to reengineer 60+ products to use parts that are supposedly available.

 

[Vil_Riker]

There were two tracks, and there were strings attached. You are correct about your statement.

It's not only fractional banking. It's a fiat currency plus a system where deficits don't matter.