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How This Ends

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Re: How This Ends

#121

Post by mym1990 »

FollowingTheDao wrote: post #77
freediver wrote: post #31

Earlier quoted context omitted.

> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.

This is the truth. What people do not understand is that interest rates will have to rise above inflation for in inflation to slow down. I assume the FED is trying to figure out how much inflation is caused by the money supply and how much is caused by supply chain issues. But too me this means even more trouble because they are waiting when there was obvious asset inflation well before the supply chain issues. IMHO,…

Can you explain why interest rates will HAVE to rise above inflation for it to slow down? CPI is already slowing down, although we have some very limited data points currently. A lot of inflation is driven by expectation, and raising interest rates is a way to tame those expectations for consumers, but I don't think the rates have to arbitrarily go above inflation to tamper it.

Re: How This Ends

#122

Post by josephcsible »

randomsearch wrote: post #74
SV_BubbleTime wrote: post #57

Earlier quoted context omitted.

>Yes, they did sit down and think that through. That's their job. This is not the first epidemic. So was “Two weeks to flatten a the curve” the plan that just happened to extended into a year or an always an intended lie?

Reality is the public couldn’t handle the facts. When scientists in the U.K. started talking about herd immunity - the only way out of a pandemic - people went nuts and they quickly had to stop using the term and start reassuring more than informing. Average pandemic is about four years, not much has changed. They just had to keep people going at the time.

> the public couldn’t handle the facts

That sounds a lot like saying "I'm smarter than you, so I'm going to lie to you, but trust me, it's for your own good".

Re: How This Ends

#123

Post by csomar »

300bps wrote: post #97
natly wrote: post #71

Getting really annoying to have to keep track of macro events affecting my life year after year instead of just being able to live a normal peaceful life.

There are lots of people who have not paid much attention to these “macro events” you speak of and it has not impacted them in any meaningful way. Covid came closest to impacting my life. But I got the Pfizer shot as early as I was legally able, same thing with a booster and pretty much have just gone about my life as usual for most of the pandemic while never getting Covid. The rest of it going on - I just don’t eve…

Covid impacted most people around the world. Professionally and socially. The Ukraine war started as a local war, but now it's affecting Europe and third-world countries who depended on Ukraine for wheat.

These last macro-events caught many people by surprised. This inflation cycle is also affecting most of the world (since import prices will factor in lots of goods).

Re: How This Ends

#124

Post by tempsy »

chrisco255 wrote: post #66
freediver wrote: post #31

Earlier quoted context omitted.

> that bond yields would never normalize. Now that they have, there is a risk free alternative to stocks. Treasury bond yields are 3%, inflation is 8.5%, so in real terms you are guaranteed to lose 5.5% annually if you hold bonds. Or basically instead of risk-free gain you are holding gain-free risk.

Risk-free loss? But maybe it's better than cash, the only other risk-free alternative? Perhaps you're paying for preservation of capital as the asset bubble deflates, and maybe that's not a bad deal?

you can buy $10k in inflation protected bonds a year per person or $15k if you buy via a tax refund

Re: How This Ends

#125

Post by dkarp »

300bps wrote: post #97
natly wrote: post #71

Getting really annoying to have to keep track of macro events affecting my life year after year instead of just being able to live a normal peaceful life.

There are lots of people who have not paid much attention to these “macro events” you speak of and it has not impacted them in any meaningful way. Covid came closest to impacting my life. But I got the Pfizer shot as early as I was legally able, same thing with a booster and pretty much have just gone about my life as usual for most of the pandemic while never getting Covid. The rest of it going on - I just don’t eve…

Presumably you don't live in an urban area then?

Re: How This Ends

#126

Post by chmod600 »

fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

I motice that you left out real estate from your analysis.

RE is interesting because it's both an asset as well as something you can use. So if there's general inflation, it's got both upward pressure (because it's an alternative to rent from a consumer standpoint) and downward pressure (because bonds are an alternative to RE from an investment standpoint).

Re: How This Ends

#127

Post by SV_BubbleTime »

symlinkk wrote: post #29
herf wrote: post #28

I agree we are working through an asset bubble in tech and housing - P/E's went quite a ways above the historical line, as did housing prices. But think about the chip shortage (automotive, consumer electronics) - raising interest rates does not "fix" supply and make prices lower. Think about oil & gas markets. Think about labor shortages. When supply is broken, it's not only a monetary policy problem. Most of these…

The “chip shortage” was fake. The actual issue was inflation since the start.

>The “chip shortage” was fake. The actual issue was inflation since the start.

Whew. Good new for me then! I guess I’m not 99 weeks out on a required part anymore.

Re: How This Ends

#128

Post by mym1990 »

Spooky23 wrote: post #99
natly wrote: post #71

Getting really annoying to have to keep track of macro events affecting my life year after year instead of just being able to live a normal peaceful life.

Agreed. Unfortunately, we’ve inherited the mess that our parents and grandparents left for us.

Pointing fingers isn't going to help with anything, whether its your parents or your next door neighbor. At some point we just need to take ownership and work towards a better future, but accountability seems to be pretty rare these days(whether its your issue or not).

Re: How This Ends

#129

Post by [deleted] »

voisin wrote: post #3
omginternets wrote: post #2

I don’t have any good mental tools to distinguish between useful and useless economic predictions like this. How does HN navigate this kind of thing?

Be wary of anyone making firm statements about the future of anything. This article doesn’t do that. This article is merely drawing similarities with past events and concludes: > First, we need to see the economy slow down and inflation slow down. We need to see stocks bottom out and hang out there for a while. And we need to be patient. None of this is going to happen fast. This seems reasonable. Wait and see based…

[deleted]

Re: How This Ends

#130

Post by EGreg »

fny wrote: post #24

I'm going to explain what has happened so far. What happens next entirely depends on how inflation continues and the feds reaction. 1. We had zero percent interest rates. This causes the value of assets with cash flows out into the future (think speculative tech, Tesla) to accelerate. 2. We had massive herding in megacap tech. These valuations are high in part because for a decade you would not have beat the index wi…

Why would bonds and cash be wrecked?

You even say that bonds would be a good deal

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