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Inflation is at a 40 year high. What can history teach us?

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Re: Inflation is at a 40 year high. What can history teach us?

#191

Post by tcbawo »

rdtwo wrote: post #134
compumike wrote: post #17

It may also help to see the cumulative inflation picture: https://totalrealreturns.com/s/USDOLLAR?normalize=end (disclosure: my side project) The 1974 and 1980 peaks from the article correspond to the steeper slope regions in those same years on my graph. (I'm plotting 1/[CPI-U price level], while the article is plotting d/dt [CPI-U price level]) On my y-axis is the purchasing power of a US dollar, relative to curren…

Yeah but that’s not the whole picture… in 1962 the ford truck was $2000 now is around 40,000 so while a new one is better you still have to earn 2x as much to get the most basic one available

I think a new 2022 Ford F-150 will run closer to $60k.

Re: Inflation is at a 40 year high. What can history teach us?

#192

Post by Spooky23 »

Syonyk wrote: post #142
mrep wrote: post #129

Earlier quoted context omitted.

Where are you at? I ask because I have 2 mortgages and a car loan in the US and 2 are fixed rate for the entire lifetime of the loan and 1 I have 10 years until the ARM starts applying so I'm laughing all the way to the bank. 90% of US mortgages are fixed for the entire loan.

I'm in the US. I certainly could do something like that. I just won't. I hope it works for you. That's a level of debt-based risk that neither myself nor my wife have any interest in. There have been a lot of people throughout history who thought similar arrangements were "sure things," and they were, up until they weren't and it all came down around their ankles. We live in a very modest ( manufactured, gasp! ) home…

You do you. But assets like real property are historically good investments. It doesn’t make sense to not buy the best house you can afford.

I’m with you with cars… but even then the maintenance expense starts to catch up.

Re: Inflation is at a 40 year high. What can history teach us?

#194

Post by commandlinefan »

groby_b wrote: post #74
beerdoggie wrote: post #54

In California, people fitting certain economic criteria are now being issued $1000 checks for inflation relief. This is beyond ludicrous. We have printed so much money, the only solution is to... print more? It's almost like it is all a sneaky backdoor to letting the government redistribute wealth without real oversight...

Given that California can't print money, why do you think those checks are "printing money"? And no, it's not a "sneaky backdoor". It's the government doing what it should do, tighten financial inequality gaps. And preventing unnecessary suffering. We're still a society, we occasionally take care of the weaker people amongst us. (Frankly, not often enough) And "without real oversight" is... you're aware this is going…

> the government doing what it should do, tighten financial inequality gaps

No, that’s really, really not what the government should be doing.

Re: Inflation is at a 40 year high. What can history teach us?

#195

Post by [deleted] »

Spooky23 wrote: post #190
Syonyk wrote: post #168

Earlier quoted context omitted.

> Concern over US natural gas supply is not warranted. At all. How'd that work for Texas a couple winters ago? Or a decade ago? Supply is more than just what's in the ground - it's the entire infrastructure related to delivering it to the various loads, and we've demonstrated at various points that it's not in as good of shape as people like to assume. Also, someone is literally blowing up pipelines over in Europe. D…

Texas is a broken theocracy. Cold places have pretty robust gas infrastructure, but cannot grow it because of the green people with gas heat who want all new installs to be heat pumps.

[deleted]

Re: Inflation is at a 40 year high. What can history teach us?

#196

Post by csomar »

mrep wrote: post #129
Syonyk wrote: post #21

> But if the main driver of inflation is the demand side, or inflation expectations, history indicates that a painful recession could be the only way to curb inflation. That's certainly the expected path forward, at least in the circles I associate with. "When the tide goes out, you find out who's swimming naked" seems a reasonable guess as to what's going to happen. Both at larger bank/investment firm scale and at t…

Where are you at? I ask because I have 2 mortgages and a car loan in the US and 2 are fixed rate for the entire lifetime of the loan and 1 I have 10 years until the ARM starts applying so I'm laughing all the way to the bank. 90% of US mortgages are fixed for the entire loan.

There is no fixed rate loan. It's all variable. There is a trader (might be the bank) that is buying variable rate and selling you a fixed rate. If he goes bankrupt, somebody will be holding the bag.

You might want to re-read your terms if the interest rates get much higher.

Re: Inflation is at a 40 year high. What can history teach us?

#197

Post by csomar »

Spooky23 wrote: post #192
Syonyk wrote: post #142

Earlier quoted context omitted.

I'm in the US. I certainly could do something like that. I just won't. I hope it works for you. That's a level of debt-based risk that neither myself nor my wife have any interest in. There have been a lot of people throughout history who thought similar arrangements were "sure things," and they were, up until they weren't and it all came down around their ankles. We live in a very modest ( manufactured, gasp! ) home…

You do you. But assets like real property are historically good investments. It doesn’t make sense to not buy the best house you can afford. I’m with you with cars… but even then the maintenance expense starts to catch up.

> But assets like real property are historically good investments.

This is wrong and might be misleading for some people. Real-estate where you live is certainly a good investment (if you are planning to live there). However, real-estate is a risky investment. I have passed through lots of abandoned commercial and residential buildings now that I'm pretty sure I'm never going to invest in real-estate.

Re: Inflation is at a 40 year high. What can history teach us?

#198

Post by taftster »

zeckalpha wrote: post #185
rdtwo wrote: post #134

Earlier quoted context omitted.

Yeah but that’s not the whole picture… in 1962 the ford truck was $2000 now is around 40,000 so while a new one is better you still have to earn 2x as much to get the most basic one available

They also last much longer

Or we are forced to make them last longer.

Re: Inflation is at a 40 year high. What can history teach us?

#199

Post by collegeburner »

compumike wrote: post #17

It may also help to see the cumulative inflation picture: https://totalrealreturns.com/s/USDOLLAR?normalize=end (disclosure: my side project) The 1974 and 1980 peaks from the article correspond to the steeper slope regions in those same years on my graph. (I'm plotting 1/[CPI-U price level], while the article is plotting d/dt [CPI-U price level]) On my y-axis is the purchasing power of a US dollar, relative to curren…

nice site you built. where did you source the data?

Re: Inflation is at a 40 year high. What can history teach us?

#200

Post by wpietri »

jrm4 wrote: post #81
wpietri wrote: post #66

Earlier quoted context omitted.

If you compare the volatility of common cryptocurrencies with the volatility of pretty much any major currency, crypto is way worse. (E.g., GBP and US inflation are around 9%, this year, but Bitcoin and Ethereum are down by 70%). The most important thing for a store of value is that it actually holds value, but crypto has a poor track record there.

Sure. I'm less going by "history" and more by "first principles." Crypto provably does what it says on the tin to some degree, even if that degree is low. I wouldn't use recent past performance as a strong predictor of immediate future performance; thinking more long term possibilities.

I have to wonder when imaginary "first principles" speculation for crypto will give way to evaluating it on its actual track record.
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