Americans Are Still Spending Like There’s No Tomorrow
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Re: Americans Are Still Spending Like There’s No Tomorrow
#2Re: Americans Are Still Spending Like There’s No Tomorrow
#3[deleted]
Re: Americans Are Still Spending Like There’s No Tomorrow
#4I had an interesting thought.
I was in the market to buy a house during like... 2019-2021. What "was supposed to be" say... a $450k 3/2 house became $540k during "the COVID pandemic housing gold rush" when rates were 3.25% with everybody bored, willing to have a bidding war (low supply, high demand... how all of these families were able to afford what felt like $200k inflated prices, I guess because of the "funny money" equity inflation in their house and they just rolled it over?)
(Unrelated but Zillow says at 7.5% interest rates that house is now $750k+, weird... makes no sense... counter-intuitive, except for how tight the supply/demand situation must be)
Long story short... I never made that move. I kept renting. Probably "below my means". Then I put a bunch of money into a money market fund that yields 5%.
So... the Fed is raising rates to 5% to try and slow inflation. But now I'm earning 5% on a bunch of money to the point that it basically offsets my rent.
So now I have more money to spend/am less financially "tight"...
doesn't that contribute to inflation? me having an "oversupply" of money will increase my demand for... travel, frivolous purchases (which was the original problem when business owners got more than what they needed influx wise with PPP loans, or consumers getting "covid relief" and then spending it on things that trickled up to business owners, etc.)
Re: Americans Are Still Spending Like There’s No Tomorrow
#5Re: Americans Are Still Spending Like There’s No Tomorrow
#6We aren't buying more stuff, stuff is just more expensive.
Re: Americans Are Still Spending Like There’s No Tomorrow
#7I had an interesting thought. I was in the market to buy a house during like... 2019-2021. What "was supposed to be" say... a $450k 3/2 house became $540k during "the COVID pandemic housing gold rush" when rates were 3.25% with everybody bored, willing to have a bidding war (low supply, high demand... how all of these families were able to afford what felt like $200k inflated prices, I guess because of the "funny mon…
> So... the Fed is raising rates to 5% to try and slow inflation. But now I'm earning 5% on a bunch of money to the point that it basically offsets my rent. ... doesn't that contribute to inflation?
I don't think your case is all that common. The vast majority of people don't have that much money such that they could earn say $1500+/month with rates at 5%. Offsetting you are a whole lot of people who only have a few thousand dollars available in case of emergency and many more who don't even have that.
(that said, I'm really enjoying making 5.5% on tbills.)
Re: Americans Are Still Spending Like There’s No Tomorrow
#8I had an interesting thought. I was in the market to buy a house during like... 2019-2021. What "was supposed to be" say... a $450k 3/2 house became $540k during "the COVID pandemic housing gold rush" when rates were 3.25% with everybody bored, willing to have a bidding war (low supply, high demand... how all of these families were able to afford what felt like $200k inflated prices, I guess because of the "funny mon…
It incentivizes you to continue saving the principal, rather than dump it into house. For others, higher rates disincentivize taking marginal credit card debt and large mortgages. Fewer businesses will get credit and will have less to spend on employees (who might otherwise be bidding up wages against other prospective employers).
Re: Americans Are Still Spending Like There’s No Tomorrow
#9[deleted]
Re: Americans Are Still Spending Like There’s No Tomorrow
#10I had an interesting thought. I was in the market to buy a house during like... 2019-2021. What "was supposed to be" say... a $450k 3/2 house became $540k during "the COVID pandemic housing gold rush" when rates were 3.25% with everybody bored, willing to have a bidding war (low supply, high demand... how all of these families were able to afford what felt like $200k inflated prices, I guess because of the "funny mon…
IANREE (I Am Not a Real Estate Expert) so please take the following with a grain of salt. If you want to buy a house and believe you can afford one (even at an "inflated" price) along with the cost of maintenance, property taxes, assessments, etc. then go ahead and do it. Best case scenario, real estate values continue to rise and you’re glad you made the move. Worst case, there’s a 2008-style crash and you and millions of other voters get government bailouts.
If you’re happy in your current situation, that’s great too!