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The Era of Very Low Inflation and Interest Rates May Be Near an End

nytimes.com

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Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#11

Post by samsonradu »

elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

Housing is not included in the CPI I believe. https://economics.stackexchange.com/questions/4777/why-arent...

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#12

Post by dang »

trustno1 wrote: post #2

So our savings will be inflated away at an only a slightly slower pace now? How kind of the Federal Reserve!

Can you please not create accounts to use HN for political flamewar? This is the sort of thing we're trying to avoid here.

https://news.ycombinator.com/newsguidelines.html

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#13

Post by sdhgaiojfsa »

elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

NY Case Schiller home price index is flat to slightly down over that period, actually. This is for the NYC metro area. I could be convinced that rent has doubled with housing price flat, but I'm guessing not?

https://us.spindices.com/indices/real-estate/sp-corelogic-ca...

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#14

Post by trustno1 »

elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

Inflation is not low, but the Fed must continually repeat that it is else the public would realize their savings and wages are being inflated away to pay off mountains of bad debt.

The fed's monetary policy is taxation without representation.

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#15

Post by quadyeast »

elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

I agree completely. Everything I buy has gotten much, much more expensive, food, housing, transportation etc. Not 2%/yr more like >5%/yr. The CPI is rigged. Probably in favor of those who must payout relative to it.

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#16

Post by refurb »

jdblair wrote: post #6
matte_black wrote: post #3

I'm not familiar with a world where interest rates and inflation aren't low. What should I expect?

Loans cost more. The interest rate on my first mortgage (in the 90's) was 7%.

Back in the 1970's a 12% interest rate on your mortgage was considered pretty good!

It basically reduces buying power for real estate. Using the google mortgage calculator and assuming a $1500 max monthly payment.

At a 3.92% (today) rate you can borrow ~$320K At an 8% rate you can borrow ~$200K

A 38% decrease in buying power. It's already happening in Canada as the gov't is trying to slow down the real estate market by making buyer qualify at a rate 2% higher than what it is today.

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#17

Post by txsh »

samsonradu wrote: post #11
elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

Housing is not included in the CPI I believe. https://economics.stackexchange.com/questions/4777/why-arent...

You’re right. Housing isn’t a consumer good. But CPI does fail to measure inflation in consumer goods. I agree with op that there has been inflation for years.

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#18

Post by tanderson92 »

> The shift looks to be driven mostly by a rise in investors’ expectations for future inflation. In the United States, prices of inflation-protected bonds imply that investors currently expect consumer prices to rise 2.09 percent annually over the next five years, up from 1.65 percent expected in September.

This claim that the shift is due to inflation expectations is inconsistent with the data. Most of the rate increases has been due to real interest rate increases, unless I am missing something which I don't think I am.

source: https://fred.stlouisfed.org/series/T5YIE, https://fred.stlouisfed.org/series/DGS5

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#19

Post by elvirs »

samsonradu wrote: post #11
elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

Housing is not included in the CPI I believe. https://economics.stackexchange.com/questions/4777/why-arent...

CPI does not include rent but thats what more than half of average couples combined income is spent on. (Couple with full time $15 per hour jobs living in $2000 per month apartment)

Re: The Era of Very Low Inflation and Interest Rates May Be Near an End

#20

Post by the_gastropod »

elvirs wrote: post #7

I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low

My rent has increased about 10% over the past decade... And I live in neighborhood that pretty rapidly gentrified ~6 years ago. Yours doubled? Really?
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