181–190 of 239 posts
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> This is clearly a result of the monetary base expanding at unprecedented levels due to covid (~40% in 2 years). Or, it's because supply chain disruptions have caused shortages, and there's more demand post-reopening chasing a smaller base of supply. Japan more than tripled its money supply since 1990 and CPI remained dead-ass flat for thirty years. It's not sufficient to say that an increase in the money supply nec…
> Or, it's because supply chain disruptions have caused shortages, and there's more demand post-reopening chasing a smaller base of supply. Here's a thought. Supply chain shortages mean people are buying less and obviously some prices are sticky. For instance, I can't buy a new car regardless of price. The price takes a while to adjust wand when "supply chain" clears up, I'll just be able to buy my car at a higher pr…
I don't expect prices to fall back down meaningfully - especially after a few wage/price cycles. However, I do expect them to stop going up, which is just as good after a few wage/price cycles. There's no reason to think the prices will continue to go up 7% per year.
Especially when in your particular example, between January and February, the price of a new car went up 0%, and a used car went up 1.5%, down from last months 3.3%. [1] Gas prices are down 1% and piped gas down 0.5%. There are signs that things are starting to turn around.
> While it is true that not every money supply increase has led to inflation, almost all high inflationary periods coincided with the money supply growing.
Correlation != causation.
> I think you need to check again. We're at 26 S&P. Last time it was this high was 2008. Time before then was briefly in 1890s (not a typo)
It's currently 25.86. In 2020, it was 25. In 2018, it was 25. In 2009 it hit 123. In 2003, it was 32. In 2002 it was 46. In 2001 it was 27. In 1999 it was 33.
Yeah, it's a little higher than average, but that's likely just due to 0% interest rates and a newfound penchant for margin lending. I don't see that as particularly or inherently unhealthy or at all indicative of "asset inflation."
> It's not nothing to the pensioners that saw their wealth evaporate 7.5% in one year and likely more to come. Hopefully social security keeps up...
Pensioners like basically everyone else aren't invested in dollar bills under their mattresses.
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This isn't right. The fed basically controls the very short end of the curve. The 30 year rate is above 2 (it briefly touched around 1.3 or something during the start of the covid panic). No one is/was discounting cashflows 10 years into the future at 0 so "all cash flows" didn't have infinite net present value.
Still, 2% over 30 years when inflation is running at 7%+ is negative in real terms. So maybe not infinite, but the key point is that investors are rewarded for holding effectively anything when real rates are negative.
You'll find as you reduce the nominal cashflows by the inflation rate to arrive at real cashflows.... they stop being a cashflow pretty quickly.
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This isn't right. The fed basically controls the very short end of the curve. The 30 year rate is above 2 (it briefly touched around 1.3 or something during the start of the covid panic). No one is/was discounting cashflows 10 years into the future at 0 so "all cash flows" didn't have infinite net present value.
I just refinanced a mortgage, and discounted the cashflow on assuming an effective interest rate of -2% to -5%, pre-inflation, assuming the borrowed cash is in a diversified portfolio. Maybe I'm an idiot, but if so, I'm not alone. Multiple major investment firms are recommending this to their clients. Anyway, I gotta go count my Krugerrands.
Put aside finance theory for a second - does it make sense that, even in theory, my rental house earning $100 per month more than the cost to upkeep it, is worth infinity? Of course not.
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> Or, it's because supply chain disruptions have caused shortages, and there's more demand post-reopening chasing a smaller base of supply. Here's a thought. Supply chain shortages mean people are buying less and obviously some prices are sticky. For instance, I can't buy a new car regardless of price. The price takes a while to adjust wand when "supply chain" clears up, I'll just be able to buy my car at a higher pr…
> Here's a thought. Supply chain shortages mean people are buying less and obviously some prices are sticky. For instance, I can't buy a new car regardless of price. The price takes a while to adjust wand when "supply chain" clears up, I'll just be able to buy my car at a higher price, further driving inflation. I don't expect prices to fall back down meaningfully - especially after a few wage/price cycles. However,…
People misuse correlation/causation expression so much I think its actually detrimental...
If something coincides with something else nearly 100% of the time, I think its safe to say there's some relation between the two. And printing money is always prior to inflation.
> It's currently 25.86. In 2020, it was 25. In 2018, it was 25. In 2009 it hit 123. In 2003, it was 32. In 2002 it was 46. In 2001 it was 27. In 1999 it was 33.
Are you talking about monthly? Maybe... The other thing about those times is we didn't have an unprecedented decline in commercial activity. How could businesses shut down indefinitely and a global pandemic looming over the world and the natural market response be "bullish for business!". Come on...
> Pensioners like basically everyone else aren't invested in dollar bills under their mattresses.
Yes, they're invested in fixed income who yield < 2% and will likely drop a lot in dollar terms once rates ramp up.
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> Here's a thought. Supply chain shortages mean people are buying less and obviously some prices are sticky. For instance, I can't buy a new car regardless of price. The price takes a while to adjust wand when "supply chain" clears up, I'll just be able to buy my car at a higher price, further driving inflation. I don't expect prices to fall back down meaningfully - especially after a few wage/price cycles. However,…
> Correlation != causation. People misuse correlation/causation expression so much I think its actually detrimental... If something coincides with something else nearly 100% of the time, I think its safe to say there's some relation between the two. And printing money is always prior to inflation. > It's currently 25.86. In 2020, it was 25. In 2018, it was 25. In 2009 it hit 123. In 2003, it was 32. In 2002 it was 46…
Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years. [1] There's obviously no causative relationship. The same is true here - you need a model to adequately explain otherwise you're just intuiting, and intuition is frequently wrong.
> Are you talking about monthly? Maybe... The other thing about those times is we didn't have an unprecedented decline in commercial activity. How could businesses shut down indefinitely and a global pandemic looming over the world and the natural market response be "bullish for business!". Come on...
Again, much of the market performance is in big tech which has done extremely well over the last two years. Google is just one example. Look at the top NASDAQ and S&P holdings and you'll see the same thing. The market isn't the economy.
> Yes, they're invested in fixed income who yield Doesn't when they entered the market, and their allocation, mean a whole lot more?
"When you are paid not to notice, it is hard to notice" etc.
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I got 2.75 on mine, which is ridiculously low. My parents paid something like 11-12% on their first house.
How much did they pay for that house though?
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How much did they pay for that house though?
exactly!! i would rather pay less for the house.
That being said, we’re in this weird regime where interest rates set the market price of homes (since people can only afford $x/month no matter the interest rate with no wiggle room)