[B0ycey]

https://www.google.com/amp/s/www.forbes.com/advisor/investing/inflation-worries/%3famp

This thread is merely to put some perspective to some of Steve America's posts in which he implies that the FEDs sudden increased borrowing will have no impact in our fiscal habits or that we will see a marginal impact on inflation only. I would say we are in a state of inflation now actually due to low production and wacking $2tn into the economy for no growth. But I digest, until we begin spending yet I don't see why he thinks he is correct when we have placed the brakes on the economy by just enacting Covid restrictions. We also are in a state of LOW INTEREST rates and as such the government has virtually no options if inflation takes hold. Also, the whole dynamics of MMT relies on taxation to control inflation and as of yet we are borrowing more and I haven't seen any plan on how we are going to pay this back or at the very least control our deficit spending. I will not go as far to say that we can expect to see something in lines to the Roaring 20s crash or even the 70s inflation bombshell, but I will say from what I am reading about the economy at the moment and the increase of price of commodities such as gas, oil, gold, copper, timber and basically everything you get underground, I do see a custerfuck right around the corner. The idea we have seen the impact of lockdown or a Covid response yet is ignoring the signs in the economy actually. So yes, my prediction is a double digit inflation figure within two to three years if not sooner.

What are your predictions folks?

[late]

Yes, there will be inflation, and it will be triggered by the money the government is throwing around, and the disruptions caused by the pandemic.

However...

The government will settle down, as will the disruptions as things get back to something vaguely resembling normal.

Inflation, sure, but it's unlikely to spiral out of control, which means it won't hit double digits.

Btw, I can remember double digit inflation, it really sucked.

[B0ycey]

Btw, I can remember double digit inflation, it really sucked.

Sure. But what do you think is different this time compared to the 70s stagnation? Commodity prices are going up, unemployment has shot up and soon demand in goods will go up when people will be able to spend their money again. Couple all that with dumping 2tn into the economy for ZERO growth and I don't see why you think everything is going to be OK! We also have low interest rates so the government has no viable options to control inflation either. So if anything things today have all the signs of being worse than anything we saw in 1970, a time you say really sucked I might add. So why are you confident we won't see a double digit inflation figure when the price of many commodities have gone up by 60% already?

[late]

Sure. But what do you think is different this time compared to the 70s stagnation? Commodity prices are going up, unemployment has shot up and soon demand in goods will go up when people will be able to spend their money again. Couple all that with dumping 2tn into the economy for ZERO growth and I don't see why you think everything is going to be OK! We also have low interest rates so the government has no viable options to control inflation either. So if anything things today have all the signs of being worse than anything we saw in 1970, a time you say really sucked I might add. So why are you confident we won't see a double digit inflation figure when the price of many commodities have gone up by 60% already?

The stagflation of the 70s was partly the result of the Fed zigging when it should have zagged. The oil price shock increased inflation, and the Fed reacted. The problem was that the oil shock happened outside the country. Which means the Fed had no control over it, and slowing the economy was simply kicking it in the nuts without a good reason to do it.

"But what about inflation? The debate we’ve been having over whether the American Rescue Plan is excessive is kind of surreal for those who remember the macro debates after 2008; this time, economists on the other side are neither knaves nor fools. There are indeed reasons to be worried about inflationary overheating. In fact, even those of us who think it will be OK expect to see above-normal inflation this year. We just think it will be a blip.



Spikes in inflation aren’t a new thing. There was huge inflation during World War I; there were bursts of inflation during World War II, after the war when price controls were lifted, and again during the Korean War. However, all of these inflation surges were brief. It wasn’t until the 1970s that we got an extended period of high inflation.

This doesn’t mean that we should discount inflation risks entirely. It does mean that we’ll need to kick the tires on whatever inflation readings we get, and try, as objectively as possible, to figure out whether or not they’re actually reason for concern."


https://www.nytimes.com/2021/04/16/opinion/economy-inflation-retail-sales.html?searchResultPosition=3

[B0ycey]

The stagflation of the 70s was partly the result of the Fed zigging when it should have zagged. The oil price shock increased inflation, and the Fed reacted. The problem was that the oil shock happened outside the country. Which means the Fed had no control over it, and slowing the economy was simply kicking it in the nuts without a good reason to do it.

I don't know what you mean by zigged and zagged, but I agree the 70s inflation was due to the oil price shock which had a knock-on effect on everything else. But given oil prices have gone up 35% this year and just under 60% since the start of the pandemic, why do you think this isn't a factor this time given that this will only go up once demand in production reaches 2019 levels. Not to mention the price of gas, copper, gold, lead and timber also shooting skywards which will have a knock-on effect on profit margins and as such cause inflation. In other words, the situation this time is similar to the 70s and in many cases worse given the amount of credit and low interest rates we see in the financial market.

"But what about inflation? The debate we’ve been having over whether the American Rescue Plan is excessive is kind of surreal for those who remember the macro debates after 2008; this time, economists on the other side are neither knaves nor fools. There are indeed reasons to be worried about inflationary overheating. In fact, even those of us who think it will be OK expect to see above-normal inflation this year. We just think it will be a blip.

Firstly, I support Biden rescue plan. My issue is he only has said the top 1% should pay their fair share of tax and as of yet, I haven't seen how he plans on doing this and that is important. The problem of course is the US has already dumped 2tn Dollar into the US economy and this is another 2tn without a plan of taxation to pay this off AT THE MOMENT. But even if we ignore all this, the issue of inflation from what I am reading was down to shutting down the economy anyway actually. That is to say, the same reasons for the 70s stagflation which was down to production not keeping up with demand and that is also yhe case currently. Couple that with the fact you are planning on quadrupling the national debt and dumping free money into the economy and you can see why I think a double digit inflation is very likely along with a run on the Dollar. You are merely repeating opinions than explaining why things are different this time compared to the 70s I might add and I have explained twice now why things are the same.

Spikes in inflation aren’t a new thing. There was huge inflation during World War I; there were bursts of inflation during World War II, after the war when price controls were lifted, and again during the Korean War. However, all of these inflation surges were brief. It wasn’t until the 1970s that we got an extended period of high inflation.

Brief meaning ten years? Besides, we are in times of high borrowing and credit which means if anything things would be worse in terms of reaching growth and defacto inflation as how are companies going to borrow to stimulate growth if the banks are going bust or not lending? Do you think the financial market can coup without another bailout - or more QE and FED debt?

This doesn’t mean that we should discount inflation risks entirely. It does mean that we’ll need to kick the tires on whatever inflation readings we get, and try, as objectively as possible, to figure out whether or not they’re actually reason for concern."

And all I am saying is all the indicators suggest a double digit inflation figure in the next few years and a time you said was really bad when it happened before. Read the market.

[late]

And all I am saying is all the indicators suggest a double digit inflation figure in the next few years and a time you said was really bad when it happened before. Read the market.

Inflation, yes, inflationary spiral, prob not.

Gas prices were lower than normal, so the irony is that all those gas prices are doing are pushing the price back up to where they were before oil prices crashed. And that could be temporary, because part of that is because Texas is full of dumb people.

We dodged a deflationary spiral, which economists genuinely fear. There will be a price to pay for that. And I appreciate your concern, I've been there. And it's not outside the realm of possibility, but the things that keep inflation going aren't there. If you can read the whole Krugman article, he makes a good point about core inflation.

[B0ycey]

Inflation, yes, inflationary spiral, prob not.

Gas prices were lower than normal, so the irony is that all those gas prices are doing are pushing the price back up to where they were before oil prices crashed. And that could be temporary, because part of that is because Texas is full of dumb people.

We dodged a deflationary spiral, which economists genuinely fear. There will be a price to pay for that. And I appreciate your concern, I've been there. And it's not outside the realm of possibility, but the things that keep inflation going aren't there. If you can read the whole Krugman article, he makes a good point about core inflation.

Natural gas prices have gone up 35% this year and speculators say this is likely to spike THIS YEAR given it is more of a factor in manufacturing than oil and we haven't reached the winter yet. Don't you know, ALL natural commodities prices have gone up significantly the past year and a half and is the reason there is speculation of significant inflation in the next couple of years. Speak to the right people and they will tell you inflation is already here actually. We should know more ONCE people begin spending again.

As for the reasons for inflation not being there, what are you talking about? You are making things up aren't you. We have reduced production and delayed demand by closing the economy. Basically kicking the can down the road. We have also dumped Dollars into the economy which means we have increased cash flow. Prices in commodities have gone up to 60% and you say there is no indicators of inflation? We have basically created the perfect conditions for the 70s stagflation whilst also doing a Weimar by dumping free money into the economy. Please explain why you have made that statement. I won't say we won't cope. But an awful lot of people are going to have a rude awakening.

[late]

As for the reasons for inflation not being there, what are you talking about? You are making things up aren't you.

"What do I mean by that? In 2011-12 it was fairly easy to debunk inflation worries by pointing to “core” inflation, which excluded volatile food and energy prices. Obviously we’ll be looking at the same measure this time. But there are reasons to think we’ll see a transitory surge in core inflation too, which doesn’t represent a deeper problem.

The somewhat paradoxical answer is that embedded inflation, which is the kind of inflation we really need to worry about, is inflation in prices that don’t change very often.

And imagine that this seller has been operating for a while in an environment in which the overall level of prices is rising at a moderately fast clip, say 10 percent a year. That is, each time it resets the price it will mark it up both to make up for past inflation and to get ahead of expected future inflation. If it changes prices once a year, it will raise the price 10 percent on each reset.

And if there are lots of price-setters acting this way, it means that overall prices will rise at 10 percent a year, even if there’s no new inflationary pressure.

It’s important to understand, however, that the usual measure of core inflation is, as I said, just a rough-and-ready way to get at the difference between inertial inflation and short-term blips. The real distinction should be between prices that are sticky and prices that aren’t."

The economy has a lot of recovering to do. The thing to look for is inflationary expectations, not hard to see if you're looking for it. People are afraid.

“A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

[B0ycey]

"What do I mean by that? In 2011-12 it was fairly easy to debunk inflation worries by pointing to “core” inflation, which excluded volatile food and energy prices. Obviously we’ll be looking at the same measure this time. But there are reasons to think we’ll see a transitory surge in core inflation too, which doesn’t represent a deeper problem.

And what measure are you looking at? The same ones as Buffett?

https://www.google.com/amp/s/www.cnbc.com/amp/2021/05/03/warren-buffett-says-berkshire-hathaway-is-seeing-very-substantial-inflation-and-raising-prices.html

By stopping production we reduced the supply line. Now they are calling for a great price due to the sudden increase of demand and we haven't even begun spending to pre covid levels yet. Demand never stopped due to the pandemic. It was delayed. And now prices are going up. I don't really know how else to explain this except just saying to you please read the fucking market.

[Rancid]

I want to say yes, there will be inflation, but fuck man, I've been saying that since 2008, and it never happened!

[late]

And what measure are you looking at? The same ones as Buffett?

https://www.google.com/amp/s/www.cnbc.com/amp/2021/05/03/warren-buffett-says-berkshire-hathaway-is-seeing-very-substantial-inflation-and-raising-prices.html

From your article:

"Federal Reserve Chairman Jerome Powell reiterated last week that he expects inflation to show a temporary move higher then settle back to around the central bank’s 2% target."

It's beginning to soak into my concrete that I won't be able to allay your concerns.

[late]

I want to say yes, there will be inflation, but fuck man, I've been saying that since 2008, and it never happened!

I am usually an economic pessimist, and almost always wrong when I do..

[B0ycey]

From your article:

"Federal Reserve Chairman Jerome Powell reiterated last week that he expects inflation to show a temporary move higher then settle back to around the central bank’s 2% target."

But I was referring to Buffetts comments not the FEDs. The FEDs comments is only in the article to bring balance to it I might add.

But if you want my honest opinion, which all depends on what happens after Covid anyway, the FED will always say they expect to see inflation fall back to its 2% target even if they really expect a double digit inflation figure in the future because to say the latter would almost certainly cause a double digit inflation figure due to everyone buying and causing a supply and demand issue because they would know inflation was coming. I always read between the lines. And the FED and BofE seem to be putting far more emphasis on its inflation targets than last year and I think that is all to do with not spooking the market - which again should be a sign for what is to come. Besides, you never did address why the current economic conditions we are seeing today are not like the 70s as commodity prices have gone up anyway despite a stagnant market.

[B0ycey]

I want to say yes, there will be inflation, but fuck man, I've been saying that since 2008, and it never happened!

Ditto Rancid. I hope I am wrong. I only wrote this thread for someone to prove me wrong given everything I am reading right now. Late is doing a piss poor job so far and I have to say there is more indicators currently for inflation coming around the corner when compared to 2008 in any case. My advice to everyone, if you plan on buying something, do it now.

[late]

Besides, you never did address why the current economic conditions we are seeing today are not like the 70s as commodity prices have gone up anyway.

I said the Fed zigged, when it should have zagged. That Fed tightened things up, this one won't.

It was literally a different economy, back then we ran on credit, now we run on debt. Then there was the demographic difference, the Boomers were at the age where they were buying houses and having kids, that was inflationary. This is also more than I want to get into.

[B0ycey]

I said the Fed zigged, when it should have zagged. That Fed tightened things up, this one won't.

This is just meaningless. What does this even mean?

It was literally a different economy, back then we ran on credit, now we run on debt. Then there was the demographic difference, the Boomers were at the age where they were buying houses and having kids, that was inflationary. This is also more than I want to get into.

Ehhhhh people are buying home today. And yes we have an economy that is run on credit now I might add, and significantly more so than the 70s I might add as once upon a time you had to have an interview to get a loan or credit, now you just need to fill in a form on the internet. And yes we have significant debt which if anything makes the situation worse today when compared to that of the 70s I might add. But really I was discussing the market conditions anyway. The 70s inflation was due to oil prices shooting up and today we have a commodity boom. Why do you think the conditions are different? Actually you have explained. And as it turns out you are clearly wrong when you say our current economy isn't a credit or home ownership one and as such proved me right!

[late]

Actually you have explained. And as it turns out you are clearly wrong when you say our current economy isn't a credit or home ownership one and as such proved me right!

Not at all what I said, but whatevs...