What do you think will happen when the pot blows and inflation takes over?

LukeDuke

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Inflation may go away for a bit over the next 1-3 years. But it'll come back and stay in my opinion. Debt monitization will begin to occur in very large and more dramatic ways than before as we cannot pay off our own interest payments on our debt. Who knows how long it can go for though.

So I don't think the pot blows anytime soon but inflation will be the theme for the next decade for sure.

 

Checkswrecks

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CW, who moderates the moderator?
Other than saying a few people are "whackos" at both extremes I stayed factual and can back it up with a chart to show the factual basis of the potential abyss we are looking into. (See the RSI, MACD, & Fast Sto lines) This chart shows that we are at a point where Congress (because they control the budget) can either compromise and pull this thing out or kick it over a cliff.

sc-7.png

On the up-side and which Wallkeeper mentioned is the fact the Debt/GDP ratio is now improving.
fredgraph.png

My guess is close to LukeDuke in that Congress will find a way for us to grind along sideways for years. The pain we currently have continues; but that's my opinion.
So leaving the left/right screaming aside, do you have a factual input to this? Something we can trade on? Historical reference? Make plans with?
 

LukeDuke

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Jul 27, 2022
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Iowa
Other than saying a few people are "whackos" at both extremes I stayed factual and can back it up with a chart to show the factual basis of the potential abyss we are looking into. (See the RSI, MACD, & Fast Sto lines) This chart shows that we are at a point where Congress (because they control the budget) can either compromise and pull this thing out or kick it over a cliff.

View attachment 99989

On the up-side and which Wallkeeper mentioned is the fact the Debt/GDP ratio is now improving.
View attachment 99990

My guess is close to LukeDuke in that Congress will find a way for us to grind along sideways for years. The pain we currently have continues; but that's my opinion.
So leaving the left/right screaming aside, do you have a factual input to this? Something we can trade on? Historical reference? Make plans with?
From what I'm reading we're in the debt spiral starting this year. Meaning after our obligated expenses like social security, military, other entitlements we won't have money leftover from taxes to pay for our debt interest. Unless something changes our debt interest and debt to GDP will only get worse and quicker than ever. One fix could be a big GDP boost which could happen depending on what we all do here in the US and if things change. Here is another decent article on the debt spiral and debt monetization. If I remember right this is the first time since WWII that our debt interest can't be paid off in a 12 month period. But the problem is we are not in any situation (for many reasons) that we can grow our way out of it. Like we could after WWII.


Would agree it's not a left/right issues although I have my opinions :) It's an issue of a system that is built on credit expansion and therefore requires inflation and debasing the currency. That leads to distorted prices on assets (if you're lucky enough to hold any). But at least in the US we have it really good compared to 4.5 billion under authoritarian governments.

As far as what to do? I'm personally done with bonds. Though I am very young. Bonds are and will continue to be negative real interest rates because we will eventually start buying our own bonds and keep interest rates on them below inflation (debt monetization). I mostly do US Total Market Index Funds with most of my net worth. I am getting involved with private real estate syndications. That's where my liquid cash will go. 1031smart.com. and https://www.touzicapital.com/ And also might able with fundrise as another real estate investment option. To me it's not super important what asset you're in in my opinion. When the money printer starts again hold onto some asset though and let it ride....

And you may have guessed it I am a bitcoiner.... I used to think it was "fake money", but have turned the corner after digging into the technical details. All money is built on trust and a network of people using it. And the best money can't be debased. Which is true of bitcoin. Bitcoin meets all the needs to me from what I've learned and I've dumped some fiat for bitcoin over the past 9 months.
 

LukeDuke

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Iowa
From what I'm reading we're in the debt spiral starting this year. Meaning after our obligated expenses like social security, military, and other entitlements we won't have money leftover from taxes to pay for our debt interest. Unless something changes our debt interest and debt to GDP will only get worse and quicker than ever. One fix could be a big GDP boost which could happen depending on what we all do here in the US and if things change. Here is another decent article on the debt spiral and debt monetization. If I remember right this is the first time since WWII that our debt interest can't be paid off in a 12 month period. But the problem is we are not in any situation (for many reasons) that we can grow our way out of it. Like we could after WWII.


Would agree it's not a left/right issues although I have my opinions :) It's an issue of a system that is built on credit expansion and therefore requires inflation and debasing the currency. That leads to distorted prices on assets (if you're lucky enough to hold any). But at least in the US we have it really good compared to 4.5 billion under authoritarian governments.

As far as what to do? I'm personally done with bonds. Though I am very young. Bonds are and will continue to be negative real interest rates because the US will eventually start buying our own bonds and keep interest rates on them below inflation (debt monetization). I mostly do US Total Market Index Funds with most of my net worth. I am getting involved with private real estate syndications. That's where my liquid cash will go next. www.1031smart.com and https://www.touzicapital.com/ And also might dable with fundrise as another real estate investment option. To me it's not super important what asset you're in in my opinion. When the money printer starts again hold onto some asset though and let it ride....

And you may have guessed it... I am a bitcoiner. I used to think it was "fake money", but have changed my mind after digging into the technical details. All money and assets are built on trust and people linking arms using it holding value. And the best money can't be debased. Which is very true for bitcoin. Bitcoin meets all the needs to me from what I've learned and I've dumped some fiat for bitcoin over the past 9 months.
 
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LukeDuke

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Another good listen on our debt spiral we're in. This video is 95% a macro economic talk for those who hate bitcoin just an FYI.

 

Wallkeeper

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Simple answer is the other moderators since there are four of us.
we are all sensitive to “hypocrisy” and try to avoid it. Also, if it is related to US politics, Stefan will keep us honest while he shakes his head thinking we are all insane….
 

Wymbly1971

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I don't have a lot to say. I'm no expert. I'm not sure why fiscal and monetary policy seems so complicated or beyond Economics 101.

I think the biggest problem we face is the fundamental understanding of "government money". What should be happening is a re-education of people in general to understand that the money that government shells out is "your money", or "taxpayer money". A LOT of frivolous spending the government does could easily be harnessed in if they asked the taxpayer directly, "Are YOU willing to pay for this?" I hope and believe that people in general have a pretty good sense of fiscal policy since they live a life where money is a "finite" resource, that spending has consequences and that risks can be managed by good mathematical sense. I am Canadian....and this is what I see as the biggest problem when it comes to money.

Case in point. I think it's reasonable to say that most people with good monetary sense would strive to be debt free and resist over-consumerism...as I do. Increases in production (GDP), wages, etc all become icing in a baseline debt-free life. The little "micro-economy's" growth will be organic. I doubt "spending like a drunken sailor" is seen as wise by anyone. My parents always said, "Don't spend more than you make." Could it be that simple?

I've heard my colleagues say, "When the economy is good, that's the time to take on debt". I almost threw up....That's not what I would do.

As far as what we can do as individuals? Get out of debt. Stay the course (it is cyclic...it will come back). Stay diversified. Invest in YOURSELF. Learn to fix things yourself, take care of yourself, turn to family and community. Turn off the news...it's mostly lies anyway.

....and for God's sake, stop saying "The government is paying for it".
 

Fennellg

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In a way it is simple. Supply and demand. We went off the gold standard in the early 70s and can control the amount of money in the system. Money is taken back out of the system via interest rates and taxes. Well extra money and low taxes and low interest, can have negative effects not unlike steroids. You cant keep using them with impunity.
 

Jlq1969

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I think that the gold standard was a utopia at the time, to prevent those who printed money from doing so in an uncontrolled way….but, why would you want to have large gold reserves, as a refuge of value it is fine….but it also has that it makes sense to collect gold......gold has value because it is "finite", but "is it useful?".....is there a demand for gold because it is known to be finite.....but does it have any utility, "today"? ……I think that today, oil has more “useful” value than gold….it is also finite, but useful…….USA, is among the top ten countries with oil reserves……and it is Number 1 in reserves of gold…..so, the USA may have abandoned the gold standard…..but they would have to join the four most powerful countries on the planet and adding their gold reserves, they would barely exceed those of the USA….so I don't think that "abandoning the gold standard" is a problem, when there are powerful countries that have a growing economy and will never achieve the gold standard with their currencies
 

Jlq1969

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I think that a pattern that should be maintained is that of "public spending"…..this should always be a percentage of the gross product….and before it grows because of the decision of who governs….it should grow because the gross product grows. “uncontrolled” public spending…is more harmful than abandoning the gold standard….and when I say uncontrolled, I mean "senseless spending"…..well-managed and efficient public spending…it is useful for a country to grow….but over time….that same public spending stops being well-managed….and becomes a burden for those who pay taxes
 
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Fennellg

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Its all the same thing. Scarcity makes something valuable. But at the end of day its all a con game. Do you really Think The Gov gives a shit about You paying your taxes. Hell they print money at will. It is nothing more than a form of control or governance.

How much use is gold to ancient man. It shines and does not corrode. Overall not a very strong or useful metal that is heavy as shit. Even modern man has little use for it. Its Medicine and industry that has a use for it.
 
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