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

Checkswrecks

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Cathy Wood of Ark Invest has a heck of a good record about where to put money and gave a really interesting interview this week on Bloomberg. She thinks at least for the near term we will have DEflation with people switching from buying things in lockdown to being able to go out which and put their money toward services. Not sure I totally agree but she has a lot of employees reading tea leaves and I don't.

 

Jlq1969

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Cathy Wood of Ark Invest has a heck of a good record about where to put money and gave a really interesting interview this week on Bloomberg. She thinks at least for the near term we will have DEflation with people switching from buying things in lockdown to being able to go out which and put their money toward services. Not sure I totally agree but she has a lot of employees reading tea leaves and I don't.

there is always the habit of those who think about the economy, to jump from inflation to deflation-recession, terms that are generally related to prices-consumption-demand ... "they always forget about stagflation" ... and sometimes, understand this concept (which is easier to measure) through the industry ... it is easier to know in which part of the curve (outside the trend), it is so that a monetary policy does not cause distortions (distortions such as those that mentioned in the article). According to the article, the monetary policy that was directed to the consumer, this was destined to the purchase of goods that "were not basic" and therefore the rise in prices. So from there it follows that "part of that monetary policy" was poorly implemented or went to the hands that really did not need it for a "basic survival consumption"
 

Ronzo

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Add to allllll of this that China trades in 2 currencies and intends on crashing 1.
This will put the final nail in the coffin when it comes to the ‘western’ world economy. Best guess when that will happen but it is on the horizon and will not end well.:(
 

SHUMBA

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massive inflation is about to over come the USA , that's not going to help sell anyones motorcycle ..... I filled my truck with gas last week it cost me 25 dollars more to fill the truck over what it cost me in January ..... paid 3.70 a gallon yesterday and almost 45 dollars to fill my mustang yesterday . products every where are increasing in price (you cannot print trillions of dollars and have them be worth anything , its a disaster we are all going to face ) its going to get bad . Harleys timing may be what does them in .
You are absolutely right.
I'm in sorely mismanaged Kanada.
We are well into the grips of inflation.
Everything you buy now has gone up drastically in price.
Our regular gas is $1.38 / litre = 1.38 x 3.785 = $5.22 CDN / U.S. gallon.
$5.22 × .75 = $3.91 U.S.
where one dollar Cdn but 75 cents U.S.
SHUMBA


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Dr Ratbagg

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massive inflation is about to over come the USA , that's not going to help sell anyones motorcycle ..... I filled my truck with gas last week it cost me 25 dollars more to fill the truck over what it cost me in January ..... paid 3.70 a gallon yesterday
The highest ever price for a gallon of regular gas was $4.11 in July of 2008, according to AAA.
 

Squibb

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Surely quantitative easing (QE), practised across many currencies, usually creates devaluation medium term & so ushers in steady inflation.

In the UK we are fast approaching 3% & I think we can anticipate 4% + this year, so I reckon we have had the phoney period of deflation already this side of the pond, suggesting the only way is up.

Many Central Banks, operating with historically low rates for many years now, have little ammunition left to control the situation. However, with public borrowing so high, inflation does at least serves to reduce the debt/GDP ratio, albeit at the expense of higher debt servicing costs.
 

Don in Lodi

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Many stations here are already charging more than that for regular. Far more for premium.
 

pooh and xtine

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Surely quantitative easing (QE), practised across many currencies, usually creates devaluation medium term & so ushers in steady inflation.

In the UK we are fast approaching 3% & I think we can anticipate 4% + this year, so I reckon we have had the phoney period of deflation already this side of the pond, suggesting the only way is up.

Many Central Banks, operating with historically low rates for many years now, have little ammunition left to control the situation. However, with public borrowing so high, inflation does at least serves to reduce the debt/GDP ratio, albeit at the expense of higher debt servicing costs.
In the UK we’ve printed not far short of £500bn (yes, £500,000,000,000) in government debt and lost tax revenue to “pay” for covid. I’m not sure what we actually got for that, but people’s savings balances have gone up £160bn! You can’t print money without its value falling, so substantial inflation is inevitable. With the government lending to the banks at 0.1%, there is no need for banks to offer anything more to savers. If inflation hits 10% p.a. every £1,000 you have in savings drops in value to £900 at the end of year 1, then £810 at the end of year 2, and so on. Savers are going to pay for whatever the government “bought” for covid.
 

Wallkeeper

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get the opinion of 500 experts and a couple of them are bound to be right (likely for the wrong reasons) and subsequently lauded as experts for the "next" cycle ....... which they miss miserably.

Best bet? Stay diversified in your own finances. It limits the big gains which is more than off set by the reduced down side risks

again....my 2 cents.....after inflation of course :cool:
 

Madhatter

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wars , potential wars , inflation , interest rates on the rise and now some major bank failures in the news.
this ride is just beginning .
 

Checkswrecks

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wars , potential wars , inflation , interest rates on the rise and now some major bank failures in the news.
this ride is just beginning .
There are ups, there are downs, and life is normal. What matters is your attitude and how you choose to be calm in the conditions of the moment.

From NYTimes:
"Has the world ever been at peace? Of the past 3,400 years, humans have been entirely at peace for 268 of them, or just 8 percent of recorded history."
War has been tightly related to inflation since Biblical Times: "“There was a great famine in the city [of Samaria]. The siege lasted so long that a donkey’s head sold for eighty pieces of silver, and a cup of dove’s dung sold for five pieces of silver”

As for inflation [& interest rates], my first house had a (iirc) 14% mortgage back in the 1980s. We've gotten used to inflation being lower than the historic average. This stuff goes back to Biblical times:
Book of Haggai: "Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes."
Proverbs: "Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle"

As for the banks, this [at least so far] is pretty minor, and four small to mid size banks taking risks is sure not like 2008 when Lehman and the biggest banks were failing.

We hadn't paid for our squandering money thru 25+ years of Afghan & Iraq wars (Bush, Clinton, Bush, Obama) when Covid hit and debt went through the roof (Trump), then Russia led the world back to war by invading Ukraine (Biden). BOTH parties got us here and BOTH are equally guilty at blowing the budget year after year, largely because they increasingly won't compromise. The one and only way to pay down massive debt thru ALL of history has been to devalue money - meaning inflation.

So again my friend, life is normal. What matters is your attitude and how you choose to be calm in the conditions of the moment.
 

Wallkeeper

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There are ups, there are downs, and life is normal. What matters is your attitude and how you choose to be calm in the conditions of the moment.

From NYTimes:
"Has the world ever been at peace? Of the past 3,400 years, humans have been entirely at peace for 268 of them, or just 8 percent of recorded history."
War has been tightly related to inflation since Biblical Times: "“There was a great famine in the city [of Samaria]. The siege lasted so long that a donkey’s head sold for eighty pieces of silver, and a cup of dove’s dung sold for five pieces of silver”

As for inflation [& interest rates], my first house had a (iirc) 14% mortgage back in the 1980s. We've gotten used to inflation being lower than the historic average. This stuff goes back to Biblical times:
Book of Haggai: "Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes."
Proverbs: "Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle"

As for the banks, this [at least so far] is pretty minor, and four small to mid size banks taking risks is sure not like 2008 when Lehman and the biggest banks were failing.

We hadn't paid for our squandering money thru 25+ years of Afghan & Iraq wars (Bush, Clinton, Bush, Obama) when Covid hit and debt went through the roof (Trump), then Russia led the world back to war by invading Ukraine (Biden). BOTH parties got us here and BOTH are equally guilty at blowing the budget year after year, largely because they increasingly won't compromise. The one and only way to pay down massive debt thru ALL of history has been to devalue money - meaning inflation.

So again my friend, life is normal. What matters is your attitude and how you choose to be calm in the conditions of the moment.
My inflated 2 cents worth

If we do not live it, we seem to have a hard time applying the lessons history has to teach us. The 1919 flu and COVID, 1939 Munich Accord and the Ukraine invasion and in this case, 1929 and the Great Depression. Banks were failing constantly from 1929-33 until the "Bank Holiday" of the New Deal forced a banking rationalization. The irony of the the October 1929 crash was on November1, 1929 the same factories were still there, the same mines were still operable, oil wells could still pump, the same labor was still available. What was lost was the confidence in the banking system led by the collapse of questionable credit practices. The means to trade goods was handicapped. 2008 look familiar?

One of the early lessons in Econ 101 relates to money and the fact it is a "convenient fiction" we invented to make trade easier. CW's point about inflation is on point. The Economy is not a Zero Sum game so some inflation is actually healthy to keep the money supply growing. For an example of what happens with out it, look at the Japanese economic struggles over the last 2 decades (yes, other issues apply there too)

I remember those 14% mortgages and 18% inflation in the mid 80's and thinking we would never see the 5-6% mortgages and 2-4% inflation our parents and grand parents enjoyed (and bitched about) from WW II to the early 70's

In Context? What we are seeing today in the banking system is a bump in the road

So the lesson? We will hit speed bumps in the economy. It is the norm, we just need to make sure we have good suspension and air in our tires.

So, to CW's point, "Life is Normal"

That is why I stay diversified.
 
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