Inflation?

[GypsmJim]

The wife and i discussed this a few weeks ago. We both agreed that when this was over (if ever) we would be seeing rampant inflation.

We have been going to the grocery store sparsely, just to get provisions, and eating at home.

Our local pizza and sub shops have remained open for pickup and delivery.

I have been wanting a sub for weeks, so today I broke down and went and got one, with mask on and credit card in hand.

My usual $4.99 half sub was now $7.00 Not going there again....

 

[LVSteve]

Can't have inflation without money. It might be as stark as that.

 

[tops]

Maybe the business wants too make the same amount of money so since it only has half the business he doubles the price. Just an old mans thoughts. Larry

 

[Abbynormal]

This one is gonna be deflation. This is not a joke.

 

[LittleCooner]

With the government printing money and throwing it at the public/masses, yes inflation will run wild. those 28-2 will be bringing 2K in a couple of years and beer will be $25 a six pack.

 

[doublesharp]

This one is gonna be deflation. This is not a joke.

nah, too many pensions and too much debt. will pay off with dollars with deflated value. don't sell your junk silver.

 

[Rudi]

If you can afford it, invest in gold and silver.

 

[doublesharp]

If you can afford it, invest in gold and silver.

and get physical possession. don't fall for the certificate scam

 

[Onomea]

Inflation, deflation, I think it could go either way. Altho I am more on the deflation side, for reasons I posted a month or so ago.

But, whatever happens, those who guessed right will think they are geniuses.

Hey, I don’t begrudge ‘em. It’s just I believe it’s a crapshoot.

 

[Absalom]

At the present time, there is no condition in place that could lead to inflation.

Instead, we’re perfectly set for a deflationary spiral like we had 1929 to 1933. Back then the austerity policy of Hoover, saving and cutting spending, drove the US deep into the Depression, and in Germany Brüning‘s even more severe policies of cutting government spending were the single most important factor in bringing Hitler to power.

What threatens the economy right now is purely a demand problem: people who should and normally would be buying stuff aren‘t. Either because they can‘t due to lockdowns, don‘t have the money due to being out of work, or won‘t because they‘re worried about the future.

The likelihood that they‘ll be rushing out and spend all their money the moment all lockdowns are lifted is zero. Prices may go up on essential stuff like haircuts as people play catch-up, but overall, demand across the economy will be slow to pick up, many people will take a wait-and-see attitude and spend conservatively, and many businesses will have to lower prices to attract customers, and likely not be able to rehire everybody very quickly due to slow traffic and lower profits.

And all that is a classic set-up for deflation. “Printing money“, for which the policies of the last few years have left very little margin anyways, changes nothing about that scenario. I doubt the random $1200 stimulus had much effect. Despite the nice letter signed by the president

 

[doublesharp]

They called it stagflation back in the 70s and there is some of that going on right now. rising prices and shrinking demand. Next few years are a crapshoot, market is goofy as hell and fundamentals do not seem to matter... but pensions are tied to stock mkt and gov is not reluctant to prop up the mkt. or not.

Long term obligations will either be defaulted or inflated away. What else can happen?

What I saw prior to c-19 was an economic plan that was genius. USMCA Alliance and Brexit forming trade agreements with Japan, Australia et al as allies by-passing EU, China and middle east.

Can still happen if election goes the right way but there is considerable more risk. I'm gambling big that it does. I see a big WPA type infrastructure plan in the future and I see the mood of the country. Optimism is trying to bust loose. A new Great Awakening is taking place and the USA's big economy is a marvel when it is humming. Things can happen fast and those with a stack of $5 Ford stock shares will wear out their arms patting their own backs.

 

[stansdds]

With each new dollar printed, or in modern times, digital dollar created, all the other dollars become slightly less valuable. This is economics 101. We are in interesting economic times with the Federal Reserve printing tons of money and issuing debt bonds as the traditional way of financing that money. What has changed is in which entities are buying those debt bonds.

China used to be the biggest buyer of our debt bonds, but they stopped buying several years ago and started selling the bonds they were holding. This act signals two things, A) China needed cash and B), China has less faith in our ability to repay the debt. Recently, when the Federal Reserve put their debt bonds up for auction, no one bid on the bonds. When the Federal Reserve now prints money and issues the debt bond, they buy their own debt bond. This is going to fail, just like every other nation that decided to print their way to prosperity.

 

[The Analyst]

Once the country reopens the economy will begin to take off. We are a consumer driven society and Americans are most happy when they are buying things. I don't think there will be much, if any inflation in the next few years. However, there will be arcane measures used to increase taxes.

 

[ladder13]

Everyone I talk to in my community is ready to spend, just give us back our freedom.

 

[HOUSTON RICK]

I don't expect much deflation once this runs it course. Federal governments pay for debts by printing more money and increasing the supply of money. If things do go far south just don't vote for the party led by the orator with the Charlie Chaplin mustache.

 

[tops]

Invest in beans and bullets. Gold is not worth anything if you are starving and don't have the means to protect your gold. Larry

 

[old bear]

I have noticed small price increases over the last month. What really stands out are the lack of the normal weekly specials and the “buy one get one free.” Offers. What I find interesting is prices rise a Hell of a lot faster than they drop.

 

[BAM-BAM]

In the last week some cuts of beef are unavailable and ground meat is up 36% since March...... and purchases are limited to 3 lbs (packs)

 

[pharmer]

Distribution problems. Before COVID 18 eggs $1.30. Now $4. There were none for a month so this is viewed as a good thing.

 

[ParadiseRoad]

...when prices start dropping...and you hear the words "deflationary spiral"...

...you'll know the chickens have come home to roost...

 

[Absalom]

They called it stagflation back in the 70s and there is some of that going on right now. rising prices and shrinking demand.....

The stagflation of the 1970s was a freak political event, caused by a perfect storm of Nixon mucking up going off the gold standard, using wage and price controls, and the Fed micromanaging the money supply yo-yo style, all against the backdrop of oil prices going through the roof, entirely for geopolitical reasons. There is pretty much nothing to be learned from that for today.

There is a tendency to use historical examples out of context.

Inflation paranoiacs like to cite the hyperinflation in Germany in 1923. That was almost entirely a political decision rather than an economic disaster, too. It was a deliberate attempt on the part of the German government to destroy the German currency to blackmail the Western powers into accepting that the reparation payments were too much of a burden. And it worked. But it has little relevance for other times.

Right now there is no indication that the fundamental principles won’t apply:

If the optimists among you are correct, and the economy takes off hot again, more or less inflation will accompany it.

If, as more people seem to worry, consumers hold back out of caution, postpone spending, and wait and see, the risk of deflation will be greater, and create negative feedback that will slow down the recovery further.

Never in history has a fixation on the money supply actually fundamentally altered these basic economic behaviors. You can lead a horse to water, but if it doesn’t trust the water ....

 

[GypsmJim]

Glad to see there is a general consensus.....LOL.

I guess the bottom line is that nobody really knows what's next.

 

[GypsmJim]

If you can afford it, invest in gold and silver.

I thought about that a short time ago. Even sent away for a prospectus and literature.

When I found out about the HUGE commissions involved, I gave up that idea.

 

[peterGun]

^ buy locally ASE with cash, a tube or two, buy the most you can afford. Then toss it in the safe and leave it for your heirs.


Sent from my iPhone using Tapatalk

 

[BAM-BAM]

Glad to see there is a general consensus.....LOL.

I guess the bottom line is that nobody really knows what's next.

Sure we do......"The New Normal".... is "comin round the mountain when it comes........."

 

[llowry61]

I am trying to reconcile the thought that people won't rush out and spend their money. Reports say that there is little or no saving going on so, doesn't that imply that people are rushing out and spending it. Credit card debt is at a high again, so that would imply not only are they spending what they have, they are spending what they don't as well.

 

[BAM-BAM]

I thought about that a short time ago. Even sent away for a prospectus and literature.

When I found out about the HUGE commissions involved, I gave up that idea.

LOL local jewelry stores can often get you what you need...... Silver Eagles (not mint sets) can be bought it tubes of 20 for about $20/coin or $400/tube.......... spot price of "silver bullion" is +$15 last I looked.

Eagles are the better for TEOTWAWKI D) as they are clearly marked as to weight and silver content. It's hard to make change for a 1oz gold coin!!!

 

[doublesharp]

The stagflation of the 1970s was a freak political event, caused by a perfect storm of Nixon mucking up going off the gold standard, using wage and price controls, and the Fed micromanaging the money supply yo-yo style, all against the backdrop of oil prices going through the roof, entirely for geopolitical reasons. There is pretty much nothing to be learned from that for today.

There is a tendency to use historical examples out of context.

Inflation paranoiacs like to cite the hyperinflation in Germany in 1923. That was almost entirely a political decision rather than an economic disaster, too. It was a deliberate attempt on the part of the German government to destroy the German currency to blackmail the Western powers into accepting that the reparation payments were too much of a burden. And it worked. But it has little relevance for other times.

Right now there is no indication that the fundamental principles won’t apply:

If the optimists among you are correct, and the economy takes off hot again, more or less inflation will accompany it.

If, as more people seem to worry, consumers hold back out of caution, postpone spending, and wait and see, the risk of deflation will be greater, and create negative feedback that will slow down the recovery further.

Never in history has a fixation on the money supply actually fundamentally altered these basic economic behaviors. You can lead a horse to water, but if it doesn’t trust the water ....

You have a condescending, all knowing tone but you give little information on how we will honor pension, social security and interest on debt obligations without inflating them away.

What is your non-inflationary, real world solution?

 

[lrrifleman]

I think that the economy is totally confused solely because of the rationing that people are encountering. In my part of NJ (not the virus hotspot), meat is being rationed at 1 package per specie, as is milk, canned goods, and virtually every other grocery item. Gasoline has dropped about forty cents a gallon, unlike some other areas. I tend to follow station prices for places I travel to. In Delaware, it had dropped about ninety cents and is starting a slow rebound, as is Portsmouth, NH. Avon, OH where I refuel when I go to Camp Perry plummeted to ninety-nice cents and has rapidly rebounded to almost $1.50.

I am noticing that purchasers on auction sites are driving up prices. Once fired brass is doing a small increase in starting price, but bidders are driving final prices like an Atlas booster. Last night I saw a relisting for a Sig P365, the expired starting price was $499.99, the new starting price was $899.99.

Personally, I expect to see discretionary spending come to a screeching halt until the grocery supply lines are stabilized and farmers/ranchers stop destroying crops, herds, and dairy products. I also expect to see a period of deflation to encourage purchasing.

 

[fiasconva]

So far all of the places we usually eat have not increased their prices. Since they are all takeout only I do try to tip a little more than usual since I don't know how much they've been hurt and just want them to still be there when this ends. Most of the ones we go to seem to busting their rear ends just trying to fill orders and carrying them out to our cars.