Is Inflation Transitory?

Submitted by XBoxBoy on July 6, 2021 - 10:34am
Inflation falls back to under 2% before end of year.
0% (0 votes)
2-3% inflation in the coming years, nothing to be worried about
10% (3 votes)
3-4% inflation but drops after a year or two
17% (5 votes)
4-5% inflation that lasts longer than the fed thinks.
24% (7 votes)
5-6% inflation and the fed is well behind the curve
24% (7 votes)
6%+ Here come the 70's all over again.
24% (7 votes)
Total votes: 29
Submitted by sdrealtor on April 5, 2022 - 10:06am.

sdrealtor wrote:
gzz wrote:
1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.

2. About a third of June’s inflation is from used car prices.

3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!

https://fred.stlouisfed.org/series/T10YIE

Do you get out much? I see it everywhere. I'm sipping a coffee right now that went up 10% this year.

I'd love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go

Update

In July my morning coffee went up 10% from 2.40 to 2.65. Just went up another 10%+ to $2.95. That’s 23% in less than a year

Not transitory. Very persistent

Submitted by scaredyclassic on April 5, 2022 - 2:12pm.

sdrealtor wrote:
sdrealtor wrote:
gzz wrote:
1. When people report uncritically 2020-2021 inflation figures, they are biased or uninformed. It is trivial to just report 2019-2021 figures to filter out the pandemic effect.

2. About a third of June’s inflation is from used car prices.

3. The media and sheeple love inflation stories. Not much evidence of expected long inflation when looking at TIPS v regular bonds. Today implied expectations is 2.33%. OMG!!!!!

https://fred.stlouisfed.org/series/T10YIE

Do you get out much? I see it everywhere. I'm sipping a coffee right now that went up 10% this year.

I'd love deflating building prices. Working on plans for a multi unit development right now. Would love to see costs drop in couple years when we are ready to go

Update

In July my morning coffee went up 10% from 2.40 to 2.65. Just went up another 10%+ to $2.95. That’s 23% in less than a year

Not transitory. Very persistent

I got a good deal on a thermos. I'm bringing my hot drinks with me.

Submitted by deadzone on April 5, 2022 - 5:50pm.

Damn my Amazon music subscription just went up from $4 to $5 a month. That's 25% increase! Even worse I didn't even realize I had an Amazon music subscription, need to do a better job checking my credit card bill.

Submitted by Coronita on June 10, 2022 - 6:20am.

Inflation 8.6%.

https://finance.yahoo.com/news/may-infla...

I really really feel sorry for folks that haven't taken steps to cap as much of their day to day living cost as possible.

Food, transportation, housing...

You guys eat out lately. It's really really expensive.

Fortunately, I don't have to commute to work anymore and all my driving is leisure. But, geesh, even then, I sort of regret canceling a Tesla last year thinking there would be better discounts and or choices next year.

I don't think the fed's policy can really fix this unless they really do something extreme and bring the economy to a halt. It seems like the problems are

1) energy/fuel shortage due to the war
2) supply chain issues from abroad due to covid

Maybe now that china is emerging from a lockdown (2) is going to get slightly better.

But the bigger problem, especially for things like chips, there's not enough capacity at the select few semi fab facilities right now in the world, and it will take a few years at least to build more capacity. The problem is in the availability of supply of goods and services.

https://www.cnbc.com/2022/05/02/chip-sho...

Submitted by gzz on June 10, 2022 - 6:40am.

I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.

There’s too much debt in America IMO. Inflation is a jubilee for our middle class.

Submitted by deadzone on June 10, 2022 - 7:21am.

gzz wrote:
I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.

There’s too much debt in America IMO. Inflation is a jubilee for our middle class.

But this inflation is very bad for the majority of people, particularly of lower economic means. If the government doesn't do something there will be major civil unrest before long.
It is fairly obvious they have no choice but to pop the bubble. which the Fed totally has the ability to do. But up till now they are raising interest rates at a snails pace and haven't even begun QT yet.

Submitted by Coronita on June 10, 2022 - 7:26am.

gzz wrote:
I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.

There’s too much debt in America IMO. Inflation is a jubilee for our middle class.

for folks like probably you and me that own our house outright or have a fixed rate mortgage 30 years where that interest payment is going to erode from inflation, this is lesser of an issue and in a lot of way makes the debt owed worth a lot less in the future. And for people that make decent money or have other sources of cash flow besides a job income, that's probably ok.

But folks that have not fixed their housing costs, have to commute to work, have to raise a family, and their paycheck is already pretty close to tapped out for day-day living expenses (and is not nearly growing as fast as inflation), this got to hurt. It hurts also people trying to "save" money to invest if they are already tapped out.

Not good overall.

Submitted by sdrealtor on June 10, 2022 - 7:39am.

Amazing to see narrative shift to inflation is wonderful. I see “wealthy” older folks on fixed incomes getting hit harder than the younger generation saddled with student loans who will be net beneficiaries over time with their debt devalued.

Submitted by an on June 10, 2022 - 8:15am.

gzz wrote:
I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.

There’s too much debt in America IMO. Inflation is a jubilee for our middle class.


100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.

Submitted by an on June 10, 2022 - 8:18am.

sdrealtor wrote:
Amazing to see narrative shift to inflation is wonderful. I see “wealthy” older folks on fixed incomes getting hit harder than the younger generation saddled with student loans who will be net beneficiaries over time with their debt devalued.

100% agree, older folks on fixed income will be hit the hardest in high inflation scenario. I feel sorry for them, since there's not much that they can do.

Submitted by gzz on June 10, 2022 - 8:21am.

Flu your properties are paid off so inflation is more neutral. Your property values and rents will tend to rise with inflation.

As for the people paying rent, their wages will generally rise with inflation.

People gripe about inflation because they view their higher wages (and businessmen their higher prices) as earned and deserved by their personal merit, but when they pay higher prices as an undeserved increased cost.

Submitted by gzz on June 10, 2022 - 8:25am.

People on fixed income get social security which rises with CPI.

People on nominal dollar pensions (mostly local gov retirees, though CA I believe is most inflation adjusted) benefited by the large disinflation that started in the 1980s, and while they are losing, these are unearned gains they are losing. And public pension funds are going to be more stable and secure now.

Submitted by sdrealtor on June 10, 2022 - 8:30am.

El Pueblo super breakfast burrito now over 11 bucks with tax. It was under 8 when the pandemic started. This older guy wants to know where his Promised deflation is?

Submitted by Coronita on June 10, 2022 - 9:05am.

gzz wrote:
Flu your properties are paid off so inflation is more neutral. Your property values and rents will tend to rise with inflation.

As for the people paying rent, their wages will generally rise with inflation.

People gripe about inflation because they view their higher wages (and businessmen their higher prices) as earned and deserved by their personal merit, but when they pay higher prices as an undeserved increased cost.

I think that's from your perspective because you are more or less well off.

Someone who doesn't own a primary home, is not in tech, is not being paid top dollars, have limited number of income streams beyond their job, and their salary does not track inflation (which many wages do not, especially in the mid to low tier), it's not that great.

Also, side note, our tax codes are not inflation adjusted right, right? Someone making $100k+ is not in low end of the tax brackets. But $100k isn't wealthy by CA standards.

Submitted by scaredyclassic on June 10, 2022 - 9:11am.

as a moderately well off person almost 60, inflation has sucked out all my confidence about retiring or working much less and makes me want to keep grinding away as long as I can. Not that i was supercofident before, but it seemed like a not too ridiculous option.Now, it seems like I could get caught in a shitstorm.

Submitted by deadzone on June 10, 2022 - 9:43am.

an wrote:
gzz wrote:
I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.

There’s too much debt in America IMO. Inflation is a jubilee for our middle class.


100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.

Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn't do something.

The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.

Submitted by an on June 10, 2022 - 9:50am.

deadzone wrote:
Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn't do something.

How small is this subset? Can you provide data?

How large is the larger class?

deadzone wrote:
The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.
Got data from history to back that up? What happened the last time we saw this kind of inflation and fed have to raise interest rate? Provide data please.

As for being the only two think the government can do, I call BS on that one. Government can do a lot more.

Submitted by Coronita on June 10, 2022 - 11:01am.

The way I look at this, what is causing inflation?

Energy costs and supply chain shortage.

Energy costs were cheap until all the sudden Russia's energy sources were cut off from the world.

Supply chain shortage was due to a shutdown abroad from covid.

With that in mind, what can the fed really do to "fix" those issues in the short to mid term? I'd say nothing, without something really drastic. If so, is it willing to do it?

Raising rates isn't going to be enough to fix rising prices of energy and shortage in the supply chain for various goods, unless demand simply falls off a cliff.

Submitted by deadzone on June 10, 2022 - 11:01am.

an wrote:
What happened the last time we saw this kind of inflation and fed have to raise interest rate? Provide data please.

As for being the only two think the government can do, I call BS on that one. Government can do a lot more.

The more appropriate question is what happened the last time we were in a bubble? Fed raised interest rates which crashed stock and RE markets in 2008. Last bubble before that? Fed raised interest rates which popped the .com bubble.

What more can the government do? You say BS so give some examples, specifically examples that won't lead to more inflation.

Submitted by sdrealtor on June 10, 2022 - 11:04am.

deadzone wrote:
an wrote:
gzz wrote:
I think this inflation level is wonderful. It erodes the real value of the national debt, student loans, credit card debt, and my mortgages.

There’s too much debt in America IMO. Inflation is a jubilee for our middle class.


100% agree. Inflation is amazing when you have a 30 years fixed rate mortgage. This will help the younger middle class the most IMHO. Those who were stretching to buy their home and are in their prime earning years. The salary will go up while their housing cost stay flat.

Perhaps this inflation is okay for a small subset of middle class home-owners. Unfortunately there is a much larger class of people that are lower on the economic ladder who are getting crushed, this will lead to major social unrest if the government doesn't do something.

The only thing the government can do is raise interest rates and QT which will destroy home values and 401K portfolios of the same middle class folks you are talking about that are benefiting from inflation.

Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes

Submitted by deadzone on June 10, 2022 - 11:21am.

sdrealtor wrote:

Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes

Yes that is true, but in recent years RE and rent has appreciated at a higher rate than inflation (at least USG inflation number), and both of those have appreciated at a higher rate than wages. So after all that, anyone that does not own a home already is still screwed, i.e. most of the younger generation.

Submitted by sdrealtor on June 10, 2022 - 2:05pm.

deadzone wrote:
sdrealtor wrote:

Wont inflation help the debt burdened lower class by devaluing the debt especially student loans? That would help all the young folks you want to be able to buy homes

Yes that is true, but in recent years RE and rent has appreciated at a higher rate than inflation (at least USG inflation number), and both of those have appreciated at a higher rate than wages. So after all that, anyone that does not own a home already is still screwed, i.e. most of the younger generation.

Student loans are at higher rates and there is no current utility like a place to live from them. Paying them off frees up purchasing power and there is career advancement for those not in dead end jobs. Over any extended period its a net positive in this regard. My friends kids around the country dont seem to have issues buying homes

Submitted by an on June 10, 2022 - 2:15pm.

There will always be people who will never be able to buy a house, regardless of inflation number.

Submitted by deadzone on June 10, 2022 - 4:13pm.

sdrealtor wrote:
My friends kids around the country dont seem to have issues buying homes

So I guess student debt isn't really a hindrance after all.

Submitted by Coronita on June 10, 2022 - 4:15pm.

deadzone wrote:
sdrealtor wrote:
My friends kids around the country dont seem to have issues buying homes

So I guess student debt isn't really a hindrance after all.

I think he meant his friends kids do not have student debt and have no issue buying a house themselves.

Submitted by sdrealtor on June 10, 2022 - 4:31pm.

deadzone wrote:
sdrealtor wrote:
My friends kids around the country dont seem to have issues buying homes

So I guess student debt isn't really a hindrance after all.

Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process

Submitted by gzz on June 10, 2022 - 4:41pm.

"their salary does not track inflation"

I think the burden of proof that the labor market is inefficient in this unusual way is on the person making the assertions.

From what I can tell, around here lower skill jobs have rapidly increasing wages.

Submitted by Coronita on June 10, 2022 - 5:05pm.

sdrealtor wrote:
deadzone wrote:
sdrealtor wrote:
My friends kids around the country dont seem to have issues buying homes

So I guess student debt isn't really a hindrance after all.

Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process

Shit, you are a genius. I think I'll do the same thing....

Submitted by FormerSanDiegan on June 10, 2022 - 7:57pm.

Inflation is always transitory.

The only question is: what is the duration .
3 years…. 5 years. …longer ?

Submitted by deadzone on June 10, 2022 - 10:09pm.

Meanwhile the bond market got crushed today thanks to that inflation report, 30 year up to 5.85%. This market collapse is really starting to kick into gear.

Submitted by Coronita on June 10, 2022 - 11:12pm.

deadzone wrote:
Meanwhile the bond market got crushed today thanks to that inflation report, 30 year up to 5.85%. This market collapse is really starting to kick into gear.

Huh????
Today,

Vanguard's total bond market ETF which supposedly tracks the entire bond market (sort of), is down... a whopping 0.85%
https://finance.yahoo.com/quote/BND

Vanguard's short term inflation protected securities ETF, is down a whopping 0.10%
https://finance.yahoo.com/quote/VTIP

Vanguard's short term bond index etf BSV is down 0.6%

and so forth....
How is this "getting crushed?"

Submitted by deadzone on June 11, 2022 - 8:40am.

Read Mortgage News Daily, maybe you'll learn something about the MBS market. Friday was brutal.

"The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That's only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well."

Submitted by Coronita on June 11, 2022 - 9:42am.

deadzone wrote:
Read Mortgage News Daily, maybe you'll learn something about the MBS market. Friday was brutal.

"The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That's only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well."

Yes , so? And how is this affect my bottom line or yours?

Seems to me you have a lot to read more so than me. Basic things such as 401k accounts retirement accounts and how they eork. ya know things that actually affect your financial future or not. I guess that's why financially , there a gap between ...oh never mind...

Submitted by sdrealtor on June 11, 2022 - 2:56pm.

Coronita wrote:
sdrealtor wrote:
deadzone wrote:
sdrealtor wrote:
My friends kids around the country dont seem to have issues buying homes

So I guess student debt isn't really a hindrance after all.

Not when you have parents that paid for your college. My daughter is taking out loans so learns about borrowing and being responsible to do well so she can pay them back. After graduation at dinner I’ll hand her an envelope and tell her to tear it up. Once she does and asks what it was I’ll let her know they were paid off for her. Part of the process

Shit, you are a genius. I think I'll do the same thing....

I think its important they learn about borrowing early and feel invested int he process of their education. I also cant wait to see her face when I tell her what she just tore up:)

Submitted by deadzone on June 11, 2022 - 6:25pm.

Coronita wrote:
deadzone wrote:
Read Mortgage News Daily, maybe you'll learn something about the MBS market. Friday was brutal.

"The average lender increased 30yr fixed rates by at least a quarter of a point (0.25%). That's only happened 4 other times since our daily record keeping began in 2009, and 3 of those were during the once-in-a-lifetime volatility that followed the onset of the pandemic. That made this the 4th worst week since 2009 as well."

Yes , so? And how is this affect my bottom line or yours?

Why does it always have to be about you, or me? There is an entire world out there, and it doesn't revolve around you!

Mortgage market tanking, interest rates going up at a faster rate than any time in history, obviously is a pre-cursor to a housing crash. You own a lot of real estate so this will affect you whether you want to accept it or not. The corresponding equities crash will definitely affect your 401K in a negative way too. Or just ignore it and keep dollar cost averaging. I don't care if it affects you or not, but stop trying to argue that it isn't going to affect a lot of other people.