Inflation

[daylatedollarshort]

If they are deceived about the unit price because the container has been modified, then you get an improper demand signal and the amount produced and price will both be too high. Maybe people should pay more attention, but the producers take advantage of the fact that they don't.

I have posted this before, but some items like paper towels and toilet paper are usually very overpriced at the supermarkets. Corporations use marketing terms like double rolls an mega rolls to make it hard to do price comparisons. I always buy goods like that online and by the pound. You can tell the weight online because of shipping weights.

Toothpaste is also usually overpriced. Brand name toothpaste at the dollar stores is a dollar (maybe $1.25 these days), making it much cheaper than even the sale prices for the same brands, same size tubes at the supermarkets.

 

[Sunset]

I have posted this before, but some items like paper towels and toilet paper are usually very overpriced at the supermarkets. Corporations use marketing terms like double rolls an mega rolls to make it hard to do price comparisons. I always buy goods like that online and by the pound. You can tell the weight online because of shipping weights.

...

I buy toilet paper and paper towels by the square foot. Of course for toilet paper it has to be 2 ply.

Can't rely on the other numbers like number of rolls or sheets per roll, etc.

 

[razztazz]

Believe it or not, many food companies are getting some pressure via ESG to reduce calories per package/unit. Bloomberg may ultimately get his way via ESG nationally what he ultimately couldn't do in NYC (Not that he personally is leading that charge, just the outcome)

What's ESG?

 

[HenryD]

What's ESG?

environmental, social, and governance

 

[11522914]

I buy toilet paper and paper towels by the square foot. Of course for toilet paper it has to be 2 ply.



Can't rely on the other numbers like number of rolls or sheets per roll, etc.

I found that is the only way to compare. It's near impossible to compare any other way.

 

[Gumby]

Yeah, well, I disagree with the ESG people on this matter. Is that allowed?

"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be “cured” against one’s will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals."

C.S. Lewis - God in the Dock: Essays on Theology and Ethics (1948)

 

[38Chevy454]

"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience. They may be more likely to go to Heaven yet at the same time likelier to make a Hell of earth. This very kindness stings with intolerable insult. To be “cured” against one’s will and cured of states which we may not regard as disease is to be put on a level of those who have not yet reached the age of reason or those who never will; to be classed with infants, imbeciles, and domestic animals."



C.S. Lewis - God in the Dock: Essays on Theology and Ethics (1948)

This is so good of a summary. Thanks for this!

 

[jollystomper]

I might be wrong, but used auto prices seem to have fallen a bit in our area. Back in December, when looking for a replacement car for our totaled 2011 Corolla, I could not find a similar car with relatively low mileage for under $24K. Now I am seeing some at various "bottom line price" dealers for under $20K.

 

[JoeWras]

Hell on earth is tiny Oreos!

 

[youbet]

Fair enough, sellers will continue to charge more even if technically they could lower prices and still make a profit. No one ever says hey we could just make $1 billion and not $2 billion. Instead it is, the consumer must pay more. I don't blame them but need to prepare for it. Cost of living just shut up real fast.

Yes. I’m noting much confusion by many folks these days. There is no historical data indicating that, in aggregate, prices will decline in the future. The rate of increase will decline but prices will continue onward and upward. This is why early high inflation is a threat to FIRE plans.

Yep, certainly agree, we need to prepare for it.

 

[W2R]

I might be wrong, but used auto prices seem to have fallen a bit in our area. Back in December, when looking for a replacement car for our totaled 2011 Corolla, I could not find a similar car with relatively low mileage for under $24K. Now I am seeing some at various "bottom line price" dealers for under $20K.

Interesting! Along these lines, gasoline seems to be falling in price in our area, $3.95 for Exxon regular now, down ~20? cents in the past two or three weeks. We're mystified and I hope our national strategic petroleum reserves can soon be replenished.

 

[youbet]

I shop Walmart for groceries as DW can't handle the effort with her COPD. These guys are very sneaky with house brand stuff. My favorite item to report on is their Great Value yogurt in the 4 pack of 6 ounce containers. Last year, the 4 pack was $1.24 and now it is $1.82 (up 47%). There's more, way more.....

I agree that is a significant price increase but it really isn’t “sneaky.”

 

[daylatedollarshort]

Yes. I’m noting much confusion by many folks these days. There is no historical data indicating that, in aggregate, prices will decline in the future. The rate of increase will decline but prices will continue onward and upward. This is why early high inflation is a threat to FIRE plans.

Yep, certainly agree, we need to prepare for it.

I don't think most of us would be as concerned about 8.5% inflation if we could make 12% on CDs. It is the real interest rate issue that has me more concerned. I would prefer not to go 100% TIPS, but worst case there is less than -1% real return on the shorter maturities, which still works with our plan. But the -6.5% real return or so on other fixed income is an issue. Even a 1% withdrawal rate on money already at -6.5% real returns doesn't come out so good in my spreadsheets. I'm hoping the Fed rate closes the gap more between what we are losing to inflation and fixed income instruments are paying.

 

[youbet]

Well, we’ll have to wait and see what the Fed’s rate increases do to the mid and long rates that drive CD’s and treasuries. Just remember though that current aggregate price levels are likely to be maintained while CD yields will vary over time.

 

[VFK57]

I am reading Ukrainian and Russian News about the war, I have relatives and friends in Ukraine. A major Russian newspaper Izvestiya" reports that the Russian National Security Committee discussing the National Currency (Ruble) to be tied to the Gold and valuables like Natural resources (the country is very rich on any metals, wood, Gas and Oil). At this point I am not sure how it may affect the US$ if any other country from G20 is going to follow the Russian move.

 

[Magus]

I am reading Ukrainian and Russian News about the war, I have relatives and friends in Ukraine. A major Russian newspaper Izvestiya" reports that the Russian National Security Committee discussing the National Currency (Ruble) to be tied to the Gold and valuables like Natural resources (the country is very rich on any metals, wood, Gas and Oil). At this point I am not sure how it may affect the US$ if any other country from G20 is going to follow the Russian move.

1) market doesn’t seem to think Russia will do anything with gold down $100 an oz the last few days
2) they won’t for a ton of reasons, most notably most of the rest of the g20 do not have a ton of natural resources and imo after the weimer republic / treaty of Versailles fiasco, no country is going to want to tie their debts to gold likely ever again

My best guess is Putin is trying to raise the price of rubles as he starts to force countries to pay for natural gas with them for no cost to him.

 

[VFK57]

1) market doesn’t seem to think Russia will do anything with gold down $100 an oz the last few days
2) they won’t for a ton of reasons, most notably most of the rest of the g20 do not have a ton of natural resources and imo after the weimer republic / treaty of Versailles fiasco, no country is going to want to tie their debts to gold likely ever again

My best guess is Putin is trying to raise the price of rubles as he starts to force countries to pay for natural gas with them for no cost to him.

A lot depend on 2 rising economic powers: China and India. Both countries refuse to join the West in condemnation of Russian attack on Ukraine and actively support Russian economy by purchasing Russian NG and oil.

 

[Car-Guy]

A lot depend on 2 rising economic powers: China and India. Both countries refuse to join the West in condemnation of Russian attack on Ukraine and actively support Russian economy by purchasing Russian NG and oil.

I had not thought about it that way... According to World-O-Meter, those 3 counties (Russia, China, India) have about 40% of the world population but only consume about 20% of the world petroleum. Add others that may support Russia and it sounds like they have plenty of buyers.

Interesting too IMO, the US has less than 5% of the worlds population but consumes about 20% of the worlds petroleum. Not surprising there.

 

[Chuckanut]

My understanding is that China is getting about a $15 a barrel discount when it buys the Russian oil.

 

[VFK57]

One more threat to US$, the world main reserve currency status, is a Saudi discussion of selling their oil to China for Yuan instead of US$. Petro dollar was one of most effective supports for the US$ world demand.

 

[VFK57]

My understanding is that China is getting about a $15 a barrel discount when it buys the Russian oil.

India gets $37 discount on Russian oil and buying large quantities. However, Russia and India discuss their trade in their National currencies.

 

[LRDave]

I'm so happy that a big company like Mondelez International is taking the time to protect my health. They must be just the nicest people.

My SIL works for Mondelez. She assures me that the company holds their customers in the same high esteem as they do their employees.

 

[lawman]

The difference between previous inflation and the current one is that most past inflation were triggered by overheated economy. We have many mid class earnings vs lower (for some goods) supply vs demand. Current inflation is more related to a break up of supply chains due to the COVID pandemic, Russo-Ukraine war, a Geopolitical split between China-Russian block vs USA-EU led block. Competing with the West, China-Russian block is shifting their payments to their currencies, tied to Yuan instead of US$. On the top of it: we printed too much US$ vs goods and services we produce. Finally if we aggressively start lifting the rates, it might lead directly to a Recession. Just what I think.

Bingo..

 

[ncbill]

One more threat to US$, the world main reserve currency status, is a Saudi discussion of selling their oil to China for Yuan instead of US$. Petro dollar was one of most effective supports for the US$ world demand.

Yuan/renimbi is not considered freely convertible...China's government can and has intervened in setting its value.

I was going to say the same for the Russian ruble but post-February 24 the ruble is no longer convertible in world markets...for the moment it has basically become an internal currency only.

 

[yhoomajor]

Yuan/renimbi is not considered freely convertible...China's government can and has intervened in setting its value.

I was going to say the same for the Russian ruble but post-February 24 the ruble is no longer convertible in world markets...for the moment it has basically become an internal currency only.

I would say that USD has proven to be not so liquid as it was/is touted to be. Russia can't even get zero cents (or rubles) out of their $400Billion plus USD(+Euro) reserves. So much for its convertibility. Any country that is not in the sphere of US/EU influence will have to think twice of parking their hard-earned savings in US/Euro reserves. Because those can be frozen (effectively stolen and given away to others) any time based on political circumstances.Russia is not the only one that has happened to. It was done to Iran. It happened to Venezuela.

This points to the strength of 10,000 years history of Gold standard in human society. If you had possession physical gold, you had the full liquidity of gold. That was yours and only yours. Lot of introspection will occur world over after current macro level events come to their natural conclusion.