Puzzling over inflation in the next 30 yrs.

[MRG]

I mainly worry about something like a pest/disease/drought destroying our corn and/or soybean production. Our entire food supply depends on ultra cheap corn and soy. Things could get ugly pretty quick if those crops both failed.

Learn to eat rice/potatoes then.

Cows are damn picky eaters.

 

[dtbach]

OK,
then learn to eat quinoa.

 

[Senator]

I am looking forward to inflation. Property values will go up. My mortgages stay the same. Rents will go up. SS will go up. Dividend yields should go up. My pension stays flat.

I think it will be higher than today, and may crest 8%. I plan on an average of 2.5%, but expect the average over the next 0 years will be closer to 5%.

 

[Running_Man]

I note there is zero concern for the far bigger danger to any retiree - continued and persistent deflation.

 

[highlow65]

I think people with non-cola pension and annuities could be hurt a lot over time with inflation, pays to be diversified but some people will suffer.

 

[NW-Bound]

Potatoes?
https://en.wikipedia.org/wiki/Great_Famine_(Ireland)

Rice?
https://en.wikipedia.org/wiki/Cochliobolus_miyabeanus

We're doomed!

OK,
then learn to eat quinoa.

I am already eating quinoa at lunch every day.

Quinoa is nutritionally superior to potato and rice, and has a much lower glycemic index. And it tastes good too.

 

[MRG]

I am already eating quinoa at lunch every day.

Quinoa is nutritionally superior to potato and rice, and has a much lower glycemic index. And it tastes good too.

Not to cows, pigs, chickens.

 

[NW-Bound]

Don't know about cows, but pigs and chickens should thrive on quinoa. It may even make the meat better. The problem is quinoa is too expensive to feed them.

 

[traineeinvestor]

I'm also of the opinion that over the longer term inflation is a bigger threat to my retirement than market fluctuations. This is in the context of needing our savings to last 50+ years (DW was 40 when I FIREd) which might as well be forever.

Consequently most of our savings are in real estate and equities which have at least the potential to generate cash flows which grow over time. Whether they will keep up with inflation is another matter but, unlike bonds, at least they have some chance. The small allocation I have to bonds is primarily to provide additional liquidity.

It's also relevant that inflation means my personal rate of inflation - not the CPI numbers. My personal spending budget is more heavily weighted towards expenses which generally go up by more than the CPI number - medical insurance, rates/property taxes, school fees etc. - so I assume an inflation number higher than CPI.

In about 4.5 years the mortgage on our home and one of our investment properties will be paid off. Plan is to borrow to buy another investment property (subject to market conditions and a bank being willing to lend to us) every few years after that to provide additional inflation protection.

I haven't completely discounted the possibility of a deflationary environment, but given the debt/deficit positions of so many governments and the actions of central banks around the world, I consider that to be a much less likely scenario.

 

[razztazz]

SS will go up

Will it?

 

[Running_Man]

I haven't completely discounted the possibility of a deflationary environment, but given the debt/deficit positions of so many governments and the actions of central banks around the world, I consider that to be a much less likely scenario.

It is precisely because of the level of debt and the impact of current rising rates that has the potential of putting stress on budgets around the globe. Italy is incapable of paying their debt, Deutche Bank is nearly bankrupt. Japan is incapable of paying debt on their interest if their average rate rises above 1.5%. It is possible that all of these moves will cause an increase to inflation, to this point there has never been an escape from ZIRP and if this occurs it will be the first one. There have been many attempts that have given much hope and short term rise in interest rates but the penalty of adding too much debt has always in the past handcuffed Japan the leading example. So we will see, current trends are interesting and near term right at a break out point, but let us see what happens in the real world after the FED starts a problem for the EM countries with a rise in interest rates.

It is far easier to be retired with increasing inflation than be in a circumstance where debt implodes worldwide. It is going to be an interesting two years coming up financially speaking.

 

[samclem]

It appears to me that the likeliest cause for high inflation in the US will be deliberate action by the government/Fed to devalue the currency. If the debt our government owes becomes unserviceable (due to its size in relation to the government receipts), there will be strong political pressure to "print more money" and make payments with this new money rather than default on debt payments/SS payments, etc. Each new dollar introduced reduces the value of all existing dollars. This is the choice that many governments have made in the past when it is politically impossible to raise taxes further--they introduce a "stealth tax" whereby all existing holding denominated int he national currency are devalued.

 

[MRG]

Don't know about cows, but pigs and chickens should thrive on quinoa. It may even make the meat better. The problem is quinoa is too expensive to feed them.

I suppose that is correct, at least pigs and chickens. They both eat protein naturally. I'm not sure how cows would manage protein?

You make the point. Quinoa is too expensive to use as animal feed.

While I agree that the most effective way to produce protein may be a plant based diet. How many people would actually eat that way? We were doing one meatless day a week for a long time, I don't want to eat that way full time.

We raised our own food for a while. A 40x60 garden, freezing and canning the leftovers. A few years of raising children for eggs and meat. It's great fun for a while maybe not so much if you have to do while old and sick. Expecially when you get into processing animals larger than chickens or rabbits. I've processed venison and helped with pork, it's a lot of work! Imagine you want a beef steak.

 

[NW-Bound]

Talking about inflation, any of y'all following what is happening right now in Venezuela? Their bolivar becomes so worthless vendors do not bother to count it. They weigh it!

Ten years ago, the exchange rate was a few bolivars to a dollar. Now, the highest Venezuelan bill of 100 bolivars is worth less than 2c.

 

[audreyh1]

Don't cows eat grass? If there is no corn they can just all be grass fed beef.

 

[NW-Bound]

Grass-fed beef is a healthier meat than corn-fed, but not as fatty and tender. And indeed corn is not a natural food for cows, though we force them to eat it.

Pigs and chicken on the other hand need carb from grain. The conversion from corn to chicken meat is nothing short of amazing. It takes less than 2 lbs of corn to get 1 lb of chicken meat. If humans were so efficient with our food, we would all weigh 1000 lbs.

Cattle are raised by letting them graze free range, so they do grow up on grass. It is only in the last few months of their life that they are fed corn in feed lots, in order to fatten them up. This is not a common practice in other countries.

 

[gcgang]

Owning the great companies of the world has been a very good way to protect and even enhance your purchasing power over the long term. If you're worried about inflation, own equities that can increase the price of their products/services.

 

[YVRRocketSurgery]

While price inflation is a concern that's on my radar in terms the purchasing power my nest egg will be able to produce, I do have faith that the BoC (and the Fed) will continue to have a policy to target inflation at 2%. Not blind faith though as there are issues with methodology and such. The BoC also reviews this policy every 5 years and can make various changes.

Interesting, even though certain things have gotten notably more expensive (property taxes, utilities, etc) our core spend isn't increasing at a similar rate. I likely need to review our spend in more detail to identify how we're compensating.

Also, one thing that kind of puzzles me is that I read a lot articles of how QE and loose monetary policy was eventually going to lead to significant inflation issues. That hasn't really happened (knock on wood) but I love to understand how that money got absorbed and what the corresponding impacts are.

 

[Senator]

A few years of raising children for eggs and meat.

I did not know you could get eggs from them, but the meat idea is a great one.

 

[Senator]

Originally Posted by Senator SS will go up

Will it?

Yes. It may be means or assets based, but you can be assured that if there is enough voters receiving it, it will go up at least as much as inflation.

 

[mrfeh]

I am sure I am missing something obvious...... TIA for your comments.

If this is a serious concern of yours, buy TIPS.

 

[VFK57]

There are many pundits who try to scare people by very high inflation and "only them, who knows how to invest in order to survive". Many of them are simply trying to sell their services by scaring people. Yet as most of us I am also worried of prospects of higher than "normal" inflation. Diversifying probably may help if it comes to higher inflation. Socks, real estate, land ?

 

[Totoro]

Putting money in socks won't help much with inflation.

 

[Hamlet]

Don't know about cows, but pigs and chickens should thrive on quinoa. It may even make the meat better. The problem is quinoa is too expensive to feed them.

If you think it is expensive now, imagine when people are trying to use it instead of corn or soy.

Our whole food supply revolves around dirt cheap corn and soy. That could be changed in a crisis, but probably not in time to avoid famine.

 

[Hamlet]

I note there is zero concern for the far bigger danger to any retiree - continued and persistent deflation.

I have large concerns in that area. I just didn't express them because the original question was about inflation fears.

Deflation is truly terrifying.