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Old 02-22-2021, 04:25 PM   #21
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Gasoline alone is up 25+% YTD.

Housing prices are going ballistic. Especially new construction. You can't touch a decent 2,500+ sq foot new construction house with "nice" but not crazy finishes here for under $8-900K ("low cost of living" Midwest state) all-in (house, land, landscaping, deck, sprinklers, etc). Meanwhile, "old" (used) houses sit on the market for months. EVERYONE wants new - and many are mortgaging themselves to the moon and back to buy new.

Food prices are going crazy. Product sizes are shrinking (don'tcha just love the "56 oz" containers of things? Yeah, THAT works for recipes - NOT).

Face it..inflation is indeed ramping up..and has ramped up bigly in the past few months already.

Huge new stimulus ($1.9T+?), "Infrastructure" bill (another couple trillion), etc is not gonna help things any on the inflation front.

As an early retiree who made a lot of sacrifices during my life to save a few pennies, this (and, candidly, the stability of our entire monetary system) concerns me GREATLY. The value of the $$s we saved is already worth ~95% what it was just a few months ago (see DXY chart) compared to a basket of 6 other non-US country currencies. Where we'll wind up in a year or three is terrifying to contemplate.

The US is dead broke. We simply can't expect to keep "printing money" in the many-trillions-of-dollars range or passing multi trillion dollar packages over and over again, and NOT have inflation go totally beserk. (To that point, for the first time ever, I'm actually considering buying GLD, IAU or some other inflation hedge like PIRMX. Wish I had bought TIPS years ago when they weren't already yielding negative..oh well!)

ETA - today's market volatility - especially with the NAS - was widely reported to be due to "inflation fears" and little else. FWIW. The Dow did recover..but the NAS got hit pretty hard, and I do wonder if this is the beginning of the air coming out of that balloon - very quickly.
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Old 02-22-2021, 04:35 PM   #22
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Originally Posted by 24601NoMore View Post
Gasoline alone is up 25+% YTD.

Housing prices are going ballistic. Especially new construction. You can't touch a decent 2,500+ sq foot new construction house with "nice" but not crazy finishes here for under $8-900K ("low cost of living" Midwest state) all-in (house, land, landscaping, deck, sprinklers, etc). Meanwhile, "old" (used) houses sit on the market for months. EVERYONE wants new - and many are mortgaging themselves to the moon and back to buy new.

Food prices are going crazy. Product sizes are shrinking (don'tcha just love the "56 oz" containers of things? Yeah, THAT works for recipes - NOT).

Face it..inflation is indeed ramping up..and has ramped up bigly in the past few months already.

Huge new stimulus ($1.9T+?), "Infrastructure" bill (another couple trillion), etc is not gonna help things any on the inflation front.

As an early retiree who made a lot of sacrifices during my life to save a few pennies, this concerns me GREATLY. The value of the $$s we saved is already worth ~95% what it was just a few months ago compared to a basket of 6 other non-US country currencies. Where we'll wind up in a year or three is terrifying to contemplate.
My largest bills are going up much faster than government inflation figures.

Property tax, homeowner's insurance.

With the same company for my work insurance, and my health insurance premiums went up about 60%, and my out of pocket for in-network services is more than 3X what is used to be along with a 5X deductible vs. the previous year.

Food probably is also this year, but I haven't tracked it that closely.
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Old 02-22-2021, 05:59 PM   #23
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Average gasoline price in U.S. is up about 10% YTD, mid-February.
Source: https://www.globalpetrolprices.com/USA/gasoline_prices/
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Old 02-22-2021, 07:23 PM   #24
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Average gasoline price in U.S. is up about 10% YTD, mid-February.
Source: https://www.globalpetrolprices.com/USA/gasoline_prices/
Key word there being "average".

Here, it's already up 25+% (I know - I pay the bill for it). Other places in the country are up even more than 25%.
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Old 02-22-2021, 08:00 PM   #25
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Another poster, Lsbcal, a while back on another thread, shared this quote from Liz Ann Sonders, chief investment strategist at Schwab:

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"... it's the whole narrative of the Fed pumping liquidity into the system, pumping confidence into the system, and especially in an environment back in March and April, where the economy was shut down, you pump all this money into the system, into the financial system, into the credit markets, and then through the fiscal side--which I know is not really the question--into the hands of businesses and individuals in an environment where the economy was shut down. Well, that liquidity has to find a home and it found it and typically finds it in not just equities, but in asset markets. So, I get the question all the time: What about inflation? Why haven’t we had inflation in light of all of this massive stimulus? And the answer is, well, we've had plenty of it, it's just been in asset prices, not in the real economy."

I found the Morningstar interview with Sonders on Jan 5, 2021, here: https://www.morningstar.com/articles...flation-scares.

Sonders expects to see signs of broader inflation when the Covid effects fade in 2021, but does not think that there's high risk of the 70's style of inflation.

While the future is not easy to see, I have to agree with Sonders that it's the easy money plus lack of outlets for spending that lead people to push up things that they can buy like cars, homes, RVs, and also dubious assets such as bit coins, "Gamestonk" kind of stocks, speculative growth stocks, etc..
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Old 02-22-2021, 08:04 PM   #26
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Bring on the inflation!
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Old 02-22-2021, 09:31 PM   #27
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Key word there being "average".

Here, it's already up 25+% (I know - I pay the bill for it). Other places in the country are up even more than 25%.
Soo, you are thinking that the "stability of our entire monetary system" (your words) is, uhhh, regional?
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Old 02-23-2021, 05:05 AM   #28
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Key word there being "average".

Here, it's already up 25+% (I know - I pay the bill for it). Other places in the country are up even more than 25%.
10% in NJ. I could not find a single place up 25% YTD.
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Old 02-23-2021, 05:27 AM   #29
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My short version, from Econ 101, is that inflation requires "too much money chasing too few goods".
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Sure looks to me like assets are inflating. Housing and equities.
Perhaps the increased money supply has mostly gone into investible assets instead of purchasable goods more broadly.
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Old 02-23-2021, 05:29 AM   #30
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It's such a complicated picture, really. We're mixing monetary policy with a fiscal stimulus, for one.

Bottom-line: I have no idea how this will play out, so I have to revert to my old stand-by of "minimize regret." (I don't regret missing out on the bitcoin boom, but maybe someday I will.)

Update from my friend. Turns out he already made a move and liquidated a lot of his real estate. So he's mostly concerned about sitting on a pile of cash and being afraid to deploy it, I guess. I'll suggest bitcoin.
Who do you think is the main entity backstopping the Federal deficits?
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Old 02-23-2021, 08:59 AM   #31
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Adam Ferguson's : "When Money Dies" book is applicable in its historical depictions.
I recently started reading it.
I also believe above normal inflation is on the horizon.
Adding 2Trillion(1.9T currently proposed in USA)to the money supply is inflationary & foolhardy. jmho

Good luck & Best wishes......
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Old 02-23-2021, 09:23 AM   #32
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Soo, you are thinking that the "stability of our entire monetary system" (your words) is, uhhh, regional?
Give me a break. That's not what I said, AT ALL.

My concerns on the stability of the US monetary system have everything to do with the Fed pumping trillions of dollars that we DO NOT HAVE and need to borrow, into the system. That's not a "regional" problem. It's a national problem.

The US is dead broke. Yet, today's politicians on both sides seem to think we can just keep issuing these multi-trillion dollar (largely boondoggle) "stimulus" bills that add HUGELY to our already unsustainable debt burden. Note that this is fairly new over the last year, after the start of COVID. We've always had large deficit spending. But it's the staggering size of the latest deficit spending that is going to inevitably lead to likely high inflation and perhaps ultimately, collapse.

Multi-trillion dollar lump spending (over and over again) simply can't last. There's only so much you can do to tax "the rich" - even at 100% total income and wealth confiscation, we just do not and would not have the money to keep putting out multi-trillion dollar programs. And if the 1.9T stimulus wasn't damaging enough..there's talk of a multi-trillion (I think I've heard $2-3T) "infrastructure" bill right behind this. Inflation? Heck, yeah. Perhaps runaway inflation.

Equally concerning - when we don't have the money to pay for programs like SS & Medicare, that's going to crush those of us in retirement. Reaching for (yet more) tax increases won't solve the problem - the debt is simply too high, and there's not enough wealthy people or corporations to increase taxes on to get enough $$ to pay for everything. So, taxes will likely HAVE to go up on ALL of us - perhaps significantly. And even then, there won't be enough $$ to pay for everything including the interest on all that new national debt.

Eventually, the whole thing has to go belly up. We simply can't keep spending at the levels that we are spending at and expect our financial system to survive long (or even near) term.

To that point - the US debt as a multiple of GDP is currently higher than that same ratio for Greece, right before Greece collapsed. Think about that. And that's BEFORE the $1.9T next stimulus and the $2-3T infrastructure bill that's almost certain to come next.

(And as you can see, this has absolutely nothing to do with the price of gas on a regional basis..)
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Old 02-23-2021, 09:25 AM   #33
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10% in NJ. I could not find a single place up 25% YTD.
Gas here, start of year: ~$2/gal.

Gas yesterday when filling up wife's car..$2.57/gal.

$2.57 / $2 = 28.5% increase since start of year.
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Old 02-23-2021, 09:29 AM   #34
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High inflation is how we fixed our national debt after WW2. Yup it is coming.

Hmm I wonder what will happen to cash, CDs and Bonds.
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Old 02-23-2021, 09:36 AM   #35
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High inflation is how we fixed our national debt after WW2. Yup it is coming.

Hmm I wonder what will happen to cash, CDs and Bonds.
Stocks would be hit very hard too. There is no escape!
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Old 02-23-2021, 09:39 AM   #36
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My short version, from Econ 101, is that inflation requires "too much money chasing too few goods". While there is a lot of money sloshing around, there is no shortage of goods. Or of labor thanks to Covid (we were approaching labor shortages a year ago and real wages were rising). And we haven't had real shortages of anything important for a long time. Hence little to no inflation.
Tell that to my insurance company that just raised my rental home premiums by 55%.
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Old 02-23-2021, 09:39 AM   #37
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Stocks would be hit very hard too. There is no escape!
When you walk to store and see higher prices you see how stocks deal with it.

Stocks may suffer but will recover. There is no recovery for cash, CDs, Bonds.
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Will stimulus lead to inflation? Shiller responds.
Old 02-23-2021, 09:42 AM   #38
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Will stimulus lead to inflation? Shiller responds.

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Interest rates are not "imbedded" with inflation. Interest rates are determined by market supply and demand. When governments decidethey can buy as many bonds as necessary in order to keep the interest rates lower, then the market is not functioning as an indicator of value. So what is the common man supposed to do? In great flocks they are buying bit coin and stocks, the biggest country supporting Bitcoin is China where 65% of all bitcoins are produced. It was not coincidental that TESLA purchased 1.3 billion dollars of bitcoin and is counting on the Chinese market for it's sales.



I think it is simplistic to not contemplate why one of the largest market cap companies in the world issues 2 billion in stock and uses one point three billion of that to buy bitcoin and since has doubled the value of the bitcoin held, that something is going on other than retirees reduced consumption. Bonds are becoming openly viable to mock as an investment by any company, since they hold no interest rate they are actually functioning as cash holdings, something to be held for short term until a risk asset can be purchased.



Another interesting fact, if you try to buy a silver eagle in hard form you will pay $35 per ounce for the metal itself at wholesale, even though paper sliver is going for $27. So silver does not have that much inflation over the past year unless you are someone who actually needs the silver.



The CRB index is about to break a 12 year trend line from the decline in 2008 and has risen nearly 100% since "stimulus" payments gave hold.



Here are the current YTD price increases in some commodities:

Crude Oil USD/Bbl 25.99%



Natural gas USD/MMBtu14.34%

Gasoline 28.84%

Propane USD/Gal 41.86%

18,000 tons of copper 18.26%

Lumber: 15.42%

Cotton: 15.54%

Sugar: 17.17%

Lithium: 45.1%

Tin: 31.41%

Cobalt: 55%

Corn: 12.76%

Rice: 4.94%

Hog Prices: 20.42%

CRB Index: 12.4%

US Houses Year over Year 10.97



The idea that a 30 year bond trading at 2% is an indication that inflation is under control is an economic self fulfilling forecast of economists who view controlling the interest rates as equivalent to controlling "inflation" and allowing for economic activity to maintain as "debt"


Thanks for the good list. Reading through it, it seems out of context without showing where these prices were pre-Covid. Maybe 1/1//20 would be a better starting point than 1/1/21. Second, there are contributing or even dominant factors for most of them, which are unique to this moment, namely trade wars, weather and early signs of the 6% GDP growth that respected economists, including Goldman Sachsí, are predicting for 2021 as we rebound from 2020.

A lot of the agriculture products above, including lumber, are subject to our lingering trade wars. For example, one of the reasons weíre paying more for lumber is because our imports from Canada have been subject to tariffs.

https://nahbnow.com/2020/12/commerce...-from-20-to-9/

1) These tariffs have also contributed, along with 2) record, fantastically low interest rates for mortgages and refinances, together with 3) explosive Covid-driven demand to larger or new houses in the work-from-home era, to the run up in housing costs on your list.

How much of the energy cost increases are due to Texas energy production recently freezing up, which was apparently avoidable and due to poor weather planning on the part of Texas energy producers and regulators?

And how much of the energy and commodity price increases above are due to the economy simply coming back to life after a unique plunge in 2020?

That lithium prices are way up in the context of EV expansion, with GM announcing it will phase to EVs, should surprise no one.

I suspect thereís a lot more going on than the Fed and Congressí actions to do their jobs and respond to a genuine crisis with many tax paying, voting citizens in dire need. YMMV but Iím taking the long view that the inflationary and deflationary factors unique to our times will sort themselves out, and am staying put.
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Old 02-23-2021, 10:30 AM   #39
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Who do you think is the main entity backstopping the Federal deficits?
Treasury and ultimately the tax-payer. Not sure I see the relevance of your question.

My point was that the monetary policy has been going on for a while (13 years now?). So the recent move in bitcoin was driven by what exactly? Recent fiscal policy?
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Old 02-23-2021, 10:48 AM   #40
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I've seen lots of arguments that most of the inflation we've experiences has been absorbed by real estate, equities, bitcoin, gold,
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