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Old 13 April 2020, 04:13 AM   #1
Flyinghunter
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Forecasting Economics: What's next > Inflation or Deflation

We certainly live in interesting times and I've been studying the economic ramifications at a macro level to better understand our trajectory. A trillion here, a trillion there seems to be the governmental modus operandi these days which would suggest inflation. However, an environment of decreasing prices and a corresponding decrease in consumer demand during record unemployment suggest deflation.

Here's the thought provoking article that got me thinking...

https://braveneweurope.com/steve-kee...bt-jubilee-now
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Old 13 April 2020, 04:48 AM   #2
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It will be a macroeconomic reckoning beyond that which followed WWII’s recovery methinks.

However, there may be rationalization of sovereign debt swaps plus synthetic financial swaps to forestall defaults.

Tracking the debt issuers and the buyers will give one a clue towards the future form of commerce between EMEA & the Americas.

Our grandchildren’s grandchildren will deal with the outcomes if we can’t pass a crucial test to craft a solution within this generation.


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Old 13 April 2020, 04:58 AM   #3
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Stagflation FTW.
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Old 13 April 2020, 07:40 AM   #4
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Deflation for the foreseeable future.
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Old 13 April 2020, 07:55 AM   #5
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We better hope deflation because with all the money the FED just created if it is inflation the Dow is going to 50,000 along with a loaf of bread.
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Old 13 April 2020, 01:07 PM   #6
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Inflation of hard goods. Market not so much.
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Old 13 April 2020, 01:25 PM   #7
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inflation of non-durable goods because of the trucking industry failing. It's already happening in europe, and we're seeing signs of it here in the US.

Without the population of trucks delivering goods, especially food items, we'll see inflation out the gazoo

Me - i've already planted my "victory" garden and ordered some goats & chickens off amazon
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Old 6 May 2021, 03:38 AM   #8
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M2 is certainly on the rise. Modern Monetary Theorists say this is fine, Milton Friedman, not so much when that growth outpaces the growth in GDP. The current metals, grains, lumber markets seem to be channeling Milton, at least for the moment. The recent run up in lumber alone has been nuts.

For those in the inflation camp, are you doing anything to hedge for the prospect of increasing prices? If so, how are you hedging?

I mean, hey, maybe it means a new fancy watch is in order. Solely to convert dollars to an asset priced in dollars as a hedge to inflation, of course.

I'd love to hear your hedging suggestions.

Last edited by George Burdell; 6 May 2021 at 04:12 AM.. Reason: forgot something
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Old 6 May 2021, 04:12 AM   #9
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Good to see everyone's in agreement.
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Old 6 May 2021, 05:20 AM   #10
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Inflation for a while. The reality is the printing of $$ has little to with it. The reality is the inflation appears to have more to do with ones perceived ability to pay that debt than how much debt. Plenty of literature (see Piketty and others) that low interest rates contribute to higher costs. Given how long they have been low, its amazing it has not happened long ago.

I think there are many excuses for the inflation (I.e. COVID) but the issues is largely inflated. Take gas. Plenty of it less and less suing it every day as they flee to electric cars, and many still locked down. So they artificially inflate the price (-cutting their own throats BTW as it will cause more and more to move to electric and away from gas). Wood, cost of wood is bananas due to what? plenty of trees out there,. The reality is many industries have lost $$ and are raising costs to cope with the bad past year. Once prices are raised, they never go down. The excuse is well the cost of gas is higher in the summer, but then the cost of my groceries does not go back down in the fall. The wood is higher because "supply chain" issues. Many got stimulus $$ and I think many business see that look, folks have more $$ and so we can raise prices and recoup losses from last year and pay back their loans that kept them afloat.
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Old 6 May 2021, 09:38 AM   #11
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The M2V or Velocity of the Money supply is finally starting to come out. Between fiscal and monetary policy, there was always a great deal of money out there but very little to spend it on when in lockdown. All asset classes then went up while major industries struggled such as the energy and travel industry.

As mentioned before, there's plenty of gasoline, but there's a pent up demand for travel at this point and the cost of fuel, airfare, hotels and rental cars is like nothing we've seen before. There's no doubt we will see $5+ gas in California, Hawaii and maybe a few other places within a month or two.

A federal judge today shot down the rental moratorium, so we'll see what the fall out from that will be as 1 in 5 renters are behind. Those who elected to go with a mortgage moratorium or forebearance will have to pay the piper soon too.

My thought, there will be a sudden spike in inflation, but a leveling off at some point (hard to tell when). I can't see a deflationary period however because today's politicians just don't have the guts to do the right thing and printing more money and kicking the can down the road will always be someone else's problem. We're still paying the debt on the Civil War.
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Old 7 May 2021, 01:09 PM   #12
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If the govt raised interest rates they wouldn’t be able to service our own debt. Rates will remain low and material costs will continue to rise. My 2cents
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Old 7 May 2021, 01:53 PM   #13
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Seeing signs of inflation on things I buy, my hedge against it is cutting out debt as hard and fast as I can, selling off some of the boats to brace for the coming increase in gas prices, and have been slowly picking up a few extra things at the grocery store on every trip. Little I know, but it makes me feel better.
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Old 7 May 2021, 03:05 PM   #14
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Corn prices nearing all time highs. They can make me overpay for wood, stocks and Rolex, but for heavens sake leave my bourbon out of it.
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Old 7 May 2021, 09:03 PM   #15
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In the macro cycle we are heading towards inflation.

How much and how soon remain the only real questions.
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Old 7 May 2021, 10:26 PM   #16
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Quote:
Originally Posted by logo View Post
Corn prices nearing all time highs. They can make me overpay for wood, stocks and Rolex, but for heavens sake leave my bourbon out of it.


It’s your tortilla chips that they’re after…

Your Bourbon is safe since time is the greatest asset driving it (oftentimes ignored in trading).


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Old 7 May 2021, 10:27 PM   #17
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High food inflation is already getting to be a problem, and it will get worse. As long as a higher amount of free currency keeps rolling out, the value/buying power will also decrease at a higher than the already outrageous 2% annual rate (~50% devaluation every 20 years).

The problem imho is a sheer lack of a truly stable currency for many decades (zero devaluation / inflation). We all know currency is a guaranteed loser, and since this is a faith-based game they're playing, once faith is lost due to central bank PR failure...

Central banks desperately need a better PR firm before their product goes to zero value.
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Old 7 May 2021, 10:38 PM   #18
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I believe that inflationary pressures are a given and we are already experiencing them. I believe it will accelerate but I’m not sure that it will be long lasting, but who really knows?

Some of the things that are pushing inflation are going to stop, like the extra free unemployment money keeping people from working and creating inefficiencies in businesses and shortages of goods. Some aren’t, like increasing housing prices without some new fundamental shift.

Then there is the chance that government actors enter with some likely ill advised policy. Look at the elimination of a step up in basis if you leave your business to your kids. They now have a big taxable asset and if they don’t have a lot of cash on hand to pay the big tax that popped up (no one knows when they are going to die and some carry inadequate insurance because this would be a new thing). Likely buyers know that and are unlikely to pay a premium when a federal and state taxman is holding a gun to the seller’s head, and what happens the the conusumer prices of that business’ goods after that sale. The only thing that we know for sure is that everyone will die. We typically don’t know when or how

Then there is the question a valuation in those circumstances, something a government policy maker that never signed the front of a check is very unlikely to have figured out.
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Old 7 May 2021, 10:48 PM   #19
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Inflation will be a result of QE.

Inflation does have the side effect of taking the sting out of debt, as was done in the UK in the '70s
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Old 8 May 2021, 12:47 AM   #20
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Quote:
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Inflation does have the side effect of taking the sting out of debt, as was done in the UK in the '70s
Yes, devaluate the value of the currency to make past debts 'cheaper' to service. Problem is when the faith in a currency runs out of value.

Years ago the British Pound Sterling was a currency. Take a look at the assert of value that 'backed it' versus today's British Pound Note and what value it has.
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Old 8 May 2021, 04:09 AM   #21
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inflation is already here. they are just burying it so the pleabs cant see it.
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Old 8 May 2021, 07:07 AM   #22
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Yes, devaluate the value of the currency to make past debts 'cheaper' to service. Problem is when the faith in a currency runs out of value.

Years ago the British Pound Sterling was a currency. Take a look at the assert of value that 'backed it' versus today's British Pound Note and what value it has.
I don't understand this. Is sterling no longer a currency?
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Old 8 May 2021, 08:44 AM   #23
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I don't understand this. Is sterling no longer a currency?
Technically, it is no longer a British Pound Sterling, and just a British Pound. Use Google to see what a British Pound Sterling was.
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Old 8 May 2021, 08:47 AM   #24
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inflation is already here. they are just burying it so the pleabs cant see it.

We don't have to worry about the price of meat. Bill Gates is buying up land and farms and shutting them down. A generation of soy boys coming soon.
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Old 8 May 2021, 05:42 PM   #25
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Technically, it is no longer a British Pound Sterling, and just a British Pound. Use Google to see what a British Pound Sterling was.
OK I think I understand the "technical" point you're trying to make, and that point is relevant to many other currencies too including the US$, but to say sterling no longer exists is a stretch. I took your helpful hint and Googled it and the first hit was Investopedia:

"What is GBP?
GBP is the abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories of South Georgia, the South Sandwich Islands, and British Antarctic Territory and the U.K. crown dependencies the Isle of Man and the Channel Islands. The African country of Zimbabwe also uses the pound. Many other currencies are pegged to the British pound, including the Falkland Islands pound, Gibraltar pound, Saint Helenian pound, Jersey pound (JEP), Guernsey pound (GGP), Manx pounds, Scotland notes. and Northern Ireland notes."
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Old 8 May 2021, 07:55 PM   #26
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Stuff will just roll don’t over think it just improvise. Always opportunities.
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Old 10 May 2021, 10:08 PM   #27
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To me it is clear from the spending bills this will result in hyper inflation. Its the only way to really pay for them. If the money is not hyperfocused i think it will combine with disappointing job market and strength. Right now i think they have way too much fluff to actually have a positive impact In my estimation working class low middle income and upper middle income are going to be hit very hard by the policies. For example the increase in gas prices is a retrograde tax that will clearly impact the spending of large parts of rural and blue collar work where EVs just can’t get it done or are too expensive.

I really feel bad for many Americans this is unpragmatic disaster.
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Old 10 May 2021, 11:35 PM   #28
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inflation is already here. They are just burying it so the pleabs cant see it.
+1
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