Posted on 01/17/2022 8:11:41 AM PST by millenial4freedom
One thing people tend to not understand is that some commodities become relatively cheaper in a high inflationary and high interest rate market.
We saw in the 1970’s that higher interest rates did not reduce inflation, contrary to common discussions of raising interest rates to fight inflation.
What we saw were housing and other hard investments became cheaper, so when inflation subsided those with money had made out like bandits. I learned that people with money make out in recession and inflationary periods.
They have to keep kicking the can down the road as far as they can before they just run out of road. And they may just be running out of road. That is when it will get REALLY bad. But they’re pretty creative. They have sort of reached a “damned if you do, damned if you don’t” point. The only question is, which choice gets you “less” damned? And if raising interest rates only affects the government “down the road”, they will increase interest rates.
Count on it. Inflation is double digit rates. Be ready for Carter II.
It's all about "power" (the desire to control the future labor of others).
Economic crashes are not new - and they generally follow periods of "easy credit" (such as the "roaring 20's) - so that those in power can entice the lemmings to assume great amounts of debt.
Deflationary cycles are those times when the power mongers decide to "call in" the easy credit they've given out, knowing it will cause bankruptcy and they can steal the underlying assets to increase their wealth and gain even more power.
It's "deflationary", since the bankruptcies mean the "claims on future labor" behind the bankrupt debts will never occur - hence the money supply (piles of claims on future labor) goes down.
A deflating money supply means companies go out of business, existing debt becomes more expensive, and prices on goods and services go up (as business owners only have that option to try or it will be time to close their doors).
The power mongers have no desire for rampant inflation - which would make our existing debt much easier to pay off and give us a certain degree of financial freedom from it.
We are nothing but slaves to the power mongers, and they are the financial masters.
Yes. But a maximum of 0.75% this year, and likely a maximum of 1.0 - 1.25% in 2023.
And they will pause for all of 2024 if they can, to allow demokkkrats time to absorb and move past the rate hikes of 2022 and 2023.
Deflation is an enemy of big government but under normal circumstances a friend to savers and wage earners.
Inflation is a friend to big government but an enemy to savers and wage earners.
… I hate big, Arbitrary government.
“Many old folks are invested (heavily) in Bond Funds and individual Bond issues. If they continue losing $$ (as they have been)” ,
Not many smart old folks. We moved mostly out of those some time ago. I have maybe 5% of my assets in bonds or bond related funds. One of those investments pays a 7% dividend, a very good return in this environment.
Very true. Existing debt becomes cheaper to pay off when inflation hits.
The Keysyone Keynesians (who see bad times demanding more spending and good times as an opportunity to spend more) are far, far beyond pump priming. These days it’s more like a bunch of spending fiends endlessly engaged in economic masturbation always chasing the high they once got by being but a little spendthrift.
“Existing debt becomes cheaper to pay off when inflation hits.”
It does eventually, but wages tend to lag several years behind inflation.
Isn't that kind of like the old minimum wage question? If $15.00 is good, why not $100.00?
Who knows when the Rubicon is crossed?
This isn't a snarky inquiry; I'm very interested in this stuff, but will never get a full grasp, I don't think.
Deflation is an enemy of "government" - true, but not those who control government and our economic system - "international banks". The banks steal the underlying assets that occur when credit gets pulled and called in - creating enormous transfers of wealth.
Deflation causes lower wages, more difficulty paying off existing debt, and economic velocity to crater. None of those are beneficial for the citizenry.
Mortgage rates have already risen.
It makes people have more "claims on future labor" that they are a "master" over.
Whether this is beneficial or not comes down to how many of those "claims" they need to transfer to the owner of the grocery store, gas station, utility company, etc.
In a deflationary environment, those with artificially high wages will be the first to lose their jobs - since businesses will need to cut cost at every turn in order to keep their doors open.
Arbitrarily. They front-running what they perceive to be an increase of the FFR.
I believe they're wrong, and that rates will come down again in the future.
I also would be surprised to see certain rates go negative at some point in coming years.
It would not surprise me to see consumers paying a bank to "keep their money safe", instead of the bank paying any interest on accounts.
Absolutely. The question is how much and how fast. And will it be only 3 or will it be 4 times this year.
Ah, but you forget that the bankers at the top calling the dance easily live off of the churn, and as inflation usually lags behind its cause they can grow substantial persistent wealth doing so.
Banks are where there’s money to steal, and stealing the value from other people’s dollars to help grow their pile is legal.
I would also suggest that our current circumstances, where people put their wages into proverbial pockets with holes in them because they are by in large are abusers of credit themselves, are not historically ordinary circumstances.
A nation that abuses credit has a government that abuses credit … who would have thunk it?
Housing cares about long bond rates. Sometimes when the FED pops up short term rates, long rates stay the same or go lower, due to an expection that the rate hike(s) will lower economic activity and inflation.
I disagree with your assessment. I believe we were actually in deflationary times due to productivity gains caused by IT and automation. And economist fear deflation more than anything. So pumping money out and low interest rates kept deflation at bay. Clinton, Obama and even Trump benefited from it. But the scamdemic stopped the productivity gains and now we are back to old school economics where the money supply and interest rates can’t remain where they are without inflation going through the roof.
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