Posted on 03/19/2021 2:27:23 PM PDT by fruser1
Except for a pittance of virus shutdown relief checks, the government and banks and not releasing the $trillions of dollars of stimulus to consumers but to banks, government agencies, non-profit agencies and pet groups to buy votes. Supposedly, as long as they do not release monies to consumers inflation will be held in check. But hard assets are inflating: housing, food, gasoline, to the point that only a few will be able to afford. Call it back door inflation
Wisdom!
Yep, they told me in 1977 it couldn’t go on like this, we’d all be eating dirt soon.
“(To be honest, they’ve also gotten a lot better)”
Well, yes and no. True, the cars are fantastically capable. But that capability is frangible. A mechanic near me advertises that you can finance your timing belt replacement. So, every 60-100000 miles you have an expense that runs from !,000 to several thousand dollars. The manufacturers have done everything in their power to prevent you from taking their car to anyplace other than a dealer, which greatly increases the cost for everything. Apparently, the Tesla dealer can completely disable your car if they detect certain things that you have done to it.
There’s a Pick and Pull near my house with a double row of Mercedes. They look like they could be on a high end used car lot. Some of them look nearly new. So, I asked about them. That one, needs a new engine; $15000. The one next to it needs a transmission; $12,000. Most of the others need one or more computers to even diagnose the problems they exhibit. Those computers are not made anymore and cost anywhere from $1500 to $3000 with no guarantee they work, because, they are coming from wrecked cars.
I have owned a number of the last model Lincoln built on the Panther platform. Since they are owned mostly by older people, you can pick one up, say, a 2009 with 60k miles, that has been garaged and well maintained. But, practically everything electric has failed. The seats won’t move. The dash doesn’t work. It’s a terrific, smooth, quiet ride. But the electrical glitches often make it practically unusable.
In short, modern cars are not built to last. They are built to go on lease. They will work fine for the first owner and that’s all that is intended by their manufacturers. There is no long, long term value.
Don’t get me started on depreciation.
BTW, I am rebuilding a ‘48 Plymouth and a ‘56 Studebaker. I have a 2004 Toyota, Tundra, which is the newest vehicle I will ever have. It’s relatively cheap to maintain, but the timing belt does cost $1,000 to replace. However, I have been able to do all the other maintenance on it myself.
Oh, how f***ing wonderful-a nostalgic revisit of the years of the Carter malaise-me getting laid off the job I’d had since graduating from college, my hubby working an extra job evenings and weekends so we could keep the bills paid and send the little cub to a private school instead of the inferior public one, squeezing every dollar and every gallon of gas-just what I’ve been wanting to do again...
Well at least this time around I work for myself and don’t have a cub at home to support, so...
Cars are much more expensive today than ever before, but they are also much more advanced.
If you built a 1990 car brand-new today I'll bet it would cost LESS than 1/4 of the median income.
However, you can't legally sell a new car today that's built to 1990 standards.
So how DO we measure price inflation in a product like this?
The paper we pass around as money is worthless. Making more of it makes it even more worthless. Inflation ensues. Quite simple actually.
“Modern” anything on the social ‘science’ world is akin to phrenology or astrology. There’s a reason those clowns went into the marshmallow and easy world of making things up and believing.
Gasoline per gallon here in southern California is at least $4.05. Some ARCO stations sell it for $3.69 but most places it’s over $4.
That's what I see. Lots of inflation without the commensurate overheated economy.
That’s the plan, isn’t it?
Welcome to Weimar America.
U.S. currency being a world standard, the effects of the inflation will probably be dispersed world-wide, which means that its overall effect will be lessened and poor people in Ethiopia will pay for our monetary sins.
Now, that there is a hockey stick!
I agree with your spending theory.
A significant portion of the stimulus checks will go to overdue rent and mortgage payments.
Another significant part of the stimulus went to old folks - like me - who will search for the best short term interest rates available and save 100% of it!
That's assuming only one factor, consumer spending. Pouring massive amounts of dollars - or anything else - into the system will devalue what's already there. That's just simple law of supply/demand.
Many other factors *without* rising economic activity such as rising oil prices can cause inflation as well. Biden is doing everything possible to kill our domestic production and destabilizing the Mideast.
And people who tell us the 2008 helicopter dumps didn't cause inflation are just wrong. Compare the price of nearly ANY product - even CPI products - from then to now.
When it becomes too great to control, the next step is devaluation of the currency. Don’t kid yourselves, it could happen.
2021 M2 is 2.6 times 2007.
Assume in the worst case that the supply of goods hasn't changed since 2007 and that spending on goods is proportional to M2.
Then we are talking about potential inflation of 260% since 2007.
Now let's refine our model
GDP has risen from 3071B to 4289B. 2007 to 2021. A 1.4 increase.
That's not nominal dollars so even if that 1.4 increase reflects some inflation, it's inflation that we don't have to worry about in the future because it's already manifested.
Thus 7471B/3071B = a ratio of M2/GDP = 2.43 in 2017
Compared to 19,394/4289 = 4.53 in 2021.
4.53/2.43 = a potential inflation of 1.86 or 86%.
Bad but better than 260%.
Now lets look at the spending assumption by examining what has happened to savings.
Personal savings have risen from 380B in 2007 to 3930B in 2021. On a per person savings thats, 380B/320M citizens = $1,188 per person in 2007 to 3930/320M citizens = $12,281 per person in 2021.
You could argue that the personal savings represents a much needed improvement.
And people probably aren't going to dissave in a time of crisis and they may make that change permanent.
So that's my back of the envelope analysis. We might be looking at inflation but it's not going to be hyper inflation (defined as 50% a month) or even 50% a year. A lot depends on what the FED and US government does in the future.
I'm guessing less than 10% a year, as the FED does have a number of ways to manage this. They can reduce the money supply as people go back to work. They can raise interest rates if the economy becomes overheated and bottlenecks start to appear which would decrease the velocity of money. Higher interest rates would increase the government deficit, but the FED could increase their purchases of gov't debt causing the interest payments to flow right back to the treasury. So the impact on the deficit could be mitigated. Still government needs to learn to live within their means. Starting with policies like tariffs that bring the economic engine to full capacity and prevent jobs from going overseas. And tax policies that keeps the engine running instead of being a disincentive. Getting the economy going full speed, cuts government spending in a number of ways, while providing more tax revenues.
See my post in 37.
>> It’s almost like they WANT to bankrupt the country.
Big picture, they want to bankrupt the whole world. The dollar is the world’s reserve currency; we go boom, everybody goes boom. “The Great Reset” will make everyone slaves to the left.
“Its already bankrupted.”
Invest in Bullets, Beans and Gasoline, FRiend! ;)
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