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Why is there no inflation?
- Thread starter bonds
- Start date
Once the velocity of all this money picks up there should be some nice price inflation. This won't happen until there is a Republican president who frees up the system. Then He'll get blamed for 8 dollar/milk even though he was just the guy that ripped the band aid off.
If the Fed wanted to sell bonds to decrease the money supply who is going to buy them? Well maybe the question isn't who but at what yield? How big of a loss can the fed take on the bonds it holds? How about this... Medicare can start paying hospitals in bonds.
If the Fed wanted to sell bonds to decrease the money supply who is going to buy them? Well maybe the question isn't who but at what yield? How big of a loss can the fed take on the bonds it holds? How about this... Medicare can start paying hospitals in bonds.
Inflation is like a market. There are bears and bulls. We are in a bear market for inflation right now. Though the fundamentals could be there for a bull, the price action just hasn't materialized yet. Inflation could be similar to BBY at $12. The buisness wasn't that bad, but the market just hated it, until the price action turned.
Inflation is like a Genie. Once it is out of the bottle, you can't put it back in. People will just start raising prices because prices are going up. It is self supporting. Once it starts, the only way to stop it will be to raise interest rates. Which would then put the soverign nations into insolvency, because the only way we can service the debt is because short term rates are 1% or less.
In 4 or 5 years, there could be so much debt racked up, that overnight we could find ourselves in a situation where when rates jump a few %, we can easily see that the debt can't be supported. Faith in the gvt will be deminished, which will further feed inflationary expectations. And it could be a total meltdown. The economy would freeze up right away, tax receipts would fall 20% overnight, or more, and we can barely even service the debt. Game over.
Scarry thing is this could really happen, and is almost likely too in next 5-15 years. Seems obvious. Unlike the 2008 crisis, there will be nobody to step in this time to save us.
Inflation is like a Genie. Once it is out of the bottle, you can't put it back in. People will just start raising prices because prices are going up. It is self supporting. Once it starts, the only way to stop it will be to raise interest rates. Which would then put the soverign nations into insolvency, because the only way we can service the debt is because short term rates are 1% or less.
In 4 or 5 years, there could be so much debt racked up, that overnight we could find ourselves in a situation where when rates jump a few %, we can easily see that the debt can't be supported. Faith in the gvt will be deminished, which will further feed inflationary expectations. And it could be a total meltdown. The economy would freeze up right away, tax receipts would fall 20% overnight, or more, and we can barely even service the debt. Game over.
Scarry thing is this could really happen, and is almost likely too in next 5-15 years. Seems obvious. Unlike the 2008 crisis, there will be nobody to step in this time to save us.
maybe so, but there isn't going to be a republican president for another 10 years. Hillary isn't as bad as you think, she was one hell of a cattle traderQuote from riskaddict:
Once the velocity of all this money picks up there should be some nice price inflation. This won't happen until there is a Republican president who frees up the system. Then He'll get blamed for 8 dollar/milk even though he was just the guy that ripped the band aid off.
If the Fed wanted to sell bonds to decrease the money supply who is going to buy them? Well maybe the question isn't who but at what yield? How big of a loss can the fed take on the bonds it holds? How about this... Medicare can start paying hospitals in bonds.
no kidding, I lived through the last one, and nobody, no matter how smart you were could figure out a way to beat it. The rich, the poor, everybody got screwed. Maybe it is the great equalizer. But the statistics don't back that up. All I can say is inflation is really a bitch.Quote from silk:
Inflation is like a market. There are bears and bulls. We are in a bear market for inflation right now. Though the fundamentals could be there for a bull, the price action just hasn't materialized yet. Inflation could be similar to BBY at $12. The buisness wasn't that bad, but the market just hated it, until the price action turned.
Inflation is like a Genie. Once it is out of the bottle, you can't put it back in. People will just start raising prices because prices are going up. It is self supporting. Once it starts, the only way to stop it will be to raise interest rates. Which would then put the soverign nations into insolvency, because the only way we can service the debt is because short term rates are 1% or less.
In 4 or 5 years, there could be so much debt racked up, that overnight we could find ourselves in a situation where when rates jump a few %, we can easily see that the debt can't be supported. Faith in the gvt will be deminished, which will further feed inflationary expectations. And it could be a total meltdown. The economy would freeze up right away, tax receipts would fall 20% overnight, or more, and we can barely even service the debt. Game over.
Scarry thing is this could really happen, and is almost likely too in next 5-15 years. Seems obvious. Unlike the 2008 crisis, there will be nobody to step in this time to save us.
Quote from morganist:
There is inflation but it is not acknowledged by the government. Biflation in that somethings are going up and some are going down.
Food prices rising, but factory produced goods prices falling due to excess capacity.
http://www.reuters.com/article/2013/05/09/us-china-economy-cpi-idUSBRE94802R20130509
Quote from Bob111:
it could be 10% or 1%. all depends how and based on what it's been calculated
Exactly. The BLS in the US has changed their methodology numerous times. Using the prior method, it's around 9.5%. You can see the official vs prior methods here:
http://www.shadowstats.com/alternate_data/inflation-charts
The government has a strong incentive to keep the number low, since numerous benefits are linked to the rate.
Quote from oldtime:
no kidding, I lived through the last one, and nobody, no matter how smart you were could figure out a way to beat it. The rich, the poor, everybody got screwed. Maybe it is the great equalizer. But the statistics don't back that up. All I can say is inflation is really a bitch.
Oldtime,
When was "the last one"? I can remember in the late 70's early 80's buying CD's that peaked at somewhere around 18% to 20%. My savings and salary increases could not keep up with the price inflation. I had a 7.75% home mortgage loan for which my bank was offering me a larger and larger cash back payment if I would pay off the entire remaining balance of my house loan. I did not pay off the 7.75% house loan early when I was getting much higher interest rates on the CD's I was holding..
Which is of course a bunch of baloney.Quote from Lucrum:
I read recently the true inflation rate here in the US is around 8% at the moment.
A good upper barrier to inflation to look at is nominal GDP growth, which has been stalling around 3-4% recently and may yet be revised sharply downward over coming quarters.