Inflation

[Marko-ER]

Grocery prices are up. Meat is way up.

Daycare raised rates.

My personal inflation rate is high.

Arby's raised their prices too. And we all know, they've got "the meats"

[xraygoggles]

it went from there will not be excess inflation to its transitory to blaming it on external forces to well actually inflation is good for you and the most recent one i saw was blaming it on the saudis. and oh don’t say hyperinflation because just saying it might bring it about, like candy man. and oh we need to pass this trillions spending bill to lower prices

they are pissing on us and telling us it’s raining. and most people believe them

you know in weimar germany everyone thought they were getting rich

Are you suggesting US is heading towards hyperinflation? I will bet you as many bitcoin (or dogecoin if you prefer) as you want that we are not.

[Tim]

I guess my guess is as good as any economist. Except for some correct economist who happens to be right while the others are wrong. I don’t necessarily know who that is. I have trouble believing the stories I am hearing about the causes of inflation. Pandemic, supply chain - ok these may have worsened the situation. But I’m stuck on the fact if there’s anything to be done systemically, it’s that raising rates is the primary tool available to try to stem inflation. We haven’t used this tool for many years, and didn’t stop the stimulus instituted in 2008 even after we were long past that. That makes it look like we were having a big party and assuming the bill would never come due. So now we’re at 6%. Does it stop there? You are right, if it’s a stable 6% that’s different from another scenario: the fed failed to raise rates in a timely fashion, we did not get out in front of this thing, and 6% goes higher. Does it stabilize? Or are we looking at a serious problem?
Yes, there’s nothing actionable here. You set your asset allocation to something reasonable and tolerable. Unless….you really believe that the fed will be forced to raise interest rates faster than they want to, faster than they are talking, despite the soothing words….well if you really believed that, there might be actions one would take…

Yeah, like driving a race car. Too much speed going into the corner and you hit the wall. Slam of the brakes and you spin out and then hit the wall. The Fed knows both or those risks. From experience. They have the best economic research wonks available. If there was an answer, they would find it. For you, try to think about going on in as a stock picker. That is how you beat it. Good luck.

[Antares]

Yeah, like driving a race car. Too much speed going into the corner and you hit the wall. Slam of the brakes and you spin out and then hit the wall. The Fed knows both or those risks. From experience. They have the best economic research wonks available. If there was an answer, they would find it. For you, try to think about going on in as a stock picker. That is how you beat it. Good luck.

Thanks. I’m sure you’re right. I’m at the local stream, panning for gold. Just in case. 🥸

[HikingDO]

Thanks. I’m sure you’re right. I’m at the local stream, panning for gold. Just in case. 🥸

Panning for gold is fun! Used to do it in the Mountains of Arizona, but not very profitable though.

[jacoavlu]

Are you suggesting US is heading towards hyperinflation? I will bet you as many bitcoin (or dogecoin if you prefer) as you want that we are not.

what would be specific terms? heading toward is rather vague

[MPMD]

Not a black swan event.

ok, call it whatever you like
it literally reshaped the entire economy so i don't think we can just blithely sit around and act like all economic problems now are unrelated.

[xraygoggles]

what would be specific terms? heading toward is rather vague

Hyperinflation has a definition: "an economy has to see an inflation rate of greater than 50% for at least a month." I'm sure its more nuanced than that, but that was the first definition on searching.

[jacoavlu]

Hyperinflation has a definition: "an economy has to see an inflation rate of greater than 50% for at least a month." I'm sure its more nuanced than that, but that was the first definition on searching.

i have heard same. i think it’s very unlikely we experience that. so if there was a bet around that, no i wouldn’t take it. especially in terms reported by our gov. i don’t think reasonable people believe overall inflation is currently as low as gov reported numbers

[Brains428]

When I say credit, I'm not talking about credit cards. Credit is interchangeable with debt. In other words, we live in a debt financed economy that has been refinanced multiple times over. So, some of these little to no to negative revenue companies (like Uber) could/would fail.

[Tim]

i have heard same. i think it’s very unlikely we experience that. so if there was a bet around that, no i wouldn’t take it. especially in terms reported by our gov. i don’t think reasonable people believe overall inflation is currently as low as gov reported numbers

There is a defined basket of goods and the same method is used consistently. However, whether that basket and method represents what the "average consumer" purchases is a different question. Not to even mention whether the weighting of the contents is representative. The same issues occur with the employment numbers. Seasonal adjustments? The economic wonks are all over this type of data. Indexes are indexes, someone has to make the call using surveys.
BLS has zero incentive to put a thumb on the scale. I could be wrong.
CDC is used to be the same.

https://www.bls.gov/cpi/tables/supplemental-files/home.htm

[jacoavlu]

There is a defined basket of goods and the same method is used consistently. However, whether that basket and method represents what the "average consumer" purchases is a different question. Not to even mention whether the weighting of the contents is representative. The same issues occur with the employment numbers. Seasonal adjustments? The economic wonks are all over this type of data. Indexes are indexes, someone has to make the call using surveys.
BLS has zero incentive to put a thumb on the scale. I could be wrong.
CDC is used to be the same.
https://www.bls.gov/cpi/tables/suppl...files/home.htm

and were you aware that their method uses a “hedonic quality adjustment”?

my ibonds are currently earning a variable rate of 7.12% which is derived from the semiannual inflation rate 3.56%.

3.56% i don’t think so

[Tim]

and were you aware that their method uses a “hedonic quality adjustment”?

my ibonds are currently earning a variable rate of 7.12% which is derived from the semiannual inflation rate 3.56%.

3.56% i don’t think so

Your point is related to the ibonds. Semi annual and what is the base period? Social security is was 5.9% annual. What were the dates used. What is the problem with "hedonic quality adjustment"? Do you think it is too high or too low or what is the suggestion. I actually don't care to be aware of it. Feel free to tear it apart. State your case.
There is an implication your you think it is understated, feel free. Educate me and tell me what it is and why it is wrong.

I had a bigger question with the unemployment survey results during the pandemic how they handled businesses the did not complete the surveys. The assumption through the sequential revisions was "a business was coming back" and just did not fill it out. Ah! Those jobs were considered still available. Total employment! They were aware that businesses were closing and the last thing they would do is fill out a BLS survey that the government was prohibiting from working.

[jacoavlu]

Your point is related to the ibonds. Semi annual and what is the base period? Social security is was 5.9% annual. What were the dates used. What is the problem with "hedonic quality adjustment"? Do you think it is too high or too low or what is the suggestion. I actually don't care to be aware of it. Feel free to tear it apart. State your case.
There is an implication your you think it is understated, feel free. Educate me and tell me what it is and why it is wrong.

I had a bigger question with the unemployment survey results during the pandemic how they handled businesses the did not complete the surveys. The assumption through the sequential revisions was "a business was coming back" and just did not fill it out. Ah! Those jobs were considered still available. Total employment! They were aware that businesses were closing and the last thing they would do is fill out a BLS survey that the government was prohibiting from working.

my point is it’s not just what a basket of goods cost. there are numerous levers which can be adjusted. and my sense is that i’m experiencing inflation more than 3.56% semiannual

but i will also say as i’ve said before inflation currently being experienced helps more than hurts me at least in terms of the number on the balance sheet bc asset inflation > liability inflation. plus i’m comfortable maintaining a modest amount of low cost leverage

[Brains428]

Seriously, though. What's worse for those within 5 years of retirement? A haircut on a portfolio balance because of increased interest rates or decreased purchasing power because of overall increased cost of goods?

The rate of change IS transitory. But- it's arrogant language for the Fed and DC to use because they're all wealthy and don't notice the price of bread.

I also don't think it would take a rate hike to 10% to cause turmoil. I think we get to 4% and it causes some issues. I'll try to find a reference to that contention.