The Inflation Thread

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Herdfan

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According to the CPI, inflation rose 7% in 2021.


That is not good. Aside from political reasons, stuff costs more and families that were already stretched, will need to find ways to pay for necessities.

So has inflation affected you? For me, early '21 was a bitch with lumber prices skyrocketing. That has mostly calmed down now, but many other supplies I buy are definitely going up.

I am fortunate to have not really been affected by the cost of groceries going up but I know some people have been.

So it is really transitory like the WH says, or are we entering a period of inflation like the late 70's?
 

Yoused

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It it not classical inflation,

Robert Reich:
… the real reason for inflation: the increasing concentration of the American economy into the hands of a relative few corporate giants with the power to raise prices.

If markets were competitive, companies would keep their prices down in order to prevent competitors from grabbing away customers. But they’re raising prices even as they rake in record profits. How can this be? The answer is they have so much market power they can raise prices with impunity.

The underlying problem is not inflation. It’s lack of competition. Corporations are using the excuse of inflation to raise prices and make fatter profits.

Granted, most people will not be aware of this, but we are not experiencing genuine inflation. It is nonsense.
 

SuperMatt

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I am a fan of the radio show “Marketplace” which is a great source of information about the markets and just about anything else dealing with finance and the economy. They discussed inflation 2 days ago.


And don’t forget, wage growth is still (slightly) ahead of inflation.

We should not assume everything will be hunky-dory, but comparing this inflation to the late 70s and early 80s is silly.
 

AG_PhamD

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Everyone has been affected by inflation. Thankfully my wife and I are financially comfortable, it’s just frustrating to see price increases.

I do know a lot of people who are really feeling the squeeze- high food prices, high gas prices, high heating oil prices, etc makes it very difficult. I know some people who are barely keeping their houses warm out of cost concerns. Not everyone saw a marked increase in wages either. I think this mainly applied to low wage hourly jobs.

There are a number of causes of inflation from the supply chain disruptions, to the fed slashing interest rates, to labor shortages boosting wages, and yes, companies taking advantage of the situation to jack up prices- this is particularly true of gas/oil.

The government also spent an astronomical amount of money to boost the economy over the past couple years that likely overstimulated the economy and encouraged some of the labor issues. And as much as the Republicans like to point the finger at Democrats for spending, much of this this stimulus spending was 99.9% bipartisan.

The fed is no longer calling this inflation “transitory” but are expected to improve throughout 2022. Let’s hope so.
 

Chew Toy McCoy

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Which do you think has a bigger impact on your life, the cost of a gallon of milk or the cost of keeping a roof over your head?

The financial establishment elite has been quite creative on how they choose to label things. See if you can detect the difference.

There's a real milk boom!

Housing inflation is out of control.

Two different words to describe the exact same thing. Yet you assume one is positive and the other is negative.

If nothing else it's a fun mental game to play when you hear these terms used and you switch it with the other.
 
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Herdfan

Herdfan

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Which do you think has a bigger impact on your life, the cost of a gallon of milk or the cost of keeping a roof over your head?

Roof for sure. But in theory, the cost of keeping a roof is more stable. If you have a fixed rate mortgage, your payment won't fluctuate much year to year. For renters, it will remain stable for the remainder of your lease. But milk (food) will have an immediate effect as will the cost of other consumables.
 

Chew Toy McCoy

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But milk (food) will have an immediate effect as will the cost of other consumables.

Which points to our obsession with instant gratification/dissapointment.

I'm not blaming any administration or party for the current situation, but I'm sure many will based on my previous statement. All my arrows are pointing directly at the fed and crisis profiteers, equally supported by both parties.
 

SuperMatt

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For the past decade, Fed interest rates have been near zero. If this inflation is not just a blip, then the good news is that the Fed has a really good hand to play in this situation. I think they were correct in taking their time to act on the rates. If they raised rates, and inflation turned out to be just a blip, it could have slowed the economy at an inopportune time.

One other item to consider if the Fed does raise rates a few points in the next couple years: home prices. One of the reasons home prices are so high is the low mortgage interest rate. With low rates, the asking price can be higher and still be affordable for a buyer. If the rates start to go up, suddenly that higher price is not affordable for most buyers.
 

Huntn

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Which do you think has a bigger impact on your life, the cost of a gallon of milk or the cost of keeping a roof over your head?

The financial establishment elite has been quite creative on how they choose to label things. See if you can detect the difference.

There's a real milk boom!

Housing inflation is out of control.

Two different words to describe the exact same thing. Yet you assume one is positive and the other is negative.

If nothing else it's a fun mental game to play when you hear these terms used and you switch it with the other.
My wife’s sister lives in Austin and a realtor told them that the house they paid $250k for about 10 years ago is worth $1m based on corporations relocating in “cheap to do business” Texas. :unsure: Ten years ago after the bubble popped, we paid $150k for our 2400SF house. Where we live in Houston, it might be worth $300k.
 
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