The Inflation Thread

[Herdfan]

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

Inflation rises 7% over the past year, highest since 1982

The consumer price index for December 2021 was expected to increase 7% from a year ago, according to economists surveyed by Dow Jones.

www.cnbc.com

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]

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]

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.

Inflation reaches a 40-year high — but it may have peaked - Marketplace

Inflation is high, clocking in at 7%. But it's also decelerating. So when will it decelerate to something normal?

www.marketplace.org

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]

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]

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.

 

[Herdfan]

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]

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]

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]

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. Ten years ago after the bubble popped, we paid $150k for our 2400SF house. Where we live in Houston, it might be worth $300k.

 

[Herdfan]

I know there was a thread where shrinkflation was discussed, but search wouldn't find it.

But noticed a new one today. Was filling up at a local Speedway and noticed their bags of mulch were now 1 cubic foot.

When I first bought a house, a bag of mulch was 3CF. Then the c-stores started selling 2CF, but you could get the 3's at the big boxes. Then they were all 2's. Now the c-stores are 1 and big boxes are 2's. Wonder how long until they are all 1's.

Of no consequence to me as I order Pine Straw from GA, but some people are going to be confused when they remember it takes 25 bags of mulch and now they are having to buy 40-50.

 

[Chew Toy McCoy]

I know there was a thread where shrinkflation was discussed, but search wouldn't find it.

But noticed a new one today. Was filling up at a local Speedway and noticed their bags of mulch were now 1 cubic foot.

When I first bought a house, a bag of mulch was 3CF. Then the c-stores started selling 2CF, but you could get the 3's at the big boxes. Then they were all 2's. Now the c-stores are 1 and big boxes are 2's. Wonder how long until they are all 1's.

Of no consequence to me as I order Pine Straw from GA, but some people are going to be confused when they remember it takes 25 bags of mulch and now they are having to buy 40-50.

There does seem to be a lot of advertising based on the size of the bag and not what’s actually in the bag. If I advertised “13 gallon bag of nails” based on today’s standards it wouldn’t be a lie that there are only 5 nails in the bag. It’s still a 13 gallon bag they are in.

 

[GermanSuplex]

As Joe Biden says, here's the deal...

Yes, inflation has hit. Yes, it sucks. It's multi-faceted, but there's no doubt that if Trump was in office, I'd be looking at his actions and policies. Now, presidencies don't exist in a vacuum, and no doubt some of Trump's bad policies have as much to do with inflation as Biden's handling of things. Regardless, Biden is in charge, and its fair to critique him on what he is or isn't doing to get the prices of gas, goods and services under control.

But here's my point: The MAGA crowd is talking about how great things were under Trump. Ok, life was amazing in 2020 and now its miserable and you want a new president, then could things have really been that great? These folks aren't whining about Biden's character or tweets or dismantling of public institutions and criminality like many of us were during Trump's reign of stupidity. It's just "I miss Trump, I was in heaven. Now I have to pay a dollar a gallon more for milk and gas is high."

It's more complex than that, I get it, but that's the general outcry. If saving a few dollars on groceries or gas is the difference between a good life and a bad one, I would guess things probably weren't as great under Trump (or any previous president) as we try to pretend they are.

The difference is, one party actually wants to stop the things that are causing all of this - tax-dodgers, grifters, people who rig the system and jack up prices for no other reason than because they can, etc.

The other party wants to enable the people jacking up the prices, line their pockets, give them tax write-offs and free money for building something somewhere, decrease regulations that help prevent EXACTLY this type of inflation, etc.

So if you're going to yell at Biden for inflation, I'm ok with that, but what is the republican solution? "Let the corporations and billionaires do what they want". That's always their solution.

 

[Herdfan]

It's more complex than that, I get it, but that's the general outcry. If saving a few dollars on groceries or gas is the difference between a good life and a bad one, I would guess things probably weren't as great under Trump (or any previous president) as we try to pretend they are.

It's not a few dollars. My truck clicked off the machine at $175 (the CC pre-authorization amount). I used to be able to fill it up for under $100. That is $75 x 7-8 times per month or $525-600. That is real money for some families. Now add in the costs of other things rising and families are squeezed. So while they may not have been living on EZ Street under Trump, they could pay their bills and maybe have some left over to put away.

 

[SuperMatt]

It's not a few dollars. My truck clicked off the machine at $175 (the CC pre-authorization amount). I used to be able to fill it up for under $100. That is $75 x 7-8 times per month or $525-600. That is real money for some families. Now add in the costs of other things rising and families are squeezed. So while they may not have been living on EZ Street under Trump, they could pay their bills and maybe have some left over to put away.

Before the inflation you say you paid $100, 8 times per month. Most people don’t pay anywhere near $800 a month for fueling their vehicle… or $1400 a month like you say you’re paying now. If we assume $5 a gallon, you are burning 280 gallons of gas a month??? Surely you realize this is more than 99% of people. If your vehicle only gets 20 mpg, you’re driving 5600 miles every month, or nearly 200 miles per day? The American average is slightly less than 30 miles a day, so the average person is maybe paying an extra $75 a month. That’s not pocket change, but it’s not majorly life-altering either.

We need inflation to get under control for sure. But let’s not exaggerate unnecessarily by implying that burning 280 gallons of gas a month is a common occurrence.

 

[GermanSuplex]

. So while they may not have been living on EZ Street under Trump, they could pay their bills and maybe have some left over to put away.

I could do that under Obama, but apparently he was the worst president ever too and it was only after Trump came in that anyone had any extra money I guess. The economy - by design - is going to go up and down. If we started locking up white collar criminals and making tax cheats pay what they owe, cut loopholes and increased corporate taxes and capital gains taxes, a lot of these issues would probably clear up pretty quickly, but in a world where ever-increasing profits are the goal, and a company that “just” does well instead of increasing its insane profits quarter over quarter, year after year is the only goal - well, I don’t see much changing.

One party wants to fix those things, the other doesn’t.

 

[Herdfan]

Before the inflation you say you paid $100, 8 times per month. Most people don’t pay anywhere near $800 a month for fueling their vehicle… or $1400 a month like you say you’re paying now. If we assume $5 a gallon, you are burning 280 gallons of gas a month??? Surely you realize this is more than 99% of people. If your vehicle only gets 20 mpg, you’re driving 5600 miles every month, or nearly 200 miles per day? The American average is slightly less than 30 miles a day, so the average person is maybe paying an extra $75 a month. That’s not pocket change, but it’s not majorly life-altering either.

We need inflation to get under control for sure. But let’s not exaggerate unnecessarily by implying that burning 280 gallons of gas a month is a common occurrence.

About 3,500. I average around 15-16 mpg. I can get 18 highway, but once I get into town it drops and then adding a big trailer, it craters to under 10.

Now you live in a city, where people probably don't drive more than 30 miles per day. But out here in rural America, the interstate in the morning is filled with people driving 30 miles one way to work. And this area is home to families where one person drives to Charleston and the other to Huntington to work. So that is 30 miles each in opposite directions.

 

[Herdfan]

I could do that under Obama, but apparently he was the worst president ever too and it was only after Trump came in that anyone had any extra money I guess. The economy - by design - is going to go up and down. If we started locking up white collar criminals and making tax cheats pay what they owe, cut loopholes and increased corporate taxes and capital gains taxes, a lot of these issues would probably clear up pretty quickly, but in a world where ever-increasing profits are the goal, and a company that “just” does well instead of increasing its insane profits quarter over quarter, year after year is the only goal - well, I don’t see much changing.

One party wants to fix those things, the other doesn’t.

Speaking of under Obama, he had a large majority in the House and a veto-proof majority in the Senate.

Why didn't he fix those things? @Chew Toy McCoy Any ideas?

 

[Eric]

Speaking of under Obama, he had a large majority in the House and a veto-proof majority in the Senate.

Why didn't he fix those things? @Chew Toy McCoy Any ideas?

Fair question, but he did only have it for 2 years. Democrats don't have the stomach to do things that need to get done, far too diverse which I get but can also be their downfall.

Republicans just don't care, one of them can deliberately burn down a house with puppies in it and the rest will defend them lock step without question.

 

[Herdfan]

Fair question, but he did only have it for 2 years.

So would it be a fair question to ask why he only had it for 2 years? If what he was doing was so popular, why did Massachusetts, one of the true Blue states, elect a Republican Senator?

The Republicans picked up 63 seats in 2010. That is a huge number for someone who was putting forth popular policies.

And I am sure the peanut gallery will chime in that it was because Obama was Black, but that is BS. If that was really an issue, he wouldn't have been elected in the first place and certainly not a second time.

 

[Eric]

So would it be a fair question to ask why he only had it for 2 years? If what he was doing was so popular, why did Massachusetts, one of the true Blue states, elect a Republican Senator?

The Republicans picked up 63 seats in 2010. That is a huge number for someone who was putting forth popular policies.

And I am sure the peanut gallery will chime in that it was because Obama was Black, but that is BS. If that was really an issue, he wouldn't have been elected in the first place and certainly not a second time.

Because historically the party in power typically loses the house and/senate during their first midterms unless things are off the charts great, which is rare, how long did Trump hold on to it? Did you ask these same questions of him? I'm guessing not but would be happy to read through any posts you can cite going back to 2018 stating it.

It has nothing to do with one's skin color or any of that, feels like this should be political science 101 but those who politicize everything have blinders on when it comes to history older than two weeks ago.