Here comes the inflation
- Thread starter Topspin
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Topspin
Verified User
your in the top 5% my guess on financial sophistication, lots of not so learned people went to bonds during the collapse as a natural saftey reaction. Thank god/Jah I didn't. I gotta admit last March/April I was pretty scared.
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The Almighty
I wouldn't count on inflation just yet. Keep in mind...
1) Housing market will no longer be propped up by the home buyers credit
2) 2005 5 year ARMS and 2007 3 year ARMS are resetting in mass this year. We very likely will see another round of increasing foreclosures due to higher ARM rates and a still very tight credit market.
3) China is pulling back hard on its credit in order to try to stem off a repeat of what occurred in our financial markets within their banking system. This coupled with the problems in the US will make it hard to find the growth necessary to see significant inflation.
4) IF Greece falls, Portugal, Spain, Italy and Ireland are likely right behind them. Germany is not likely to be capable of supporting them all. Again, this could lead to a stagnant environment with a possibility for deflation rather than inflation.
5) I hope I am wrong. Perhaps they will indeed spend the remaining 65% or so of the stimulus money in a fashion that will actually increase jobs for the next 3-5 years (which should be done via infrastructure build out/repairs). I just don't have much faith in the government to do the right thing (regardless of who is in power).
1) Housing market will no longer be propped up by the home buyers credit
2) 2005 5 year ARMS and 2007 3 year ARMS are resetting in mass this year. We very likely will see another round of increasing foreclosures due to higher ARM rates and a still very tight credit market.
3) China is pulling back hard on its credit in order to try to stem off a repeat of what occurred in our financial markets within their banking system. This coupled with the problems in the US will make it hard to find the growth necessary to see significant inflation.
4) IF Greece falls, Portugal, Spain, Italy and Ireland are likely right behind them. Germany is not likely to be capable of supporting them all. Again, this could lead to a stagnant environment with a possibility for deflation rather than inflation.
5) I hope I am wrong. Perhaps they will indeed spend the remaining 65% or so of the stimulus money in a fashion that will actually increase jobs for the next 3-5 years (which should be done via infrastructure build out/repairs). I just don't have much faith in the government to do the right thing (regardless of who is in power).
Topspin
Verified User
All good points, but to counter. 1. House prices have been rising since last summer.
2. Oil and copper are good indicators. 3. The days of the American consumer being the only driver of inflation are over. 4. More cars sold in China last year than U.S., India is much further behind but worldwide auto sales will be huge next decade even if flat here.
Lastly, I do think the unemployment rate here will keep salary inflation down and prevent what would be 70's style hyperinflation otherwise.
2. Oil and copper are good indicators. 3. The days of the American consumer being the only driver of inflation are over. 4. More cars sold in China last year than U.S., India is much further behind but worldwide auto sales will be huge next decade even if flat here.
Lastly, I do think the unemployment rate here will keep salary inflation down and prevent what would be 70's style hyperinflation otherwise.
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911 EVERY DAY
Gold is a shitty investment that's only even being propped up because Ron Paul nutjobs are scared into buying it by commercials on the Glenn Beck show.
FUCK THE POLICE
911 EVERY DAY
I think the IMF will bail out Greece if push comes to shove, but it would be stupid of the EU not to step in and offer a kinder agreement.
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The Almighty
True to an extent, but again it was largely driven by the new home buyers credit, which expires at the end of the month.
Yes, they can be indicators, but they have not moved much in the past four months and the rise they have seen is due to what? Speculation? Or real demand?
Which is why I pointed out the troubles in the EU and the tightening of credit in China.
Not a counter point toppy. It is last years data and it is not indicative of the tightening in credit we are NOW seeing in China.
perhaps over the next decade this will pan out. But we are talking about whether we will see inflationary pressures THIS year (and next). Short term vs. long term toppy. Eventually we will see inflation. I just don't think it is around the corner as you indicated.
Yes, wage inflation is not a concern until the unemployment gets back at least under 5.5%. Which is several years out at best.
Topspin
Verified User
we'll see superfreak you shake off my points quit easy and I get them from various economist. Personally I think the days of us selling more cars than China are done. I also think it's kina foolish to call the copper and gold speculation. We'll see I don't even know what were at now 1.5% ish and I'm no economist but I would bet on not over 2.5% and rising.
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The Almighty
1) I did not 'shake off' your points. I simply pointed out that most of them have little to do with inflation.
2) Whether we sell more cars than China is irrelevant to the topic of inflation.
3) I did not call copper and gold 'speculation'. I asked you what was driving the recent uptick in copper and oil (I will include gold in that question). Is it that demand is actually picking up or is it speculation based on expectations of growth in demand? There is a difference toppy. One is inflationary, the other may or may not be.
Which makes it a good investment. Your first goal is to make money, if it is based on "ignorance" or not doesn't matter.
You cant have massive expansion of governement without eventually having inflation. Just a matter of time. Use the time you have left before it hits to eliminate your variable debt and lock into low fixed rates. Also I would make some room in your monthly budget for increases in utility and fixed consumer costs.
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The Almighty
No toppy, I am pointing out the difference of what HAS occurred and what IS occurring.
CHINA IS TIGHTENING THEIR CREDIT MARKET. They are trying to SLOW THEIR GROWTH RATE. This does not mean they will not grow, it means they will not likely grow as fast as previously expected.
Russia is a huge risk right now given the political environment.
India is not as bad as China, but they are pulling back as well.
Brazil is still strong.
bottom line, everything I stated is correct with regards to the potential for worldwide growth to slow (thus mitigating inflationary pressures). It is not a given, nor have I stated as such. I simply pointed out that you are likely to be early with your 'here comes inflation' statement.
If you weren't such a GEDer when it comes to economics, perhaps your panties would not be so tightly bunched at this time.
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The Almighty
eventually it likely will hit due to monetary expansion. However, if the governments pull back here and that spending is not replaced by corporate or individual spending, then there is likely to be a pull back first. I hope I am wrong, but I think the second part of the double dip hits before the inflationary pressure.
This could all change if the credit market loosens up in response to the government pulling back on spending. Without access to credit, corporations are likely to play conservatively. (unless of course they are deemed 'too big to fail'... in that case they will continue taking massive risks and either profit from it or get bailed out by the taxpayers again)