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It’s all under control.
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@kid-chocolate the Biden takes over line is irrelevant. Inflation is up globally. Domestic policies anywhere are pretty much irrelevant.
Other than printing money in the early days of the pandemic to keep the economy(s) from tanking.
Which was on Trumps watch.
Which is also irrelevant.
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@kid-chocolate the Biden takes over line is irrelevant. Inflation is up globally. Domestic policies anywhere are pretty much irrelevant.
Other than printing money in the early days of the pandemic to keep the economy(s) from tanking.
Which was on Trumps watch.
Which is also irrelevant.
Wait - I thought it was Ardern's fault?
Serious question though, why do you think the money supply was irrelevant?
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@nzzp sorry badly worded. I meant you can't blame Biden - or even Trump given every country reacted similarly.
Economics 101: Demand exceeds capacity = Inflation
We have pent up demand due to the pandemic and reduced capacity due to supply chain issues and unavailability of labour (also largely pandemic related). Throw in wage inflation, high commodity prices across the board, crippling shortages of key components, uncertainty caused by over heated property and share markets and now a regional war that threatens to escalate.
You also have a couple of generations that are used to price stability, including the decision makers that we trust to bring inflation under control. For a couple of decades we have used interest rates to peg back inflation but (again pandemic) there has been a reluctance to draw that arrow out of the quiver....
Still as long as nobody panics it wouldn't take a lot to see a correction. Unfortunately I see plenty of signs of panic.
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This post is deleted!
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@kid-chocolate the Biden takes over line is irrelevant. Inflation is up globally. Domestic policies anywhere are pretty much irrelevant.
The very first thing Biden did when he took office was reverse Keystone. Day One. That moved a lot of chess pieces and had immediate American domestic and global repercussions. He made Greta smirk, but the financial and political fallout was predicted the day he did it.
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@nzzp sorry badly worded. I meant you can't blame Biden - or even Trump given every country reacted similarly.
Economics 101: Demand exceeds capacity = Inflation
We have pent up demand due to the pandemic and reduced capacity due to supply chain issues and unavailability of labour (also largely pandemic related). Throw in wage inflation, high commodity prices across the board, crippling shortages of key components, uncertainty caused by over heated property and share markets and now a regional war that threatens to escalate.
You also have a couple of generations that are used to price stability, including the decision makers that we trust to bring inflation under control. For a couple of decades we have used interest rates to peg back inflation but (again pandemic) there has been a reluctance to draw that arrow out of the quiver....
Still as long as nobody panics it wouldn't take a lot to see a correction. Unfortunately I see plenty of signs of panic.
Good summation. People often don't seem to realise that inflation as measured by (CPI, RPI etc) is not what is happening, it is what has happened. It is as much about where we were last year as where we are today. Interestingly from the figures out today US core CPI has fallen. Hopefully that's a leading indicator.
Edit: This popped up as part of a daily update from a fund management company:-
Wall Street temporarily rallied after the latest US CPI data. Though the print came in at 8.5% for March, the fastest rise in prices since 1981, core inflation rose by just 0.3%, notably lower than expectations and showing that inflationary pressure can be mostly attributed to volatile categories such as food, commodities and energy prices. This has caused investors to speculate that the Fed may require less interest rate rises this year to control inflation.
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@kid-chocolate said in Inflation:
@kid-chocolate the Biden takes over line is irrelevant. Inflation is up globally. Domestic policies anywhere are pretty much irrelevant.
The very first thing Biden did when he took office was reverse Keystone. Day One. That moved a lot of chess pieces and had immediate American domestic and global repercussions. He made Greta smirk, but the financial and political fallout was predicted the day he did it.
That argument might hold water if there was a shortage of oil. There isn't.
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I have read the Fed can't raise interest rates too much to combat inflation because then the US won't be able to service its own debt. Extremely worrying if true.
Quite apart from their ability to print their own money, if they were worried about debt, then they'd let inflation eat at it...
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The problem though is not just Governmental debt but also corporate and personal debt, both of which are at or near record levels, owed by companies and individuals who have known nothing else but ultra cheap borrowing for the last 13 years or so. These debtors do not have the same luxury as the state.
The usual sledgehammer to combat inflation is raising interest rates but this is in itself inflationary. Moreover, if you have corporates and individuals that cannot roll over their cheap debt and/or can no longer service that debt, then say hello to recession. Recession, inflation and high interest rates are an appalling mix.
Also here we need some context. I and quite a few on here can remember when interest rates were much higher, double digits in the UK, even then a 1% hike that put 10% on your servicing costs was bloody painful. A 1% hike that puts 50% on your servicing costs doesn’t bear thinking about.
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@catogrande I remember well the recession Australia "had to have" when the cash rate reached 18 per cent , the mortgage rate 17 per cent, and loans to businesses above 20 per cent.
The difference is when the tide goes out this time and we see who has been swimming naked, they've got little excuse for loading themselves with debt which becomes unmanageable at two or three per cent.
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@antipodean said in Inflation:
@catogrande I remember well the recession Australia "had to have" when the cash rate reached 18 per cent , the mortgage rate 17 per cent, and loans to businesses above 20 per cent.
The difference is when the tide goes out this time and we see who has been swimming naked, they've got little excuse for loading themselves with debt which becomes unmanageable at two or three per cent.
The thing is, that is all many people know. Anything else is just shit that their parents tell them as scare stories. And if you look at interest rates historically, that period from the late 70's through to the mid 90's is really the outlier.
In my work (investment), part of my team consists of highly qualified younger guys that had never experienced an interest rate rise in their adult lives. It's almost like something that had become consigned to the past when the summers were always long, the policemen wore high hats and the BBC was the font of all truthfulness.
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@catogrande said in Inflation:
@antipodean said in Inflation:
@catogrande I remember well the recession Australia "had to have" when the cash rate reached 18 per cent , the mortgage rate 17 per cent, and loans to businesses above 20 per cent.
The difference is when the tide goes out this time and we see who has been swimming naked, they've got little excuse for loading themselves with debt which becomes unmanageable at two or three per cent.
The thing is, that is all many people know. Anything else is just shit that their parents tell them as scare stories. And if you look at interest rates historically, that period from the late 70's through to the mid 90's is really the outlier.
In my work (investment), part of my team consists of highly qualified younger guys that had never experienced an interest rate rise in their adult lives. It's almost like something that had become consigned to the past when the summers were always long, the policemen wore high hats and the BBC was the font of all truthfulness.
Not going to lie, I keep liquidity to take advantage of people who over stretch:
Financial stress was defined as having less than 5 per cent of income left over after expenses. It found the Labor seat of Chifley in Sydney, which includes Mount Druitt and Rooty Hill, recorded 73.6 per cent of households in stress. Over in southern Sydney, 70 per cent of mortgage holders in the Labor seat of Barton, which covers Rockdale and Hurstville, are also in mortgage stress. Kate Colvin, spokeswoman for advocacy group Everybody’s Home, said while outer metro areas of Sydney tended to have the most financial stress, there were affluent suburbs that were also in trouble. “Outer metro areas are where lower income households tend to be purchasing a home and are geared up to the eyeballs to do so, for example in Sydney in outer metro areas, we have more than 70 per cent of mortgagees in financial stress in Macarthur and Fowler,” she told news.com.au.
Perhaps that's a character flaw. /shrug
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@antipodean said in Inflation:
@catogrande said in Inflation:
@antipodean said in Inflation:
@catogrande I remember well the recession Australia "had to have" when the cash rate reached 18 per cent , the mortgage rate 17 per cent, and loans to businesses above 20 per cent.
The difference is when the tide goes out this time and we see who has been swimming naked, they've got little excuse for loading themselves with debt which becomes unmanageable at two or three per cent.
The thing is, that is all many people know. Anything else is just shit that their parents tell them as scare stories. And if you look at interest rates historically, that period from the late 70's through to the mid 90's is really the outlier.
In my work (investment), part of my team consists of highly qualified younger guys that had never experienced an interest rate rise in their adult lives. It's almost like something that had become consigned to the past when the summers were always long, the policemen wore high hats and the BBC was the font of all truthfulness.
Not going to lie, I keep liquidity to take advantage of people who over stretch:
Financial stress was defined as having less than 5 per cent of income left over after expenses. It found the Labor seat of Chifley in Sydney, which includes Mount Druitt and Rooty Hill, recorded 73.6 per cent of households in stress. Over in southern Sydney, 70 per cent of mortgage holders in the Labor seat of Barton, which covers Rockdale and Hurstville, are also in mortgage stress. Kate Colvin, spokeswoman for advocacy group Everybody’s Home, said while outer metro areas of Sydney tended to have the most financial stress, there were affluent suburbs that were also in trouble. “Outer metro areas are where lower income households tend to be purchasing a home and are geared up to the eyeballs to do so, for example in Sydney in outer metro areas, we have more than 70 per cent of mortgagees in financial stress in Macarthur and Fowler,” she told news.com.au.
Perhaps that's a character flaw. /shrug
I always go back to the saying "Life is like a shit sandwich. The more bread you've got, the less shit you eat".
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@catogrande said in Inflation:
@antipodean said in Inflation:
@catogrande I remember well the recession Australia "had to have" when the cash rate reached 18 per cent , the mortgage rate 17 per cent, and loans to businesses above 20 per cent.
The difference is when the tide goes out this time and we see who has been swimming naked, they've got little excuse for loading themselves with debt which becomes unmanageable at two or three per cent.
The thing is, that is all many people know. Anything else is just shit that their parents tell them as scare stories. And if you look at interest rates historically, that period from the late 70's through to the mid 90's is really the outlier.
In my work (investment), part of my team consists of highly qualified younger guys that had never experienced an interest rate rise in their adult lives. It's almost like something that had become consigned to the past when the summers were always long, the policemen wore high hats and the BBC was the font of all truthfulness.
Indeed. In a previous life I ran Treasury for a substantial business - we borrowed off about 6 different lenders across various tenors / products.
When rates were rising again around 2015 I I got all the lenders in to have a chat about how things were changing, how I should anticipate liquidity squeezes etc.
It became obvious, very very quickly, that none of them had a clue.
Inflation