Inflation? And then what?

[Martinjmpr]

The Real Estate one is interesting. I read SOTI (Somewhere On The Internet) that one of the things driving real estate prices up is the fact that there are lots of investors out there looking to invest their client's money, and since government bonds and other "safe" investments are generating zero or near-zero income, the only things that investors can make money on are the stock market and real estate.

So it's an inversion of the usual situation where real estate (especially commercial real estate) developers have to compete against each other for a limited amount of money available. In that situation - where there are more people who want to take in money than there are people wanting to invest money - the developers have to show the investor that their development is likely to be a money maker so they can get access to that money, and investors can pick and choose which developments they want to invest in to maximize their returns.

But in our current situation, it's just the opposite: There are more "investors" who want to invest their money than there are developers, so investors are just throwing money at anything that looks even remotely viable because there isn't anywhere else for investors to invest.

That's why, for example, you see so much commercial office and retail space being built even though you can drive around the metro area and see lots and lots of vacant office and retail space now.

Here's an example: River Pointe. That's the one at Santa Fe and Hampden where they redeveloped that whole area into a big shopping center with the Target, Costco, Buffalo Wild Wings, Sportsman's Warehouse, etc.

We lived in Englewood, just on the other side of Santa Fe, when they opened that shopping center around 2008 and 13 years later, there are store fronts that are vacant and have NEVER had any paying client. For 13 years! There are many other examples as well.)

[Grant H.]

Yeah the Venezuela comparisons make no sense. Same for those who want to compare inflation to what happened in Weimar Germany after WWI.

If you think about it, last year there were a lot of things that people typically spend money on - dining out, movies, sporting events, concerts, etc - that were not available to them. So that money was saved and often not spent on other things.

Travel - for much of 2020 people couldn't travel outside the US, and even travel IN the US was restricted, and often the things that people might travel to see were closed. So, again, that money wasn't spent and it was saved.

People unsure about the economy also pulled their spending back, not sure if they'd have a job or if the economy itself would collapse (as some predicted it might early on in the COVID days.)

And finally, the government pumped out money to people in the form of stimulus checks.

Simple supply and demand: More dollars (demand) chasing fewer goods (supply) = inflation.


Unfortunately I see some people saying "we need moar stimulus checks!" which would be like trying to fight a raging fire by spraying gasoline on it.

You are giving the majority of this country WAY too much credit assuming that people saved. Look around, everyone picked up a new hobby and bought pieces/parts/equipment for that. There are no used vehicles, and the price on used vehicles is through the roof.

A lot of people in this country were let go during 'rona, and were getting their normal unemployment PLUS an additional $46k-ish... ($600/wk from the Fed, and $300/wk from the State) Plus the "stimulus" checks.

Despite all this additional money, the USA is BILLIONS of dollars behind on rent. The numbers are hard to find, and likely being suppressed, but in July of 2020 there was ~$21 BILLION dollars of unpaid rent in the USA. Extrapolating that ~6 months to 18 months is pretty easy...

So now you have people making an extra $50k a year, NOT paying rent, and they still can't make their "back rent" payments now that the moratorium has ended. That money isn't sitting in the bank...

Idiots spent it on TV's, cars, new hobbies, blah blah blah. Tons of them lost it by getting suckered into the "meme stock" pump and dump of GME/AMC/Shit-Crypto/etc...

The vast majority of our countrymen don't understand financial responsibility, and live by making the minimum monthly payment on their rent/home, 2 cars, 4 tv's, all their food (credit cards), etc. Somewhere in the last 2-3 years, I saw a statistic that stated that less than 10% of the population of the USA could get their hands on 10k in cash within 72 hours, without having to take out a short term, high interest rate loan.

The Real Estate one is interesting. I read SOTI (Somewhere On The Internet) that one of the things driving real estate prices up is the fact that there are lots of investors out there looking to invest their client's money, and since government bonds and other "safe" investments are generating zero or near-zero income, the only things that investors can make money on are the stock market and real estate.

So it's an inversion of the usual situation where real estate (especially commercial real estate) developers have to compete against each other for a limited amount of money available. In that situation - where there are more people who want to take in money than there are people wanting to invest money - the developers have to show the investor that their development is likely to be a money maker so they can get access to that money, and investors can pick and choose which developments they want to invest in to maximize their returns.

But in our current situation, it's just the opposite: There are more "investors" who want to invest their money than there are developers, so investors are just throwing money at anything that looks even remotely viable because there isn't anywhere else for investors to invest.

That's why, for example, you see so much commercial office and retail space being built even though you can drive around the metro area and see lots and lots of vacant office and retail space now.

Here's an example: River Pointe. That's the one at Santa Fe and Hampden where they redeveloped that whole area into a big shopping center with the Target, Costco, Buffalo Wild Wings, Sportsman's Warehouse, etc.

We lived in Englewood, just on the other side of Santa Fe, when they opened that shopping center around 2008 and 13 years later, there are store fronts that are vacant and have NEVER had any paying client. For 13 years! There are many other examples as well.)

I agree that we are seeing investment into real estate from "not normal" sources.

Here in CO, Weed dealers have been buying real estate to "launder" their money since 2013.

Your investor theory makes perfect sense to me as well.

I've also seen the theory postulated that cash rich companies are parking cash in real estate to avoid any significant changes in the tax code by the Biden admin.

[clodhopper]

A BIG part of the problem is too many of the Millennial voters do not even know what inflation really is. Inflation is the creation (We used to say "printing".) of more fiat money [Latin for "let it be done." There's nothing "backing" fiat money but "the good faith and credit of the Federal Reserve."] by the Fed. Flooding the economy with more dollars "helps" only temporarily.

When wholesalers A, B, C, D through J realize they're being paid with dollars which are WORTH LESS than they were three months ago they (naturally) raise prices. Those wholesalers' customers -- the retailers and service industries -- (naturally) raise THEIR prices. The consumer / taxpayer takes it in the wallet.

Remember, CORPORATIONS DO NOT PAY TAXES. Their customers pay their taxes -- in the form of increased prices.

Where do you think the 2.2 TRILLION dollars of Covid relief (Trump administration) came from? The Fed electro-magically CREATED those dollars.



You answered your own question.

Because hundreds of thousands of American families are already reducing discretionary spending, economic growth is already being impacted. (Don't look at the Stock Markets to recognize this impact. Look at the prices of ... groceries, tires, home repairs, AMMO, etc..)

If your family isn't ready for *asinine* hyper-inflation, you'd better hurry and get ready.

? PRAY!!!
? Pay off your credit cards. Interest is financial DEATH.
? Stock up on Beans, Bullets and Band-Aids.
? Get to know your neighbors. In a crisis, if you haven't formed a group of people on whom you can depend, your neighbors are probably "it".

Inflation is Biden's plan to solve the supply chain problem.

[BushMasterBoy]

Precious metals. Gold & silver. It has been money for over 6,000 years.

[MrPrena]

^ very true, but those millennial are allocating to buttcoin and crip-to coin.

[Grant H.]

^ very true, but those millennial are allocating to buttcoin and crip-to coin.

I really don't understand how anyone can look at ANY crypto and think that it falls in the same category as PM.

But yeah, I've seen more and more people start to fall prey to that idea...

[MrPrena]

I really don't understand how anyone can look at ANY crypto and think that it falls in the same category as PM.

But yeah, I've seen more and more people start to fall prey to that idea...

Seems like Millennials are meme'ing, fomo'ing, and hedging it with crypto.
Crypto might have been fun and cool when it was about $1-3000. Now, it has been mainstreamed and some investors (incl majority of newb investors) are hedging the inflation with it. I agree and I am perfectly fine by
"missing out" on the crypto. I will just find something cheaper, better, and have higher return investment than cryptos.

[Vic Tory]

Delfuego, you just argued against yourself....

The Venezuela hyperbole has gotta stop. This is a not-so-clever sound bite. The USA and Venezuela have zero things in common. Period.

While I do not agree with you, it's your opinion. I was ready to leave it....

But your VERY NEXT POST...

I think we are paying less interest on inflated prices. It makes us feel like we are getting a better deal. The Fed is printing imaginary money and loaning it for zero percent (or less) to banks and they loan it to people. US bonds often have a negative yield/return. They are flooding the market with cheap capital and they say it's good for everyone. Prices of property keep going up and wages simply don't. The middle class is disappearing and the USA seems to be slide into a 2nd world country with the "have" and the "have not". Remember the banks are still making extra money on the back-end too with CDS (credit default swaps) or whatever the have renamed them too after 2008.

Maybe you don't realize it, but your second post is ... what happened in Venezuela.



That country went from the 4th biggest economy in the world to ... insane hyperinflation and no Middle Class. The only people who prospered in that country were the Chavez people ... and now the Maduro people.

[HoneyBadger]

I really don't understand how anyone can look at ANY crypto and think that it falls in the same category as PM.

But yeah, I've seen more and more people start to fall prey to that idea...

Pretty much all crypto except Bitcoin and Ether are crap. BTC and ETH are the foundation that all other cryptos ride on. Bitcoin is actually better than gold as a store of wealth because it is PERFECTLY scarce. Gold takes time and effort and investment to mine and add to the world supply, and in theory there is a finite amount of gold on Earth, but we don’t know exactly how much that is. Bitcoin also takes resources to produce, but there is a known and cryptologically limited amount of Bitcoin. Once the supply runs low, no government or private entity can manipulate it in such a way as to devalue it. Nobody can simply “print” more Bitcoin. ETH is unique because it’s a framework for other goods and services to ride upon with a huge amount of possibility.

Remember that gold doesn’t have much intrinsic value… it’s only valuable because we say it is.

[Grant H.]

blah blah blah... Crypto fanboi isms removed...

Remember that gold doesn’t have much intrinsic value… it’s only valuable because we say it is.

Congratulations.

You literally just described why Crypto of ANY KIND is a farce as a wealth store...

PM is tangible, and has value in society. The current agreed upon value? Maybe not, but it is still valuable.

Crypto is neither of those things...