Are You Concerned About Inflation?

by Simon 112 Replies latest social current

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  Simon

  Now we have to pay for the decades of easy money and irresponsible spending.

  Exactly. Thanks to the Cantillon effect those closest to the money printers got money very cheap, or for free, and were able to buy assets. The rest of us get the bill, and our savings stolen.

  Do you think a hike to 10/15/20% is possible? No. If the interest rate were raised to 10%, the US couldn't service its debt (by taking out new debt).

  They can't deal with it. Not only would they crash everything, they wouldn't be able to afford their own debt. It also puts a future out of reach of many young people who will be unable to buy a home even if rates are 10% without a massive market crash of prices. The trouble is, politicians aren't going to take the pain - they don't want to answer to the boomers who got rich by indebting the future generations.

  The only solution is a default, a war, or both.

  Japan is trying to prop up its currency by printing and buying its own bonds. The whole thing is breaking.
  
  
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  joey jojo

  I believe the world never really recovered from the 2008 financial crisis.

  Companies that had no right to continue trading because of their greed and stupidity, were propped up artificially and handed billions. These billions came from thin air, via the printing press.

  Ever since then, markets have continued trading at unnatural levels thanks to handouts and low interest rates.

  The effects of the pandemic and war on finances is now like the tide retreating and we'll see who has been swimming naked.
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  waton

  yes I am worried, have to pay the house taxes this month, went from $4 000 to $5 000, 25% inflated. In the meantime the bank pays me 2% on the accounts.

  bananas are still bargains though, and so is fixed rate borrowing.
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  TonusOH

  I believe the world never really recovered from the 2008 financial crisis.

  I think that is when we needed to do two things in the USA:

  1. Raise interest rates and force people and companies to be more responsible with spending decisions.

  2. Recognize the danger in any company becoming "too big to fail" and making sure that could no longer happen.

  We didn't do either. Bad fiscal decisions kept being made because borrowing was so easy. Corporations have continued to grow larger and swallow up any attempts at competition, thus creating massive mega-companies that can harm the economy if they are mismanaged.

  Those aren't the only mistakes being made, but they create the environment in which an economic downturn has the capacity to become much worse and much more difficult to deal with.
  
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  FedUpJW

  the bank pays me 2% on the accounts

  I sure wish my bank paid that. On the "preferred" account I have with a modest six figure balance they pay a whopping effective rate of 0.1%. Every quarter I get between $1.00 to $1.20 interest. That is one of the higher rates locally.

  One of the things I do is to use credit nearly exclusively every month, then pay the account off in full with every statement. I can receive more in cash back from the credit card than I would ever make from using cash for initial purchase.
  
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  Simon

  What's happened is that profit has been privatized and losses socialized. A few elites get ultra wealthy while the majority, who don't have their connections, get poorer. The rich live off the debt they force the rest into.

  The "market" doesn't even work to price things as the heavy finger of government is on one side of the scale ... heck, they've practically sat on it.
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  sloppyjoe2

  @Simon you stated the only solution was a default, war or both. What does a war do for the economic problems we have? Genuine question, I don't understand how that helps.
  
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  Simon

  Up to 9.1% now, the wheels are coming off.

  What does a war do for the economic problems we have? Genuine question, I don't understand how that helps.

  It's a dramatic reset. Some country can't / won't pay their debts, someone wants to seize their assets. Or someone decides some other countries assets would be really nice to have to solve their problems. Or heck, it's a great distraction and election booster for the powers that be. Nothing enables those in power to syphon off funds quite like a war - you see the exact thing happening in Ukraine right now ... we have to pour $billions in, with no accountability and receipts to check where the money goes.

  Ultimately, it's a big system reset.
  
  
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  road to nowhere

  Cushion is gone for us. Housing is taking a hit. Groceries, gasoline, home heat/cooling doubling as promised.
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  fulltimestudent

  Ummm! Australians are feeling the inflationary effect too, inflation is officially supposed to be 5%,

  But I noticed (a previous comment) a suggestion that it's around 9% in North America, but a few days ago I read this article by an American citizen name of David Goldman claiming that the real rate is 20% (in the USA). If he's right, you guys have my sympathy, because at the rate of 20% it's hard to stop. And, my mind jumps to the last days of Chiang Kai Shek and his Guo Min Dang (KMT) party government, where you needed (some say) a wheelbarrow full of paper money to buy a loaf of bread.

  https://asiatimes.com/2022/07/americans-face-20-inflation-for-essentials/