Buying with monopoly money

[SD Realtor]

I thought Rich explained it very well so I will try to augment his theory..

3. As a result of foreign currency pegs, QE here leads to looser monetary policy and thus higher demand in foreign countries. This leads to increased competition for commodities and many other items that could feed into our own domestic prices, regardless of our unemployment rate.

**This one hurts. China and the USA want to buy some oil. China has a huge appetite for oil right now and is holding treasuries and getting paid in dollars which are continuing to depreciate. China will pay more for the oil and thus we will be forced to as well. They have a ton of useless dollars and would rather get something for them now, then less of something for them later when they are more useless.

4. If #3 gets bad enough, foreign countries could let their currencies rise, which would lead to an increase in prices of items we import.

**We already have problems with the way China pegs their currency. As #3 above happens this will only get worse. Other countries will follow suit.

5. Commodity prices in specific could increase due to #1 (more money flowing into risk assets) or #3 (higher demand in foreign countries). They could also rise as foreign countries try to redeploy their excess dollar reserves. Commodity price increases do feed into inflation over time.

**My example above was only for oil however many people do not have a clue about how much we actually import. We import everything from oil to drywall to metal screws. You guys think Walmarts are Targets are the only big imports? Go to your Home Depot or Lowes as well. The issue at hand is commodities are the root of everything. As commodity prices rise everything follows suit. It takes time but it happens.

**Honestly I think the bigger issue at hand over the misunderstanding is the lack of the experience. If you are under 40 you have no clue of this sort of stuff. You were a child at best in the late 70s and early 80s and you didn’t see it. You don’t know what a gas line is, you didn’t witness any of this stuff so it is surreal to you. Asking me for a concrete example of how prices go up when it has been explained seems to validate that. If your costs have only gone up 1 or 2% this year then that is what it is, mine have gone up more. This stuff doesnt take 1 year to happen. It happens over a decade. Believe me we are just barely starting the cycle.

[Anonymous]

[quote=SD Realtor] getting paid in dollars which are continuing to depreciate.[/quote]

If dollars were depreciating, wouldn’t we have … inflation?

BTW, I am over 40, and grew up in the rust belt. I recall once having bank CDs that paid 12%.

I’ve seen inflation, plenty of unemployment in my own family, and am well aware of the decline of American manufacturing.

I’ve also lived in Silicon Valley.

So I might actually have a little perspective on the ebbs and flows of the economy.

[Anonymous]

[quote=SD Realtor] getting paid in dollars which are continuing to depreciate.[/quote]

If dollars were depreciating, wouldn’t we have … inflation?

BTW, I am over 40, and grew up in the rust belt. I recall once having bank CDs that paid 12%.

I’ve seen inflation, plenty of unemployment in my own family, and am well aware of the decline of American manufacturing.

I’ve also lived in Silicon Valley.

So I might actually have a little perspective on the ebbs and flows of the economy.

[Anonymous]

[quote=SD Realtor] getting paid in dollars which are continuing to depreciate.[/quote]

If dollars were depreciating, wouldn’t we have … inflation?

BTW, I am over 40, and grew up in the rust belt. I recall once having bank CDs that paid 12%.

I’ve seen inflation, plenty of unemployment in my own family, and am well aware of the decline of American manufacturing.

I’ve also lived in Silicon Valley.

So I might actually have a little perspective on the ebbs and flows of the economy.

[Anonymous]

[quote=SD Realtor] getting paid in dollars which are continuing to depreciate.[/quote]

If dollars were depreciating, wouldn’t we have … inflation?

BTW, I am over 40, and grew up in the rust belt. I recall once having bank CDs that paid 12%.

I’ve seen inflation, plenty of unemployment in my own family, and am well aware of the decline of American manufacturing.

I’ve also lived in Silicon Valley.

So I might actually have a little perspective on the ebbs and flows of the economy.

[Anonymous]

[quote=SD Realtor] getting paid in dollars which are continuing to depreciate.[/quote]

If dollars were depreciating, wouldn’t we have … inflation?

BTW, I am over 40, and grew up in the rust belt. I recall once having bank CDs that paid 12%.

I’ve seen inflation, plenty of unemployment in my own family, and am well aware of the decline of American manufacturing.

I’ve also lived in Silicon Valley.

So I might actually have a little perspective on the ebbs and flows of the economy.

[Anonymous]

Rich,

If I used the word hypothetical when describing your response, it wasn’t the best word choice.

Probably better to say that there were a lot of assumptions in your response. Of course you are trying to predict the future, so the use of some assumptions are reasonable.

I’m really just looking for a common-sense version of the pro-inflation argument. One that’s not too thick with economic theory and jargon. That’s why I choose to pose the question in familiar, everyday terms.

I’m not posing a fictitious situation.

I’m aware of the watered-down Econ 101 explanation: Printing money leads to inflation.

But basic facts suggest that our current situation not that simple.

We’ve had increasing debt for decades.

We’ve had “loose” monetary policy for a long time.

There haven’t been any signs of high inflation.

Lots of folks are sure it’s coming, and yet no one is raising prices.

The OP suggested that “serious inflation is coming.” I take that to mean annual inflation way well of 5% starting in the next 10 years. Otherwise leveraging in illiquid asset, even at 4.5%, is really not the slam-dunk he describes.

Inflation is nowhere near these numbers.

Why will anyone start raising prices any time in the near future?

My question is not hypothetical at all.

[Anonymous]

Rich,

If I used the word hypothetical when describing your response, it wasn’t the best word choice.

Probably better to say that there were a lot of assumptions in your response. Of course you are trying to predict the future, so the use of some assumptions are reasonable.

I’m really just looking for a common-sense version of the pro-inflation argument. One that’s not too thick with economic theory and jargon. That’s why I choose to pose the question in familiar, everyday terms.

I’m not posing a fictitious situation.

I’m aware of the watered-down Econ 101 explanation: Printing money leads to inflation.

But basic facts suggest that our current situation not that simple.

We’ve had increasing debt for decades.

We’ve had “loose” monetary policy for a long time.

There haven’t been any signs of high inflation.

Lots of folks are sure it’s coming, and yet no one is raising prices.

The OP suggested that “serious inflation is coming.” I take that to mean annual inflation way well of 5% starting in the next 10 years. Otherwise leveraging in illiquid asset, even at 4.5%, is really not the slam-dunk he describes.

Inflation is nowhere near these numbers.

Why will anyone start raising prices any time in the near future?

My question is not hypothetical at all.

[Anonymous]

Rich,

If I used the word hypothetical when describing your response, it wasn’t the best word choice.

Probably better to say that there were a lot of assumptions in your response. Of course you are trying to predict the future, so the use of some assumptions are reasonable.

I’m really just looking for a common-sense version of the pro-inflation argument. One that’s not too thick with economic theory and jargon. That’s why I choose to pose the question in familiar, everyday terms.

I’m not posing a fictitious situation.

I’m aware of the watered-down Econ 101 explanation: Printing money leads to inflation.

But basic facts suggest that our current situation not that simple.

We’ve had increasing debt for decades.

We’ve had “loose” monetary policy for a long time.

There haven’t been any signs of high inflation.

Lots of folks are sure it’s coming, and yet no one is raising prices.

The OP suggested that “serious inflation is coming.” I take that to mean annual inflation way well of 5% starting in the next 10 years. Otherwise leveraging in illiquid asset, even at 4.5%, is really not the slam-dunk he describes.

Inflation is nowhere near these numbers.

Why will anyone start raising prices any time in the near future?

My question is not hypothetical at all.

[Anonymous]

Rich,

If I used the word hypothetical when describing your response, it wasn’t the best word choice.

Probably better to say that there were a lot of assumptions in your response. Of course you are trying to predict the future, so the use of some assumptions are reasonable.

I’m really just looking for a common-sense version of the pro-inflation argument. One that’s not too thick with economic theory and jargon. That’s why I choose to pose the question in familiar, everyday terms.

I’m not posing a fictitious situation.

I’m aware of the watered-down Econ 101 explanation: Printing money leads to inflation.

But basic facts suggest that our current situation not that simple.

We’ve had increasing debt for decades.

We’ve had “loose” monetary policy for a long time.

There haven’t been any signs of high inflation.

Lots of folks are sure it’s coming, and yet no one is raising prices.

The OP suggested that “serious inflation is coming.” I take that to mean annual inflation way well of 5% starting in the next 10 years. Otherwise leveraging in illiquid asset, even at 4.5%, is really not the slam-dunk he describes.

Inflation is nowhere near these numbers.

Why will anyone start raising prices any time in the near future?

My question is not hypothetical at all.

[Anonymous]

Rich,

If I used the word hypothetical when describing your response, it wasn’t the best word choice.

Probably better to say that there were a lot of assumptions in your response. Of course you are trying to predict the future, so the use of some assumptions are reasonable.

I’m really just looking for a common-sense version of the pro-inflation argument. One that’s not too thick with economic theory and jargon. That’s why I choose to pose the question in familiar, everyday terms.

I’m not posing a fictitious situation.

I’m aware of the watered-down Econ 101 explanation: Printing money leads to inflation.

But basic facts suggest that our current situation not that simple.

We’ve had increasing debt for decades.

We’ve had “loose” monetary policy for a long time.

There haven’t been any signs of high inflation.

Lots of folks are sure it’s coming, and yet no one is raising prices.

The OP suggested that “serious inflation is coming.” I take that to mean annual inflation way well of 5% starting in the next 10 years. Otherwise leveraging in illiquid asset, even at 4.5%, is really not the slam-dunk he describes.

Inflation is nowhere near these numbers.

Why will anyone start raising prices any time in the near future?

My question is not hypothetical at all.

[bearishgurl]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses. It is pretty easy to follow the commodity trail. Start at the cost of water and fuel. People who grow everything from fruits/vegetables to feed for cattle/pigs etc incur higher prices. Increasing fuel prices also impact them and the transporters who are needed for the supply chain. Cotton and other things that are grown for textiles and clothing are affected. Pretty much everything at the base is affected and as you move up the manufacturing chain additional costs are added.

The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.

The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche. I guess personally I am more skeptical. I don’t believe the unemployment stats and I don’t believe the inflation stats. I simply look back on my on ledger for what I spend on food and clothing over the past few years and the increase is noticeable. Same with my electric and gas bills for the same home. Much more then the 1 or 2% I am being told by the govt.[/quote]

Totally agree, SDR. When I am in the Ralphs or Vons in the early morning a couple of times a week, I always see sr citizens make a beeline for the clearance table/racks to the bent cans and smashed boxes and hover over the marked-down meat section and marked-down bakery cart to see what is available. Some just sigh and leave with nothing and hit the next Vons/Ralphs to do the same thing.

I am just incredulous how a =<.50 can of green beans has turned into $1.50 overnight! Groceries have gone up a LOT in the last 18 months, even at the military commissaries. SDGE has also gone up some, although I severely limit my own usage to keep my bill manageable.

[bearishgurl]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses. It is pretty easy to follow the commodity trail. Start at the cost of water and fuel. People who grow everything from fruits/vegetables to feed for cattle/pigs etc incur higher prices. Increasing fuel prices also impact them and the transporters who are needed for the supply chain. Cotton and other things that are grown for textiles and clothing are affected. Pretty much everything at the base is affected and as you move up the manufacturing chain additional costs are added.

The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.

The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche. I guess personally I am more skeptical. I don’t believe the unemployment stats and I don’t believe the inflation stats. I simply look back on my on ledger for what I spend on food and clothing over the past few years and the increase is noticeable. Same with my electric and gas bills for the same home. Much more then the 1 or 2% I am being told by the govt.[/quote]

Totally agree, SDR. When I am in the Ralphs or Vons in the early morning a couple of times a week, I always see sr citizens make a beeline for the clearance table/racks to the bent cans and smashed boxes and hover over the marked-down meat section and marked-down bakery cart to see what is available. Some just sigh and leave with nothing and hit the next Vons/Ralphs to do the same thing.

I am just incredulous how a =<.50 can of green beans has turned into $1.50 overnight! Groceries have gone up a LOT in the last 18 months, even at the military commissaries. SDGE has also gone up some, although I severely limit my own usage to keep my bill manageable.

[bearishgurl]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses. It is pretty easy to follow the commodity trail. Start at the cost of water and fuel. People who grow everything from fruits/vegetables to feed for cattle/pigs etc incur higher prices. Increasing fuel prices also impact them and the transporters who are needed for the supply chain. Cotton and other things that are grown for textiles and clothing are affected. Pretty much everything at the base is affected and as you move up the manufacturing chain additional costs are added.

The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.

The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche. I guess personally I am more skeptical. I don’t believe the unemployment stats and I don’t believe the inflation stats. I simply look back on my on ledger for what I spend on food and clothing over the past few years and the increase is noticeable. Same with my electric and gas bills for the same home. Much more then the 1 or 2% I am being told by the govt.[/quote]

Totally agree, SDR. When I am in the Ralphs or Vons in the early morning a couple of times a week, I always see sr citizens make a beeline for the clearance table/racks to the bent cans and smashed boxes and hover over the marked-down meat section and marked-down bakery cart to see what is available. Some just sigh and leave with nothing and hit the next Vons/Ralphs to do the same thing.

I am just incredulous how a =<.50 can of green beans has turned into $1.50 overnight! Groceries have gone up a LOT in the last 18 months, even at the military commissaries. SDGE has also gone up some, although I severely limit my own usage to keep my bill manageable.

[bearishgurl]

[quote=SD Realtor]The manager at ralphs will simply pass on his expenses. It is pretty easy to follow the commodity trail. Start at the cost of water and fuel. People who grow everything from fruits/vegetables to feed for cattle/pigs etc incur higher prices. Increasing fuel prices also impact them and the transporters who are needed for the supply chain. Cotton and other things that are grown for textiles and clothing are affected. Pretty much everything at the base is affected and as you move up the manufacturing chain additional costs are added.

The manager at Ralphs has nothing to do with it. he is simply the endpoint in the supply chain.

The other thing is that you are making an implicit assumption about inflation and that is you are accepting the statistics carte blanche. I guess personally I am more skeptical. I don’t believe the unemployment stats and I don’t believe the inflation stats. I simply look back on my on ledger for what I spend on food and clothing over the past few years and the increase is noticeable. Same with my electric and gas bills for the same home. Much more then the 1 or 2% I am being told by the govt.[/quote]

Totally agree, SDR. When I am in the Ralphs or Vons in the early morning a couple of times a week, I always see sr citizens make a beeline for the clearance table/racks to the bent cans and smashed boxes and hover over the marked-down meat section and marked-down bakery cart to see what is available. Some just sigh and leave with nothing and hit the next Vons/Ralphs to do the same thing.

I am just incredulous how a =<.50 can of green beans has turned into $1.50 overnight! Groceries have gone up a LOT in the last 18 months, even at the military commissaries. SDGE has also gone up some, although I severely limit my own usage to keep my bill manageable.

[Author]

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