inflation rate of 15%?

[paranoid]

Are you surprised if somebody tells you that the inflation rate of the last 10 years has been about 15% yearly?

You shouldn’t be.

What’s the biggest spending item in most household? It’s the home. and the home price has increased about 15% yearly over the last decade.

That’s also about the rate of M3 expansion.

If you look at things from this angle, the interest rate will have a long long way to go up! how about 15% fed rate? Are you ready for this? what the stock market and housing market look alike?

[bigmoneysalsa]

15% is ridiculous. If inflation had run at 15% the last ten years, then prices should be about quadruple what they were in 1997. Are rents 4 times higher than 1997? Is your grocery bill 4 times higher? Hell, even gas isn’t 4 times higher.
I am a big time housing bear, but I really don’t get the “CPI-is-nonsense-inflation-is-really-super-high” stuff that a lot of people here seem to believe in.

[bigmoneysalsa]

15% is ridiculous. If inflation had run at 15% the last ten years, then prices should be about quadruple what they were in 1997. Are rents 4 times higher than 1997? Is your grocery bill 4 times higher? Hell, even gas isn’t 4 times higher.
I am a big time housing bear, but I really don’t get the “CPI-is-nonsense-inflation-is-really-super-high” stuff that a lot of people here seem to believe in.

[paranoid]

Maybe I exagerated a little bit. but SD housing has increased about 200% in the last decade. that’s about 10% /year. so for first time home buy, the inflation can be considered to be about 10% /year for the last decade, or equivalently 15% for the last 7 years.

Combining this with the M3 expansion, I’m not surprised that the interest rate has just broken a 20 year down trend, and started rising recently, panicked many on the wallstreet.

[paranoid]

Maybe I exagerated a little bit. but SD housing has increased about 200% in the last decade. that’s about 10% /year. so for first time home buy, the inflation can be considered to be about 10% /year for the last decade, or equivalently 15% for the last 7 years.

Combining this with the M3 expansion, I’m not surprised that the interest rate has just broken a 20 year down trend, and started rising recently, panicked many on the wallstreet.

[Anonymous]

Inflation sometimes hits the price of consumption goods (reflected in high CPI in the mid/late ’70s) and sometimes it hits asset prices (homes, today); that was a revealation to me that I read in a Marc Faber column some months ago.

[Anonymous]

Inflation sometimes hits the price of consumption goods (reflected in high CPI in the mid/late ’70s) and sometimes it hits asset prices (homes, today); that was a revealation to me that I read in a Marc Faber column some months ago.

[bob007]

if something doubled in 10 years the annual growth rate is 70 divided by 10 which is 7%

the basic rule is
interest rates need to be above inflation rate for a currency to be valuable

[bob007]

if something doubled in 10 years the annual growth rate is 70 divided by 10 which is 7%

the basic rule is
interest rates need to be above inflation rate for a currency to be valuable

[one_muggle]

bob,

you’re assuming the dollar is valuable…?!

-one muggle

[one_muggle]

bob,

you’re assuming the dollar is valuable…?!

-one muggle

[paranoid]

jg, you got it. Marc Faber said this recently
“Then you have to find a measurement of inflation. We measure inflation by rise in money supply. It would be wrong to think that the inflation is just consumer price increases. Inflation is a loss of purchasing power of your currency, dollar or Rupee. It can manifest itself by rise in consumer price but it can also manifest itself by a loss of purchasing power of money against real estate, or against stocks and real estate.”

[paranoid]

jg, you got it. Marc Faber said this recently
“Then you have to find a measurement of inflation. We measure inflation by rise in money supply. It would be wrong to think that the inflation is just consumer price increases. Inflation is a loss of purchasing power of your currency, dollar or Rupee. It can manifest itself by rise in consumer price but it can also manifest itself by a loss of purchasing power of money against real estate, or against stocks and real estate.”

[JWM in SD]

Paranoid,

Nice subject selection. I have said for sometime now to the Helicopter / inflate away my debt crowd that the inflation has already happened. It just didn’t manifest in the CPI but rather in inflated asset prices: first stocks and then residential real estate.

The sad thing is that when you see some smug realtor or mortgage broker driving around in their MB or BMW, that’s where the value of your savings went!!! They arbitraged the inflation in housing via M3 liquidity growth J6packs plans of saving for a house got farther and farther away as the prices got ever more inflated.

[JWM in SD]

Paranoid,

Nice subject selection. I have said for sometime now to the Helicopter / inflate away my debt crowd that the inflation has already happened. It just didn’t manifest in the CPI but rather in inflated asset prices: first stocks and then residential real estate.

The sad thing is that when you see some smug realtor or mortgage broker driving around in their MB or BMW, that’s where the value of your savings went!!! They arbitraged the inflation in housing via M3 liquidity growth J6packs plans of saving for a house got farther and farther away as the prices got ever more inflated.

[Author]

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