What will accompany inflation here?

[moneymaker]

Assuming we taper and China starts selling their paper or something along those lines and we start to have the inflation that everyone knows is coming, what else will it come with? Will there be a predecessor like layoffs, shortages, energy spikes? Anyone want to take a stab at the likely scenario coming our way?

[The-Shoveler]

Slow insidious wage inflation from the bottom up, Just kidding sort of,

But I think the Minimum wage hike that is then linked to inflation is that first volley.
It really is a long time coming IMO.

China selling their paper would be just a opportunity for the Fed to buy it back at a discount.

[livinincali]

If the fed continues tapering why would you expect inflation? The inflation already happened. It’s staring you right in the face with record levels on the DOW and S&P. I expect to see deflation in asset prices once the spigot gets turned off. It will likely get pretty bad because there’s tons of leverage being used to bet on higher assets prices right now. Margin debt in the stock market is at record highs.

I actually expect main street to weather the coming crash in assets prices better than it has in the past because it hasn’t been benefiting much from rising asset prices. Also many companies have cash reserves so that they aren’t bankrupt when lending gets tight in a coming recession. Sure there will be unemployment increases and people might start redefining their retirement dreams once their portfolios get blown up but we’ll survive.

[The-Shoveler]

It would take a reversal of OER to have assets effect wages.

1981 was the start of the great take away of the american dream,(that is when it was determined it was not part of the plan any more).

[moneymaker]

Yeah it might take a while to happen, just thinking ahead, or trying to at least. If inflation is coming I might want to buy those solar panels now, if unemployment is coming I might want to save(i.e. not spend).

[livinincali]

[quote=moneymaker]Yeah it might take a while to happen, just thinking ahead, or trying to at least. If inflation is coming I might want to buy those solar panels now, if unemployment is coming I might want to save(i.e. not spend).[/quote]

Solar panels are technology. They’ll always get cheaper/better over time like computers and televisions. Only buy the solar panels if you’re going to do it with cash, and after spending that cash you have a reserve living expense fund. Buying solar panels on credit because you think there’s inflation coming is exactly what the powers want you to think, but it’s likely to be a poor decision.

[NotCranky]

raises for government employees and a bigger piece of the bigger pie for entities big enough to sponsor lobbyists.

[FlyerInHi]

Taper means less cash in the economy and less lending. A slower economy in China would mean less demand for high end goods from the West, and probably lower asset prices in China.

I don’t see all that being the cause of inflation, quite the contrary.

[FlyerInHi]

incidentally, the Fed has to taper because the deficit is shrinking. Otherwise, the Fed will be buying all new issues.

[paramount]

I strongly suggest watching the Karl Denninger video I posted earlier this week. This guy is super, super sharp, one of the best interviews on the macro economy I’ve seen.

He was the founder of MCI as I recall.

http://youtu.be/wWbYWawYem4

(Just skip to approx. 19:00 for the economic part)

[paramount]

In the aftermath of the recent chaos and market turmoil in emerging markets, today King World News spoke with the man the Fed called on to execute QE1 and who also set up the Fed’s massive trading room, former Fed member and former Managing Director at Morgan Stanley, Andrew Huszar. What he had to say will stun KWN readers around the world. He warned stocks may collapse 30% or more in a matter of months if the Fed continues on the current course, and he also said that the Fed is now running the largest hedge fund in the world and it may end in disaster. Below is what Huszard had to say in Part I of this remarkable interview.

Eric King: “Andrew, what made you come out publicly and say that QE was a failure and apologize to everybody? What made you come out and do that?”

Huszar: “I left the Fed in 2011. … I maintain great respect for a lot of the people inside (the Fed), and so I struggled for a long time to come out and speak publicly about it. But in the end I spoke out because I believe that QE, while initially well-intentioned, has really allowed the US to kick the can down the road with respect to major structural reform that has to do with its economy.

[SD Realtor]

Yep no inflation here. Except that that the food you buy is more expensive and packaged in smaller quantitied. You pay more for water, more for sewer, and more for energy. It has been staring you in the face for the past several years.

Don’t worry though, you can always eat your cheap flatscreen and keep warm by burning your low priced cell phone plan at night.

[FlyerInHi]

as someone mentioned earlier, the inflation has already happened. The taper will not cause inflation.

[an]

[quote=SD Realtor]Yep no inflation here. Except that that the food you buy is more expensive and packaged in smaller quantitied. You pay more for water, more for sewer, and more for energy. It has been staring you in the face for the past several years.

Don’t worry though, you can always eat your cheap flatscreen and keep warm by burning your low priced cell phone plan at night.[/quote]
Certain food is more expensive but not all. Same with energy. Sure, energy from sdge is getting more expensive, but energy from solar is getting cheaper every year. I went solar a year ago and my bill over the last year has been between $5-100. It used to be between $150-450.

I’m not saying we’re not seeing inflation. I’m just saying what we’re seeing is not as drastic as you’re making it seem. Maybe it’s the type of food I eat and the source of my energy.

[no_such_reality]

[quote=AN][quote=SD Realtor]Yep no inflation here. Except that that the food you buy is more expensive and packaged in smaller quantitied. You pay more for water, more for sewer, and more for energy. It has been staring you in the face for the past several years.

Don’t worry though, you can always eat your cheap flatscreen and keep warm by burning your low priced cell phone plan at night.[/quote]
Certain food is more expensive but not all. Same with energy. Sure, energy from sdge is getting more expensive, but energy from solar is getting cheaper every year. I went solar a year ago and my bill over the last year has been between $5-100. It used to be between $150-450.

I’m not saying we’re not seeing inflation. I’m just saying what we’re seeing is not as drastic as you’re making it seem. Maybe it’s the type of food I eat and the source of my energy.[/quote]

I went solar three years ago. My cost per Kwh works out to about 10 cents, the rest of the Pigg’s cost for my energy use works out to about 25 cents/Kwh. provided I get full life expectancy out of them.

Solar isn’t cheaper, it’s actually much more expensive and just transferred the cost to non-users via taxes thanks to the rebates and tax incentives.

[Author]

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