Will high inflation return ?

[lewman]

I’m starting this as a follow-up to my other topic “will it burst/deflate/stay flat?” where Nhamlin gave a good explanation to why nominal property prices stay flat during the 80s while in reality real prices (i.e. prices with inflation taken into consideration) actually fell.

I think there’s at least some possibiities that high inflation could come back to haunt us.

One of the biggest reasons we were able to enjoy a low inflationary environment was globalization. We import goods produced by countries like china, taking advantage of the relatively low labour cost. This will likely continue even though some argue that wage pressure’s already seen in china but I think multi-nationals have gotten quite good at following where the cheap labour is and it’ll be some time before the world runs out of that.

Another reason had been the strength of the USD throughout most of the 90s and so it pushes down import prizes. But I see the dollar weakening over the next few years so that game may be over.

Then you’ve got commodity prices rising. Question is how much of that would be passed on to consumers and I don’t really have a view.

Then there’s ben with his talks about inflation targeting. But if inflation does shows its ugly face again, does Ben have the guts to raise rates, at risk of killing the housing market ?

Hmmmm … this is a difficult one … anyone care to contribute ?

[lewman]

Rich, how would a debasing of the dollar cause wage to rise ?

I think there’s a very good chance the dollar will resume its fall (twin deficits, inability to raise rates …) after the last rate hike that’s expected to happen some time in the near future.

Lewis

[lewman]

Rich, sure, that’s the reverse of the rising dollar—–>lowering import prices I mentioned; but I thought you were referring to “wage inflation” or rising wages.
Lewis

[KIBU]

Strange, this poor guy Lewman was talking to himself.

Some have suggested protecting money by convert to foreign currency.

Would you do that???

[KIBU]

Strange, this poor guy Lewman was talking to himself.

Some have suggested protecting money by convert to foreign currency.

Would you do that???

[patientrenter]

KIBU,

The general investing question you pose belongs in a different forum, but as it happens I am considering investing in foreign currencies for the specific real estate purpose of preserving the real value of the savings I am building for a home purchase, so I’ll comment on that.

I’m looking at far Asian currencies that trade at a discount to their purchasing power: Japan (surprisingly), China, Philippines, Malaysia, Singapore. I am not sure how to do it efficiently. US banks that offer foreign currency accounts pay lousy rates, and some of the currencies are not available. I may buy futures in Chicago.

Patient renter in OC

[patientrenter]

KIBU,

The general investing question you pose belongs in a different forum, but as it happens I am considering investing in foreign currencies for the specific real estate purpose of preserving the real value of the savings I am building for a home purchase, so I’ll comment on that.

I’m looking at far Asian currencies that trade at a discount to their purchasing power: Japan (surprisingly), China, Philippines, Malaysia, Singapore. I am not sure how to do it efficiently. US banks that offer foreign currency accounts pay lousy rates, and some of the currencies are not available. I may buy futures in Chicago.

Patient renter in OC

[Anonymous]

We are already in a period of high inflation, if you take it to mean expansion of money supply. I think that money supply is globally growing at like 12% minimum. That money has to go somewhere – it will be converted into higher prices. It looks like it’s going into the DOW right now, and from credit, was going into housing. But you can already see it start to be reflected in the prices of certain goods, such as dairy.

The post office had an interesting statement a few months back. They complained that it was becoming increasingly difficult to keep working by raising the cost of stamps on par with stated inflation…because the government’s measure of inflation (prices of a basket weighted of goods) didn’t include materials, such as paper, that they used.

[Anonymous]

We are already in a period of high inflation, if you take it to mean expansion of money supply. I think that money supply is globally growing at like 12% minimum. That money has to go somewhere – it will be converted into higher prices. It looks like it’s going into the DOW right now, and from credit, was going into housing. But you can already see it start to be reflected in the prices of certain goods, such as dairy.

The post office had an interesting statement a few months back. They complained that it was becoming increasingly difficult to keep working by raising the cost of stamps on par with stated inflation…because the government’s measure of inflation (prices of a basket weighted of goods) didn’t include materials, such as paper, that they used.

[Author]

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