[livinincali]

[quote=moneymaker]Inflation is definitely government caused. Historically it has been by printing too much paper. Now the government has taken a new course, instead of printing money they are borrowing from themselves, i.e. the credit card method. As everyone knows, with a credit card it can only end 1 of 2 ways. Either you end up paying more in the end (which will cause inflation) or you go bankrupt (deflation). Which do you think it will be for our government?[/quote]

Doesn’t matter if the government borrows or prints. Whether you use your credit card to buy something or cash it spends the same and causes the same demand. Now if you use credit you pulled forward that demand and will pay a price something in the future if you intend to pay the debt off but our government doesn’t intend to pay the debt off because they can’t. Increasing the demand side of the equation while waiting for the supply side of the equation to catch up is always going to cause an initial inflationary effect.

Bottom line whether the government prints and spends or borrows and spends it causes the same initial inflationary effect. Now if the government does pay that debt back or defaults it will cause an deflationary effect but it they just print and pay off the debt it won’t. If they do print and pay off debt it could cause a hyper inflationary event. I.e. a loss a faith in the currency, but it shouldn’t create a major inflationary event since the money has already been spent as credit.

My expectation it it’s likely we’ll see see deflationary pressures for a long time (a la Japan) and/or a shorter deflationary depression that might result in a hyper inflationary event. Depends on what the government tries to do to prevent the deflationary cycle from playing out.

[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.

[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.

[livinincali]

[quote=Jazzman][quote=livinincali]
The other potential problem is capitol controls. So you can get your money stuck over there. For example they just recently passed this capitol control.

The limit on personal remittances has been cut to $75,000 per year, from $200,000 per year.

That would mean even if you saw things changing where it was a bad investment to be in India it would take you 3 years to get your money back out. A lot can happen in 3 years.[/quote]

Unless of course you had a dollar account in India.[/quote]

You earn no interest on a dollar account in India. So it completely defeats the purpose.

[quote]
The RBI said the Resident Foreign Currency (Domestic) Account can be opened with a licensed bank which is also an authorised dealer in foreign exchange. By this criteria, most of the banks would be able to offer the dollar account facility to their clients.
Since the account will be maintained in the form of a current account, there will, of course, be no interest earned on the balance, a foreign exchange dealer explained.
[/quote]

[livinincali]

[quote=Jazzman]The only risk is exchange rates. If the bank will allow multiple currency accounts, you can switch back quickly if needs be. The problems I’ve run into is some foreign banks don’t allow US residents to open an account. As far are declaring interest, if the bank doesn’t provide US tax-filing docs, you can, in theory, use any exchange rate when converting back to USDs.[/quote]

The exchange rate can get you. For example in 2010 it was $1 = 45.74 rupees. Now it’s 62.07 rupees. So if you invested $100K in 2010 and got 9.5% per year you would have 6,575,861 rupees but converting that back to dollars now would be $105,942. So you got 9.5% interest per year but your net interest gain was a little over 1% per year because of the exchange rate change. Now obviously it could work in your favor rather than against you, but it’s impossible to know ahead of time.

The other potential problem is capitol controls. So you can get your money stuck over there. For example they just recently passed this capitol control.

[quote]
The limit on personal remittances has been cut to $75,000 per year, from $200,000 per year.
[/quote]

That would mean even if you saw things changing where it was a bad investment to be in India it would take you 3 years to get your money back out. A lot can happen in 3 years.

[livinincali]

[quote=kev374]Planning to move out about $160,000 over to India where the interest rates are 9.5% annually. The Rupee has seen some volatility lately but I feel that it has hit a high of 62 to a dollar and the downside risk is small. Even if it goes to 70 to a dollar then it’s about a years worth of interest anyway.
[/quote]

Indian saving accounts are insured up to 100,000 Rupees but in US dollars that’s only $1,600. If you pick the wrong Indian bank and it becomes insolvent you could lose 99% of your money.

http://www.dicgc.org.in/English/index.html

[livinincali]

[quote=spdrun]Rutgers has a 4-year undergrad graduation rate of about 50%. A lot of students do live at home and commute, then have summer and part-time jobs — it’s not hard to pull down $3000 over half the summer and another $4-5000 over the rest of the year with a part-time job or internship. 10 hr/wk, nothing huge.[/quote]

$5000 / (36 weeks * 10 hours per week) = $13.89/hr. If you can find that job at 18-19 might be better to just stick with the job and not go to school. Especially if you’re not doing the STEM thing.

[livinincali]

[quote=Jazzman]I would imagine many boomers are also cash hording at the moment.[/quote]

Some might be but with many not having enough saved for retirement, they are probably more likely invested in riskier assets looking for the 8-10% that always gets touted.

The reality is that many boomer retirees are significantly exposed to the stock market. Many have pensions or 401K plans with few options. The big problem with asset being sold isn’t that some boomers will hang on to assets because they aren’t giving them away. The problem is pension funds don’t have that option. If they are on the hook for pension payments that exceed new money coming in they are forced sellers.

[livinincali]

Boomers are in their peak asset accumulation years still. They are near the top of the wage scale and all looking for assets to fund their retirement years. Assets are purchased with discretionary income, while mortgage debt is debatable stocks and bonds are not. The problem is that not only will some boomers look to cash in their assets, the demand for assets from the boomer generation will shrink as well. We all know the next generations for the most part as broke as hell and up to their eye balls in debt. Always ask yourself who are you going to sell to. Could your kids or your neighbor kids afford to buy your house at it’s current price. You have to sell to somebody’s kids.

I just don’t see how this ends well. At a macro level I expect most assets prices to crash as the supply/demand curve switches. That said there are probably various pockets of assets that will always remain valuable, it’s just incredibly difficult to guess right. The bottom line is comfortable retirement for the masses is a new concept in society and we likely don’t have the economy or resources to support it.

[livinincali]

[quote=scaredyclassic]
Borrowing or paying 250k for any law degree today is a risky maneuver. I would oppose my kids doing that…[/quote]

Borrowing for any major is pretty risky these days. At a macro level the ROI on borrowing the full college cost is negative now. If you get scholarships, grants, and/or beat the averages in terms of graduation rats and job prospects it can still be positive though.

[livinincali]

[quote=flu]
I’m predicting some consolidation that will happen in 2014…..I don’t think some companies are going to make it…. It’s going to probably going to end up being a 3-legged race with Qualcomm, MediaTek, and TBD 3rd player on the low end…..
[/quote]

I’d agree. Mobile hardware is turning into a commodity just like laptop did 10 years ago. Do you buy the AMD processor or the Intel processor, but the replacement cycle slows down. You won’t have people replacing their smart phone every 2 years it will start growing to 3,4,5 years. Just like that laptop was good enough for 5 years back in the day for the average person. There just isn’t much need for more horsepower on a mobile device. You can always ship hard core computations to the cloud so why do I need more processing power and more battery drain on a mobile device. The most resource intensive thing I can think of on a mobile device is video processing, either decoding video or rendering video game graphics.

[livinincali]

[quote=AN]If there’s all these research put in to produce BEV and FCEV, why aren’t there a lot of research being made in desalinating water? After all, the ocean water is abundant. If we can desalinate at a more affordable cost, then all these talk about drought would be moot.[/quote]

Yeah, but we might kill a fish.

[livinincali]

[quote]
widespread, effective advertising
not: low price to make the house less work to sell
[/quote]

Not sure this matters at all. Every serious buyer is going to be checking the MLS daily. Putting a effective ready to go listing (i.e. good pictures included, maybe a walk through video) is pretty much all you need now. A hot listing is a new listing.

[quote]
not: low price to make the house less work to sell
not: high price to get the listing, then pressure to lower the price
[/quote]

A buyer determines the price. I’d probably list it a little lower than comps and just make sure you have an agent that knows how to manage multiple offers (bidding war). That way you can be pretty sure about moving June 15th to June 30th.

You list it on May 1st. Get your multiple offers in. Pick a buyer and do a 30-45 day escrow.

[livinincali]

[quote=outtamojo]It’s a plain 530I without any of the packages. Only thing going for it was it had only 45K miles on it and nary a ding. The insurance adjuster first gave it a $7K repair estimate at which point I thought for sure it was going to be totaled. I had it towed to repair shop and they found additional things that would put the repair bill at about $11K and Allstate ok’d it! With $11K cash seems like it’d be perfect time to get a new car and avoid the inevitable money pit that all old bimmers become.[/quote]

I’d take the money and salvage. You can probably get at least a grand because of the low mile engine and tranny.

[livinincali]

[quote=spdrun]I read “5-year fixed” as “fixed for five years.” ARMs definitely always existed, even one or two years ago.[/quote]

I know they existed. They just haven’t been popular products with rates this low.

[Author]

Posts