11 ms·

More cash because everyone with half a brain knows this money printing won't hold the market up forever, and they're terrified of runaway inflation. The insane

by noofen 5y ago

More cash because everyone with half a brain knows this money printing won't hold the market up forever, and they're terrified of runaway inflation. The insane market speculation going on is also a symptom of this. It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies. I know about their bullshit CPI numbers, and anyone who is gullible enough to believe "there is no inflation" deserves what's coming.

Analemma_ 5y ago
> It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies Are you willing to bet money on this claim? Because I will happily take the other side of that wager. It is absurd.
- deleted 5y ago
  [deleted]
- thaeli 5y ago
  In the long term, everyone with more debt than assets is on the other side of that wager.
- intergalplan 5y ago
  Houses around here have been going up in price 5-10% year over year around here since, like, 2012 or 2013. Foreclosures aside (now long gone, but widely available for a few years), they never dropped all that far from their '08 peak, really, either. I'm in probably a third- or two-and-a-halfth-tier US city, so this isn't NY or SF or CHI or LA or even Austin or Denver. New housing is going up fast and everywhere, and has been non-stop aside from a very brief period after the '08 bubble. 2020 happened, and the prices went up even faster, and everywhere in the city, not just in certain areas. WTF is going on, if not inflation? (serious question, I'd like to know what other explanation there could be)
  - kart23 5y ago
    don’t think so. look at canada’s housing market, look at NZ. those markets are truly insane compared to the US, and they’re not printing a ton of money or experiencing major inflation. housing has become a good investment simply because the supply isn’t great enough in desirable areas, and people with money recognize it. inflation is up, but not on the scale you claim.
    - intergalplan 5y ago
      Right, but, all other assets seem to be doing exactly the same thing.
    - jdsully 5y ago
      Canada's M1 is up 27%, M2 up 20% over the last 12 months. They aren't printing nearly as much as the US but it's still dramatic vs prior years.
    - wcarss 5y ago
      I dunno about NZ, but Canada printed pretty hard for COVID relief[0,1]. Regarding inflation, anecdotally food etc prices in Toronto seem much higher this year than last, and did last year too, but the CPI data doesn't share my opinion. 0 - https://betterdwelling.com/canadas-money-supply-is-growing-at-the-fastest-rate-in-over-30-years/ https://betterdwelling.com/canadas-money-supply-is-growing-a... 1 - https://economics.bmo.com/en/publications/detail/76f0b0ca-c05e-4e32-9d70-93630654f659/ https://economics.bmo.com/en/publications/detail/76f0b0ca-c0...
      - intergalplan 5y ago
        Our groceries seem to be at least 2x what they were in '05. Meanwhile, if anything, our tastes have gotten cheaper and we're better at bargain-shopping. US CPI tells me they should only be 35% higher. LOL. Bullshit.
      - anthony_barker 5y ago
        Maybe Toronto will reach peak crane? https://i1.wp.com/www.denverpost.com/wp-content/uploads/2021/04/RLB-north-american-crane-index.png?fit=620%2C9999px&ssl=1 https://i1.wp.com/www.denverpost.com/wp-content/uploads/2021...
- deleted 5y ago
  [deleted]
- noofen 5y ago
  I am betting money on this claim, 90% of my net worth is in equities and BTC/ETH.
  - trimbo 5y ago
    It seems like equities do not (long term) perform well relative to currency in inflationary markets because companies' costs also rise. Apple, e.g. would be spending more per unit iPhone and would eat margin or require a price increase, which leads to fewer sales etc. There are exceptions, like energy companies, for example. IIRC Exxon went up in the 1970s while the market as a whole stayed flat and lost value relative to the USD. At the extreme, in the Weimar republic, the stock market did what the US is doing today... until the stocks flatlined relative to the currency[1]. [1] - Haven't read it but sources that claim this point to this book (I just bought it though, it's only $3): https://www.goodreads.com/book/show/8567383-when-money-dies https://www.goodreads.com/book/show/8567383-when-money-dies
    - noofen 5y ago
      Thanks for the link, looking forward to reading it. I agree, I think we will see SPY do just fine for the next few years. Then, it won't be fine.
  - bottled_poe 5y ago
    It’s too much risk. It may work out, but unless you know something the rest don’t, it is just gambling.
    - noofen 5y ago
      I understand how it can look that way. But from my perspective, being long USD is a much more dangerous gamble. I'm young and have a high risk tolerance, we will see.
    - concreteblock 5y ago
      Choosing to allocate most of your net worth in, e.g. cash, is a gamble too.
jeffreyrogers 5y ago
If the numbers were really that off in the past wouldn't quality of living be much less than it is for most people in the US? I am skeptical of inflation staying low in the future, and I think they do sometimes make questionable quality adjustments in the inflation data, but if inflation was actually much greater than they've claimed you would see a gradual immiseration of the population.
- danhak 5y ago
  *immiseration of those who don't hold assets Which is precisely what's been happening. Just take a walk around any major urban center in the U.S. There is misery in the streets. The opioid crisis is another manifestation of the same despair. Historic civil unrest, "eat the rich" / "billionaires shouldn't exist" rhetoric heating up. Etc. etc.
  - emodendroket 5y ago
    But none of those things are very recent.
    - danaris 5y ago
      It's been happening gradually over the course of the last 40-odd years.
- noofen 5y ago
  > if inflation was actually much greater than they've claimed you would see a gradual immiseration of the population. Have you been watching the news lately? Keep watching. Violence and deaths of despair are skyrocketing and will continue to.
  - bottled_poe 5y ago
    I don’t believe that. Any data sources?
- wcarss 5y ago
deleted 5y ago
[deleted]
paulpauper 5y ago
Pundits have been making this argument since 2010 about runaway inflation and about prices being unsustainable. Yet prices keep going up and inflation remains low. Maybe it is best to just ignore those people. There is no evidence either of USD decline either. Foreign currencies, especially currencies of emerging markets, have fallen considerably against the dollar in recent years. If there is runaway inflation, real estate would be a good hedge. Inflation is not really a concern for Americans because all global wealth tends to be measured in US dollars anyway. It's not like Americans become poorer due to inflation, because all their wealth is denominated in dollars.
- saint_abroad 5y ago
  > It's not like Americans become poorer due to inflation, because all their wealth is denominated in dollars. What of the nearly 40% of Americans that can't cover a surprise $400 expense, due to having no wealth?
  - pirate787 5y ago
    That 40%/$400 thing is fake news. https://www.cato.org/blog/it-true-40-americans-cant-handle-400-emergency-expense-0 https://www.cato.org/blog/it-true-40-americans-cant-handle-4...
    - saint_abroad 5y ago
      Reality is more nuanced than that. https://www.politifact.com/factchecks/2019/jan/29/howard-schultz/checking-howard-schultzs-claim-40-percent-american/ https://www.politifact.com/factchecks/2019/jan/29/howard-sch... The survey actually states, "Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money." https://www.federalreserve.gov/publications/2018-economic-well-being-of-us-households-in-2017-executive-summary.htm https://www.federalreserve.gov/publications/2018-economic-we... Nevertheless, that doesn't strike me as having wealth.
      - 5y ago
undefined1 5y ago
for those downvoting you: Home Values +8% Money Supply +24% Stock Market +23% Oil +80% Corn +69% Steel +145% Wheat +25% Coffee +34% Cotton +35% Copper +50% Lumber +126% Soybeans +71% this is over the past year.
- gruez 5y ago
  Who should I believe, a government agency conducting a methodical survey of the country's economy, or some guy with a list of numbers that's possibly cherry picked?
  - noofen 5y ago
    Yes, of course, because government agencies have your best interests in mind.
    - gruez 5y ago
      As opposed to random hn commenters who possibly have an agenda?
      - noofen 5y ago
        Random HN commenters might have an agenda (what would it be?). Government agencies definitely have an agenda.
        gruez 5y ago
        >Random HN commenters might have an agenda They're also anonymous, so you should assume the worst. This is especially true when the supporting evidence is suspect (ie. a bunch of arbitrary picked numbers). On the other hand the BLS's methodology is documented (https://www.bls.gov/opub/hom/cpi/ https://www.bls.gov/opub/hom/cpi/), so I'm willing to give them a pass even though their incentives might be skewed. >(what would it be?) their beliefs? "agenda" here doesn't have to be something nefarious. an anti-vaxxer's agenda is anti-vaccine, but that doesn't mean they're scheming to get everyone infected.
randomopining 5y ago
Your statements are contradictory. If there will be 8-10% inflation then people will park their money in assets like stocks, thus keeping the market up.
dragonwriter 5y ago
> It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies. Since dollar prices of final goods and services can be tracked, and don’t show that trend, its not reasonable at all; nominal price levels of goods and services haven’t generally increased by about ~2.5× over the past decade. > I know about their bullshit CPI numbers, CPI is BLS, not the Fed. And its a whole lot less bullshit than what you’re spreading right here. > and anyone who is gullible enough to believe "there is no inflation" deserves what's coming. The idea that inflation might be coming at some indefinite point in the future is, of course, unfalsifiable, and its been a constant refrain from the same segment of society for as long as I've been alive. The claim that there has been massive inflation since 2010, OTOH, is both falsifiable and false.
- lotsofpulp 5y ago
  >The claim that there has been massive inflation since 2010, OTOH, is both falsifiable and false. Depends where you live and what lifestyle you live. If I took the total amount spent on all the things and services I have purchased over the years and compared them to their price in 2010, I would have spent far less in 2010. Spending on land, healthcare, retirement savings, taxes and education eclipse the total spent for everything else. Is that not inflation (for me, at least)? All I know is that to buy the things I need or want to buy in the future, I need to ensure I am earning more and more because I am betting the price will be higher in the future. At least it's been true during my adult life of ~15 years.
  - chii 5y ago
    > Spending on land, healthcare, retirement savings, taxes and education eclipse the total spent for everything else. buying land as an asset is not spending - it's investing. Healthcare+education - i agree, it has become more expensive overtime. Taxes - you earn more, hence pay more taxes. It's not due to inflation. Retirement savings - ditto with land, it's an investment, not spending. And you choose how much to invest here, and the increase is not due to inflation (but expectation of inflation might affect your decision, but that's not a causal relationship to inflation).
thorwasdfasdf 5y ago
I do agree the CPI vastly undercounts inflation but we loose credibility when we through out numbers so far off from reality. 8-10% is realistic for real estate over the last year or two. But, we need to look at longer term trends to establish inflation as a huge problem. Even 4% actual inflation would be very very high, as that would be 2% per year over CPI, which would compound to 80% over the CPI in just 30 years or so. Let's take a look at some actual values: - the big mac index shows inflation at about 4% for the last 20 years. - Cape shiller housing index for US has been showing inflation at about 4% over the last 20 years. This is a real problem that will affect rents as well because the rent to own ratio spread can't continue to increase forever. - housing of course is now 10%+ over the last year. And yes, those quality adjustments made by the boys in the labor department are very questionable: I don't know how they sleep at night.

by noofen 5y ago

Analemma_ 5y ago

> It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies Are you willing to bet money on this claim? Because I will happily take the other side of that wager. It is absurd.

deleted 5y ago
[deleted]
thaeli 5y ago
In the long term, everyone with more debt than assets is on the other side of that wager.
intergalplan 5y ago
Houses around here have been going up in price 5-10% year over year around here since, like, 2012 or 2013. Foreclosures aside (now long gone, but widely available for a few years), they never dropped all that far from their '08 peak, really, either. I'm in probably a third- or two-and-a-halfth-tier US city, so this isn't NY or SF or CHI or LA or even Austin or Denver. New housing is going up fast and everywhere, and has been non-stop aside from a very brief period after the '08 bubble. 2020 happened, and the prices went up even faster, and everywhere in the city, not just in certain areas. WTF is going on, if not inflation? (serious question, I'd like to know what other explanation there could be)
- kart23 5y ago
  don’t think so. look at canada’s housing market, look at NZ. those markets are truly insane compared to the US, and they’re not printing a ton of money or experiencing major inflation. housing has become a good investment simply because the supply isn’t great enough in desirable areas, and people with money recognize it. inflation is up, but not on the scale you claim.
  - intergalplan 5y ago
    Right, but, all other assets seem to be doing exactly the same thing.
  - jdsully 5y ago
    Canada's M1 is up 27%, M2 up 20% over the last 12 months. They aren't printing nearly as much as the US but it's still dramatic vs prior years.
  - wcarss 5y ago
    I dunno about NZ, but Canada printed pretty hard for COVID relief[0,1]. Regarding inflation, anecdotally food etc prices in Toronto seem much higher this year than last, and did last year too, but the CPI data doesn't share my opinion. 0 - https://betterdwelling.com/canadas-money-supply-is-growing-at-the-fastest-rate-in-over-30-years/ https://betterdwelling.com/canadas-money-supply-is-growing-a... 1 - https://economics.bmo.com/en/publications/detail/76f0b0ca-c05e-4e32-9d70-93630654f659/ https://economics.bmo.com/en/publications/detail/76f0b0ca-c0...
    - intergalplan 5y ago
      Our groceries seem to be at least 2x what they were in '05. Meanwhile, if anything, our tastes have gotten cheaper and we're better at bargain-shopping. US CPI tells me they should only be 35% higher. LOL. Bullshit.
    - anthony_barker 5y ago
      Maybe Toronto will reach peak crane? https://i1.wp.com/www.denverpost.com/wp-content/uploads/2021/04/RLB-north-american-crane-index.png?fit=620%2C9999px&ssl=1 https://i1.wp.com/www.denverpost.com/wp-content/uploads/2021...
deleted 5y ago
[deleted]
noofen 5y ago
I am betting money on this claim, 90% of my net worth is in equities and BTC/ETH.
- trimbo 5y ago
  It seems like equities do not (long term) perform well relative to currency in inflationary markets because companies' costs also rise. Apple, e.g. would be spending more per unit iPhone and would eat margin or require a price increase, which leads to fewer sales etc. There are exceptions, like energy companies, for example. IIRC Exxon went up in the 1970s while the market as a whole stayed flat and lost value relative to the USD. At the extreme, in the Weimar republic, the stock market did what the US is doing today... until the stocks flatlined relative to the currency[1]. [1] - Haven't read it but sources that claim this point to this book (I just bought it though, it's only $3): https://www.goodreads.com/book/show/8567383-when-money-dies https://www.goodreads.com/book/show/8567383-when-money-dies
  - noofen 5y ago
    Thanks for the link, looking forward to reading it. I agree, I think we will see SPY do just fine for the next few years. Then, it won't be fine.
- bottled_poe 5y ago
  It’s too much risk. It may work out, but unless you know something the rest don’t, it is just gambling.
  - noofen 5y ago
    I understand how it can look that way. But from my perspective, being long USD is a much more dangerous gamble. I'm young and have a high risk tolerance, we will see.
  - concreteblock 5y ago
    Choosing to allocate most of your net worth in, e.g. cash, is a gamble too.

jeffreyrogers 5y ago

If the numbers were really that off in the past wouldn't quality of living be much less than it is for most people in the US? I am skeptical of inflation staying low in the future, and I think they do sometimes make questionable quality adjustments in the inflation data, but if inflation was actually much greater than they've claimed you would see a gradual immiseration of the population.

danhak 5y ago
*immiseration of those who don't hold assets Which is precisely what's been happening. Just take a walk around any major urban center in the U.S. There is misery in the streets. The opioid crisis is another manifestation of the same despair. Historic civil unrest, "eat the rich" / "billionaires shouldn't exist" rhetoric heating up. Etc. etc.
- emodendroket 5y ago
  But none of those things are very recent.
  - danaris 5y ago
    It's been happening gradually over the course of the last 40-odd years.
noofen 5y ago
> if inflation was actually much greater than they've claimed you would see a gradual immiseration of the population. Have you been watching the news lately? Keep watching. Violence and deaths of despair are skyrocketing and will continue to.
- bottled_poe 5y ago
  I don’t believe that. Any data sources?
wcarss 5y ago

deleted 5y ago

[deleted]

paulpauper 5y ago

Pundits have been making this argument since 2010 about runaway inflation and about prices being unsustainable. Yet prices keep going up and inflation remains low. Maybe it is best to just ignore those people. There is no evidence either of USD decline either. Foreign currencies, especially currencies of emerging markets, have fallen considerably against the dollar in recent years. If there is runaway inflation, real estate would be a good hedge. Inflation is not really a concern for Americans because all global wealth tends to be measured in US dollars anyway. It's not like Americans become poorer due to inflation, because all their wealth is denominated in dollars.

saint_abroad 5y ago
> It's not like Americans become poorer due to inflation, because all their wealth is denominated in dollars. What of the nearly 40% of Americans that can't cover a surprise $400 expense, due to having no wealth?
- pirate787 5y ago
  That 40%/$400 thing is fake news. https://www.cato.org/blog/it-true-40-americans-cant-handle-400-emergency-expense-0 https://www.cato.org/blog/it-true-40-americans-cant-handle-4...
  - saint_abroad 5y ago
    Reality is more nuanced than that. https://www.politifact.com/factchecks/2019/jan/29/howard-schultz/checking-howard-schultzs-claim-40-percent-american/ https://www.politifact.com/factchecks/2019/jan/29/howard-sch... The survey actually states, "Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money." https://www.federalreserve.gov/publications/2018-economic-well-being-of-us-households-in-2017-executive-summary.htm https://www.federalreserve.gov/publications/2018-economic-we... Nevertheless, that doesn't strike me as having wealth.
    - 5y ago

undefined1 5y ago

for those downvoting you: Home Values +8% Money Supply +24% Stock Market +23% Oil +80% Corn +69% Steel +145% Wheat +25% Coffee +34% Cotton +35% Copper +50% Lumber +126% Soybeans +71% this is over the past year.

gruez 5y ago
Who should I believe, a government agency conducting a methodical survey of the country's economy, or some guy with a list of numbers that's possibly cherry picked?
- noofen 5y ago
  Yes, of course, because government agencies have your best interests in mind.
  - gruez 5y ago
    As opposed to random hn commenters who possibly have an agenda?
    - noofen 5y ago
      Random HN commenters might have an agenda (what would it be?). Government agencies definitely have an agenda.
      - gruez 5y ago
        >Random HN commenters might have an agenda They're also anonymous, so you should assume the worst. This is especially true when the supporting evidence is suspect (ie. a bunch of arbitrary picked numbers). On the other hand the BLS's methodology is documented (https://www.bls.gov/opub/hom/cpi/ https://www.bls.gov/opub/hom/cpi/), so I'm willing to give them a pass even though their incentives might be skewed. >(what would it be?) their beliefs? "agenda" here doesn't have to be something nefarious. an anti-vaxxer's agenda is anti-vaccine, but that doesn't mean they're scheming to get everyone infected.

randomopining 5y ago

Your statements are contradictory. If there will be 8-10% inflation then people will park their money in assets like stocks, thus keeping the market up.

dragonwriter 5y ago

> It's reasonable to assume USD is losing 8-10% of its value every year from 2020 onwards, thanks to Fed policies. Since dollar prices of final goods and services can be tracked, and don’t show that trend, its not reasonable at all; nominal price levels of goods and services haven’t generally increased by about ~2.5× over the past decade. > I know about their bullshit CPI numbers, CPI is BLS, not the Fed. And its a whole lot less bullshit than what you’re spreading right here. > and anyone who is gullible enough to believe "there is no inflation" deserves what's coming. The idea that inflation might be coming at some indefinite point in the future is, of course, unfalsifiable, and its been a constant refrain from the same segment of society for as long as I've been alive. The claim that there has been massive inflation since 2010, OTOH, is both falsifiable and false.

lotsofpulp 5y ago
>The claim that there has been massive inflation since 2010, OTOH, is both falsifiable and false. Depends where you live and what lifestyle you live. If I took the total amount spent on all the things and services I have purchased over the years and compared them to their price in 2010, I would have spent far less in 2010. Spending on land, healthcare, retirement savings, taxes and education eclipse the total spent for everything else. Is that not inflation (for me, at least)? All I know is that to buy the things I need or want to buy in the future, I need to ensure I am earning more and more because I am betting the price will be higher in the future. At least it's been true during my adult life of ~15 years.
- chii 5y ago
  > Spending on land, healthcare, retirement savings, taxes and education eclipse the total spent for everything else. buying land as an asset is not spending - it's investing. Healthcare+education - i agree, it has become more expensive overtime. Taxes - you earn more, hence pay more taxes. It's not due to inflation. Retirement savings - ditto with land, it's an investment, not spending. And you choose how much to invest here, and the increase is not due to inflation (but expectation of inflation might affect your decision, but that's not a causal relationship to inflation).

thorwasdfasdf 5y ago

I do agree the CPI vastly undercounts inflation but we loose credibility when we through out numbers so far off from reality. 8-10% is realistic for real estate over the last year or two. But, we need to look at longer term trends to establish inflation as a huge problem. Even 4% actual inflation would be very very high, as that would be 2% per year over CPI, which would compound to 80% over the CPI in just 30 years or so. Let's take a look at some actual values: - the big mac index shows inflation at about 4% for the last 20 years. - Cape shiller housing index for US has been showing inflation at about 4% over the last 20 years. This is a real problem that will affect rents as well because the rent to own ratio spread can't continue to increase forever. - housing of course is now 10%+ over the last year. And yes, those quality adjustments made by the boys in the labor department are very questionable: I don't know how they sleep at night.