Inflation

[agstar77]

Well who would have thought rising prices would cause inflation. All those operating loans may get more expensive. Just perfect.

[Grahamp]

Not looking for an argument but all this week I have been reading the kids the book “Whatever Happened to Penny Candy.” Rising prices don’t cause inflation. Inflation causes rising prices.

I am a glass half full, optimistic, world getting better kind of guy but reading this simple kids book has reminded me that we are in for a world of hurt. Everyone. Too bad it didn’t have to be this way. Like communism every single real world example of inflating a currency has failed but we thought it would be different for us because we are special. We are not special. We are very unspecial.

[agstar77]

The cause does not matter. Will interest rates rise?

[burnt]

Not looking for an argument but all this week I have been reading the kids the book “Whatever Happened to Penny Candy.” Rising prices don’t cause inflation. Inflation causes rising prices.

I am a glass half full, optimistic, world getting better kind of guy but reading this simple kids book has reminded me that we are in for a world of hurt. Everyone. Too bad it didn’t have to be this way. Like communism every single real world example of inflating a currency has failed but we thought it would be different for us because we are special. We are not special. We are very unspecial.

While you are reading Riichard Maybury, you would find his 'Whatever Happened to Justice?" a very good read as well.

It shows where our system went badly off the rails. When you trade "justice" for "legal", you're done. And it wasn't by accident, either.

[burnt]

"The cause does not matter." - why does that reply not surprise me, considering the source?

What an incredibly well thought out response. Consistency is usually considered a virtue, but significantly less so when pounding the wrong path.

[dalek]

It’s just starting. At my favourite building supply store they were told this morning by their flooring supplier that his cost per container for shipping is going to be $20-21,000 by fall up from $3,000 this past winter

[blackpowder]

Locking in rates here.

[Sodbuster]

The right thing to do is to start hiking rates, but I doubt that the government has the guts to do it. I might be wrong but the longer we go down this road the worse it’s going to be.

[errolanderson]

Any rate hike threatens a market crash. It also gives investors serious pause that the gravy train is over.

Inflation has the shelf-life of the remaining life of a grossly manipulated stock market. Should equities drop, asset deflation takes hold. The warm-up act is the recent collapse in lumber. Commodities have come under increased selling pressure this summer.

Any sustained drop in equities and investors will stampede out of their long positions en mass. This is not ‘if’ this is ‘when’ (IMO). Then we will all hear the chant of buy the dip, recently heard in cryptos.

The housing market is now a crash waiting to happen, let alone hike rates. Central banks can’t raise rates. If they could, they would . . . but the gig is up.

[jazz]

errol, I think you are missing the next stage for the CBs, digital currency, defacto negative rates and cash dolled out directly to consumers to spend with a time limit on it.

They just tried that very experiment in china.

[errolanderson]

errol, I think you are missing the next stage for the CBs, digital currency, defacto negative rates and cash dolled out directly to consumers to spend with a time limit on it.

They just tried that very experiment in china.

Jazz, good points . . . but these are just glorified 'can kicking tactics' to pass-the-buck and buy more time, while digging the financial hole deeper.

Right now, the market just wants you to buy more stocks, as this seen as an impenetrable money-making machine, The Dow just broke 35,000 points today, How about that . . . all is good. Investors can feel the warm, protective cocoon of central banks guarding their best interests.

So what's the end game? Valuations now have little connection to economic reality?

There are serious, unavoidable write-offs ahead no matter how debt is marketed in a new, shiny package. This will likely led by commodity weakness. Inflation won't handle this well. Zombie companies will begin to float-to-the-top as government stimulus gradually dries up. My two-bits . . . .

[AlbertaFarmer5]

The end game of a fiat currency is always a economic collapse followed by hyperinflation. It's never different this time.

But historically speaking it has always been one currency at a time.
What happens when they all do it together, possibly even coordinated?
Collapse is relative to something else, usually the competing currencies.
We seem to be seeing all currencies losing value relative to tangible assets now, but is that a recipe for hyperinflation and loss of confidence?

[agstar77]

Is it a zero sum game? Currency only a method of valuing barter. If they collapse we will find the true value of all goods. Maybe Chinese trinkets are not worth as much soy as they think.

[Austrian Economics]

A friend posted this on Twitter regarding the nature of inflation. Everyone focuses on rising prices, but the reality is that it's more like a process of borrowing every more until you exhaust your ability to pay it back. As more and more marginal borrowers default, the economy implodes.

"Inflation does not get us out of debt, or ease the burden of debt.

Inflation is the process of borrowing more. Each dollar of debt may be worth less--but we owe exponentially more of them!"

[errolanderson]

Does the continued drop in commodity prices and cryptos over the past 24 hours suggest a stronger U.S. dollar and weakening inflation? Crude oil has lost significant ground over the past two weeks. Many commodity bubbles have shown serious price cracks this summer.

The fact U.S. bond yields remain unable to move up despite strong U.S. inflation data suggests all is not well in demand recovery. Personally, I'm biased to a modestly higher U.S. dollar into August, weakening gold prices on failing inflation and continue pressure on the Cdn dollar. USD might take a run toward the 2021 high of 93.40 on the dollar index possibly by late summer. We'll see . . . .

Late July / Early August may be a test for equities and investor confidence meaning; right around the corner. South Korean bull analyst Dae won Yoon actually issued a technical warning for the NASDAQ last night. For what it is worth . . . .