INFLATION--the Gold bugs are back, led by major Chinese Institutional Investors

Money is being sucked up, albeit slowly. That will slow growth.

 

A few things. There are wage increases. Dishwashers now making $17 per hour at Longhorn Steakhouse, Pappacito’s, etc. Second, 2019 energy prices aren’t likely to return. Third, real estate will come down with higher interest rates. Some sort of equilibrium will be reached.

 

They allow substitutions of high priced beef for example with lower cost chicken to some extent.

 

MoM inflation has been nearly zero for 2-3 months now. Assuming that continues, by next June, YoY inflation will be <2%. Unfortunately, as energy and other prices stop rising or even fall, labor rates will continue to increase. So, there are a lot of moving parts that are hard to predict. But labor pay rates will go up if the Fed doesn’t crash the economy.

 

Next hike will be 0.75-1.00%.

 

To beat inflation…

There’s always bananas.
Dirt cheap. Almost free.
Filling.
Delicious
Nutritious.
Fresh fruit.
Amazing job providing such healthy, delicious nutrition for a nominal cost.
Let’s hear it for Dole and Del Monte!!!

 

So they do play with the numbers to make them look better than they are.

 

You probably could make a jingle out of that.

 

GDP measurements in $s will slow because the money supply is not growing or decreasing slightly. That is what I said. But also understand GDP is meaningless. You can't add apples to oranges and you can't add $ of apples to $ of oranges. You can add the $ values but it doesn't tell you what you think it is.

 

Some sort of equilibrium... That happens in every situation. The point is, are we devaluing our currency or not? Once this bout is over are we still on the path of devaluation? Was this a permanent or temporary stop/reduction? To me it isn't good enough to say 2-5% inflation is okay.

 

Powell's Pivot to "Pain" but No Gain: Triggering the Coming Recession | Jon Wolfenbarger

 

August's Price Inflation Soared, and That Means Earnings Fell Yet Again | Ryan McMaken

 

Fed is introducing sound money policy and yet you complain.

 

IMHO, the Fed is too slow and reactive.

These sorts of 0.50, 0.75, even 1.00 bumps to the interest rate should have been done a half year before they were actually made.

 

https://www.nytimes.com/2022/09/14/business/social-security-cola-increase.html

 

How Will US Inflation Data Impact the September Fed Meeting?

"Headline US inflation increased +0.1% m/m and +8.3% y/y, topping forecasts of no gain m/m and an +8.1% y/y increase. The core reading was hotter than expected as well, coming in at +0.6% m/m versus a forecast of +0.3%, and the y/y was at +6.3% versus +6.1% expected.

Markets are now discounting a 100% chance of a 75-bps rate hike by the Federal Reserve next week. There is also a 20% chance of a 100-bps rate hike. This is a significant increase from a month ago, when there was less than a 50% chance of a 75-bps rate hike and a 0% chance of a 100-bps rate hike."

 

Definition of TRANSITORY

transitory

Definition of transitory

1: of brief duration : TEMPORARY
// the transitory nature of earthly joy

2: tending to pass away : not persistent

 

Water under the bridge now. Colossal screw up. But that is not an excuse to crash the economy now.

 

With unemployment very low, there is much more wiggle room than usual.

 

Check out militaryhorn's thread on the (potential) Railroad Strike.

If you think inflation is bad now...

If it's not resolved, then inflation might bump up 3-5% (or more with a prolonged railroad strike).

 

Sound money is gold standard and floating market based interest rates.

 

Explain why every modern country has abandoned the gold standard.

 

Uh oh...

Don't y'all make me dig up that old clip from the movie Wall Street again...

 

It’s the argument of absolutism vs relativism. We don’t keep track of the earth’s location on an absolute basis, but on a relative basis (I.e., relative to the sun). A system designed based on relativism is a better system.

 

But don't tell that to dogmatic extremists.

 

I have a phd in engineering from UT. I have studied this since grad school. I too was predetermined to think an absolute system was better, but realized over the years the superiority of relative systems. Remember it’s not the absolute price that matters to a seller, but the margin over costs (which is relative). Same for the buyer: it’s not the absolute price that matters but the incremental utility relative to the price paid by the buyer (at the cost of money).

 

no arguments here...