2021 - Is inflation finally back in the conversation?

[Muy Frio 182]

I couldn’t find a non CR thread to place this, but I just found it. It’s a sizable amount though. Not familiar with all the machinations of the IMF. Is this straight up money printing to build up sovereign reserves or are they from some stockpile of currency that has built up? @bernorange is the SDR expert. 
 

 

[bernorange 8359]

I talked a lot about the the SDR issue in the original "Tin Foil Hats / Total Perspective Vortex" thread on the old site.  I did post some follow up on the issue in the redux thread here (it's in CR, but it's not a typical CR thread, so don't shit it in please):

https://www.surlyhorns.com/board/index.php?/topic/4200-tin-foil-hats-and-the-total-perspective-vortex-redux/&do=findComment&comment=3094740

Your post caught me by surprise.  I had not read anything indicating that this new tranche was forthcoming.  So, $500B back in Feb/March and now another $650B roughly 6 months later.  Half a trillion here, half a trillion there.  Eventually, we'll be talking about "real" money.

[bernorange 8359]

^^^ This isn't a new tranche.  This is the same tranche that they talked about back in February.  It just took them 6 months to get around to it (while increasing the amount from $500B to $650B.

[Incredulity 11655]

20 hours ago, Trey3216 said:

 

Good, but I would have gone with the classic...

 

[Muy Frio 182]

Just another marker. 
 

Elevated prices for feed, freight and packaging also mean Tyson is getting squeezed by inflation, which it estimated at 14% in the quarter. Some of that will be offset by price gains expected next month.

“Costs are hitting us faster than we can get pricing at this point,” King said.

 

[Muy Frio 182]

 

[Parliament 14246]

So can we go back to some "Brrrrrrrrrrr?"

[gsoda3 3248]

On 8/9/2021 at 1:03 PM, jimmyjazz said:

It's almost as if the rate of change is . . . common.

3 pages ago you were claiming grocery prices hadn't changed in 10 years.  

[jimmyjazz 45891]

5 minutes ago, gsoda3 said:

3 pages ago you were claiming grocery prices hadn't changed in 10 years.  

Two different things.  When there are events that drive prices down, the rebound is typically quick and steep.  You can see it in that plot.

If you took my thoughts about grocery prices as saying that no item has fluctuated in price by even a penny for 10 years, then you're being silly.  I can assure you that the price I pay for milk, ground beef, cheese, cucumbers is not substantially different in either direction from what I have typically paid for at least the last decade.

You know this to be true, you just like being a dick.

[gsoda3 3248]

1 minute ago, jimmyjazz said:

Two different things.  When there are events that drive prices down, the rebound is typically quick and steep.  You can see it in that plot.

If you took my thoughts about grocery prices as saying that no item has fluctuated in price by even a penny for 10 years, then you're being silly.  I can assure you that the price I pay for milk, ground beef, cheese, cucumbers is not substantially different in either direction from what I have typically paid for at least the last decade.

You know this to be true, you just like being a dick.

i think it's fascinating that in the face of literal receipts being posted you can't admit to or even consider being wrong. 

 

part and parcel to my day job is to consider all sides and contingencies of an issue.  i imagine most higher functioning roles require the same thought processes and yet on this UT alumni board, where you assume most posters would be used to exercising this logical flexibility, it's so often nonexistent.      

[jimmyjazz 45891]

2 minutes ago, gsoda3 said:

i think it's fascinating that in the face of literal receipts being posted you can't admit to or even consider being wrong. 

Because snapshots showing price fluctuations over time do not override my very clear experience of generally paying $3.30 for a gallon of milk or $3.99 for a pound of beef or $0.45 for a cucumber, for years and years now.

You know what?  I give up.  I don't give a fuck what you think about your high functioning role and whether you think I'm a low-IQ rank and file screw pusher (which I most assuredly am not).  You win.  Carry on.

[gsoda3 3248]

7 minutes ago, jimmyjazz said:

Because snapshots showing price fluctuations over time do not override my very clear experience of generally paying $3.30 for a gallon of milk or $3.99 for a pound of beef or $0.45 for a cucumber, for years and years now.

You know what?  I give up.  I don't give a fuck what you think about your high functioning role and whether you think I'm a low-IQ rank and file screw pusher (which I most assuredly am not).  You win.  Carry on.

i'm not trying to put you down, sincerely.  i apologize if this came across more harsh than i intended.  this rejection of evidence to pursue a narrative grinds the same gear those bull paste eating buffoons do.  

[washparkhorn 9939]

Inflation scaremongering is nothing new. 

• We have massive deflationary headwinds in this economy and the world economy because of Covid.
• Delta kicked up the deflationary headwinds.
• Base effects remain in play. 
• Inflation remains much easier to control than deflation (look it up). 

 

[UT_OB1 2217]

2 hours ago, jimmyjazz said:

Because snapshots showing price fluctuations over time do not override my very clear experience of generally paying $3.30 for a gallon of milk or $3.99 for a pound of beef or $0.45 for a cucumber, for years and years now.

You know what?  I give up.  I don't give a fuck what you think about your high functioning role and whether you think I'm a low-IQ rank and file screw pusher (which I most assuredly am not).  You win.  Carry on.

Average price of ground beef was 2.50ish 10 years ago. It marched up over the next several years. Hovering around $4 for 2 years now, but the price has gone up. 
 

https://data.bls.gov/timeseries/APU0000703112

 

We just got a notice that the citric acid we use (happens to be food grade) is going to triple to quadruple in price for bulk tank delivery.  Our VPs have been focused on cutting costs, but the utility costs overwhelm everything else. I don’t understand how we are somehow unable to raise prices right now when everyone else (including our customers) are. 

Edited August 11, 2021 by UT_OB1

[Neonmoon 38129]

1 hour ago, washparkhorn said:

Inflation scaremongering is nothing new. 

• We have massive deflationary headwinds in this economy and the world economy because of Covid.
• Delta kicked up the deflationary headwinds.
• Base effects remain in play. 
• Inflation remains much easier to control than deflation (look it up). 

 

It’s almost as if they’re financially motivated 

[jimmyjazz 45891]

19 minutes ago, UT_OB1 said:

Average price of ground beef was 2.50ish 10 years ago. It marched up over the next several years. Hovering around $4 for 2 years now, but the price has gone up. 

That curve is not even close to what I've seen in Austin in that time frame.  Maybe we're a bit insulated, I don't know, but that "national average" price growth is not typical around here.

It sorta shows the US is just now eclipsing the price peak in early 2015, so that's 7 years of +/- stasis, but that's cherry-picking the data and I am loathe to do that.

I do know we haven't seen nearly 5% annual inflation for 10 years.  That's nuts.  It's just not real.

[UT_OB1 2217]

3 hours ago, jimmyjazz said:

That curve is not even close to what I've seen in Austin in that time frame.  Maybe we're a bit insulated, I don't know, but that "national average" price growth is not typical around here.

It sorta shows the US is just now eclipsing the price peak in early 2015, so that's 7 years of +/- stasis, but that's cherry-picking the data and I am loathe to do that.

I do know we haven't seen nearly 5% annual inflation for 10 years.  That's nuts.  It's just not real.

This is me totally going off memory, but i feel like something happened that caused the beef prices to go up, and then they just never came back down.  Or at least it seemed like they didn’t. But I do remember paying under $2 per pound when I lived off far west in early 2000s. 
 

It has been nice to see wood come back down.  I hope cars follow soon. I also hope all the commodity chemicals and packaging does too because it is making things a bit crappy at work. Everyone’s stress levels are high (also can’t find staff)

[jimmyjazz 45891]

25 minutes ago, UT_OB1 said:

This is me totally going off memory, but i feel like something happened that caused the beef prices to go up, and then they just never came back down.  Or at least it seemed like they didn’t. But I do remember paying under $2 per pound when I lived off far west in early 2000s. 

Mmmm . . . the Far West HEB, when I was in grad school.  They had several smokin' hot cashiers, a few of which my roommate and I might have invited to our party at the FW/Woodhollow apartment complex when we wrapped up our masters programs, and damn if they didn't show up.  I was stunned.  It was a good night.

[NotActuallyALonghorn 4975]

12 hours ago, UT_OB1 said:

This is me totally going off memory, but i feel like something happened that caused the beef prices to go up, and then they just never came back down.  Or at least it seemed like they didn’t. But I do remember paying under $2 per pound when I lived off far west in early 2000s. 
 

It has been nice to see wood come back down.  I hope cars follow soon. I also hope all the commodity chemicals and packaging does too because it is making things a bit crappy at work. Everyone’s stress levels are high (also can’t find staff)

If I recall correctly, there was a pretty major drought in 2012 I think that caused lots of producers to sell off a huge chunk of their stock because they couldn't find hay. Folks were driving halfway accross the US just to get loads of hay. That caused the price to crater and then skyrocket when the drought ended and nobody had any stock. Seems like there should have been plenty of time for prices to normalize since then.

[Muy Frio 182]

 

Also, if you ever try to go on Price is Right, make sure Jimmy is your guy in the crowd helping. 
 

Which costs more, the Stove Top stuffing or the Julio’s tortilla chips?

[Muy Frio 182]

Also thought this was interesting tidbit regarding expectations moving up. 
 

 

[bernorange 8359]

Quote

The world's second-largest meat processor says it will keep raising its prices.

In its third quarter, which runs to July 3, Tyson Foods hiked up its average price for pork by 39%, beef by 12%, and chicken by 16%, it said Monday.

CEO Donnie King said during an earnings call that the company planned to raise prices for retailers again next month to cope with higher costs - he estimated that "unprecedented inflation" reached 14% in the quarter.

"Costs are hitting us faster than we can get pricing at this point," King said.

"We will continue to take price to match the nature of the cost that's coming to us," he added.

Companies including Procter & Gamble, General Mills, and Coca-Cola have also announced price hikes to offset rising costs, triggering higher prices at both stores and restaurants.
...

https://www.msn.com/en-us/money/companies/grilling-could-soon-get-more-expensive-tyson-foods-the-worlds-second-largest-meat-processor-has-already-hiked-prices-as-much-as-40percent-and-says-theres-more-on-the-way/ar-AAN90HL

[Storm the Field 5294]

On the other hand:

 

[UT_OB1 2217]

47 minutes ago, Storm the Field said:

On the other hand:

 

As I said up thread, it has been nice. It still needs to drop about 1/3 of its price to get back to historical levels.  But I’m glad I’m waiting til dec/Jan to build my rv deck and roof, as the cost to build has dropped about $20k in wood costs since I priced it in april. 

Edited August 12, 2021 by UT_OB1

[jimmyjazz 45891]

I can't imagine the pain of being locked into a cost+ house build over the last year.  I ran into a similar spike in reinforced concrete when I was having a house designed ~ 2005.  Fortunately, I wasn't yet locked into a build contract, but it seemed like weekly we were shaving features off the home to accommodate the architect's latest estimates for slab cost.  We ended up selling the lot and buying a house that was a few years old.

[tbone_ 14113]

As a developer of apartment complexes I can tell you that all gmax framing contracts are cost plus in that type of environment. The sub will just say I can’t deliver and you can sue me or pay the freight. Been living this real time.

[elfenix 34223]

friend's family operates a steel sub and has been getting killed on their contracts this last year.

 

anyway, a graph stolen from u/integralds on reddit:

Edited August 12, 2021 by elfenix

[jimmyjazz 45891]

2 hours ago, elfenix said:

anyway, a graph stolen from u/integralds on reddit:

I don't think that chart is surprising at all.  The obvious question is whether CPI will come back down towards the target zone, and when?

[Bozo_Casanova 26437]

36 minutes ago, jimmyjazz said:

I don't think that chart is surprising at all.  The obvious question is whether CPI will come back down towards the target zone, and when?

I think the important thing is that the sun will drown us in fire. Maybe tomorrow, maybe eventually. 

[Upgrayedd 5810]

3 minutes ago, Bozo_Casanova said:

I think the important thing is that the sun will drown us in fire. Maybe tomorrow, maybe eventually. 

Hopefully not tomorrow.  I have a tee-time.  Was supposed to be today but I rescheduled because of that intergalactic war thingy. 

[jimmyjazz 45891]

47 minutes ago, Upgrayedd said:

Hopefully not tomorrow.  I have a tee-time.  Was supposed to be today but I rescheduled because of that intergalactic war thingy. 

Well, tomorrow is the day Trump retakes the White House, so traffic might be nuts with all the parades.  Better leave early for the golf course.

[workswithseed 2090]

So are we going to be Japan? Stagflation just forever?

[workswithseed 2090]

I'm starting to believe that deflation is more of a scare tactic since you keep bringing it up. I don't give a shit if things get cheaper for consumers instead of expensive and hurt the poor the most.

[jimmyjazz 45891]

1 hour ago, workswithseed said:

I'm starting to believe that deflation is more of a scare tactic since you keep bringing it up. I don't give a shit if things get cheaper for consumers instead of expensive and hurt the poor the most.

A truism:  shit always rolls downhill.

[Neonmoon 38129]

8 hours ago, jimmyjazz said:

I don't give a shit if things get cheaper for consumers instead of expensive and hurt the poor the most.

Well at least he said it out loud. 

[Muy Frio 182]

Ticking back up 

 

[bernorange 8359]

11 hours ago, workswithseed said:

... deflation ... don't give a shit ...

Credit deflation will bring pain to everyone.  Banks failing and the financial system choking will strangle the economy.  It's what happened in 2007/2008.  

[UT_OB1 2217]

Lumber ticking back up to 500.  That’s better than 2 months ago, but it keeps dipping in to the upper 400s and bouncing back over 500 and then 600.  I want to crash through the 500 floor and keep on going in to 300s

[gsoda3 3248]

6 minutes ago, UT_OB1 said:

Lumber ticking back up to 500.  That’s better than 2 months ago, but it keeps dipping in to the upper 400s and bouncing back over 500 and then 600.  I want to crash through the 500 floor and keep on going in to 300s

tell the kids their tree house can wait

[XYZ 2154]

4 hours ago, bernorange said:

Credit deflation will bring pain to everyone.  Banks failing and the financial system choking will strangle the economy.  It's what happened in 2007/2008.  

There won’t be credit deflation. The Treasury/Fed will see to that.

[workswithseed 2090]

6 hours ago, Neonmoon said:

Well at least he said it out loud. 

That inflation hurts the poor, while a deflation would help them. Sure I said it out loud.

[jimmyjazz 45891]

7 minutes ago, workswithseed said:

That inflation hurts the poor, while a deflation would help them. Sure I said it out loud.

Uhhh . . . have you ever heard of this thing called "The Great Depression"?

[workswithseed 2090]

1 minute ago, jimmyjazz said:

Uhhh . . . have you ever heard of this thing called "The Great Depression"?

Yeah, which was prolonged by government. 

[washparkhorn 9939]

 

[washparkhorn 9939]

2 hours ago, workswithseed said:

deflation would help them

nope.

A nice primer on deflation, wws:

Spoiler

When most of us think of inflation, we think of rising prices that strain budgets and take away our buying power. During the late 1970s and early 1980s, inflation skyrocketed as high as 14.8% in the U.S. and interest rates climbed to similar levels. Few living Americans know what it's like to face the opposite phenomenon - deflation.

Since too much inflation is generally regarded as a bad thing, wouldn't it follow that deflation might be good thing? Not necessarily, since much depends on the cause and circumstances of the deflationary cycle and how long it lasts. (Deflation has continued to pop up throughout economic history - but is that such a bad thing? Learn more in The Upside Of Deflation.)

What Is It? Deflation is a general decline in prices as a function of supply and demand for products, and the money used to buy them. Deflation can be caused by a decrease in the demand for products, an increase in the supply of products, excess production capacity, increase in the demand for money, or a decrease in the supply of money or availability of credit.
Decreased demand for products can manifest itself in the form of less personal spending, less investment spending and less government spending. 

While deflation is often associated with an economic recession or depression, it can occur during periods of relative prosperity if the right conditions are present.

If prices are dropping because a product can be produced more efficiently and cheaply in greater quantity, that's viewed as a good thing. An example of this is consumer electronics which are far better and more sophisticated than ever. Yet prices have consistently dropped as the technology improved and spurred more demand.

The effect on prices by fluctuations in the demand for money is usually a function of interest rates. As the demand for money increases during a period of inflation, interest rates rise to compensate for the higher demand and to keep prices from rising further.

Conversely, deflation will result in lower interest rates as the demand for money drops. In that case, the goal is to spur buyer demand to stimulate the economy.

Severe economic contraction during the Great Depression resulted in deflation averaging -10.2% in 1932. 

As the stock market began to crater in late 1929, the supply of money declined along with it as liquidity was drained from the marketplace.

Once the downward spiral had begun, it fed on itself. As people lost their jobs, this reduced the demand for goods, causing further job losses. The decline in prices wasn't enough to spur demand because rising unemployment undercut consumer purchasing power to a far greater degree. The snowball effect didn't stop there, as banks began to fold as loan defaults rose dramatically.
As banks stopped lending money and credit dried up, the money supply contracted and demand tanked. Although the demand for money remained high, no one could afford it because the supply had shrunk. Once this vicious cycle took hold, it lasted a decade until the beginning of World War II.

There are many reasons to be concerned about a prolonged deflationary period, even without an event as devastating as the Great Depression:

1. Demand for goods decreases since consumers delay purchases, expecting lower prices in the future. This compounds itself as prices drop further in response to decreasing demand.

2. Consumers expect to earn less, and will protect assets rather than spend them. Since 70% of the U.S. economy is consumer-driven, this would have a negative effect on GDP.

3. Bank lending drops since borrowing money makes less sense in regards to the real cost. This is because the loan would be paid back with money that is worth more than it is now.

4. Deflation ensures that borrowers which loot to purchase assets lose since an asset becomes worth less in the future than when it was bought.

5. The more indebted you are, the worse your condition since your salary will likely decline while your loan payments remain the same.

6. During inflation, there is no upper limit on interest rates to control the inflation. During deflation, the lower limit is zero. Lenders won't lend for zero percent interest. At rates above zero, lenders make money but borrowers lose and won't borrow as much.

7. Corporate profits usually drop during a deflationary period, which could cause a corresponding decrease in stock prices. This has a ripple effect to consumers who rely on stock appreciation and dividends to supplement their incomes.

8. Unemployment rises and wages decline as demand drops and companies struggle to make a profit. This has a compounding effect throughout the entire economy.

Ever since the Great Depression, there has been a continuing debate on how best to combat recessions and deflation. Federal Reserve Chair Ben Bernanke has adopted a policy of "quantitative easing," which essentially amounts to printing money to buy U. S. Treasuries. Following Keynesian economic theory, he is using the money supply to offset the economic contraction that resulted from the financial meltdown in 2008 and the bursting of the housing bubble. How this plays out remains to be seen since these policies are designed to cause inflation.

If the U.S. were to enter a sustained deflationary cycle, your best protection is to hold onto your job and have as little debt as possible. You don't want to be locked in to paying off a loan with money that is increasing in value every day. Save as much money as possible and defer discretionary purchases until prices are lower. Finally, consider selling assets that you don't need while they still have value.

https://www.investopedia.com/financial-edge/0311/the-dangers-of-deflation.aspx

 

[Dbeasy 15042]

10 minutes ago, washparkhorn said:

 

I am of the opinion, supported by no data whatsoever, but by my understanding of the Chinese mindset, that all of these supply chain restraints are orchestrated to inflict pain on the U.S. on purpose, in their quest to rule the world.  I'm not kidding.

[washparkhorn 9939]

1 minute ago, Dbeasy said:

I am of the opinion.  . . that all of these supply chain restraints are orchestrated to inflict pain on the U.S. on purpose[.]

It is being watched - closely. Your truncated opinion (see above) is monitored by the US government, as the pivot from China continues. It is a serious risk. Your full opinion is a worse case scenario. Chinese diplomats have taken an aggressive stance in public, recently, signaling an increase in tension.

The USD is under assault by China, Russia and their ilk. Crypto also threatens the USD. If we lose our role as the world's reserve currency issue,  this nation's economy will collapse. 

[Muy Frio 182]

4 hours ago, washparkhorn said:

The USD is under assault by China, Russia and their ilk. Crypto also threatens the USD. If we lose our role as the world's reserve currency issue, this nation's economy will collapse. 

The biggest things undermining the USD are American fiscal policy, military adventurism, and our overly aggressive use of it as a weapon. Crypto is a byproduct of these things. 

[washparkhorn 9939]

53 minutes ago, Muy Frio said:

The biggest things undermining the USD are American fiscal policy, military adventurism, and our overly aggressive use of it as a weapon. Crypto is a byproduct of these things. 

Crypto is a bet against the USD. You enjoy all the luxuries that come with having the preferred reserve currency, but you bet against it. 

Not a moral judgment. Just explaining your bet. The humble describe the bet as a hedge protecting assets priced in USD. 

 

[Muy Frio 182]

7 minutes ago, washparkhorn said:

Crypto is a bet against the USD. You enjoy all the luxuries that come with having the preferred reserve currency, but you bet against it. 

Not a moral judgment. Just explaining your bet. The humble describe the bet as a hedge protecting assets priced in USD. 

 

We’ve talked about this before. I don’t want the USD to go down, that’s just what I see happening. It would be foolish of me not to plan accordingly.