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Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7461621
01/15/22 02:56 PM
01/15/22 02:56 PM
Joined: Mar 2007
Posts: 33,291
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
W

Joined: Mar 2007
Posts: 33,291
McGrath, AK
I agree with you that the move by Nixon on gold was a poor decision. ( but I think you mean even earlier than that) That said, I think if we were still on a gold standard completely, it would really constrain the growth of the economy.

On the other hand, at least private enterprise would not be competing with government for capital.

Where would markets be without central banks ? Realistically, I think we'd be about 30% lower on the indexes than right now. But there is another side to that question. Without central banking there would likely be a lot more unpredictability about the cost of capital. I think that would affect the markets to an even greater degree than the recent easy money policies.

The whole argument about interest rates has moved from the realm of economics to the realm of politics, IMO. If we accept that the rate of inflation is currently 7%, then the 10 year treasury should be yielding 3.5-4%. But it is now around 1.8%

Every 1 % rise in rates increases the federal government's interest costs by 290 billion dollars per year. So if the ten year yield climbs to 3.5-4 % that means interest costs will be around 580 billion per year.

The bond market is telling us that there is no way the Fed will go that high. I agree they won't. Interest costs alone would eat up much of the annual budget, leaving nothing to spend on transfer payments. That won't happen. If it does happen we will be looking at a recession and the Fed will be again dropping rates just like they did in 2018.

A catastrophic event is possible and chances probably get greater as time passes. Here's one that is possible though pretty low probability IMO.

We see Biden stacking the Fed board of governors with easy money, climate change, anti-business activists. The game plan is to use the Fed to attack the banks and the oil companies. How will that lower prices ? We know just the opposite will happen. We may as well put Lizzy Warren and Bernie Sanders in charge of everything.

But consider the disruption it would cause if Biden resigned after the two year point of his residency. No one in his right mind wants Harris. This may not be the "big one" but it sure will roil the capital markets world wide.


Personally. I think inflation will decline not because of Fed intervention but slowly as the supply chain works out the kinks. I suspect by this time next year we will still be looking at 3-4% inflation and a yield on the ten year treasury at 2.5 MAX. I know you see that at that point we still have a negative real interest rate.

If that is true, then I don't see Armageddon in the markets because money will still be 'cheap'.

Whatever way this plays out, it is going to be a volatile and choppy time in the markets, IMO.


As an after thought.......I am more worried about this push by Yellen to impose the 15% worldwide tax on all business everywhere. Just another attempt to make it more difficult to avoid government confiscation of private assets, IMO, and a closer step to world government. And, of course, the biggest targets are all US corporations..................even Ford

grin


Mean As Nails
Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7461681
01/15/22 04:20 PM
01/15/22 04:20 PM
Joined: May 2010
Posts: 8,811
mn north of blakely
S
Steven 49er Offline
trapper
Steven 49er  Offline
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Joined: May 2010
Posts: 8,811
mn north of blakely
Even Ford! LMFAO.

For sure still following sound money practices would put a constraint on the economy and our standard of living would be lower. More importantly it would put serious constraints on a central government. Our model of government would look entirely different if they actually had to pay for the nonsense they do and propose

I don't look at either of those scenarios as a negative. We've given up a lot of liberty to get here and will give up more.

I can't say I could put a figure to where the indices would be without a debt backed currency but I think 30 percent lower is a bit conservative. Let us not forget that governments aren't the only one awash in unsustainable debt.

The fed picks by Biden would have generally scared the crap out of me but any more I feel let's get it on and get this over with.

I suppose I do mean earlier than Nixon breaking the Breton Woods accord, the Federal Reserve Act of 1913 in my opinion is the cause of most of what ails this country. It's only goal and achievements was to benefit 2 groups in the country.

This coming year will be interesting to say the least. 3 to 4 percent published inflation yoy is a possibility. The question is how much of that can our legacy costs take before it bankrupts the system
If we get a couple more years of say 5 percent CPI it will put a major damper on those on a fixed income and SS will be in even bigger trouble

If you see the ten year at 2.5 max where does that put the 30 year? Inverted again?

You brought up that naughty recession word. I think we are in the beginning of one at least in the technical sense.

Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7464595
01/18/22 11:15 AM
01/18/22 11:15 AM
Joined: May 2010
Posts: 8,811
mn north of blakely
S
Steven 49er Offline
trapper
Steven 49er  Offline
trapper
S

Joined: May 2010
Posts: 8,811
mn north of blakely
In bizarro world china has announced they are cutting rates, albeit it only 10 basis points and also some QE.

Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7464611
01/18/22 11:25 AM
01/18/22 11:25 AM
Joined: Mar 2007
Posts: 33,291
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
W

Joined: Mar 2007
Posts: 33,291
McGrath, AK
China is having a tough time with their economy. Breaks my heart !!

Will the curve invert ?? I hope not. But I certainly expect it to flatten.

The 10 year is at 1.85 right now. The markets really don't like it !


Mean As Nails
Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7464921
01/18/22 05:09 PM
01/18/22 05:09 PM
Joined: May 2010
Posts: 8,811
mn north of blakely
S
Steven 49er Offline
trapper
Steven 49er  Offline
trapper
S

Joined: May 2010
Posts: 8,811
mn north of blakely
Maybe the fed will get their technical difficulties fixed and can jump in and buy some to drive the price down.

Last edited by Steven 49er; 01/18/22 05:10 PM.
Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7464930
01/18/22 05:15 PM
01/18/22 05:15 PM
Joined: Mar 2007
Posts: 33,291
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
W

Joined: Mar 2007
Posts: 33,291
McGrath, AK
LOL That would be the absolute end of any credibility for sure !

I guess they could have the Chinese do the buying laugh


Mean As Nails
Re: 7 % inflation LOL LOL LOL [Re: white17] #7464931
01/18/22 05:17 PM
01/18/22 05:17 PM
Joined: May 2010
Posts: 8,811
mn north of blakely
S
Steven 49er Offline
trapper
Steven 49er  Offline
trapper
S

Joined: May 2010
Posts: 8,811
mn north of blakely
Originally Posted by white17


Will the curve invert ?? I hope not. But I certainly expect it to flatten.

t !


Only a 30 BP spread now right?

Maybe Lael Brained can save us lol

Last edited by Steven 49er; 01/18/22 05:19 PM.
Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7464933
01/18/22 05:22 PM
01/18/22 05:22 PM
Joined: Mar 2007
Posts: 33,291
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
W

Joined: Mar 2007
Posts: 33,291
McGrath, AK
About that yes. The ten is yielding 1.872 and the 30 is at 2.189


Riiiiiiiight !! This other nominee really scares me. Raskin complete lefty radical


Mean As Nails
Re: 7 % inflation LOL LOL LOL [Re: jbyrd63] #7464983
01/18/22 06:04 PM
01/18/22 06:04 PM
Joined: Dec 2021
Posts: 828
Indiana
C
CaseXX Offline
trapper
CaseXX  Offline
trapper
C

Joined: Dec 2021
Posts: 828
Indiana
Hello gentleman just saw this, wanted to say a few words. My interest in pm, is just like my interest in land. For me anyway I've always felt the need to keep my investments in something with intrinsic value, and I'm not much on Art. And I do enjoy trading the ratios, growing with no out of pocket except the cost of gas and lunch. I see that aspect as more of a hobby. But one I take seriously.

That aside,from a historical perspective, recorded history anyway, correct me if I'm mistaken. There has never been any Govt., Country, State, that has lasted, for very long anyway that has relied on a fiat currency system. And yes I am aware of other mediums, some strange, some not so as in salt. And also for the first time in history ALL of the worlds govts. currently are on some form of fiat system. Maybe I'm nieave(sp) but I see our current system as a giant house of cards. Doomed to fall from its own weight. And just as a further aside, if au. and it's industrial little brother ag. are not as valuable as some may feel. Why do we [The US Govt.] expend so much time, energy, expense. Guarding and hiding it. Heck sell Ft. Knox pay down the debt put the solders and tanks where they'll do some good. Just my thoughts. Thanks if you read them.
Case


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