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Re: Deflation in China [Re: Bob_Iowa] #7946039
09/07/23 02:14 PM
09/07/23 02:14 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
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Posts: 34,667
McGrath, AK
Absolutely right !

The other thing going on is that a couple days ago the Atlanta Fed bank said the economy is on track to grow at 5.6% annually this year.
Yellen would love to see that because of increased tax revenues but this is the LAST thing that Powell wants to see. He is fighting a strong labor market already.

But consider this. If the economy is currently growing at 5.6% with nominal interest rates at 5.5 %...........that indicates to me that the economy could still grow at 3% even if rates were at 6% or higher.

If I can see that.......... I am certain Powell can too.


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7946287
09/07/23 09:02 PM
09/07/23 09:02 PM
Joined: Jan 2019
Posts: 2,847
North central Iowa
B
Bob_Iowa Offline OP
trapper
Bob_Iowa  Offline OP
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Joined: Jan 2019
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North central Iowa
Iíve been reading where chances are the FED isnít going to raise rates here in September, but very well could in November. Iíve been thinking about liquidating some assets that have debt on them, to lower other debt, but with the interest rates now and the capital gain taxes I would end up with higher payments so itís keep working and see what happens.

Re: Deflation in China [Re: Bob_Iowa] #7946311
09/07/23 09:19 PM
09/07/23 09:19 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
Originally Posted by Bob_Iowa
The way I understood the article White is that the CCP needs to become more capitalist view, but the writer of the article has the belief that they will return to a more strict form of communism, which I can see happening and in that situation they will reduce the burden of their aging population though some disturbing means. One point in that article that worries me the most is when they talk about China turning to international affairs which to me means a war, as history has shown in this country that a major war can spur on the economy mainly the manufacturing sector and thatís whatís been driving their economy lately.


That's the way I interpreted this also.
If things get bad enough for China they may view hostilities as their best alternative.
Sort of reminds me of FDR in 1939


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7946318
09/07/23 09:24 PM
09/07/23 09:24 PM
Joined: Jan 2019
Posts: 2,847
North central Iowa
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Bob_Iowa Offline OP
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Bob_Iowa  Offline OP
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Joined: Jan 2019
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North central Iowa
That was my thought.

Re: Deflation in China [Re: white17] #7946379
09/07/23 11:21 PM
09/07/23 11:21 PM
Joined: Mar 2014
Posts: 3,004
Central Texas
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Chancey Offline
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Central Texas
Originally Posted by white17
Originally Posted by Bob_Iowa
The way I understood the article White is that the CCP needs to become more capitalist view, but the writer of the article has the belief that they will return to a more strict form of communism, which I can see happening and in that situation they will reduce the burden of their aging population though some disturbing means. One point in that article that worries me the most is when they talk about China turning to international affairs which to me means a war, as history has shown in this country that a major war can spur on the economy mainly the manufacturing sector and thatís whatís been driving their economy lately.


That's the way I interpreted this also.
If things get bad enough for China they may view hostilities as their best alternative.
Sort of reminds me of FDR in 1939


That sounds very bad to me given they have the capacity to build and manufacture stuff and we don't; as we shipped it all away.

Re: Deflation in China [Re: Chancey] #7946944
09/08/23 10:29 PM
09/08/23 10:29 PM
Joined: May 2010
Posts: 10,016
mn north of blakely
S
Steven 49er Offline
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Steven 49er  Offline
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Posts: 10,016
mn north of blakely
Originally Posted by Chancey
Originally Posted by Steven 49er
Not save chancey, reset.

Dirt the 95 or so trillion figure doesn't take into account unfunded liabilities. That figure is truly staggering.

Ken I don't see how the US government can withstand these rates much longer or much higher ones. Eventually the service on the debt will cripple the nation.

Frankly I don't see how the math is going to work.



Reset it to what Steven?

Could you please give me the Cliff's notes version of what you mean by the sentence in Bold? I don't understand it. I thought we need the high/or higher interest rates to tackle the inflation.



Food for thought Chancey. 7.1 trillion of US debt matures in the next 12 months. Of course we will have to refinance that debt, the interest rates will at least double. How long are we going to be able to do that.

Another food for thought, August commercial bankruptcies were up 54 percent year over year.

Yes higher rates are necessary to combat inflation, those higher rates come with consequences.

This isn't 1981, the world is awash in debt.


"Inflation is always and everywhere a monetary phenomenon". Milton Friedman.
Re: Deflation in China [Re: Bob_Iowa] #7946949
09/08/23 10:33 PM
09/08/23 10:33 PM
Joined: Aug 2011
Posts: 42,820
james bay frontierOnt.
B
Boco Offline
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Boco  Offline
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Posts: 42,820
james bay frontierOnt.
Time for the great re-set.


Forget that fear of gravity-get a little savagery in your life.
Re: Deflation in China [Re: Bob_Iowa] #7947219
09/09/23 11:24 AM
09/09/23 11:24 AM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
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Dirt Offline
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Dirt  Offline
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Joined: Dec 2010
Posts: 10,557
Armpit, ak
Best I can figure the banks are betting normal interest rates can last 2 years before we go back to abynormal.


Who is John Galt?
Re: Deflation in China [Re: Bob_Iowa] #7947294
09/09/23 01:36 PM
09/09/23 01:36 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
I saw a few credit unions offering 6% on 1 year CD's this morning.
With mortgage rates approaching 8% and ten year treasuries around 4.26% I'd guess they are trying to entice depositors with 6% while locking in 8% mortgages for 30 years.


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7947300
09/09/23 01:49 PM
09/09/23 01:49 PM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
D
Dirt Offline
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Dirt  Offline
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Joined: Dec 2010
Posts: 10,557
Armpit, ak
CD rates are not following the traditional pattern. Feels like shopping for Airline tickets. smile


Who is John Galt?
Re: Deflation in China [Re: Bob_Iowa] #7947304
09/09/23 01:55 PM
09/09/23 01:55 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
LOL ! That's true!


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7947316
09/09/23 02:19 PM
09/09/23 02:19 PM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
D
Dirt Offline
trapper
Dirt  Offline
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Joined: Dec 2010
Posts: 10,557
Armpit, ak
White, I'd like your opinion on something. I've had the POA on my mother for few years now and have been working on cleaning up much of her investment strategy. She is invested in several Bond funds that look to be paying dividends in the 3% range and these bond funds are way underwater right now. The monthly dividends appear to be reinvesting in the bond funds. Would it not be wiser, at this point, to put these dividends in 5 plus percent money markets for awhile? Not savvy on how all this works.

Thanks for any response.


Who is John Galt?
Re: Deflation in China [Re: Bob_Iowa] #7947325
09/09/23 02:37 PM
09/09/23 02:37 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
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white17 Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
Here's my opinion on that.
It is pretty likely that MOST of the damage has already happened in those bond funds. IF (big if) you believe that the Fed will start cutting rates next year, then those same funds should see price appreciation if and when that happens.

The question on money markets is one of volatility. Rates can and will fluctuate substantially with every daily change in bond yields. Also, if the Fed DOES start lowering rates, those 5% + yields will drop but you won't see any price appreciation as you would in a bond fund.

If I was in that position I would look at opening a Treasury direct account and just use T-bills at this point. I would stay on the short end of the yield curve for now until things become a bit more clear relative to what the Fed will do. I'd be looking at 1-4 month maturities.

If the economy starts to soften significantly and the Fed starts making noises about seriously reducing rates........then I would start locking in some longer term maturities.

One problem with bond funds is that they never mature so you are constantly dealing with fluctuating share prices of the fund NAV.

The way to avoid that is by owning the bonds(or bills/notes) directly and holding them to maturity. The only risk is reinvestment risk


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7947332
09/09/23 02:53 PM
09/09/23 02:53 PM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
D
Dirt Offline
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Joined: Dec 2010
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Armpit, ak
My thoughts are similar " stop putting in the bond fund and look for new fixed investments in 5 plus percent range.?" That's what we are thinking right? The money market is my savings account to hold money until I invest in fixed investments. The way I'm playing it.


Who is John Galt?
Re: Deflation in China [Re: Bob_Iowa] #7947336
09/09/23 02:58 PM
09/09/23 02:58 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
Pretty much Yes.

I should add...

Is this bond fund tax advantaged in any way ? Is it corporate/government bonds or is it possibly tax free municipal bonds ?

Is your mom still living ? If so, does she live in a state with an income tax ?

If you sold the bond fund completely, would she benefit at all from the capital loss ? Does she have any other income that could be reduced by that loss for tax purposes ?


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7947341
09/09/23 03:04 PM
09/09/23 03:04 PM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
D
Dirt Offline
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Dirt  Offline
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Armpit, ak
Taxes are not that big an issue since the nursing home costs are 100% deductible.


Who is John Galt?
Re: Deflation in China [Re: Bob_Iowa] #7947349
09/09/23 03:11 PM
09/09/23 03:11 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
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"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
OK. And is she in Alaska ?

The reason I ask is because US Treasuries are not taxed at the state and municipal level.


Mean As Nails
Re: Deflation in China [Re: white17] #7947350
09/09/23 03:13 PM
09/09/23 03:13 PM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
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Dirt Offline
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Dirt  Offline
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Joined: Dec 2010
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Armpit, ak
Originally Posted by white17
OK. And is she in Alaska ?

The reason I ask is because US Treasuries are not taxed at the state and municipal level.


No.


Who is John Galt?
Re: Deflation in China [Re: Bob_Iowa] #7947352
09/09/23 03:17 PM
09/09/23 03:17 PM
Joined: Mar 2007
Posts: 34,667
McGrath, AK
W
white17 Offline

"General (Mr.Sunshine) Washington"
white17  Offline

"General (Mr.Sunshine) Washington"
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Joined: Mar 2007
Posts: 34,667
McGrath, AK
OK well if she is in a state that has an income tax.....that is another reason in favor of going with treasury securities as opposed to the bond fund. The bond fund "income" could be taxable at the state level.


Mean As Nails
Re: Deflation in China [Re: Bob_Iowa] #7947353
09/09/23 03:26 PM
09/09/23 03:26 PM
Joined: Dec 2010
Posts: 10,557
Armpit, ak
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Dirt Offline
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Dirt  Offline
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Posts: 10,557
Armpit, ak
Well, I can't get her out of the Bond Fund now! Maybe someday! smile


Who is John Galt?
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