Inflation.......... ?

[Malum Prohibitum]

The money supply shot up in 2020, when Trump was president, and has remained high ever since.

Anybody remember what was happening in 2020?

The results were predictable, but nobody wants to point out the simple truth of what caused it, and nobody seems aware that "prices" are not inflation, which further obscures what is going on.

Milton Friedman famously said: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”

The Real Story Behind Inflation

What do you know about inflation? Milton Friedman famously said: “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” Of course, we all know the driver of the quantity of...

www.heritage.org

Check out the chart below.

2020 was the year the federal government increased the money supply at the same time that they shut down most economic output.

The effects were felt for years and are still with us.

Look at the pre-2020 and post-2020.

This is not rocket science. If another country did this, and I showed you the chart, and asked you what was going to happen to the cost of groceries in the years on the right hand side of 2020 as compared to the left hand side, what would you say? Nobody wants to give the same answer, however, because it is our country, and politics and bias get in the way of clear thinking.

 

[Snuby642]

You scoff at egg shortage?

I saw a bumper sticker that said: gas ass or eggs nobody rides for free.

 

[ToddM]

Where I think the rubber is really going to hit the road is in the next 20+ years with retirement folks. Most people in their 40's right now have almost zero savings, almost nothing in retirement, many won't own their own homes, and pensions are basically extinct. The average 401k balance of 45-55 year olds is about $150k, half of Americans have no retirement accounts at all, add to that the massive increase in health issues in both young and older people, and the quality of healthcare tanking because investment groups buying up the medical industry and stripping it for profits, and it's going to get ugly. Medical issues related to cancer and obesity are quickly impacting younger and younger Americans. Cancer rates are skyrocketing for people 30-45. Early onset cancer rates (cancer before the age of 50) is increasing at 1-2% every year.

Then you have all the kids coming out of school with large student debt, no affordable apartment options, and much higher "average" living expenses than most generations. Now a lot of those "living expenses" are personal choice. When I was growing up in the 80/90's almost no one had cell phones, no one was spending $50 a week at a coffee shop, and many appliances/goods/cars were retained (and lasted) much longer. Now the average family has a $200 cable bill, a $200 cell phone bill, streaming bills, xbox subscriptions, amazon and costco memberships, two car loans and they swap cars every 3-4 years, appliances last a handful of years if you are lucky, and they probably spend $100 a week at starbucks or more if they have a couple kids. $1000 phones for every family member every 2-3 years, and new $1000 iPads, $500 smart watches, neither of which anyone wants after 2-3 years. Many families I know with 3-4 drivers are spending almost $300-500 a month just on car insurance. The list goes on and on. A lot of that pain is created by the consumer that over leverages themselves to have toys, and companies have become masters of manipulating customers with social media and all the information they get on individual buying habits, interests, and all that screen time they get to inundate them with ads. Not to even get into how badly the CPI index is manipulated to keep the # they report artificially low. If a base model Honda Civic increases in price $5k, but it gained features/technology compared to the previous model, it doesn't count toward the CPI, same is true for anything with technology. However the reality for the consumer is the cheapest Honda Civic you can buy just got $5k more expensive.

When I moved into my townhouse in 2016 it was valued at $225k, it's current value is just shy of $500k at 1400 square feet, suggested rent is $2500/mo. Most young professionals I know if they are living in an apartment outside a slum without roaches they are paying $2000 a month for a 2 bedroom, and $1500+ for a 1 bedroom. If they want to live downtown, or somewhere nice, it's more. It used to be rent on a nice middle of the road clean apartment was much lower than a mortgage but now they are similar. I just don't see how younger folks are ever going to put enough $ away to buy housing when rent is just as expensive as a mortgage. It's more critical than every for young people to make sure they get a really good paying job, are smart with their budgets, and put money away early on, however it's also become harder to do so.

I'm really thankful I lucked into a really good job, and my grandparents/parents really instilled in me the importance of saving $ early in my career, but even we spend way more than we should on crap.

 

[babyguppy]

Median home price in the nation is $420,400

The last time it was $200k was 2003

After rising very quickly past that (because the government was pushing banks to loan to everybody) the housing situation crashed, and then housing finally passed $300k in 2015.

There has never been a time in history when an average 25 year old could afford a larger than 2500 square foot home (since you asked about 25 year olds and $500k houses). If you want to give some example from 1950, you have to remember that the average square footage back then was about 1100 square feet.

The solution is to build more houses, and smaller ones, but the moment you try to do that everybody in your town is down at the town council meeting opposing it.

Price is supply and demand.

• i'm talking my area,, not 'median' don't give a fk about NY and CA screwing it up for the rest of the nation.
• and NO, 200k was not 2003... there were lots of 45 and 65k homes in 2011 during the bubble. (in my area)
• "There has never been a time in history when an average 25 year old could afford a larger than 2500 square foot home" - i never quoted square footage so that's YOU putting words into people mouths.

correct, price is supply and demand, eliminate immigration and deport illegals, and watch housing prices come down.

 

[babyguppy]

Egg shortage is not inflation, either.

price of EGGS are DIRECTLY related to inflation
fuel costs
feed costs
Care to explain why eggs were over 7 dollars a dozen the first 2 years into Bidens economy?
Next you'll try to blow smoke our asses and say, that the rising prices of the egg McMuffins from 2 for 2 to 2 for 5 aren't related to inflation
Here's the biggest LOL on the Fk'n planet
"prices" are not inflation
^^ this guy must be a fact checker for Facebook
GTFO

 

[Snuby642]

Well got to give credit to the bird flue chicken cull for 1/2 the problem on eggs.

But ya sack of layer pellets went north and when you toss in some sunflower seeds and maybe some corn mixed in for the winter, those perfect free range mixed breed layers eggs are getting expensive.

Slaughtered all the roosters at once instead of on demand to save feed, less one fine stud.

Beef prices slaughtered or walking are ridicules. Been using scoop of feed per head, fixing to be counting out cubes per head and that's with plenty of grass for now.

Fixing to be all grass fed, amazingly some dumbasses think that's better.

Take a blind taste test and join reality on good beef taste.

I grew up my younger years on grass fed at the farm, 1960's that's what farmers ate .

Kind of like the package of bacon that's only 12 oz. Some of us are not that stupid, we see this shit going on everywhere.

The dems tell the sheep it's normal and good. The Republicans come in, fix it and the fucking sheep are told prices went up since we started selling 1 lb packs of bacon.

The dems need put down hard and fast.

 

[babyguppy]

Well got to give credit to the bird flue chicken cull for 1/2 the problem on eggs.

But ya sack of layer pellets went north and when you toss in some sunflower seeds and maybe some corn mixed in for the winter, those perfect free range mixed breed layers eggs are getting expensive.

Slaughtered all the roosters at once instead of on demand to save feed, less one fine stud.

Beef prices slaughtered or walking are ridicules. Been using scoop of feed per head, fixing to be counting out cubes per head and that's with plenty of grass for now.

Fixing to be all grass fed, amazingly some dumbasses think that's better.

Take a blind taste test and join reality on good beef taste.

I grew up my younger years on grass fed at the farm, 1960's that's what farmers ate .

Kind of like the package of bacon that's only 12 oz. Some of us are not that stupid, we see this shit going on everywhere.

The dems tell the sheep it's normal and good. The Republicans come in, fix it and the fucking sheep are told prices went up since we started selling 1 lb packs of bacon.

The dems need put down hard and fast.

right there....
shrinkflation, also known as package downsizing, weight-out, and price pack architecture is the process of items shrinking in size or quantity while the prices remain the same.

can a green beans could feed 4, now it barely feeds two. 16oz, to 14, to 12 (lots of liquid, aka water weight). I dug into the freezer and pulled out a 4 year old stick of sausage from Sams's club. It was 3lbs (4.99), the ones Sam's Club sells today are less than 2 lbs. (price is up to 5.99).
My god, and hamburger prices.. and can I get a Amen on bacon. Yea, we see that shit...
Hell, economy is so bad, they can't even do shrinkflation without raising the prices on the smaller amount.

 

[mosin46]

Where I think the rubber is really going to hit the road is in the next 20+ years with retirement folks. Most people in their 40's right now have almost zero savings, almost nothing in retirement, many won't own their own homes, and pensions are basically extinct. The average 401k balance of 45-55 year olds is about $150k, half of Americans have no retirement accounts at all, add to that the massive increase in health issues in both young and older people, and the quality of healthcare tanking because investment groups buying up the medical industry and stripping it for profits, and it's going to get ugly. Medical issues related to cancer and obesity are quickly impacting younger and younger Americans. Cancer rates are skyrocketing for people 30-45. Early onset cancer rates (cancer before the age of 50) is increasing at 1-2% every year.

Then you have all the kids coming out of school with large student debt, no affordable apartment options, and much higher "average" living expenses than most generations. Now a lot of those "living expenses" are personal choice. When I was growing up in the 80/90's almost no one had cell phones, no one was spending $50 a week at a coffee shop, and many appliances/goods/cars were retained (and lasted) much longer. Now the average family has a $200 cable bill, a $200 cell phone bill, streaming bills, xbox subscriptions, amazon and costco memberships, two car loans and they swap cars every 3-4 years, appliances last a handful of years if you are lucky, and they probably spend $100 a week at starbucks or more if they have a couple kids. $1000 phones for every family member every 2-3 years, and new $1000 iPads, $500 smart watches, neither of which anyone wants after 2-3 years. Many families I know with 3-4 drivers are spending almost $300-500 a month just on car insurance. The list goes on and on. A lot of that pain is created by the consumer that over leverages themselves to have toys, and companies have become masters of manipulating customers with social media and all the information they get on individual buying habits, interests, and all that screen time they get to inundate them with ads. Not to even get into how badly the CPI index is manipulated to keep the # they report artificially low. If a base model Honda Civic increases in price $5k, but it gained features/technology compared to the previous model, it doesn't count toward the CPI, same is true for anything with technology. However the reality for the consumer is the cheapest Honda Civic you can buy just got $5k more expensive.

When I moved into my townhouse in 2016 it was valued at $225k, it's current value is just shy of $500k at 1400 square feet, suggested rent is $2500/mo. Most young professionals I know if they are living in an apartment outside a slum without roaches they are paying $2000 a month for a 2 bedroom, and $1500+ for a 1 bedroom. If they want to live downtown, or somewhere nice, it's more. It used to be rent on a nice middle of the road clean apartment was much lower than a mortgage but now they are similar. I just don't see how younger folks are ever going to put enough $ away to buy housing when rent is just as expensive as a mortgage. It's more critical than every for young people to make sure they get a really good paying job, are smart with their budgets, and put money away early on, however it's also become harder to do so.

I'm really thankful I lucked into a really good job, and my grandparents/parents really instilled in me the importance of saving $ early in my career, but even we spend way more than we should on crap.

bravo! this is maybe the best summation of the current and prob future road that i have seen. you describe just what my grands are facing. prob never own as rents are = to mortgage or higher. saving for a down payment impossible because of $5 eggs etc. you point out the stupidity of all the high tech,basically useless toys. correct on cars. i had to get a new one because of a totaled wreck. is a 5 yo nissan loaded with all the digital crap that i don't want or need. you have to buy it as no "stripped" models exist. a good part of the cost is gov mandates and all the rest thrown in because people just can't conceive of finding a place without GPS etc. insurance home,health,auto is huge,even for me as a retiree. i can handle it because i have gotten control of my toy addiction. most young were raised without any such control. agree obesity is now the most common body type and health care is just a DR typing on the comp,pushing the latest meds and referring out anything that requires any work. ie if they can't just blow off or ignore any finding they stumble on to. don't even start on environmental degradation and crime. both seem to be on an unstoppable upward climb. the deteriorated international situation isn't helping.

 

[Gary/CO]

No, the solution isn't to build more houses. In an era of central planning where the central bank chooses the winners and the losers, the solution is to have a sound monetary system and not the current fiat based fractional reserve banking system. There is no free market price discovery.

Most of the world went to pure fiat in 1971 when Nixon closed the gold window (renounced Bretton Woods). He wanted Bretton Woods II that would revalue gold higher than $35 oz. However, Germany floated the marks and other nations followed. The 1973 Petro-dollar agreement created a demand for dollars (Treasury Bills/Bonds) b/c nations had to hold dollars for global trade.

Watch Mike Maloney's Hidden Secrets of Money for free on U-toob and you'll learn the difference between money and currency. If you have time (a little over one hour), go to Thegreattaking.com where there is a free pdf (less than 100 short pages or link to a free U-toob video) to explain how you can be fleeeced of your equites, 401(k) and bank savings/checking/CDs. The author explains how the laws were changed to make sure (per Satan Klaus (Schwab)), "You'll own nothing and you'll be happy."

 

[Gary/CO]

Todd brought up his historical perspective. Absolutely nothing wrong with what he wrote but I can offer an older perspective.

Back in my days you could flip burgers, wait on tables, pump gas AND walk away from college with no debt. Those were the days before guaranteed school loans. All the latter did was encourage the colleges to jack up tuition cost to maximize what the school could get paid. There was a boom in colleges/university building and younger students graduated with debt.

The middle class manufacturing jobs have fled overseas in search of greater corp profit. Blame David Rockefeller for that idea. Post WW II a guy with a high school diploma can work in a factory, build cars or make Maytag washers, marry, buy a home and raise a family. Those jobs are gone now so when these kids with $100k in debt graduate from college, they become indentured servants who can't use bankruptcy (Dubya's reform of bankruptcy laws meant that school loans cannot be forgiven by bankruptcy) to escape their debt burden. Sally with her degree in women studies flips burgers until she's 65 at which point her loans are paid off and she can start saving for retirement.

Now throw in inflation. If you watch that Mike Maloney series linky you'll understand why we have inflation. We must not b/c of the bovine feces the econ professors said but b/c of the nature of the fractional reserve banking system. It crashes w/out inflation. Sally the student can't keep up with it. BTW, I mentioned the Fed Res picking the winners and losers.

Look up the Cantillon Effect. Those closer to the money spigot when the Fed Res hits the return key benefit. It takes a while for the effect of fresh dollars to be felt so the big boys who get the newly created dollars win b/c they can buy up assets first beffore the dollar devalues. So who were the big winners? Member banks (they bought equity, bought back their own shares) and hedge funds (who bought equity and real properties). The little fish won a little b/c of equity prices and sometimes residential property values. The stock market does not reflect the economy (it is part of perception management) but the pursuit of captial returns and fear of missing out has driven many from safer methods of generaating wealth into the stock market or real property. The only thing the average Joe got was 1) Time & 2) Inflation. Inflation is simply the creation of fresh money (actually currency) without a corresponding increase in goods/services. It's too much money chasing too few things. Period.

If you remember recent history, after the housing bust of 2007 the financial world was on the brink of collapse thanks to MBS (mortgage backed securities) and derivative trading. It survived ONLY because of TARP (troubled asset relief program) and subsequent QE (quantitative easing - nice way to say the Fed mashes down the return key to create more digital dollars). There has been no economic recovery since 2007 and everything has been on life support since. The wheels will fall off when the dollar collapses (good read is Ferguson's When Money Dies). If you believe the recent governent stats about how healthy the economy is, it's because of massive government hiring, overspending and old fashion lies. Nomi Prins has a book (Permanent Distortion) on the subject and the over-leverage of 2008 has minimally increased tenfold.

Here's the lies: the housing market was never allowed to properly deflate. Banks kept homes off the market for fear of them selling underwater of the loan that was foreclosed on. They waited until fresh money went in to reinflate the bubble. Housing prices will deflate (but I can't say with respects to dollar terms). The stock market is used to transfer the risk from the big investment firms to the common man. The main source of wealth of most Americans can vanish when those two things happen. Sidenote: commercial real estate collapsed with the covid lockdown and office vacancies and businesses send employees away to work from home.

If you understand how the fractional reserve banking system works, you'll understand why the US has been funding foreign wars (Ukraine, Israel) includling the Taliban (conflict means lower cost access to resources). Those newly created dollars have to go somewhere and a lot goes the defense industry, graft by politicians and then some to the recipient nation (where more graft happens - we should have learned this from the aid to Republic of China/KuoMinTang during WW II).

I'm not saying don't own your home. You need a place to hang your hat. Rather, I'd shy away from real property (both residential and commercial) unless it's income producing (ranch, farm, timber, mineral, water rights).

It's only a matter of time before it ends and fractional reserve banking works until it doesn't. We're approaching the "doesn't work" moment.

 

[Emerson0311]

Todd brought up his historical perspective. Absolutely nothing wrong with what he wrote but I can offer an older perspective.

Back in my days you could flip burgers, wait on tables, pump gas AND walk away from college with no debt. Those were the days before guaranteed school loans. All the latter did was encourage the colleges to jack up tuition cost to maximize what the school could get paid. There was a boom in colleges/university building and younger students graduated with debt.

The middle class manufacturing jobs have fled overseas in search of greater corp profit. Blame David Rockefeller for that idea. Post WW II a guy with a high school diploma can work in a factory, build cars or make Maytag washers, marry, buy a home and raise a family. Those jobs are gone now so when these kids with $100k in debt graduate from college, they become indentured servants who can't use bankruptcy (Dubya's reform of bankruptcy laws meant that school loans cannot be forgiven by bankruptcy) to escape their debt burden. Sally with her degree in women studies flips burgers until she's 65 at which point her loans are paid off and she can start saving for retirement.

Now throw in inflation. If you watch that Mike Maloney series linky you'll understand why we have inflation. We must not b/c of the bovine feces the econ professors said but b/c of the nature of the fractional reserve banking system. It crashes w/out inflation. Sally the student can't keep up with it. BTW, I mentioned the Fed Res picking the winners and losers.

Look up the Cantillon Effect. Those closer to the money spigot when the Fed Res hits the return key benefit. It takes a while for the effect of fresh dollars to be felt so the big boys who get the newly created dollars win b/c they can buy up assets first beffore the dollar devalues. So who were the big winners? Member banks (they bought equity, bought back their own shares) and hedge funds (who bought equity and real properties). The little fish won a little b/c of equity prices and sometimes residential property values. The stock market does not reflect the economy (it is part of perception management) but the pursuit of captial returns and fear of missing out has driven many from safer methods of generaating wealth into the stock market or real property. The only thing the average Joe got was 1) Time & 2) Inflation. Inflation is simply the creation of fresh money (actually currency) without a corresponding increase in goods/services. It's too much money chasing too few things. Period.

If you remember recent history, after the housing bust of 2007 the financial world was on the brink of collapse thanks to MBS (mortgage backed securities) and derivative trading. It survived ONLY because of TARP (troubled asset relief program) and subsequent QE (quantitative easing - nice way to say the Fed mashes down the return key to create more digital dollars). There has been no economic recovery since 2007 and everything has been on life support since. The wheels will fall off when the dollar collapses (good read is Ferguson's When Money Dies). If you believe the recent governent stats about how healthy the economy is, it's because of massive government hiring, overspending and old fashion lies. Nomi Prins has a book (Permanent Distortion) on the subject and the over-leverage of 2008 has minimally increased tenfold.

Here's the lies: the housing market was never allowed to properly deflate. Banks kept homes off the market for fear of them selling underwater of the loan that was foreclosed on. They waited until fresh money went in to reinflate the bubble. Housing prices will deflate (but I can't say with respects to dollar terms). The stock market is used to transfer the risk from the big investment firms to the common man. The main source of wealth of most Americans can vanish when those two things happen. Sidenote: commercial real estate collapsed with the covid lockdown and office vacancies and businesses send employees away to work from home.

If you understand how the fractional reserve banking system works, you'll understand why the US has been funding foreign wars (Ukraine, Israel) includling the Taliban (conflict means lower cost access to resources). Those newly created dollars have to go somewhere and a lot goes the defense industry, graft by politicians and then some to the recipient nation (where more graft happens - we should have learned this from the aid to Republic of China/KuoMinTang during WW II).

I'm not saying don't own your home. You need a place to hang your hat. Rather, I'd shy away from real property (both residential and commercial) unless it's income producing (ranch, farm, timber, mineral, water rights).

It's only a matter of time before it ends and fractional reserve banking works until it doesn't. We're approaching the "doesn't work" moment.

Part of planning for the future is getting used to not “owning” much except what you can carry or load on your shit box. Letting go of many things that aren’t really ours is a stressful journey, but does prepare for most of our future.

 

[Gary/CO]

Final word: It is not about doom and gloom. If you anticipate & mitigate, you can thrive as hard times can also be opportunity. As the Get Even! author George Hayduke said, "Where there is confusion, there is profit."

 

[SONIC SAAMI]

Chaos creates cash

 

[Malum Prohibitum]

Post WW II a guy with a high school diploma can work in a factory, build cars or make Maytag washers, marry, buy a home and raise a family. Those jobs are gone now so when these kids with $100k in debt graduate from college, they become indentured servants who can't use bankruptcy (Dubya's reform of bankruptcy laws meant that school loans cannot be forgiven by bankruptcy) to escape their debt burden. Sally with her degree in women studies flips burgers until she's 65 at which point her loans are paid off and she can start saving for retirement.

Now throw in inflation.

OK, I will throw in inflation.

1946 8.3%
1947 14.4%
1948 7.7%

Sally did not work post - WWII, usually. She married. She had kids. She gave them hand me down clothes. Her husband worked. They owned one car, with no air conditioning, if they owned any cars, and he took that car into town, where he met other men and carpooled the rest of the way to work. Sally was stuck at home with the children in a house that had no air conditioning. Sally made meager meals with lots of things like casseroles and bean soup to stretch the family dollar. Electronics? LOL. In 1946 only 8000 households had this enormously expensive luxury item called a TV. More houses had radios. Families entertained themselves in other ways.

That home with no ac was only 817 square feet.

https://247wallst.com/special-report/2016/05/25/the-size-of-a-home-the-year-you-were-born/

Families were larger then than now, too.

We love to look back at the good old days, but nobody seems to want to remember what things were really like. Folks did not spend money back then like now, because they simply had nowhere near the household income that we enjoy today. Eating out was a rare luxury. Eating expensive food at home was a rare luxury for the middle income person in America, too.

Most of you would scoff at an 817 square foot home for a family, but that is the normal way folks lived.

When I was a small child, I still remember my grandparents living not too differently from that (grandparents who were that post WWII generation, so, no surprise). Grandma's house did not have heat, either, so Grandpa would get the fire roaring in the fireplace while all the grandkids (cousins and siblings all) settled into sleeping bags to read comic books before going to sleep on the living room floor, bellies full of food Grandma baked, much of it from her garden or picked by us (for Grandma to make her Blackberry Cobbler).

Grandma and Grandpa lived frugally and left some money for inheritance down three and four generations, because they saved.

Americans do not believe in saving anymore. They do not believe in frugality.

Savings rate immediately post WWII was 21%

By 1950 it dropped to 12%

It continued to drop with exceptions for quick scares like covid, when it temporarily hit a high percentage before dropping back down to a pitiful single digit number lower than 5%. <--- and that is an average. Many homes have negative savings rates. Many have 0. Some have higher savings rates, such as immigrant families in the US, which offset the profligate spending of native born Americans.

Sort of like the average man weighed 160 pounds in America back then. The average woman is more than that now. More, more, more of everything, even when it is bad for you. Spend, eat, consume, then bitch about politics because it has to be somebody else's fault.

 

[ToddM]

Agreed on student loans for sure, it's allowed colleges to charge whatever they want. As soon as colleges knew that guaranteed loan amounts would increase to cover tuition/board regardless of how much they raised it, they were laughing all the way to the bank. The amount in loans our new hires come in with on average is staggering. However if they play their cards right their salaries will make up for it. I'd imagine most are getting hired with starting salaries north of $90k these days, and can advance that to north of $150k in 5 years if they are good performers, but many are not that lucky. It took a long time to pay my loans off, and to be fair I could have been more budget savy, but so many don't have good jobs to compensate for those loans and they quickly end up in a bad financial spot.

Combine that with kids who have been groomed since they were 5 years old to trust everything teacher/schools tell them, and they walk into a college and get told by the program/finance people that X program has 100% placement and not to worry about the loans cause they'll be making $100k a year in no time and they swallow it hook line and sinker. Many parents these days are not going to make their kids work in school, and most still feel the only way to get ahead is a college degree. Meanwhile a lot of people I know in the trades are making more than many college graduates I know and without $50-100k in loans to pay off. Kids have no concept of how much that debt will put them behind in life.

For giggles I just looked at my undergrad school, if I remember right 20 years ago my total cost per year there was around $8k a year, that was with with housing and food. The current estimate is just shy of $30k depending on the program, that's more than double what it should be based on historical inflation of the dollar over that time. The most amazing part is that now the meal plan costs more $6k than housing $5k.

It's not all bad though, I work with a lot of young very bright, smart engineers and scientists and many of them have good financial pictures they are actually working hard to make happen. However in my experience they are the vast exception among young people.

 

[Gary/CO]

Savings rate immediately post WWII was 21%

By 1950 it dropped to 12%

It continued to drop with exceptions for quick scares like covid, when it temporarily hit a high percentage before dropping back down to a pitiful single digit number lower than 5%. <--- and that is an average. Many homes have negative savings rates. Many have 0. Some have higher savings rates, such as immigrant families in the US, which offset the profligate spending of native born Americans.

Sort of like the average man weighed 160 pounds in America back then. The average woman is more than that now. More, more, more of everything, even when it is bad for you. Spend, eat, consume, then bitch about politics because it has to be somebody else's fault.

Sally Student is largely a 1990s creation. Many women attending college in the old days (pre-Fed Guaranteed Student Loan) didn't have that mountain of debt and in the '40s, many were working for the Mrs. Degree (sexist but true). My aunt told me she went to UC Berkeley in the late '40s for about $11.00 a semester/quarter. She could catch the bus to Berkeley and it was cheap.

How you "save" determines whether you saved at all. John Williams' ShadowStats is more honest report on inflation than what the BLI gives. http://www.shadowstats.com/ Inflation is the hidden tax that destroys your savings, earings and retirement.

If you deposit it into the bank, say BoA, you're paid anywhere from .01% to .04% and you're still losing to inflation (per Williams inflation is 4% to 8%). Your deposit's growth does keep pace with inflation so you lose purchasing power. It's designed that way to encourage people to chase the returns and in so doing, accept greater risks (and accept the risk transfer from the rich). Additionally, depositors are exposed to The Great Taking.

What is that? The Dodd-Frank Act which followed in the wake of TARP redefined the depositor as unsecured creditors who stand second in line for funds deposited in the bank. The bank owns the deposit thanks to Dodd Frank (and don't mention FDIC b/c they can't possibly cover all the savings). On 10/24 the depositors at the First National Bank of LIndsay all got a haircut (ala Cyprus). Anybody who had over $250k lost that amount (unlike SVB where Yellen said reimburse everyone including foreign depositors). Europeans have the same issue about bail-ins and the Chinese (Workers' Paradise and not Taiwanese Chinese) can't withdraw their funds that they deposited (financial repression). It's global (and part of Satan Klaus Schwab's plan for us to own nut'n and be happy).

The same may be said of your 401(k) and brokerage accounts where the vast majority of Americans squirrel away their wealth. UCC puts the secured creditors ahead of the unsecurred creditors (us) and unless you direct register your shares OR take delivery of the stock certificate, you are exposed to rehypothecation (remember MF Global and PFG Best?).

Concur with you Malum Prohibitum that people spend too freely. That's the problem with credit card, desire for immediate gratification instead of deferred gratification. In the olde days when you wanted that big radio, new refrigerator/freezer or television, you paid on installments and once it was paid off, the dealer allowed you to take it home. Now! and I don't wanna wait! Cinema, TV and social media play a large part along with the "keep up with the jones' and Americans mistake material trappings for signs of success. In the media you see twenty-somethings living in a big house with lotsa loot but no one ever figures out how they paid for it. Sidenote: China has a lot of fake "social influencers" who pretend their rich but are yuan/renmenbi less. LOL.

People must save but as mentioned, how you save determines whether you saved at all.

Sidenote: savings are important for building the economy. Banks make loans to small businesses and small businesses hire people. No deposits = less loans = less small business = less employment. The government should not be in the loan business (think Bathhouse Barry's failed Solynda) or bailing out failed businesses (that started with Penn State RR). Capitalism allows for failure and chrony-capitalism (which is what we have) socializes the losses. Because of inflation and exposure to asset forfeiture, this just isn't the environment to keep your earnings in the bank.

I encourage people to go the the link above and when you're done, check out the Hidden Secrets of Money series that is free on U-toob. What took me two years of book reading to learn is explained in those ten, simple lessons.

 

[tightInThePants]

Do they want us to have a high savings level? Will our stock evaluations change if instead of only a few people being smart with their money, the entire country penny pinches and puts their money into investments? Will next quarter's er beat expectations if we all did that?

 

[Gary/CO]

Do they want us to have a high savings level? Will our stock evaluations change if instead of only a few people being smart with their money, the entire country penny pinches and puts their money into investments? Will next quarter's er beat expectations if we all did that?

Nothing I've seen suggests that "they" want us to have high savings. AFAIK, since we are (or were) a consumer based economy, they want us to consume (spend like there's no tomorrow).

Stocks go up under hyperinflation. Historical precedents include Weimar, Zimbabwe and Venezuela. However, share holders don't have liquidity and share prices don't keep pace with inflation either. Modernly you have frozen assets you can't touch (if you get to keep them at all under the Uniform Commerical Code).

Suggest no one blindly believes the figures produced by the government. Last quarter was "up" because of massive government hiring, free spending by the same (which means creating new dollars which result in more inflation) and outright lies by the BLS and administration.

I'm not your financial adviser nor do I pretend to be one in real life. I'm just an old guy who is unfettered by the formalities of an economics education but who reads a lot of books on monetary history. Ferguson's When Money Dies is a good read.

 

[Malum Prohibitum]

Do they want us to have a high savings level? Will our stock evaluations change if instead of only a few people being smart with their money, the entire country penny pinches and puts their money into investments? Will next quarter's er beat expectations if we all did that?

In some measure, that has already happened.

Read about Jack Bogle and the rise of the index fund. The index fund made it possible for average Americans to simply invest in the market and ride it out at a very, very low cost. For example, VOO, Vanguard's S&P 500 ETF, has an expense ratio of 0.03%. It's one year return, even with the steep drop in the market at the end of December, was 25%.

As a result, Vanguard has grown and grown and grown, and now other companies (not owned by the investors like Vanguard) are trying to copy the model. Five of the ten largest funds are Vanguard. Three of the others are a company copying Vanguard's model. Only the ninth and tenth place funds are the older high cost fund model.

I do not know who "they" is, but maybe you should ignore "they" and get on investing.

I explained it this way to my young adult son. If you have 50k, and you add $2k a month to it until you are 67, and you average 10% returns annually, you will have $23 million.

Or you can get a bigger house and buy expensive vehicles and blow your money and later worry about retirement and bitch about politicians. Your choice.

https://www.ramseysolutions.com/retirement/investment-calculator?srsltid=AfmBOoqC0dERl45DeqIJAKnDyz3EnnyXHK-Qv17eGlE6W4s2AFrSAFLY

He decided to listen to me. Hopefully he sticks to it.

If you don't like my 10% assumption, use the link and put in your own assumption. If you are older, then get started and save more.

Ignore "they." You don't know "they" and owe nothing to "they" by way of explanation of how you invest your money. Jock Bogle made it possible for you to grow wealthy without "they" being able to stop you, and millions have already done it.

There are 24 million millionaire households in the US. Some of them are teachers and firefighters. Join them and forget about "they"

 

[Malum Prohibitum]

Do they want us to have a high savings level? Will our stock evaluations change if instead of only a few people being smart with their money, the entire country penny pinches and puts their money into investments? Will next quarter's er beat expectations if we all did that?

The more money "we" save and invest, the more money "we" and "they" make.

The stock market is a market. When buying pressure is high, the prices go up, just like eggs. Still lots of housewives want eggs when the supply is short, the price goes up. There is a field number of corporate shares in the market. When more money pours in, the price goes up. When the sellers outnumber the buyers, the price goes down.

Low cost index mutual funds with low minimums have a lot to do with why the market returns have been what they are.

You do not need to pick only the top performing stocks. Nobody can do that, anyway, not consistently, year after year. You just need to buy the market. VTSAX is total stock market. All of them. You get all the winners, too. VFIAX is the S&P 500. You can pick up a small percentage of one of their bond funds if you want to play it a little safer (the government told Jack Bogle "No!" to calling the bond funds an index, so Vanguard does not call the bond funds an index, but the description will tell you what it is).

Then just pour money in every payday, without fail, no matter what. Do it when the market is up. Do it when the market is down. Do it every pay day. You will find over time that pouring money in when the market is down is the best decision you will have ever made, but you don't know which way the market is heading so just do it every pay day, up or down. Invest, invest, invest. The percentage of your income that you invest is the most important determinant of your success.

Stop borrowing. No car payments. No credit cards. Just stop it. No new mortgages. Maybe refinance to get a lower rate, but do not take cash out and do not extend the years term. Make sure the mortgage is paid off well ahead of retirement.

Make interest something you are paid, not something you pay. Then you will be one of "they"

 

[Malum Prohibitum]

Nothing I've seen suggests that "they" want us to have high savings. AFAIK, since we are (or were) a consumer based economy, they want us to consume (spend like there's no tomorrow).

You are correct.

But if you invest 30% of your income, I guarantee your stupid relatives and friends and acquaintances will keep up that debt driven consumerism just fine.

That does not mean you have to go along with it.

All I see when my buddy pulls up in his nice new truck is that is investment accounts will suffer. I tell him, "Nice truck," and it is nice, and he smiles, but I wonder why he still has student loans and vehicle payments and goes on four vacations a year. I know what he makes. I know the size of his family. I know what that costs. He is not investing.

I am.

I got a late start, too, so I have to save a big percentage to make up for it.

Younger folks, get started today. That is the one thing I wished I had done more of earlier.

 

[Gary/CO]

I have neighbors who are very much keep up with the Jones' mindset. They bragged about their 7% CD but if real inflation is 8% their purchasing power is contracting. Buy less with more dollars.

All I see when my buddy pulls up in his nice new truck is that is investment accounts will suffer. I tell him, "Nice truck," and it is nice, and he smiles, but I wonder why he still has student loans and vehicle payments and goes on four vacations a year. I know what he makes. I know the size of his family. I know what that costs. He is not investing.

Concur 100%. He has fallen prey to consumerism, exposed to repossession and likely foreclosure too. Had a coworker whose tenant stiffed him on rent so he (tenant) could take a vacation. Tenant belongs to the own' nut'n and be happy crowd. Coworker sued tenant get his rental income (and won).

Many espouse chasing capital and fuel it with FOMO. There's a time for everything and it depends on one's risk tolerance. If one is young and can rebuild wealth, that person can take more risks. If one is old then generally the risk tolerance is less as there is less time to rebuild wealth.

BTW, when Thurston Howell III was stranded on Gilligan's Island, being a millionaire meant something. Modernly (Jan. 2025) the average homeowner in San Francisco or Washington, DC and its immediate surrounding are millionaires per se and they're the new middle class. The trick is to stay that way and to have liquidity to take advantage of the opportunities that will arise.

Another good read is Anna Eisenmenger's Blockade: Diary of an Austrian Housewife.

ETA: Setting aside money for investing is exactly what the book, The Richest Man in Babylon, recommends. It's an ancient work that is as relevant today as when it was first pressed onto clay tablets. Best of all, it's free on U-toob. Everyone should either read a hardcopy or listen to the free U-toob video.

 

[Malum Prohibitum]

it depends on one's risk tolerance. If one is young and can rebuild wealth, that person can take more risks. If one is old then generally the risk tolerance is less as there is less time to rebuild wealth.

You are correct again, but I have learned that downturns are the time I will love five years on.

If the market drops 50%, and I stay the course, I am buying those shares half off. Even if the market returns only to where it was before, all of those shares I bought at the bottom double. Shares all the way down and back up appreciate as well. Everybody looks at the chart that shows a V from the top, down 50% and back to where it was and declares, "0% return! Horrible." Those of us who invest twice a month know better, because all of the shares we bought are worth more when things get back to what others are calling 0.

But I learned the hard way about risk tolerance. When I was younger, turn of the century, I guided my parents into aggressive all stock mutual fund allocations. They panicked during a downturn and sold everything at the bottom and bought a high priced annuity. They did not tell me for years, and when they did, I about cried. It cost them hundreds of thousands of dollars (more than half a million had they just left it alone until today) and more if they would have continued investing regularly on the way down and back up as I instructed them.

Risk tolerance matters. I know what mine is, but I made a mistake advising others when I did not know theirs. They were all happy so long as the returns were high, but went into a panic when the market turned down.

I still remember my mother looking at me and declaring, but we could have lost everything! I had a very hard time not laughing, but managed not to do so because I could still see the fear in her eyes. This was years later. I tried to explain to her that losing everything was impossible. They were in almost the entire market. Losing everything would mean there was no longer a market, no companies, no economy, and then it would not matter.

Ugh.

After that I resisted advising them for years, but they kept asking, so I finally relented. A good 50/50% mix of stocks and bonds. Dad died, but Mom has stayed the course and is retired and happy to have what she has.

I groan, though, knowing (A) she could have had half a million more, and (B) that she is not getting the 25% return last year but a lower one due to the bond allocation. Nevertheless, she is happier with the more stable performance.

I am still all in 100% stock market no bonds. All low cost index funds. Steady as she goes through bull or bear.

 

[Gary/CO]

Malum Prohibitum - my only suggestion for a person who is into stocks is that they either direct register their shares or take delivery of the stock certificates. Ditto for any accounts the person controls. That reduces the exposure and the brokerage cannot hypothecate them and expose the holder to rehypothecation. Rehypothecation is lawful under the UCC and has been upheld by the Federal Bankruptcy Court in NYC. Brokerages will hate the investors who do that but DGAF if they do. It's slower as one has to surrender the certificate if they want to raise $$$ for a trade, but it's safer.

 

[lariat]

Do they want us to have a high savings level? Will our stock evaluations change if instead of only a few people being smart with their money, the entire country penny pinches and puts their money into investments? Will next quarter's er beat expectations if we all did that?

No, a high savings level cannot be afforded by the USG. In order for tax revenues to keep pace to assist in paying for the government largess there needs to be velocity of money - taxes received from the sales of goods and services. IMO, this is one reason (a big one), they pushed for taxes on unrealized gains this last year, as that reserve of money is largely out of the overall economy. This will also be the reason for crypto to replace the dollar - just like in China, spend it by a certain time or it will be deleted. The only other way to fund the government is treasuries, which produces inflation - and don't be fooled, that is part of the equation as well.

A key component of the velocity of money is the money being created at every bank in America when loans are made from customer deposits - fractional reserve system. This is hugely important. This is becoming tenuous at the moment because of the banks not lending but saving their money back to address bad loans and the fact that they put customer's deposits into bonds. Those bonds were very low yield (high bond prices) and now that rates have gone up from when they bought the bonds they now have unrealized losses on their balance sheets due to the market value of those bonds going down. Couple this with an ever increasing number of loan defaults and you have both skittish banks with respect to lending, a decrease in the creation of money AND a decrease in the velocity of money which translates into fewer tax revenues. This means the only way to get around this (since the government has limited ability to mandate that banks give out loans) is that they government must sell bonds and print money, so we get inflation.

At the moment it isn't the economy that is funding the government through taxation, it is the selling of debt. But there are real cracks starting to show up there, as is evidenced by bond sales by the Fed and market pricing. HOWEVER, as long as tax rates are not reduced the inflation of money will contribute to the tax revenue - IOW, the price of everything going up both falsifies the real GDP numbers and supports tax revenue through sales tax of goods that are more expensive than they were previously.

It's going to crumble. The question is when. This is also why we will go to war with the BRICS nations - with them pulling out of the US dollar being the reserve currency in varying degrees, the hegemony of the dollar is at risk. Putin and others know this and are capitalizing on the high debt of the West to bring it to bankruptcy (ultimate goal). This is what a lot of the saber rattling is all about, not what the MSM says.

 

[Gary/CO]

It's more than bank loans that expand the "money" supply. Every time we slap down the plastic for payment we are also guilty of expanding it. Banks have taken a beating b/c of commercial real estate loans that have gone undewater. Another reason as mentioned as people drift towards higher yield (bonds), they leave the banks. This created problems for some banaks like SVC which bellied up.

As for government bonds, it's been a few years now but nobody shows up for the Treasury Auctions or if someone does, it's b/c the Fed Res has been slipping money under the table for the buyer to buy (and therefore sustain the illusion that there is a demand for dollars). I think that the Fed Res Note will be the last man standing among the fiat currencies but all fiat currencies eventually die. Crack-up boom comes to mind.

Like yourself lariat, I don't know when but it's inevitable. The carpet could havve been yanked out from beneath us since TARP/QE and it's likely that they'll do it just for the incoming administration. The only real thing we little fish got since TARP/QE was time. I've used it to 1) relocate away from a major metropolitan center, 2) take mitigation meaasures to allow me (or my heirs) to take advantage of the chaos.

Sidenote: I know a fellow who was a 5 year old kid in Germany when the Allies defeated the Nazis. He said post-war there was no money but cigarettes substituted for it (for a while). To survive you either had to have something to trade or a job skill to earn things. If you had neither, you didn't eat. After years of WW II reading I finally came across this account that tells of the revaluation of the mark. This is by a German soldier who was a PoW here before being shipped to England where he stayed a spell before returning to Germany:

"Then, on June 20, 1948, the monetary reform occurred. Ten Reichsmarks were now worth only one new German mark. Every German received forty new marks, and as one radio commentaator staated, 'Now Germans were either all poor or all rich together.' The reform did not matter to us. We had not been able to save any money. But suddenly now there were goods in the stores but people were unable to purchase them."

The same may well happen to the Fed Res Note. Swap ten/twenty/hundred/what-not Fed Res Note for the new dollar. (Meixco did this when Reagan was President). I know the bankers want to move the world to digital and if they do, they'll have total control over humanity. They can, as described, devalue your currency (expiration date so spend or lose it). They can deny your purchaase (no 2A for you peasant) or if you're persona non-grata b/c of a post on some social mediaa account, Jason Bourne you: Invalid Account . Soi Boi Justin Castreau in Canada did that to the truckers and their supporters.

Note: Unlike the 1930s where folks who held bonds generally won out b/c of dividend payments, that won't be the case today. Bonds are in bubble territory and the bond market will probaably go first. What's the value of a contract where the other party cannot perform? Zed/zero/zip/nada.

Disclaimer: None of this is to be taken as financial advice. Do your own due diligence and research it for yourself before making any financial decisions.

 

[lariat]

It's more than bank loans that expand the "money" supply. Every time we slap down the plastic for payment we are also guilty of expanding it. Banks have taken a beating b/c of commercial real estate loans that have gone undewater. Another reason as mentioned as people drift towards higher yield (bonds), they leave the banks. This created problems for some banaks like SVC which bellied up.

As for government bonds, it's been a few years now but nobody shows up for the Treasury Auctions or if someone does, it's b/c the Fed Res has been slipping money under the table for the buyer to buy (and therefore sustain the illusion that there is a demand for dollars). I think that the Fed Res Note will be the last man standing among the fiat currencies but all fiat currencies eventually die. Crack-up boom comes to mind.

Like yourself lariat, I don't know when but it's inevitable. The carpet could havve been yanked out from beneath us since TARP/QE and it's likely that they'll do it just for the incoming administration. The only real thing we little fish got since TARP/QE was time. I've used it to 1) relocate away from a major metropolitan center, 2) take mitigation meaasures to allow me (or my heirs) to take advantage of the chaos.

Sidenote: I know a fellow who was a 5 year old kid in Germany when the Allies defeated the Nazis. He said post-war there was no money but cigarettes substituted for it (for a while). To survive you either had to have something to trade or a job skill to earn things. If you had neither, you didn't eat. After years of WW II reading I finally came across this account that tells of the revaluation of the mark. This is by a German soldier who was a PoW here before being shipped to England where he stayed a spell before returning to Germany:


The same may well happen to the Fed Res Note. Swap ten/twenty/hundred/what-not Fed Res Note for the new dollar. (Meixco did this when Reagan was President). I know the bankers want to move the world to digital and if they do, they'll have total control over humanity. They can, as described, devalue your currency (expiration date so spend or lose it). They can deny your purchaase (no 2A for you peasant) or if you're persona non-grata b/c of a post on some social mediaa account, Jason Bourne you: Invalid Account . Soi Boi Justin Castreau in Canada did that to the truckers and their supporters.

Note: Unlike the 1930s where folks who held bonds generally won out b/c of dividend payments, that won't be the case today. Bonds are in bubble territory and the bond market will probaably go first. What's the value of a contract where the other party cannot perform? Zed/zero/zip/nada.

Disclaimer: None of this is to be taken as financial advice. Do your own due diligence and research it for yourself before making any financial decisions.

Couple of things: any loan, like ANY loan, even from Uncle Rufus creates cash in a fiat system. I used banks because it’s easily understood but you are correct, credit cards definitely add to the money supply, just not actual cash. And that’s the point AND the very thing that kills a country - THERE ISNT ENOUGH MONEY TO PAY OFF ALL THE OUTSTANDING DEBT. This goes for every fiat system out there. The US royally fucked itself by absolutely abusing its hegemony and taking debt to the moon. The world will suffer because of it and this is the reason BRICS nations are hoarding gold at unprecedented levels and not buying US debt - they know it’s coming and want both a hedge against it AND to utilize it as an economic weapon. They know when it all goes down they will have to take part in the worldwide downturn but are trying to minimize their losses while hastening the fall of the US. The trick is for them to stay solvent through it as well. People in Washington know this, and that WW3 has started as an economic one. If they haven’t figured this out we are governed by morons. But I will also submit that some know it and are trying to hasten it as I cannot comprehend another reason why a politician would vote for all this ridiculous spending with trillion dollar budgets other than to hasten the fall of the US - DEI and climate initiatives, insane money to Ukraine and other countries to build a wall, allowing millions of migrants in to pull down the welfare system, etc. see the trend? It’s not just BRICS, it’s also some in power within both parties.

The impact to pensions and 401ks when this all rolls over is going to be absolutely shocking to most.

But if you look at credit card, auto, home and other defaults/ debt write-offs you can see the US consumer is not able to make their payments. This won’t end well. Any DOGE activity will only add to the unemployment rate since the majority of jobs in the Biden administration were through government jobs. There should be no expectation that if DOGE does what it says that there will not be economic pain, but it is necessary.

Everyone must get their financial house in order. The question is not IF we get caught up in this, the real question is what degree of impact each individual will be affected. They will use crypto to default on some of the debt and reduce the savings of US dollar holders. It really can’t be any other way at this point, and it will be used to create the velocity of money for taxation that otherwise cannot be achieved - through the minimization of savings and forcing all dollars to participate in the economy.

 

[Gary/CO]

Bravo lariat!

They will use crypto to default on some of the debt and reduce the savings of US dollar holders. It really can’t be any other way at this point, and it will be used to create the velocity of money for taxation that otherwise cannot be achieved - through the minimization of savings and forcing all dollars to participate in the economy.

This is the plan unless people reject CBDC. Nigerians and Ghanans both rejected their govt/bank effort to shove it down their throats. We can too and if we do, we break the central bank.

The only thing to add is something our education system (school/college/universities) doesn't teach: the distinction between money and currency. Additionally all fiat currencies return to their instrinsic value and the Foster & Myslin book, Fiat Paper Currency, discusses this by examining each nation and their various failed currencies.

Where one puts their wealth determines whether they have any wealth after the reset.

 

[Malum Prohibitum]

Lots of doom and gloom in here. If you folks have been using this stuff as an excuse to blow your money with no discipline instead of saving and investing, then you have missed out on the best decades to have been a normal saver and investor in human history.

It's too bad.

Some of you need to turn off your social media feed and get to doing something productive that makes your life better.

Building wealth is one of those things.

 

[devildog93]

Lots of doom and gloom in here. If you folks have been using this stuff as an excuse to blow your money with no discipline instead of saving and investing, then you have missed out on the best decades to have been a normal saver and investor in human history.

It's too bad.

Some of you need to turn off your social media feed and get to doing something productive that makes your life better.

Building wealth is one of those things.

I would say equal parts of investing and hedging against the government driving it off a cliff are probably in order. People can do whatever they want, but I heard enough great depression stories from my great grandma to think things like that don't happen. Plenty of investor class people wished they had approached things a little differently. If you want to swing for the fences, by all means, have at it. To think you are being level headed strategically while knowing what normally happens around the world throughout history seems a little foolish though.

 

[Alpine 338]

Median home price in the nation is $420,400

The last time it was $200k was 2003

After rising very quickly past that (because the government was pushing banks to loan to everybody) the housing situation crashed, and then housing finally passed $300k in 2015.

There has never been a time in history when an average 25 year old could afford a larger than 2500 square foot home (since you asked about 25 year olds and $500k houses). If you want to give some example from 1950, you have to remember that the average square footage back then was about 1100 square feet.

The solution is to build more houses, and smaller ones, but the moment you try to do that everybody in your town is down at the town council meeting opposing it.

Price is supply and demand.

Lots of factors causing the high home prices... shortage of available homes in general, more local government bureaucracy (adds costs, including more stringent building codes) in building a home, higher price of materials, higher price of land, higher labor costs, etc. etc.

I sold my almost 3900-sqft home during Covid, and started building a smaller 1200-sqft off-grid home. The profit I made on selling that bigger house was pretty much all absorbed into the smaller build, and I'm doing most of the build myself.

With the fires in LA County, over 10,000+ structures lost, which I equate to a minimum of 20K homeless people now, and can't imagine that won't have an impact on housing prices, not only regionally, but nationwide.

 

[Gary/CO]

More history.

In the wake of NAFTA (free trade agreement), middle class production jobs were starting to leave the country. Prior to that we had lost the electronics (TV, radios/stereos so no more RCA, Magnavox, Phillips), camera (no more Kodax and rise of Nikon, Pentax, Canon) and began losing the automobile industry to Japan (this was around the '70s so free trade was not to blame for those industries). With free trade, we saw the start of factory closures and as mentioned, factory production jobs was the path for high school grads (and non-grads) to realize the middle class dream. We started seeing production workers being laid off and we used to make everything we consumed here. Remember when Silicon Valley was known for the chip making industry? The trouble is that creates a trade imbalance and wealth flows from the consumer nation to the producting nation.

Then we saw the DotCom bubble. The bust wrecked a lot of people. Fed Res Chair Alan Greenspan loosened monetary policy and introduced lowered interest rates) that resulted in cheap money. The winners were home owners who came to believe that real estate would never drop. To profit on rising equity prices, loans were offered with ads touting: get an equity loan and live the lifestyle you deserve! So (stupid) people took out equity loans to improve their homes or worse, for material sh*t (rather than invest). People overspent on the assumption that their home prices would always climb and never drop.

As home prices rose, a buying frenzy followed that was supported by the low interest rates. Unqualified people were allowed to buy (liar loans) and all these loans were sold on the international market. Loans were divided up into shares so 10% on one person's loan went into Mortgage Backed Security #1, another 10% in #2, 15% into #3 and so on and so forth. Another person's loan was similarly parceled out and this included the liar loans to unqualfied buyers who wanted to get rich by buying a house. House flipping was promoted by real estate gurus (anybody remember Tom Vu?) who suggested buying a house, using that house as collateral for buying another house, rinse and repeat until you have a housing empire. These loan packages, or Mortgage Backed Securities, were sold to international investors, banks, etc. The leveraging by big investments increased the risk and when the housing bubble burst in 2007, the leveraging exacerbated the financial crisis that threatened to bring down the major banks and financial institutions.

(Side note: The housing bust in 2007 saw people who lost everything lose it. In California, some killed their employers and others their family. Some who didn't lose it abandoned their pets and walked away from their underwater mortgage).

Because the big banks were incestuously tied together through collateral debt obligations and derivatives, the failure of one instittuion threatened to bring down everyone else in a successive chain of failure (the domino effect).

Hence we got TARP and QE in 2008 to stave off the financial crisis. The trouble with QE is that once it started, each successive infusion of fresh dollars was less effective than the previous one. Bernanke was painting the Fed Res into a corner and we should have taken the pain in 2008. We'd be on the road to recovery right now but because it has been deferred, it ony exacerbates the pain.

The trouble with QE is that it inreased inflation. If you believe that 2% inflation is good, you've never compounded it over the course of thirty years. 2% is only good when the economy is expanding at a rate higher than 2%. For every new dollar created, it devalued existing dollars correspondingly. For a while our greatest export was inflation and probably gave rise to the Arab Spring. An Arab living on subsistence level had to figure out does he buy food for his family or clothing? Americans were initially insulated from it because of the dollar's standing as the World's Reserve Currency.

(Sidenote: The dollar became the World's Reserve Currency with the 1944 Bretton Woods Agreement. Back then the US had the most gold in the world and promised not to print more dollars than it had gold. We had over 24000 tons of gold back then. LBJ's War on Poverty and Vietnam War made other nations realize that the US was printing more dollars than it had gold. LBJ also stopped the minting of species money (silverr coins) in 1965 (so keep your pre-1965 90% silver coins). In response to overprinting and devaluation of the dollar, DeGaulle sent warships to collect their gold from the US and as other nations followed, Fort Knox's gold vaults began empty. Then in 1971 Nixon interrupted Bonanza (TV Western) to announce closure of the gold window - effectively renouncing Bretton Woods. The dollar floated and for the first time all nations (Switzerland excepted) had fiat currency. To stabalize the dollar and sustain its demand as the world's reserve currency, in 1973 Kissinger got Saudi Arabia , the biggest oil producer, to accept nothing but the dollar for its oil sales. Thus was born the petro-dollar and UAE quickly followed suit. This sustained the global demand for dollar.

Today the dollar's status as the world's reserve currency is being threatened by the rise of BRICS and as mentioned, nobody shows up for the Treasury Auctions (unless they're slipped dollars by the Fed Res). The demand for the dollar is slipping and China does direct currency swaps via CIPS, Russia has SPFS to bypass American based SWIFT. If the world rejects the dollar, those surplus dollars come home and inflation (too much money chasing too few goods/services) gets out of hand).

Saudi Arabia already accepts other foreign currencies than the dollar for oil trade settlement. It didn't openly renounce the '73 Petro-dollar agreement but doesn't have to. So has UAE and other OPEC members. While the US has used its military to protect the petro-dollar (Hussein agreed to accept the Euro for his oil and Khadaffi wanted the gold dinar), but our military is exahausted by endless wars and deployments. While still formidable, our military is overstretched and woke/DEI has only weakened it. Ourr ability to impose military force to protect the petro-dollar is not as it once was.

The Chinese curse, may you live in interesting times, approaches. There's another Chinese word, weiji, which means crisis and opportunity are the same thing. Those who anticipate and mitigate will have an opportunity to prosper and perhaps even build generational wealth.

 

[lariat]

More history.

In the wake of NAFTA (free trade agreement), middle class production jobs were starting to leave the country. Prior to that we had lost the electronics (TV, radios/stereos so no more RCA, Magnavox, Phillips), camera (no more Kodax and rise of Nikon, Pentax, Canon) and began losing the automobile industry to Japan (this was around the '70s so free trade was not to blame for those industries). With free trade, we saw the start of factory closures and as mentioned, factory production jobs was the path for high school grads (and non-grads) to realize the middle class dream. We started seeing production workers being laid off and we used to make everything we consumed here. Remember when Silicon Valley was known for the chip making industry? The trouble is that creates a trade imbalance and wealth flows from the consumer nation to the producting nation.

Then we saw the DotCom bubble. The bust wrecked a lot of people. Fed Res Chair Alan Greenspan loosened monetary policy and introduced lowered interest rates) that resulted in cheap money. The winners were home owners who came to believe that real estate would never drop. To profit on rising equity prices, loans were offered with ads touting: get an equity loan and live the lifestyle you deserve! So (stupid) people took out equity loans to improve their homes or worse, for material sh*t (rather than invest). People overspent on the assumption that their home prices would always climb and never drop.

As home prices rose, a buying frenzy followed that was supported by the low interest rates. Unqualified people were allowed to buy (liar loans) and all these loans were sold on the international market. Loans were divided up into shares so 10% on one person's loan went into Mortgage Backed Security #1, another 10% in #2, 15% into #3 and so on and so forth. Another person's loan was similarly parceled out and this included the liar loans to unqualfied buyers who wanted to get rich by buying a house. House flipping was promoted by real estate gurus (anybody remember Tom Vu?) who suggested buying a house, using that house as collateral for buying another house, rinse and repeat until you have a housing empire. These loan packages, or Mortgage Backed Securities, were sold to international investors, banks, etc. The leveraging by big investments increased the risk and when the housing bubble burst in 2007, the leveraging exacerbated the financial crisis that threatened to bring down the major banks and financial institutions.

(Side note: The housing bust in 2007 saw people who lost everything lose it. In California, some killed their employers and others their family. Some who didn't lose it abandoned their pets and walked away from their underwater mortgage).

Because the big banks were incestuously tied together through collateral debt obligations and derivatives, the failure of one instittuion threatened to bring down everyone else in a successive chain of failure (the domino effect).

Hence we got TARP and QE in 2008 to stave off the financial crisis. The trouble with QE is that once it started, each successive infusion of fresh dollars was less effective than the previous one. Bernanke was painting the Fed Res into a corner and we should have taken the pain in 2008. We'd be on the road to recovery right now but because it has been deferred, it ony exacerbates the pain.

The trouble with QE is that it inreased inflation. If you believe that 2% inflation is good, you've never compounded it over the course of thirty years. 2% is only good when the economy is expanding at a rate higher than 2%. For every new dollar created, it devalued existing dollars correspondingly. For a while our greatest export was inflation and probably gave rise to the Arab Spring. An Arab living on subsistence level had to figure out does he buy food for his family or clothing? Americans were initially insulated from it because of the dollar's standing as the World's Reserve Currency.

(Sidenote: The dollar became the World's Reserve Currency with the 1944 Bretton Woods Agreement. Back then the US had the most gold in the world and promised not to print more dollars than it had gold. We had over 24000 tons of gold back then. LBJ's War on Poverty and Vietnam War made other nations realize that the US was printing more dollars than it had gold. LBJ also stopped the minting of species money (silverr coins) in 1965 (so keep your pre-1965 90% silver coins). In response to overprinting and devaluation of the dollar, DeGaulle sent warships to collect their gold from the US and as other nations followed, Fort Knox's gold vaults began empty. Then in 1971 Nixon interrupted Bonanza (TV Western) to announce closure of the gold window - effectively renouncing Bretton Woods. The dollar floated and for the first time all nations (Switzerland excepted) had fiat currency. To stabalize the dollar and sustain its demand as the world's reserve currency, in 1973 Kissinger got Saudi Arabia , the biggest oil producer, to accept nothing but the dollar for its oil sales. Thus was born the petro-dollar and UAE quickly followed suit. This sustained the global demand for dollar.

Today the dollar's status as the world's reserve currency is being threatened by the rise of BRICS and as mentioned, nobody shows up for the Treasury Auctions (unless they're slipped dollars by the Fed Res). The demand for the dollar is slipping and China does direct currency swaps via CIPS, Russia has SPFS to bypass American based SWIFT. If the world rejects the dollar, those surplus dollars come home and inflation (too much money chasing too few goods/services) gets out of hand).

Saudi Arabia already accepts other foreign currencies than the dollar for oil trade settlement. It didn't openly renounce the '73 Petro-dollar agreement but doesn't have to. So has UAE and other OPEC members. While the US has used its military to protect the petro-dollar (Hussein agreed to accept the Euro for his oil and Khadaffi wanted the gold dinar), but our military is exahausted by endless wars and deployments. While still formidable, our military is overstretched and woke/DEI has only weakened it. Ourr ability to impose military force to protect the petro-dollar is not as it once was.

The Chinese curse, may you live in interesting times, approaches. There's another Chinese word, weiji, which means crisis and opportunity are the same thing. Those who anticipate and mitigate will have an opportunity to prosper and perhaps even build generational wealth.

Not disagreeing with you, but there are some things of importance here. They point to a common element.

I was part of that dotcom crash. It sucked. But there were two things that occurred beforehand: the Long Term Capital Management failure brought about by excess leverage and flawed quantitative analysis. This damn near took down the economy and some international banks and required almost a $4B bailout from banks that was put together by the Fed. This had knock-on effects in the banking system. This played a role in the dotcom bust magnitude as the Fed lowered interest rates that fed into the malinvestment of "vaporware", "shelfware" and just generally bad business models. At that time, if you remember, Greenspan was on his "irrational exuberance" kick. And Bernanke's "helicopter money" was coming into focus. Had everyone known then what we know now, Mr Bernanke would have been kicked out of the government, or should have been. I still have articles printed out that decried that very idea and warned of what would inevitably come.

Then with home prices there was the "instar stage" of a housing crisis that was forming with these lowered interest rates, along with a series of pushes in the early 2000's to lend to low income buyers - The American Dream Downpayment Act. These things lead in part to the predatory lending, "dark pools", and mortgage bundling of subprime loans into investment vehicles as you alluded to - hedge funds loved them. Again, the Fed had to step in when the music stopped.

For me, much of this leads to the conclusion that there is a real issue with government agencies getting involved with the free market as it creates opportunities for imbalances and malinvestment within various markets. It also takes resources away from industry sectors that would otherwise contribute to the economy meaningfully. We should be avoiding this and allowing those who invest unwisely to take their lumps instead of being supported. But the reality is that will never occur, making much of it look like a pump and dump scam. This "saving by the Fed" (looking at you SVB) is also a reason why we are in our current state - we keep doing the same thing and winding up with the same general results - ever increasing amounts of debt. It also shows that the politicians making the laws are really not the brightest people in the room, or are in on it.

 

[W54/XM-388]

, or are in on it.

It's all one big club and you and us aren't in the club.

 

[NoDopes]

with government agencies getting involved with the free market as it creates opportunities for imbalances and malinvestment within various markets.

It also provides for corruption and grift. We have literal crime families running the goverment. $100B to Ukraine and they specifically voted for ZERO oversight and accounting.

 

[Snuby642]

The Biden crime cartell .

 

[lariat]

Strong Upward Pressure on the Cost of Food, What’s in Your Basket?

By many measures the price of food is on the rise. Let’s discuss some charts.

mishtalk.com

 

[babyguppy]

Strong Upward Pressure on the Cost of Food, What’s in Your Basket?

By many measures the price of food is on the rise. Let’s discuss some charts.

mishtalk.com

I look at the price of 'Meat, chick, fish, eggs' at 2020 Jan vs current 2024. 1.9 to 4.2 BS!!
They really should try harder to be more accurate. more like
2020 vs 2024
Meat 4.99 to 8.99 for the price of 'sirloin' at sams
eggs .79 to 3.99 (came down from 9.99) at sams
chick .79 lb to 3.99
bacon.. sighs .. was 9.99 for 16oz now it's 15.99 for 12 oz
Hell, when Ahi Ahi is cheaper than sirloin steak.. something's wrong.
they try to drop the prices near the end of Biden's tenure, so people just see a before and after and forget the During part.. gas.. 3.59 85 octane for about 3 years.
currently 2.89 at sams... was 1.79 under Trump

 

[lariat]

I look at the price of 'Meat, chick, fish, eggs' at 2020 Jan vs current 2024. 1.9 to 4.2 BS!!
They really should try harder to be more accurate. more like
2020 vs 2024
Meat 4.99 to 8.99 for the price of 'sirloin' at sams
eggs .79 to 3.99 (came down from 9.99) at sams
chick .79 lb to 3.99
bacon.. sighs .. was 9.99 for 16oz now it's 15.99 for 12 oz
Hell, when Ahi Ahi is cheaper than sirloin steak.. something's wrong.
they try to drop the prices near the end of Biden's tenure, so people just see a before and after and forget the During part.. gas.. 3.59 85 octane for about 3 years.
currently 2.89 at sams... was 1.79 under Trump

Dont disagree. Look at the price of cattle futures. It will go higher due to the low headcount on the herds. I was just at my local Wal-Mart and saw brisket was $63-70, and that aint quality meat. All protein is going up.

For many in America, the more you spend on food the less you have to buy anything else or save. That has real implications for the overall economy when you add in inflation vs wage growth, job openings, etc.

 

[NoDopes]

Went out to Pluckers for lunch the other day with the wife. Wings/fries/tea and burger/fries/tea, total bill over $50.
Definitively not going out as much with these prices.

 

[Gary/CO]

Janet Yellen herself said, "Cash is not a convenient store of value." (my italics)



When she said that, it was under a -0.75 basis rate. Today (1/2025) the % rate is higher today BUT it doesn't outstrip inflation. That's why I said how you store your wealth determines whether you've stored any wealth at all. If you're investing in equities (and accepting the transfer of risk from the big boys) to preserve and grow your wealth, it MUST out pace the real rate of inflation. Be wary of a crack up boom with historical precedents cited. Equities can increase BUT there won't be any liquidity (you're locked out and can't sell). Also mentioned is how exposing yourself to equities, savings or CDs can make you vulnerable to The Great Taking (if you haven't gone to this link yet, spend an hour and get an education that took me years of book reading to learn) and lose everything (so direct register or take delivery of your stock certificate). Almost hate to say it but US Treasury Bills are more secure than bank savings or CDs. Treasury will always pay you, but what can you buy with inflated dollars? Disclaimer: I don't have any T-bills.

Note: when the credit system fails which it will, cash will be king. However, that will only be for a short period and then everyone realizes it's worth the paper it's printed on.

Don't squander your wealth on stupid stuff (fast cars, jet skis, big screen TVs, luxury items, keeping up with the jones' BS). Think The Richest Man in Babylon as in this free audiobook link: (it's almost 5 hours so I read the hard copy which takes about 1 hr). This should have been required high school reading. Note: 2A stuff is OK b/c of their utility.

However, you should also know the difference between money and currency. We have the latter but not have had the former. I gave a link in a previous post for you guys to learn the difference.

Pro-tip - one way to beat inflation is to buy what you will need tomorrow today before the prices go up. Be sure it can be stored long term. You don't want to spend all your ducats b/c if you're anticipating building wealth, you need liquidity. Anna Eisenmenger's book (Blockade: Diary of an Austrian Housewife or sometimes called Blockade: Diary of an Austrian Middle Class Woman free at this link (cheaper than buying a used hardcopy like I did when it wasn't online yet) offers a first hand account of hyper-inflation in post-WW I Austria.

Weiji (Chinese word meaning crisis and opportunity are the same thing)- which side do you want to be on?

Last, get good with God.

Disclaimer: None of this is financial advice. Exercise due diligence and research everything for yourself. I'm just an old guy who read a lot of books.

 

[NoDopes]

https://archive.org/stream/Blockade-TheDiaryOfAnAustrianMiddle-classWoman1914-1924/Blockade-TheDiaryOfAnAustrianMiddle-classWoman1914-1924_djvu.txt

 

[Snuby642]

We have a cow needs butchering.
My son was quoted a price of 5$ per lb to cut / wrap. WTF?

Haven't got it in a trailer yet.
But it is huge corn fed beast.

Been ferral for years and eating on corn feeders daily.

Recently took a cow to slaughter house and got 2$ per lb.

So We are planning on building a small butcher shop.

 

[babyguppy]

We have a cow needs butchering.
My son was quoted a price of 5$ per lb to cut / wrap. WTF?

Haven't got it in a trailer yet.
But it is huge corn fed beast.

Been ferral for years and eating on corn feeders daily.

Recently took a cow to slaughter house and got 2$ per lb.

So We are planning on building a small butcher shop.

hamburger grinder. Steaks, hamburger and some beer to make it fun while you process the cow with your son.

 

[Emerson0311]

hamburger grinder. Steaks, hamburger and some beer to make it fun while you process the cow with your son.

Locally it’s $1/pound hanging weight if you take it to a butcher. $470 for a cow elk a couple months ago. If you have space to hang it and cut, a day off work and not paying 40% tax on your work sounds pretty good.

 

[mosin46]

I look at the price of 'Meat, chick, fish, eggs' at 2020 Jan vs current 2024. 1.9 to 4.2 BS!!
They really should try harder to be more accurate. more like
2020 vs 2024
Meat 4.99 to 8.99 for the price of 'sirloin' at sams
eggs .79 to 3.99 (came down from 9.99) at sams
chick .79 lb to 3.99
bacon.. sighs .. was 9.99 for 16oz now it's 15.99 for 12 oz
Hell, when Ahi Ahi is cheaper than sirloin steak.. something's wrong.
they try to drop the prices near the end of Biden's tenure, so people just see a before and after and forget the During part.. gas.. 3.59 85 octane for about 3 years.
currently 2.89 at sams... was 1.79 under Trump

there is a reason food and gas are not in gov inflation lies. real value about 40%.

 

[Snuby642]

I called several more places and found a reputable butcher that my other son has made retail purchases from.

Thier quoted rate for standard family style processing is about 100$ worth of kill fees and then $1.15 per lb cut / wrapped.

Furthermore I described the huge fat corn thief cow to the owner and was told to keep it for my family because cattle they reserve for family and friends doesn't eat that good.

Now to get it to a smaller pasture and into a trailer eventually. Last one was a Longhorn mix that didn't like trailers. Lol

Sorry for the rant it started out relative. No explination for the highball quote.

Anyway the missus just spent 2790$ for her round trip to Johannesburg South Africa to go on a safari with friends . Airline tickets only. She earned and saved that all on her own.

Was thinking I could buy a nice top tier scope, before inflation runs me out of shooting more than 100 yards.

 

[lariat]

It's all of it.
People can barely afford to feed themselves (if at all) and are losing/lost the dream of buying a house.
The last 4 years the housing market went from *affordable* 200's to out of reach 450's and 500K. What average 25 year will be able to afford a 500k dollar house (let alone save for the down payment) if they are getting screwed in every sector, from gas to food.
very disheartening. No way to save.
Hearing about 700k local chickens getting destroyed because of a 'bird flu' that will give you a cold. Hype it up, telling people it will kill you like the 65 year old person who suffered from cancer and had a low ability to fight infection .. sound familiar?
700k chickens is a lot of potential eggs. (using food as an example)
I hear everybody in this thread. I've had this convo with my kids. Inflation doesn't just happen, it's planned.
As soon as trump takes office, the Gov will release more accurate numbers of inflation to blame on Trump. We know it's double digit, let's see if 'they' admit it.
I doubt 'they' will admit it, because then COLA would kick in.

I was talking with the VP of a local credit union. Housing prices are high, no doubt, but they are seeing people that cannot afford to buy due to the increases in insurance and property taxes. He also stated that a 15 year loan is around 7.5% for the average credit rated buyer. 9% for a 30 year loan. Add that rate to the cost of houses and it is unobtainable for most.

 

[Gary/CO]

I was talking with the VP of a local credit union. Housing prices are high, no doubt, but they are seeing people that cannot afford to buy due to the increases in insurance and property taxes.

Insurance is a crucial component. Insurance companies decline selling insurance (think California where insurance was dropped a year before the Palisades Fire) and when you want to buy or (re)build and can't buy insurance, you're out of a buying or rebuilding loan. Banks won't offer loans if you don't insure the property.

If you're hit by disaster like our fellow citizens in Lahaina (HI), Santa Rosa & Paradise (CA), Florida or North Carolina and the insurance company denies your claim or delays it, you can't rebuild and may be forced to sell your land pennies on the dollar. Many of those folks in LA's Palisade and Ventura are more affluent and should be able to rebuild but we'll see. I personally believe it's a component of Satan Klaus' (Schwab) own nut'n and be happy and designed to reduce we commoners to peasant/tenants in their neo-feudalistic order. You might want to check out 15 minute cities and fires allow them to "build back better."

Sidenote: An insurance adjuster/classmaate once drilled into our little study group that insurance companies aren't there to insure people against loss. They're profit-driven and paying out ducats is contrary to their interest.

 

[lariat]

Insurance is a crucial component. Insurance companies decline selling insurance (think California where insurance was dropped a year before the Palisades Fire) and when you want to buy or (re)build and can't buy insurance, you're out of a buying or rebuilding loan. Banks won't offer loans if you don't insure the property.

If you're hit by disaster like our fellow citizens in Lahaina (HI), Santa Rosa & Paradise (CA), Florida or North Carolina and the insurance company denies your claim or delays it, you can't rebuild and may be forced to sell your land pennies on the dollar. Many of those folks in LA's Palisade and Ventura are more affluent and should be able to rebuild but we'll see. I personally believe it's a component of Satan Klaus' (Schwab) own nut'n and be happy and designed to reduce we commoners to peasant/tenants in their neo-feudalistic order. You might want to check out 15 minute cities and fires allow them to "build back better."

Sidenote: An insurance adjuster/classmaate once drilled into our little study group that insurance companies aren't there to insure people against loss. They're profit-driven and paying out ducats is contrary to their interest.

Yeah, I kind of fell into this rabbit hole as we are trying to get a new property policy at church (which are being cancelled at an alarming rate nationwide). They are holding out to the last minute and word has gotten back through the broker that it is because of the disasters you discussed. Then doing research I came across this unsurprising article.

California wildfires may raise insurance costs nationwide | Fingerlakes1.com

California wildfires may raise insurance costs nationwide Fire

www.fingerlakes1.com