The Death of Inflation

[biglentil]

Peter Schiff article "There is a big difference between earning money and just receiving money that’s been printed. When you have a job you earn money because you have contributed some value to society. You have helped produce a product or provide a service. As compensation, you earn some money that you can use to buy some of the goods and services in the economy that you helped create.

But if you don’t create anything, if you don’t have a job and the government just prints money and gives it to you, now you go out to spend it — you contributed nothing. Yet, you’re drawing from the supply of goods and services that you didn’t help to expand. So, it’s pure inflation. Prices just go up. That’s the only thing that can happen.”

But a lot of people have bought into the myth that you can consume without producing.

The recent spike we have seen in price inflation is just the beginning.

[farming101]

It would depend how much money for nothing people are given. If it is just enough to keep them alive and provide the basics it is not inflationary.
It also depends whether or not the availability of goods and services remains abundant. If a portion of the workforce is productive enough to supply everything the whole population requires inflation should not be a big deal.
Government policy is to regulate inflation, not get rid of it

[sumdumguy]

So, if the Canadian Economy needs to “grow” and interest rates are going to stay down because of that fact, then why would Trudeau keep raising Carbon taxes and defeat that rationale. Instead he should be reducing consumption taxes to grow the economy. Low interest rates do nothing but create housing bubbles - dangerous policy to go unchecked as seen in 2008 US. Too low-too long.

[sumdumguy]

Container yard east of Regina is packed to the nines with full containers sitting. What’s going on? Don’t see any trains being filled, none on the tracks either. Maybe those of you moving around see some rail movement. Are railcars moving down those tracks. Something seems off.

[burnt]

The processor who takes our IP soys is having one heck of a time getting empty cans for shipping them overseas. Consistently dealing with getting a very small percentage cans ordered and promised.

Asia is paying shipping companies to return them empty for a faster turn-around.

[helmsdale]

Used 8'x 40' can was $5500 last month.

$7500 a couple days ago... if you can find one.

Another one today... not necessarily apple's to apple's, but going rate on a 30ish hp Kohler auger motor was ~$3000 around christmas time. First place phoned yesterday said they've gone up alot, and new price is $4200.

Neighbor said a bundle of posts was ~$650 last year. $950 the other day.

[furrowtickler]

This has the double wham effect.
Money for nothing reduces productivity, we’re seeing it already with the shortages of product thus creating inflation.
Now the people have a more difficult time making ends meet, government answers with more handouts perpetuating the problem.

This has been tried in Canada for decades ... and has done exactly as you pointed out .

[errolanderson]

Every American can sit on-the-couch this weekend and have their bank balance jacked-up automatically.

Is this inflation risk?. . . lack of productivity risk? . . . or both? . . . or is this crash risk?

[biglentil]

Every American can sit on-the-couch this weekend and have their bank balance jacked-up automatically.

Is this inflation risk?. . . lack of productivity risk? . . . or both? . . . or is this crash risk?

1 and 2 yes but crash risk unlikely, not until they cut off the free money to the addicts. Plenty of it will find its way into Robinhood and crypto exchanges. Used cars under $3000 might get hard to find along with Xbox's. Saving in dollars is a sucker bet only for those willing to watch the purchasing power of their hard earned money get eroded by inflation. The ones that get money for nothin know better.

[HITTGrapevine]

1 and 2 yes but crash risk unlikely, not until they cut off the free money to the addicts. Plenty of it will find its way into Robinhood and crypto exchanges. Used cars under $3000 might get hard to find along with Xbox's. Saving in dollars is a sucker bet only for those willing to watch the purchasing power of their hard earned money get eroded by inflation. The ones that get money for nothin know better.

That about hits the nail on the head.
People who sit on the sidelines with cash savings during times of high inflation will watch their wealth evaporate. The rush to be fully invested is everywhere. Stimulus money and savings all going into consumer goods, equities, real estate, land. Prices for everything going higher and higher.
Where does the safe money go?
The economy already is already overstimulated.
And the US has just cracked the lid on another $1.9 trillion stimulus package.
Lock in your rates. This could get interesting

[shtferbrains]

"Where does the safe money go?"

The real money like the backroom boys that are advising the great reset?
Where is the low risk spot to protect acumulated lifetime earnings from bad fiscal management by governments.

[errolanderson]

"Where does the safe money go?"

The real money like the backroom boys that are advising the great reset?
Where is the low risk spot to protect acumulated lifetime earnings from bad fiscal management by governments.

Realize my opinion is not a popular one . . . but any inflationary push will be short-lived (IMO). The U.S. bond market is already hinting at this.

The central bank/Fed money printing show is now extremely long-in-the-tooth. To me, this faked prosperity is now in its final stage . . . like the ‘final burst’ of a fireworks show, . . . then welcome potential ‘rapid asset deflation’ or the death-of-inflation.

[Rareearth]

Please elaborate on the US Bond market, and the effect of higher rates.

[biglentil]

Realize my opinion is not a popular one . . . but any inflationary push will be short-lived (IMO). The U.S. bond market is already hinting at this.

The central bank/Fed money printing show is now extremely long-in-the-tooth. To me, this faked prosperity is now in its final stage . . . like the ‘final burst’ of a fireworks show, . . . then welcome potential ‘rapid asset deflation’ or the death-of-inflation.

That thesis is based on the thinking that the fed is somehow going to change its course after at least 50 years of loose monetary policy. The printing presses do not appear to be slowing down just the opposite. They expanded the money supply by 30% in the last 12 months and just announced another $1.9t. If there were a death of inflation like you say wouldn't that mean they could go on another printing show?

[Rareearth]

Historically yes, if investors lose confidence in the stock markets or fear higher interest rates, then they move into bonds driving higher yields.

Now with all the QE, or extra cash stimulus, the stock markets are going higher because that’s historically the best rate of return. Now as a hedge, or just another - next best (safe??) place to invest, investors are now buying bonds as well. Both can go up at the same time, why not?

Govt is promoting the idea that the economy is booming, unemployment is down. This begs the question “compared to what or when?” Last month isnt fair, hows about last year or two years ago?

If interest rates go up, or is supported by Govt, they won’t get re elected and as well, massive recession and bankruptcy killing the economy and consumer.

China is squeezing the market, forcing consumers to buy China everything. This is through control of container freight and sneaky/ quiet inflation in North America that everyone is underestimated. No one wants to work, paid to stay at home with stimulus, higher my minimum wages, higher wages at Wallmarts, Targets, McDonald’s etc. Higher fuel, food prices, housing, etc