The Death of Inflation

[shtferbrains]

If we say fu c you to China where will all
those Amazon deliverys come from.
Who will restock Walmart and Cabellas?
Norico makes a pretty good 1911 way cheaper than anyone else.
Paper Tiger with lots of political BS.

[errolanderson]

Fed Chair Powell again took the easy road yesterday or was it an act-of-desperation?

No Fed rates hikes until 2023. That outta get investors all excited and save the stock market bubble.

This about sums up how bad markets conditions are and incoming risk of fallout both to equities and commodities. Every artificially propped-up asset bubble is now at high-risk (IMO).

Gold tried to rally on the Fed's 'easy way out' statement. But again faltering . . . .

[jazz]

errol, I share your concerns about all this, but lets look at Japan. They are a country that ran into these problems 30 yrs before the rest of us. Their govt only debt is 250% of gdp.

Declining demographics, zombie companies, imports much of its raw materials and resources, hollowed out manufacturing base and they still carry on somehow. Not only does their CB print money, it also buys equities too in other countries.

The short answer is, as flawed as it is, this system can easily carry on another generation.

[macdon02]

Fed Chair Powell again took the easy road yesterday or was it an act-of-desperation?

No Fed rates hikes until 2023. That outta get investors all excited and save the stock market bubble.

This about sums up how bad markets conditions are and incoming risk of fallout both to equities and commodities. Every artificially propped-up asset bubble is now at high-risk (IMO).

Gold tried to rally on the Fed's 'easy way out' statement. But again faltering . . . .

All he can do is talk..... literally. If he raises rates, he'll blow up every country in the world due to the recent debt binge. So CB's will continue to purchase their own govts debt and the bond market will likely turn into a zombie similar to Japan. Regardless im not touching it. If lumber futures are the canary in the coal mine and they do correlate with equities reasonably well. Hang on for runaway cost increases, it's only just begun. "Officially" everything will be roses, while supply of goods is impossible to obtain. The Beatles put it best, Back in the USSR.

[Hamloc]

All he can do is talk..... literally. If he raises rates, he'll blow up every country in the world due to the recent debt binge. So CB's will continue to purchase their own govts debt and the bond market will likely turn into a zombie similar to Japan. Regardless im not touching it. If lumber futures are the canary in the coal mine and they do correlate with equities reasonably well. Hang on for runaway cost increases, it's only just begun. "Officially" everything will be roses, while supply of goods is impossible to obtain. The Beatles put it best, Back in the USSR.

No doubt in my mind everything I use on the farm has greatly inflated in price in the last 6 months, I am not concerned about deflation! I am concerned about availability and the affordability of what I need to operate.

[biglentil]

No doubt in my mind everything I use on the farm has greatly inflated in price in the last 6 months, I am not concerned about deflation! I am concerned about availability and the affordability of what I need to operate.

Exactly. We can prebuy inputs for the current growing season, but who has the storage or ability to pre buy inputs for 2022 or 2023. If you plan on buying fuel, fert and chemical beyond 2021 you are technically short commodities. Im not willing to gamble on Errol being right that our input costs will fall. That's why I offset my risk of rising inputs by going long commodities, without the need of buying additional fuel tanks, sheds, and fert bins. Availability is a whole nother can of worms that dollars sometimes just can't fix. Parts and chemicals in particular.

[jazz]

Bank of America statement on economy;

https://markets.businessinsider.com/news/stocks/stock-market-outlook-inflation-stimulus-returns-bonds-investing-sectors-bofa-2021-3-1030175296

excerpts

"We believe we are at a secular turning point for both inflation & interest rates," Hartnett and a team of Bofa strategists said in a note Thursday. "We believe 2020 likely marked a secular low point for inflation and interest rates due to a reversal of deflationary secular factors, fiscal excess, and an explosive cyclical reopening of the global economy creating excess demand for goods, services and labor."

"We believe the long-term asset allocation implications of 2020s inflation are bullish real assets, commodities, volatility, small cap, value & EAFE/EM stocks, and bearish bonds, US dollar, large cap growth," said BofA.

So there is both inflation and deflation working its way through the economy. Looks like these asset classes are trading places.

[errolanderson]

Over-indebtedness is ultimately 'deflationary' . . . .

[furrowtickler]

No doubt in my mind everything I use on the farm has greatly inflated in price in the last 6 months, I am not concerned about deflation! I am concerned about availability and the affordability of what I need to operate.

Then add in $170 carbon tax on everything we need to farm for next year expenses.....

Ahhh , farming is soooooo easy lol

[ajl]

Over-indebtedness is ultimately 'deflationary' . . . .

As are tax increases. We have both on deck going forward. Price of oil nose diving at a time of typical seasonal strength. A bit worried about once the fundamentals of the grains complex, ie crop problems in china, South America, North America, Russia and Europe simultaneously, will make a violent swing the other way.

[blackpowder]

If we say fu c you to China where will all
those Amazon deliverys come from.
Who will restock Walmart and Cabellas?
Norico makes a pretty good 1911 way cheaper than anyone else.
Paper Tiger with lots of political BS.

Funny you should mention that as the Chinese Type 81s and SKS are not banned, prohibited, or restricted.
Politics you say? Lol

[biglentil]

Over-indebtedness is ultimately 'deflationary' . . . .

A dollar only comes into existence as someone else's debt. What value does the dollar have if debts aren't paid back? ZERO. That's why dollars are said to carry counterparty risk. When interest rates rise significantly to cool inflation, this time around defaults would overwhelm confidence in the dollar. Stagflation

[farming101]

A dollar only comes into existence as someone else's debt. What value does the dollar have if debts aren't paid back? ZERO. That's why dollars are said to carry counterparty risk. When interest rates rise significantly to cool inflation, this time around defaults would overwhelm confidence in the dollar. Stagflation

There is also taxation as a means to cool inflation. I would not rule it out. However, most things happening now do not follow the script.....
Confidence in the dollar is ultimately based on a nation's ability to successfully collect taxes

[helmsdale]

Shortages of plastics, and semiconductors.

Semiconductor shortages are idling RAM truck production plants. Soaring prices are likely going to drive consumer prices up for everything.

So... if a board on your combine fails this fall, will you be able to get parts? And if you cant get parts, will you be able to bypass it to keep on going?

[errolanderson]

Surprise slump in U.S. manufacturing released today.

U.S. durable-goods orders fell by $2.9 billion or 1.1% in February, compared to January’s 3.5% increase. The data were weaker than expected; expectations called for durables good to increase 0.7%.

The report noted that this is the first drop in durable goods orders in nine months.
Excluding transportation, new orders fell by 0.9%. Core durable goods orders also missed expectations as economists were calling for a 0.6% rise.

Gold traders appear to view critical support at $1,700 an ounce.