Inflation (aka: gouging) has peaked . . . .

[Sodbuster]

If you bought a house or land based on 2% interest rates than your game plan sucks. I don’t think we will ever see 20% interest rates like the 80’s but it’s not unreasonable to pay 8% mortgage rates, no way we will ever get to double digit mortgage rates unless of course our Canadian peso collapses. It would be a good for the market if we could get 5% on GIC’s instead of everyone investing in the stock market because there is no other game in town.

[Grahamp]

To add to Errol's points...

I have a thesis that the recent rise in inflation is attributed to supply-chain issues rather than increased demand.

We are likely aware of the port backlogs inhibiting supply with the associated increases in supply.

Approx 500 ships waiting in Shanghai this past week.

Ships leaving with empty containers, etc.

I listened to a podcast the other day and learned that the US homeowner has withdrawn $413B from home equity and spent it.

It is gone.

It reminds me of a conversation with a banker who has wage-earning customers using the home equity to buy expensive rec vehicles.

XHB, the SPDR Homebuilders ETF has experienced a substantial retracement and appears to have further go.

While not devastating, it is not exactly healthy and will likely experience another 20-25% drop.

I will post the linear chart for dramatic effect.

[ATTACH]10483[/ATTACH]

Perhaps this foreshadows lower house prices.

Increased interest rates will certainly lower home values.

I understand that US mortgage payments have risen 38% in the past year or two.

We know that will result in lower home values.

So now the consumer has less disposable income and the value of their home is likely to drop with less equity to draw from.

This could lead to the demand destruction that Errol has been forecasting.

Grain is a bit of a different animal; however, I understand that China has an estimated 1.5 years of inventory.

If true, I anticipate this will be used to gain influence with other nations, primarily African.

Similar to what I believe was the primary focus of the CWB.

I have an idea of how food and resource security concerns will be addressed in the future.

That is a discussion for another time though.

I don’t know how to snip out a line but the key thought I think is

“ I listened to a podcast the other day and learned that the US homeowner has withdrawn $413B from home equity and spent it.”

This money has been consumed, perhaps it represents retained earnings on amazon and macdonald’s balance sheet, but regardless of that it most likely is now a floating interest rate liability on the homeowners mortgage which is already highly inflated.

It reminds me of a story Peter Grandich(Us Gold Bug) told in 2007 just before the housing collapse in the US. He explained that in the highest price zip code in New Jersey (where he was from) there was an extraordinary high refinance rate, he then further explained that of the refinancers, the highest percentage ever had borrowed more then was originally owed on the mortgage before the refinancing. Finally the cherry on top was in that same zip code they had a record number of building permit applications for self storage units. I can still see Peter standing at the podium as he said in his thick New Jersey accent, “ So what is going on here? People are mortgaging their futures, taking unrealized equity out of their inflated house and buying stuff that not only do they not need but that won’t fit in their house!” lol.

The housing market collapsed 6 months later. I don’t think we are out of the inflation woods yet but definitely food for thought.

[AlbertaFarmer5]

Thanks for the reality check, Errol and others. Always needed.

But before we get too bearish, Central banks/ Policy makers, desperately need/want to keep adding money to the system to keep it from collapsing. Events conspired lately to cause big inflation, so at least on paper, they need to slow down the easy money policies to tame the inflation. Which, will inevitably be too much, and too late, and deflation will result.

Which is exactly that they need, so they can continue the party of easy monetary policy for another decade or two. Putting a very definite bottom in the markets, much sooner, and much higher than any pessimists think possible. It doesn't solve anything, and there will eventually be a day of reckoning, but positioning yourself for it has been a disaster for the past few decades.

Don't worry about deflation, we have all the tools we need to combat that. And as a farmer, we benefit from inflation, so don't worry about that. It is just the brief violent corrections inbetween that we need to fear.

[foragefarmer]

[QUOTE=Taiga;53872 Ukraine is a smokeshow.[/QUOTE]

In what way?

Let hear it.

[furrowtickler]

It was a matter of time, whenever things go too far they always swing back. There is no way the average Joe can handle the current inflation, it has to blow up something soon.
Time to lock up what a person can, get this crop in and hold tight for the next year on spending.
This will not be pretty.
Errol you finally may be vindicated. Not sure about ag inputs and machinery, they will hold us ransom as long as they can.

[furrowtickler]

If / when this happens, how far behind are commodities like oil , gas , grain and oilseeds ?
Maybe time to seriously consider what Tom4 is doing asap ?

[fjlip]

"Ukraine is a smokeshow."

Or I say a Ukrainian squirrel...to distract from all the evil sh*t our Turd and Biden/Hunter has done or is involved in, plus COVID lies and WEF agenda.

[shtferbrains]

Ukraine is out of control.
No smoke show.
No squirrels.
No Bull Shit.
Just dirty little war that ordinary people die.
Looks like it will get a lot dirtier.

67% of Ukrainians speak Russian.
Killing what used to be your freind is the dirtiest of dirty little wars.

[foragefarmer]

"Ukraine is a smokeshow."

Or I say a Ukrainian squirrel...to distract from all the evil sh*t our Turd and Biden/Hunter has done or is involved in, plus COVID lies and WEF agenda.

So what your stating on behalf Taiga, Trudeau and Biden are actually using Putin's invasion of Ukraine to their benefit in not having to deal with various domestic issues.

I guess Trudeau and Biden should be grateful to Putin for creating such a diversion for them.

Why on earth would either of them be focused on women and children being killed, Ukraine cities being flattened and 5 million Ukrainians being displaced.

You should of have let Taiga answer, and be the bigger fool of the two of you.

[tubs]

So what your stating on behalf Taiga, Trudeau and Biden are actually using Putin's invasion of Ukraine to their benefit in not having to deal with various domestic issues.

I guess Trudeau and Biden should be grateful to Putin for creating such a diversion for them.

Why on earth would either of them be focused on women and children being killed, Ukraine cities being flattened and 5 million Ukrainians being displaced.

You should of have let Taiga answer, and be the bigger fool of the two of you.

Biden and Trudeau won't get hurt by this the people getting killed are the peasants the rich people are long gone from that area. As the WEF is concerned it is a timely distraction and blame all the worlds ills on putin. Everybody will forget all the hurt that was caused by the lockdowns and blame Putin. In the mean time the americans are selling weapons left right and centre even Canada bought f35 without any parlementary debate. The swamp is so deep it is not funny and if you are so concerned about human live why did you not worry about the people in Yemen those people are being bombbed every day by Saudi arabia but that is ok because they supply oil to Canda and USA. Keep on sleeping folks it is going to be a long stretch of upheavel I think at least 5 years. We have had peak prosperity 2 years ago.