Inflation

[nobbie48]

Inflation, stagnation, shrinkflation, what's the reality and why are our three major political parties like the three monkeys, deaf, dumb and blind?

Inflation is supposedly about 7%. Seriously????

I filled the car gas tank, drove to the grocery store and bought a head of lettuce. Tomorrow I file for bankruptcy. We're not eating the romaine. We just pass it around and take turns licking it.

Stagnation: I don't hear a bunch of people bragging about double digit raises, other than Galen Weston types. We are actually being told prices will not go down and raises will not match inflation.

Shrinkflation: I keep getting frustration stares from my wife when I mention liter tubs of yogurt or ice cream. Will we some day see gas at 1.399 per half later.

Shrinkflation is a total rip off because not only does the unit cost of the product go up the shelf cost has to cover the new packaging. The spin offs include the difficulty of cost comparing and recipe adjustments. Here's where a packaging law could help. Make standard packaging numbers for mainline grocery items. We buy 5 pound bags of potatoes not 4.8 points. We buy liters of milk not 900 ml except with chocolate milk which I've seen in 900 ml cartons.

Mention any of the above to politicians and they suddenly decide to look for new stars in the constellation and begin to whistle. If they address the question they typically start with "You have to understand........" another peeve of mine.

Why, when I point out a problem, do I get told I have to understand?

Why doesn't the person creating the problem have to understand?

 

[Lightcycle]

Mention any of the above to politicians and they suddenly decide to look for new stars in the constellation and begin to whistle. If they address the question they typically start with "You have to understand........" another peeve of mine.

Why, when I point out a problem, do I get told I have to understand?

Why doesn't the person creating the problem have to understand?

Instead of knee-jerk blaming the current administration, a better question to ask is, "Is rampant inflation a global trend?" The answer is yes, BTW.

Global Inflation Tracker Q3 2022: Inflation May Have Peaked…

Global inflationary pressures ease slightly in Q3 2022 after…

www.euromonitor.com

And if it is, how are we doing in comparison to other countries. The answer is, "Just as bad as other G7 countries, and not as bad as the US and the UK":

Canada inflation: How we compare to other G7 nations

With a meeting of G7 finance ministers underway this week, a CTVNews.ca analysis found that while Canadians are feeling the pain of record-high inflation, among G7 nations we are surpassed by Germany, the U.S., and the U.K.

www.ctvnews.ca

Also, what are the root causes behind inflation and is it in control of politicians? It's easy to second-guess the political response to the pandemic, should there have a full lockdown? How do you balance public safety vs GDP in the face of so many unknown variables at the start of COVID? But the current *global* supply-chain disruption... is that the fault of politicians as well?

There are well-known and well-defined cycles of boom and bust. There will always be recessionary periods There will always be people who will want to blame *someone* for what is well-accepted as the cyclical nature of the economy. There will always be people with a political agenda seeking regime change to capitalize on local unrest and dissatisfaction without bothering to put it into context.

 

[POWERMAN]

Typically speaking, how long does Inflation and Recession usually last?

 

[Lightcycle]

Typically speaking, how long does Inflation and Recession usually last?

How long is a piece of string?

The Great Depression lasted over 10 years.

The recession after the Great Financial Crisis lasted 18 months.

 

[mimico_polak]

Companies figured out that people will just complain, yet keep paying. So why drop the price so long as people keep paying?

Would you charge $500 if you know you could command $1000 for the same service?

As long as we keep paying, inflation will keep going.

Is the true number below or above 7%? I’m not smart enough to know that answer.

 

[Brian P]

The coronavirus pandemic was a shock to the system. It's totally unsurprising that the shock is going to reverberate for a while afterward.

A friend of mine is in debt up to his ears. He's rightly concerned.

I've continued living within my means, and I don't owe anything to anyone. Whatever.

 

[MacDoc]

The housing crash in 89 and subsequent recession lasted a few years into the early 90s.
I'd call this one a bit more severe due to the post covid issues and the Russia war.
Housing losses at this point are likely locked in for a decade. Toronto had the worst bubble on the planet so furthest to fall.
Economy and job market might be less impacted than in the early 90s as lots of boomers retiring and stimulus funds still sloshing about.
Just be happy you are not in the UK.... Canada is reasonably positioned to weather the down turn. YRMV

 

[Baggsy]

So if I ever do something incredibly stupid, I'm covered as long as others did it too?

That never flew with my mother, I don't think it will fly now.

 

[Lightcycle]

So if I ever do something incredibly stupid, I'm covered as long as others did it too?

That never flew with my mother, I don't think it will fly now.

What was incredibly stupid?

 

[Baggsy]

What was incredibly stupid?

Shirley you jest.

Massive borrowing when rates are low.
Never planning to pay the money back.
Crippling debt when rates rise.

While it wasn't just us, we made a very good show of it.

I wonder if New Zealand managed to fall back in the hole, that they'd dug themselves out of not that long ago.

TLDR: Gov't thought that the budget would balance itself.

 

[Lightcycle]

Shirley you jest.

Massive borrowing when rates are low.
Never planning to pay the money back.
Crippling debt when rates rise.

While it wasn't just us, we made a very good show of it.

I wonder if New Zealand managed to fall back in the hole, that they'd dug themselves out of not that long ago.

TLDR: Gov't thought that the budget would balance itself.

Yes, Feds tried to engineer a soft-landing via fiscal stimulus. But what was the alternative during and after the pandemic? Do nothing and they would have been crucified for it. You know there would have been a boatload of armchair pundits waiting to attack the government whether they acted or let market forces prevail.

So yes, we overspent, but to think that was the only cause of inflation is over-simplifying things. Other factors:

Russia invading Ukraine.
Export restrictions caused by the war.
Labor shortages and factories closures caused by pandemic.
Cascading effect of transportation stoppages and labor shortages contributing to supply chain problems.

There are more moving parts than whatever problems were caused by fiscal policy.

Most of those were out of control of the politicians. After the longest bull market ever recorded in history, there was bound to be a pullback.

 

[GreyGhost]

The housing crash in 89 and subsequent recession lasted a few years into the early 90s.
I'd call this one a bit more severe due to the post covid issues and the Russia war.
Housing losses at this point are likely locked in for a decade. Toronto had the worst bubble on the planet so furthest to fall.
Economy and job market might be less impacted than in the early 90s as lots of boomers retiring and stimulus funds still sloshing about.
Just be happy you are not in the UK.... Canada is reasonably positioned to weather the down turn. YRMV

Housing losses are locked in? You need to look deeper at the numbers. Average price is down a bunch from feb but the dwellings that were selling in feb are not the ones selling now. Find a property that sold dec-Feb and again jun- and the vast majority are very similar with many being up high five/low six figures. Time on market is way up but for a specific house, the huge drop in the average does not apply. Sure, there are some down 30% but those were a ridiculous price when bought and now a panic sell. They lost on the purchase, not the sale.

 

[Chris-CJ]

What is different about this financial downturn is that stocks and bonds have mirrored each other in their drop in value.

Triple whammy, inflation+recession+rise in lending rates.
Causes:
War in Ukraine, sanctions that have backfired and China shifting its priority from economics to the consolidation of power, cyclical market downturn (never mind that companies balance books are not awash in red ink)

Never a dull moment!
(At least the supply chain issue appears to be normalizing)

 

[MacDoc]

I seem not to be alone Home price 'chill,' weaker financial markets lead to $900B Q2 loss in net wealth; largest on record: RBC

Canadians lose $900B of net wealth in home price 'chill'​

https://www.ctvnews.ca › business › home-price-chill-wea...

1 day ago — Home price 'chill,' weaker financial markets lead to $900B Q2 loss in net wealth; largest on record: RBC ... Based on facts, either observed and verified

A global house-price slump is coming​

It won’t blow up the financial system, but it will be scary​

A global house-price slump is coming

It won’t blow up the financial system, but it will be scary

www.economist.com

The Economist tends to be on the correct side of history in its calls.

This was chilling way back in 2005....

In come the waves​

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops​

Jun 16th 2005 |

NEVER before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history.

my bolding ....

In come the waves

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops

www.economist.com

Monetizing shelter is nearly as cruel as monetizing water.....recipe for extensive social unrest.....IMNSHO ....we ain't seen nothin' yet.

I'm parked in a quiet backwater living cheaply...my goal of creating a business and jobs is completed......speculating on property was not in the biz plan and I detest what comes of that particularly odious human tendency

GG - look at your analysis of multiple unit housing ....what's the flaw?
$1 million lot.......a small patch of dirt.

something to consider

A Job and No Mortgage for All in a Spanish Town​

A Job and No Mortgage for All in a Spanish Town (Published 2009)

The mayor of Marinaleda boasts that his town, with its municipal housing program and bustling farming cooperative, is a Communist oasis that people are flocking to.

www.nytimes.com

Marinaleda: Spain's communist model village

Amid the ruins of the Spanish economy, one Andalusian village is thriving. Could it be the answer to modern capitalism's failings, asks Dan Hancox

www.theguardian.com

I'm slightly under the influence of Deep River at the moment

Karl Marlantes’ ‘Deep River’ is an epic tale of Finns, the Wobblies and the will to endure

Karl Marlantes, who wrote the breakout novel "Matterhorn," has penned a novel that has all the elements of a classic immigrant story. But the immigrants in “Deep River” aren’t Central American, Chinese or Irish — they’re Finns, and they’re based on...

www.seattletimes.com

 

[mimico_polak]

And yet today I hear on the radio....Wall Street is on track to have the best October since the 70s or 80s.

Go figure.

 

[timtune]

A fellow on the radio said inflation is caused when people have money but there are fewer goods to go around. And then JT sent out cash to help people get by with this inflation. A self fulling prophecy.

 

[Georg3__]

how are we supposed to survive in this economy >.>

please

 

[Sixbagger]

The NUMBER ONE cause of inflation is central bank printing presses.
More fiat money chasing the same goods and services equals higher prices.
All other factors only have a small effect on inflation.

 

[GreyGhost]

how are we supposed to survive in this economy >.>

please

Dont buy new cars? The less we buy, we both personally save money and lower inflation as fewer people are chasing the goods.

 

[nobbie48]

I seem not to be alone Home price 'chill,' weaker financial markets lead to $900B Q2 loss in net wealth; largest on record: RBC

Canadians lose $900B of net wealth in home price 'chill'​

https://www.ctvnews.ca › business › home-price-chill-wea...

A global house-price slump is coming

It won’t blow up the financial system, but it will be scary

www.economist.com

The Economist tends to be on the correct side of history in its calls.

This was chilling way back in 2005....


my bolding ....

In come the waves

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops

www.economist.com

Monetizing shelter is nearly as cruel as monetizing water.....recipe for extensive social unrest.....IMNSHO ....we ain't seen nothin' yet.

I'm parked in a quiet backwater living cheaply...my goal of creating a business and jobs is completed......speculating on property was not in the biz plan and I detest what comes of that particularly odious human tendency

GG - look at your analysis of multiple unit housing ....what's the flaw?
$1 million lot.......a small patch of dirt.

something to consider

A Job and No Mortgage for All in a Spanish Town (Published 2009)

The mayor of Marinaleda boasts that his town, with its municipal housing program and bustling farming cooperative, is a Communist oasis that people are flocking to.

www.nytimes.com

Marinaleda: Spain's communist model village

Amid the ruins of the Spanish economy, one Andalusian village is thriving. Could it be the answer to modern capitalism's failings, asks Dan Hancox

www.theguardian.com

I'm slightly under the influence of Deep River at the moment

Karl Marlantes’ ‘Deep River’ is an epic tale of Finns, the Wobblies and the will to endure

Karl Marlantes, who wrote the breakout novel "Matterhorn," has penned a novel that has all the elements of a classic immigrant story. But the immigrants in “Deep River” aren’t Central American, Chinese or Irish — they’re Finns, and they’re based on...

www.seattletimes.com

The Spanish example is an interesting case of an agricultural society which is quite different than industrial agriculture. As Peter Zeihan put it, in an agricultural society having children benefits the society by providing farm labour but with industrialization and moving families to a city, children are basically expensive pets.

Part of the Spanish scenario is high labour specialty agriculture instead of wheat production done by massive machines. There's a good chance of success in a niche market but how many niche markets would survive in our mega market big box environment?

Work ethic. In the west we have become brain washed into believing we are above showing work sweat. Amish Ohio is a wake up call. Ten year old boys and girls driving wagons and implements pulled by teams of massive horses. Here my 60ish uncle died of a heart attack mowing the front lawn while his 30ish son was inside watching TV.

It seems the Spaniards in that region welcome the work. Here we bring in foreign labour while our own are on various form of pogey.

In traditional Amish country, working is not something to be ashamed of, the opposite of our precious little darlings waiting for a corner office and limo ride.

I often reflect on a comment made by a Dutch designer I had as a client 30-40 years ago. He came from war savaged Holland just after the war and he said the damaged canals and dikes looked like anthills with thousands of men using picks, shovels and wheelbarrows to move the dirt.

When he went back for a visit ten years later work was continuing but heavy machinery had come in and the thousands of men were no longer working there. He wondered about the loss of jobs but also considered whether was it right for men to slave, moving dirt, if a machine could do the work more efficiently.

A play on words with the bikers "Live to Ride" mantra. Do you work to live or live to work?

Personally I enjoy work of the satisfying nature, whether it's baking something for a neighbour or fixing something for a friend. Being ordered to up my production to meet someone else's quota would kill that pleasure.

A hundred years ago we were an industrial society. I don't know if our brains were capable of handling the shift to industrialization that fast.