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I agree. My favorite working definition is 50% GPI per month for at least a year at a minimum. Six or seven percent annualized isn't in the conversation.
CPI is not inflation. it's highly manipulated with hedonics and substitutions.
Real inflation rate is over 12% (probably 15+). That said, I agree that we will not have hyper-inflation when the deflationary forces are so strong. We will have sustained high-inflation because we cannot afford higher rates.
Rates go up in a disinflationary/deflationary environment because you need to incentivize people to lend by baiting with higher returns.
Also you need higher rates to stop inflation to encourage people to hold assets in expectations of higher than inflation returns. Inflation occurs when people don't want to hold on to the monetary medium.
Putting it all together, buy assets/make sure you're beating inflation >15% return and you're OK (this is why there's so much rampant speculation out on the edges of the risk curve).
CPI is not inflation. it's highly manipulated with hedonics and substitutions.
Real inflation rate is over 12% (probably 15+). That said, I agree that we will not have hyper-inflation when the deflationary forces are so strong. We will have sustained high-inflation because we cannot afford higher rates.
Rates go up in a disinflationary/deflationary environment because you need to incentivize people to lend by baiting with higher returns.
Also you need higher rates to stop inflation to encourage people to hold assets in expectations of higher than inflation returns. Inflation occurs when people don't want to hold on to the monetary medium.
Putting it all together, buy assets/make sure you're beating inflation >15% return and you're OK (this is why there's so much rampant speculation out on the edges of the risk curve).
Indeed. its hilarious. Rising real estate prices have nothing to do with inflation ...? Kind of strange given things cost more with more expensive real estate then isn't it? Low rents are where cheap labor comes from. Don't see it when its rising of course. Only when it levels off an falls do owners have to switch from capital appreciation to other sources like rent.
CPI is not inflation. it's highly manipulated with hedonics and substitutions.
Real inflation rate is over 12% (probably 15+). That said, I agree that we will not have hyper-inflation when the deflationary forces are so strong. We will have sustained high-inflation because we cannot afford higher rates.
Rates go up in a disinflationary/deflationary environment because you need to incentivize people to lend by baiting with higher returns.
Also you need higher rates to stop inflation to encourage people to hold assets in expectations of higher than inflation returns. Inflation occurs when people don't want to hold on to the monetary medium.
Putting it all together, buy assets/make sure you're beating inflation >15% return and you're OK (this is why there's so much rampant speculation out on the edges of the risk curve).
The CPI is merely a price change index tracking prices on thousands of goods and services in the 1500 mini economies that makes this country up .
It is not a measure of anyone’s personal inflation rate nor personal cost of living.
In the more then 6 years we have been retired we still have not needed an inflation raise as somethings went up , some down and some we no longer do or buy
CPI is not inflation. it's highly manipulated with hedonics and substitutions.
Real inflation rate is over 12% (probably 15+). That said, I agree that we will not have hyper-inflation when the deflationary forces are so strong. We will have sustained high-inflation because we cannot afford higher rates.
Rates go up in a disinflationary/deflationary environment because you need to incentivize people to lend by baiting with higher returns.
Also you need higher rates to stop inflation to encourage people to hold assets in expectations of higher than inflation returns. Inflation occurs when people don't want to hold on to the monetary medium.
Putting it all together, buy assets/make sure you're beating inflation >15% return and you're OK (this is why there's so much rampant speculation out on the edges of the risk curve).
Indeed. its hilarious. Rising real estate prices have nothing to do with inflation ...? Kind of strange given things cost more with more expensive real estate then isn't it? Low rents are where cheap labor comes from. Don't see it when its rising of course. Only when it levels off an falls do owners have to switch from capital appreciation to other sources like rent.
Not strange at all........very few governments anywhere account for RE price changes directly in inflation measures.
Don't want to get into the politics... not trying to offend anyone, or support any cause with this post. Just wanted to know... let's say I believe we are looking at hyper-inflation in the next year or so... what can I do to protect myself?
- I have two homes, do I keep them, or do I sell them? Will they simply increase in equity... e.g. because the price goes up since the value of the dollar is less?
- I have a lot of my money in the stock market. How does the stock market react in hyper-inflation... does it go up with inflation? Or does it go down in value?
- I have $75k in cash. I assume this will immediately lose value in hyper-inflation. What should I be doing with it?
- I have some assets, e.g. tangible items that have value which I can turn around and sell a few years from now (vintage Swiss watches that I bought cheap and restored, etc.)
GOLD and CRYPTO: No thanks on gold, and I do already have some crypto in BTC and own Miami Coin and Bitcoin ... and not planning on buying anymore.
Thank you for any responses / advice. Would be interested in knowing what you guys are doing to hedge against this as well?
THANK YOU!!!
My life is completely simplified based on the fact that I only have another 10-20 years to live.
I was watching Jeff Gundlach and he sold US stocks and bought European stocks (as a hedge to the falling value of the US dollar) which seems like an interesting strategy. He said so far it is not not working; but, he's not sure how well it is working.
I would think RE going to be the best hedge. Because it's real and has value to your life regardless of what the market value is (to me this is low risk regardless of prices). I would only worry about RE prices on investment rental property. But, that's just me
My life is completely simplified based on the fact that I only have another 10-20 years to live.
I was watching Jeff Gundlach and he sold US stocks and bought European stocks (as a hedge to the falling value of the US dollar) which seems like an interesting strategy. He said so far it is not not working; but, he's not sure how well it is working.
I would think RE going to be the best hedge. Because it's real and has value to your life regardless of what the market value is (to me this is low risk regardless of prices). I would only worry about RE prices on investment rental property. But, that's just me
Real estate is the best long term real estate hedge for the individual because it it the vehicle in which credit expands. The first things that rise in price is real estate. equities and cars. These things are often purchased on credit. Meanwhile the gold bugs are confused about why gold prices are not moving. Who accumulates gold on credit? So there is little expansion of credit.
Problem is the backlash also hits credit lines first, and then its the assets held with equity that rise, like gold or bonds. So real estate also the place to get caught in a short term liquidity trap. .Any wonder why gold is so stable? No credit swings.
But anyway "cheap labor" that uses dirt roads, mules and sickles out competes highways, airports and lawn mowers because obvious capital intensive areas just can't compete and few ever seem to figure out that "cost of living" is money flowing to a rentier, the cost of labor is the cost of land that it sits on. Its the cause of and solution to inflation. All the surplus created by capital intensive societies do no go directly to labor or capital. It flows into real estate and the banking system that lends into it.
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