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I understand how many will say that those who are negative on the economy are a bunch of losers and are just jealous but I wonder how much of this economic bubble is because of the federal reserves near-zero interest rate policy since 2008.
I don't think there has ever been a debt jubilee compared to this.
I wonder what happens if the inflation really escalates, are they just going to leave the interest rate at 0.25% to 0.50% like now?
Each dollar of debt is a fiscal stimulus that causes more inflation.
New data out today Consumer debt increasing at 11% annualized rate.
Business debt which was $18.5 trillion went up by 130 billion in March alone.
Mortgage debt went up 16.7 trillion to 17.9 trillion in one year, which was in increase of 1.2 trillion dollars in just 12 months.
So the stimulus cash is gone, Americans have high credit card debt, and if where I work is any indication, a lot of them have 401k loans taken during covid still outstanding. Methinks this inflationary pressure could turn around quick with good tightening fed policy and an end to QE and paying down of the balance sheets. Maybe allow zombie firms to go bankrupt, pop the everything bubble.
I predict by year end they are still doing QE, rates are under 1%... they will panic and pump at the first sign of trouble. I'm frankly surprised their rhetoric is so anti-inflation, considering that's really the only way out. I think they are just telling people what they want to hear.
Consumer debt may be high, but mine isn't. And that's the only thing I can really control. We're debt free.
Same with mortgages; Our home is paid for.
I do invest in public companies, but I know how to read the quarterly reports, so I don't invest in companies I do not understand.
Inflation is here, but there's not much I can do about it. We're retired and fortunate enough to have cash flow that can take care of anything that comes up......
And Folks, that is all you can do. Take care of your own business and cash flow and try not to get bogged down with new unnecessary cars and depreciating stuff. Save some money somewhere, and put a little food into storage just in case.
It's crazy, the housing market Nationwide is on fire and more and more people are buying and house prices go up. It makes sense at mortgages will go up.
But if you look at historical data not just from 2019 to 2021 but 10 years you see that the increasing dead load was a trend for many years not just 2021
All the numbers we are seeing now are due tothe Bulwhip effect of shutting down the economy during covid, then opening it back up again.
That sent enormous waves of downturn following by boomtime, which will continue to ripple forward for the rest of 2022 at least.
We should not compare these distortions to past performance...this is an anomoly...an outlier.
We should do as moneill did above inpost #9...stay focused upon longer term trends to see past these short term waves.
The media is sensationalizing these short-term stats to sell advertising....nothing more to see here.
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