Well, the difference now is the FED must keep the rate THEY PAY down near zero. So you'll see 10% inflation, maybe 2% on savings accounts. Or less... Back in the Carter/Reagan years, it was 16% (that was a peak) maybe 8-12% return on CDs or savings. Money always seeks a good, happy home - that's why real estate has been going crazy. Cryptocurrency, etc.
Inflation
- Thread starter Gary S
- Start date
73Z L92
Veteran Member
Our first house we bought back in 1981 the interest rate on our home loan was 15%. I worked every minute of over time I could get to pay it off early.
Do I think that is going to happen again? No but I bet we see 6-7% as the norm.
Do I think that is going to happen again? No but I bet we see 6-7% as the norm.
"To go back to the initial question: will the ongoing inflationary pressures persist as in the 1960s and and 1970s? Our study underscores the risk that a similar persistent pattern of inflation might characterize the years to come. Nevertheless, we emphasize that the factors behind the heightened inflation risk today are quite different from those that caused the Great Inflation. As described in several narrative accounts (Meltzer, 2009; Taylor, 2011), the heightened inflation rate of the 1960s and 1970s was the result of the lack of the Federal Reserve’s independence from the fiscal authority. This lack of independence critically tarnished the credibility of the monetary framework, paving the way for the surge of trend inflation in the 1960s and 1970s. In contrast, the risk of persistent high inflation the U.S. economy is experiencing today seems to be explained more by the worrying combination of the large public debt and the weakening credibility of the fiscal framework."
"Thus, the recipe used to defeat the Great Inflation in the early 1980s might not be effective today. In the early 1980s, the resolute anti-inflation stance taken by the Federal Reserve and backed by the new administration was the winning move. An important factor behind this success was the historically low government debt that provided strong credibility to the fiscal backing. Today the problem of controlling inflation is compounded by the highly uncertain fiscal situation, with the Congressional Budget Office (CBO) projecting federal debt to keep rising after the year 2023 to reach its highest level ever recorded in 2032 (Congressional Budget Office, 2022).1 Therefore, even though monetary policy independence is a much more widely respected and better understood value today, high inflation can still be a threat if the fiscal situation is left unresolved. In fact, we show that if the private sector loses confidence in the fiscal authority’s willingness to fix this quickly-deteriorating fiscal backdrop, hawkish monetary policies can mire the U.S. economy in a prolonged period of stagflation."
"All told, our results suggest that conquering the post-pandemic inflation necessitates an overhaul of the fiscal framework aimed at financing the large stock of government debt as well as the increase in public expenditure needed to cover rising costs associated with population aging and climate change."
ssupercoolss
Veteran Member
My first or second home circa 1994 ish was like 6.5%. dropped since then obviously, but honestly, 6% isnt bad compared to what my parents told me about 18% loans......back then it made sense for them to put an addition on the house, rather than move.
I was a supply chain advisor in a fortune 100 company and we spent considerable effort dissecting supplier requested price increases. In a many of cases vendors significantly padded actual increases and failed miserably when we asked for and evaluated the supporting documentation.
my guess is this is 50% actual costs and a chance to gouge a litte while no one’s watching.
take for example an iwata 400 spraygun. I paid $239 for the model now selling for $429. No way the cost of labor, raw materials, manufacturing, and shipping warrant that type of increase.
my guess is this is 50% actual costs and a chance to gouge a litte while no one’s watching.
take for example an iwata 400 spraygun. I paid $239 for the model now selling for $429. No way the cost of labor, raw materials, manufacturing, and shipping warrant that type of increase.
Recession or Not, There Will Be Pain
Investors and stock strategists are braced for a different kind of slump, but a slump nonetheless.
"When is a recession not really a recession? When it’s a “rolling” recession."
"A rolling recession occurs when different segments of the economy slump at different times, resulting in very low overall growth in gross domestic product output. By maintaining the barest minimum of growth and avoiding a sharp and prolonged economic contraction, rolling recessions sidestep being labeled as official recessions. Rolling recessions are also referred to frequently as “growth” recessions."
"Said Mester: “My current view is that it will be necessary to move the fed-funds rate up to somewhat above 4% by early next year and hold it there; I do not anticipate the Fed cutting the fed-funds rate target next year.”"
"“We’re headed for an extended lower-growth environment that allows for a greater possibility of a rolling recession within industries. That should reduce the longer-term real growth rate of the economy, but a sharp contraction is unlikely because consumers are in good shape with less debt and higher savings.”"
"Such an environment will hurt corporate earnings, which make equities less attractive but should benefit high-quality corporate bonds, Helfert says."
"Rolling or growth recessions are not common in the modern era, says Schwab’s Sonders. But “this cycle is incredibly unique,” because of the pandemic and pandemic-related disruptions that we are “still at the mercy of,” she says."
Yes I was kind of surprised by that statement, too.
Just paid $7 for a quart of Wesson vegetable oil. Wife says it was $2.69 just a couple months ago. About a $1.25 and up for an apple, bag of small navel oranges are well over $6. $4 for a smaller jar of Smuckers jam. Three bucks for a loaf of bread. I don't know how they measure inflation but the numbers I'm seeing are a joke. Well over a thousand bucks for a set of tires. Sure glad I'm not into beer and cigarettes these days. Wish I could stay out of the grocery too.
