Inflation - stubbornly hard to kill

[WayDownSouth]

According to the FDIC, 63 banks are at risk of insolvency... The FDIC has about $125 billion to cover that $517 billion.

The banks are technically insolvent if they only have $516,999,999,999 out of that $517 billion.  That's what insolvency means.

Thanks for clarifying for me! LOL

[WayDownSouth]

I'm mostly in cash and some assets ATM but nothing huge.

Your response to what you describe as out of control inflation is to stay in... cash?!?

You're deep into various conspiracy websites that are telling you the same doomer crap because (usually) they're trying to sell you something. Go find out what they were saying 1 or 2 or 5 or 10 years ago, and you'll find the same stuff, over and over and over. And if you listened to them and didn't invest/stay invested, you're a lot poorer today.

Don't get me wrong, we could have a great depression starting tomorrow. All of the government data could be wrong. I think it's pretty unlikely, but anything is possible.

There are reams of great articles about the power of positive/optimistic investing, if it's something that interests you, please let us know (if nothing else, google "world's worst market timer"). We're here to help!

-W

I am a day trader, Walt. I require cash. I don't use leverage like most traders. Also, I didn't tell you which currencies I hold or why, so how can you judge. Cash is surprising to you? Interesting.... I guess you're a one-trick pony.

And I'm not deep into any doomer websites. Nobody is selling me anything. I'm not retarded. I have liquid, tangible cash and a shitload of specifically chosen non-traditional hard assets. I can do/buy whatever I want (within my limits of course) at almost any moment. Only about 20% of what I have is not in my full/free possession. I'm not stupid enough to leave whatever I worked for on my computer screen or on a piece of paper.

At this point, you just need to stop posting for a while. I cannot tell if you are a pure troll, or if you actually believe the garbage you are typing out, or if it is some combination of both. If the statements you post are true, it would be within your limits to buy a small country at this point due to your "ability" to double your money in 1/1000th the time of the market.

Don't make the capital excuse again, if you had this superpower to double money at the rates you suggest, you would obviously take loans to quickly deploy large sums of money and start the doubling!

$250k into Forex trading if you're capable. If not, look into it and look into a SPECIALIST of Forex trading... With $250k you can make double your money in the next 3 to 6 months alone, turning that $250k into $500k and then pull ALL profits and repeat. Never allow yourself to lose more than 2.5 percent and only invest in one single currency at any given time. Thank me later.

BTW I'm not a financial advisor and I specifically recommend that if you don't feel 100% capable, do the research to find the best person out there to do it for you. It doesn't matter what they charge - reputation over everything.

Money is moving heavily and quickly and currencies are fluctuating like never before. The coming months will be some of the best months in history for those who know what to buy. Be careful, and disregard this completely if it doesn't resonate with you. I don't want you to lose your money. I'm telling you though, this is where the big plays are happening right now.

No if I had billions I wouldn't be selling tradelines as a side hustle. I don't know what math you're doing but your calculations are impossible if you have no clue what I'm investing in, how often, or how long I've been doing it.

Lets say that if you put $1MM in your favorite investment, and I used $1MM to day trade, I'd probably need a couple few good days to make what you'd make in about 8-10 years. But they'd need to be good days, which aren't every day. Nonetheless, yes the total time spent would be around 1/1000th. I think that's safe to presume, for example, if your $1MM went into an index fund. Who really cares. Does it really matter? You're not even the OP.

Many of you REALLY like to argue about anything that doesn't fall into a very narrow viewpoint. Not enjoyable. Open up a bit.

Instead of trying to mix various comments together and then twist the context, why not create your own response? Do you even know what trolling is? It's exactly what you're doing. Additionally, talking crap about things you can't and don't comprehend. Troll away, my friend!

[nereo]

Let’s stick to the forum rules

[WayDownSouth]

No shit. Technically they're all insolvent. But I was just speaking about the FDICs own report since the FDIC was mentioned.

These words don't mean what you think they mean.   If a bank is insolvent it can't function and closes its doors.  All the banks that are open today are solvent.   I was simply pointing out (maybe inarticulately) that unrealized losses and insolvency are two different concepts.   A bank can have unrealized losses and be perfectly solvent.   

What is happening here is that banks typically store reserves in the form of bonds.  As interest rates go up, the value of the bonds goes down.  If the banks were forced to sell, they would do so at a loss.  But they haven't needed to.    Hence the "unrealized" part.   If the bonds are held to maturity, there is no loss at all.   

Good points. The FED was and is always ready and willing and dripping at the mouth for any opportunity to create more debt so that's always been a lifesaver for the system as a whole. I mean they've kept the stock market running hot through all of this, right?

The FDIC is not the Fed.   Two completely separate organizations.   The FDIC is fully self-funded and does not create debt.   I recommend you stop reading crypto sites.   You're getting very bad information about how the financial system works.

Here's a great one specifically for you, Telecaster. Since speaking with you about finance feels very much like teaching a toddler to write a novel, I'll leave you with a simple link and let you roam free to learn on your own. (And yes, I'm aware that the FED and FDIC are two different organizations... hence their different names)

"The FDIC’s unexplained decision to borrow from the Fed to resolve failed banks last spring — and the Fed’s choice to apply penalty pricing to a loan with a government guarantee — added to the banking industry’s multibillion-dollar bill."

https://bankingjournal.aba.com/2024/03/the-fdics-unusual-loan-from-the-federal-reserve/

^ That might be just a tiny bit of an eye-opener for you. Now imagine what they don't publish. There's a whole world of information out there to explore. You just might be surprised by what you find if you dip your toe in.

[WayDownSouth]

Let’s stick to the forum rules

Agreed. I feel bullied often by the same people for doing nothing more than posting my opinion. I get personal attacks, and repeatedly singled out by others who are usually the same 5 or 6 people. I don't believe I've ever done the same to any of them without being significantly provoked. Thank you for the reminder, I know I'm not the only one who needs it.

[MOD NOTE: Okay, I had enough of this guy.  They've been banned for all the inflation trolling.]

[nereo]

I'll just drop this here and see how it ages.

ZERO interest rate cuts in 2024, possible hike before EOY. 2025 will be at least 3 hikes.

Inflation will (and must) continue to rise.

Well, this post didn’t age very well.  Less than four months later the Fed cut rates by 0.5% and inflation (CPI) has fallen every month since March.

Let’s see if there are further rate cuts in Nov or Dec

[MustacheAndaHalf]

The Fed's tentative plan is for 0.25% rate cuts at the Nov and Dec meetings, to reach their 1.00% in rate cuts for 2024.  But they need to see inflation falling or stabilizing to keep the path they're planning.

China's economy seems to be weakening, and taking Europe down with it.  In that environment, I wouldn't expect inflation to surge in the U.S.  If there's too much demand in the U.S., Americans can just rely on the supply in Europe or China.  But rising inflation isn't the sole concern, and I'm sure the Fed will be watching jobs numbers closely (part of their motivation for a 0.50% rate cut this meeting, I believe).

[Telecaster]

Well, this post didn’t age very well.  Less than four months later the Fed cut rates by 0.5% and inflation (CPI) has fallen every month since March.

Let’s see if there are further rate cuts in Nov or Dec

I've observed that many people in crypto space have their own economic theories that are loosely based on Austrian economics, but only sort of.    One of the common misconceptions they have is that deficit spending always causes inflation.   Hence the belief that inflation must rise. 

In reality sometimes deficit spending causes inflation but we aren't experiencing those conditions right now.   Huge government stimulus during COVID combined with global supply chain problems definitely caused some inflation, but those problems have basically worked themselves out so we should be seeing falling inflation, which is in fact what we are seeing.   

[Must_ache]

Well, this post didn’t age very well. 

Neither did the original post.

[reeshau]

Well, this post didn’t age very well.  Less than four months later the Fed cut rates by 0.5% and inflation (CPI) has fallen every month since March.

Let’s see if there are further rate cuts in Nov or Dec

I've observed that many people in crypto space have their own economic theories that are loosely based on Austrian economics, but only sort of.    One of the common misconceptions they have is that deficit spending always causes inflation.   Hence the belief that inflation must rise. 

Reminds me of the Upton Sinclair quote:

“It is difficult to get a man to understand something when his salary [or investment] depends upon his not understanding it”

[ChpBstrd]

Well, this post didn’t age very well.  Less than four months later the Fed cut rates by 0.5% and inflation (CPI) has fallen every month since March.

Let’s see if there are further rate cuts in Nov or Dec

I've observed that many people in crypto space have their own economic theories that are loosely based on Austrian economics, but only sort of.    One of the common misconceptions they have is that deficit spending always causes inflation.   Hence the belief that inflation must rise. 

In reality sometimes deficit spending causes inflation but we aren't experiencing those conditions right now.   Huge government stimulus during COVID combined with global supply chain problems definitely caused some inflation, but those problems have basically worked themselves out so we should be seeing falling inflation, which is in fact what we are seeing.

"People in the crypto space" are getting fucking weird. My search engine is occasionally bringing up things like antivax content posted on bitcoin fan sites. What... precisely... does a vaccine for a deadly virus have to do with trade-able internet tokens? Then there are the Cult of Elon and the Cult of Donald. Why are they at this party? Qanon, is that you? Anti-feminists, why are you buying dogecoin?

The common denominator is how the attraction toward crypto is strongest among people who hate their own government. If you believe your country's government is the cause of all your dissatisfaction, then you might be receptive to

• schemes that claim to hide your money from the claws of government,
• conspiracy theories about the government implementing mass mind control through nanoscale computers floating around in vaccine solutions,
• political narratives about billionaire heroes applying their wealth to vanquish the establishment regime, who are running fake democratic elections and all that, or
• a plan to establish a new utopian social order where the people who bought cryptos and NFTs become the new billionaires while those who held onto dollars, stocks, and bonds lose everything and become slaves.

 
Also there is the aspect that crypto offers people something new to do while sitting in front of a device (which is how they spend their time, and the actual cause of their dissatisfactions), namely talking about their crypto. The in-this-together feeling of pumping and dumping each other is an acceptable substitute for actual friendships in the mind of the modern male who spends almost every waking hour on the internet.

[vand]

I'll just drop this here and see how it ages.

ZERO interest rate cuts in 2024, possible hike before EOY. 2025 will be at least 3 hikes.

Inflation will (and must) continue to rise.

Well, this post didn’t age very well.  Less than four months later the Fed cut rates by 0.5% and inflation (CPI) has fallen every month since March.

Let’s see if there are further rate cuts in Nov or Dec

Yes it fell every month from March to Sept.. and has then risen every month since :D

https://financialpost.com/news/economy/fed-rate-hike-risk-rises-hotter-inflation



While I think the markets have learnt to live with a higher terminal rate of inflation than before, confidence is fragile and if we see it rising again due to the tariffs or other factors the inflation story have a rather unpleasant 2nd chapter. That's not my base scenario but it can't be easily dismissed either.

[ChpBstrd]

The timing of QE and QT changes are eerily correlated with the rate of inflation. QT was reduced in June, and shortly thereafter inflation starts rising again. QT will likely end within the next couple of months, so let's see what happens then!

If the Fed fails to raise rates again, markets are going to start thinking the actual inflation target is 3%, about where it is now, rather than 2%. That explanation is arguably consistent with rising long-term rates (to offset higher expected inflation) and a rising stock market (because discount rates may not have to rise).

If the Fed continues to say "not quite there yet" but taking no action, the 3% argument could continue persuading investors. And this is not a bad outcome, necessarily. Econ textbooks from a generation ago identified 3% as the optimal inflation rate to encourage economic activity while minimizing menu costs, capital flight, malinvestment, etc.

[vand]

Beware the eggflation:

https://finance.yahoo.com/news/why-egg-flation-could-end-up-being-a-headache-for-the-fed-morning-brief-110023438.html

Consumer Inflation expectations jump:

https://finance.yahoo.com/news/inflation-fears-rise-to-highest-since-nov-2023-as-consumer-sentiment-hits-7-month-low-165315825.html

pessimism over the inflation outlook drove down February's preliminary read and one-year inflation expectations jumped to 4.3% from 3.3% last month.

Some of that may be related to Trumps tariffs, but still.

[vand]

The timing of QE and QT changes are eerily correlated with the rate of inflation. QT was reduced in June, and shortly thereafter inflation starts rising again. QT will likely end within the next couple of months, so let's see what happens then!

If the Fed fails to raise rates again, markets are going to start thinking the actual inflation target is 3%, about where it is now, rather than 2%. That explanation is arguably consistent with rising long-term rates (to offset higher expected inflation) and a rising stock market (because discount rates may not have to rise).

If the Fed continues to say "not quite there yet" but taking no action, the 3% argument could continue persuading investors. And this is not a bad outcome, necessarily. Econ textbooks from a generation ago identified 3% as the optimal inflation rate to encourage economic activity while minimizing menu costs, capital flight, malinvestment, etc.

I think the problem, as ever, is that the price inflation is most keenly felt in basic living amenities - stuff like eggs (see above), butter & cooking oil, home and car insurance, rents, HOA fee & utility bills.. people have no option but to suck up the above-average inflation increases in these everyday expenses, which contributes to the ongoing social unrest we are seeing -it's absolutely true that if you have little or no financial assets then you haven't benefitted from any of the inflation, but only born the brunt of price increases.

[vand]

The last month's CPI/PPI numbers have us currently at 2.8%, so the recent run of higher inflation has stopped for now.

However.. the University of Michighan's survey of consumer sentiment shows an alarming rise in inflation expectations:

The 5yr expectation has now climbed to 3.9% - the highest it's been since 1992. Inflation expectations are becoming entrenched, which becomes a self-fullfilling prophecy.  The 1yr is up to 4.9%.

I think there was an attitude that people were prepared to put up with a bit more inflation while the markets kept going higher and the economy was still solid, but if those conditions are no longer true then I think you'll hear a lot more disgruntlement about it.

http://www.sca.isr.umich.edu/tables.html

[ChpBstrd]

There seems to be a disconnect between the opinions of the public and the opinions of bond investors.

Bond investors setting the price for treasuries and TIPS, imply an average 5-year inflation rate of only 2.48%

The expected one-year inflation rate implied by bond pricing is 2.18%.

So presumably, the average consumer survey respondent should be going all-in on TIPS, because they are priced at bargain levels. Either that or the bond market is totally ignoring the signs of higher future inflation that consumers can see, and investors in nominal bonds are about to take a facepunch.