Author Topic: Inflation - Should We Be Worried  (Read 5495 times)

EscapeVelocity2020

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Inflation - Should We Be Worried
« on: January 12, 2022, 07:49:56 AM »
Looking to start up a discussion on MMM's latest post.
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So What Happens Now?
The first rule of this situation is the same as all other situations: donít panic, and enjoy this whole journey as a learning experience. Prices will fluctuate, and the worldís economy will adjust accordingly in the coming years. You and I will continue to prosper.

The big picture magic is already starting to happen: supply chains are starting to untangle themselves, and companies are making big new investments to increase production.
...

In typical MMM fashion, it is very rosy and optimistic - I'm not trying posting this as some kind of rebuttal or take-down.  I realize MMM's attitude is a good way to go about life in general, but at the same time, I would also have appreciated a bit of balance in his post that inflation can be one of the biggest hurdles to Early Retirement.  I go back to this post from GoCurryCracker - https://www.gocurrycracker.com/the-worst-retirement-ever/
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Pure 4% withdrawals for a retirement starting in 1965 were a disaster, with the portfolio dropping to $0 in about 25 years.  This occurred regardless of asset allocation.  A portfolio of 50% stock / 50% bonds failed just as surely as a portfolio of 100% stock.

Not trying to fear monger, and I hope that the coming years surprise me that the Fed is able to roll off much of the $9T balance sheet of mostly real-negative yield treasuries and risky mortgage backed securities with success.  I'm also predicting, at some point, investors will complain that continuing to raise rates while the stock market falters is 'unfair'...  I remember feeling this way in 2000 when my NASDAQ stocks were getting destroyed - if only Greenspan would STOP IT, he has no idea what he's doing!!!  LOL.

Mostly I'm interested to hear what others are seeing when it comes to inflation and what others think will happen in our FIRE circles.  It will also be interesting, as a global group, to get a bigger and more tangible picture of what is going on IRL.

I also predict that inflation and Fed tightening will be playing out for a long time...  but also hope to be proven wrong on that and get back to ~2% inflation and ~2% Fed rates without too much disruption.  I am doubtful, which is why I went to the trouble of posting a thread to help keep us busy in the meantime :)

Syonyk

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Re: Inflation - Should We Be Worried
« Reply #1 on: January 12, 2022, 07:11:34 PM »
Just don't ask about the near and literal slave labor involved in that amazing tech deflation... all supply chains lead to China anymore, and if people are being cagey about the details beyond there, they probably lead to labor camps.  What's a little genocide if you can get a cheap 96" TV, though, right?

I tend to remind myself that the current iteration of the FIRE movement has literally never seen a bear market.  It dates to sometime after the 2008-2010 housing market explosion, and developed in an era of The Market Will Never Go Down.  At least, not seriously, and Buy The Fleeping Dip!

How long that's likely to last into the future requires a better crystal ball than I have, but it's reasonable to figure that exponential growth on a finite planet is eventually going to come to an end.  In our lifetimes?  In 100 years from now?  Not sure, but at some point it's likely, and a lot of the "decoupling" people talk about is disturbingly close to "Well, we build it somewhere cheaper and take the profits here."  Eventually you run out of cheaper places to build stuff, or it turns out that it's basically all built by slave labor, which... not really new, but a bit harder to ignore lately.

The general point of "As long as your investments are going up faster than inflation, is no problem!" holds, as long as you're in the "most of my wealth is investments" world and not something like the "I still work for my money and am not getting 10+% raises per year" world... I suppose "just go find a different job" is a reasonable enough answer if you can find it, but it seems a bit "Oh, yes, well, how hard can the working world be, pip pip, cheerio!" to me.  Some markets are strong, others less so, and I certainly wouldn't want to be trying to relocate at the current moment and housing bubble...

I've generally been trying to take the more contrarian path of trying to drive down my long term expenses through productive property improvements - solar, gardens, eventually some root cellars, etc.  The goal is that regardless of where things go, I have the ability to cover a lot of my basic needs locally on the property, and, more importantly, have the experience to help scale this out when the needs come.  I also generally model the US, at least, as a dying empire on the way down its arc through history (a Trump-type politician wasn't a surprise, that he showed up in 2016 was about 8 years ahead of my estimates), so I question just how long the current kick the can game with the markets will be able to continue - and be backed by actual things to buy.  All the money in the world doesn't help if there's nothing of what you want, and knowing people far deeper into the fabrication side of things than I am, the random whiplashing shortages of basic things like box tube are pretty well concerning.  You can't get trailer axles either.

We'll see.  I don't think the inflation is currently the end of the world, though it sucks an awful lot if you're fixed income with annual cost of living increases that come nowhere near inflation, and it will make accumulating wealth harder if you're not already substantially in the markets.

The whole "arc of empire" thing is a lot more concerning than inflation, though.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #2 on: January 12, 2022, 07:46:16 PM »
Good points @Syonyk for sure.  Many of them come down to sustainability, a 'buzz word' in Norway at least.  It's great to have improvements in corporate financials that lead to better quality of life, but only if they are sustainable...  Americans seem addicted to the fast food version of this - I want to feel good, look cool, and be instantly gratified for as long as possible.  We don't care if it's unsustainable, we all want it and we'll all pay good old American dollars (the global reserve currency) for it.

Who would've ever thought Bitcoin would be a thing, but one of its reasons for having value is that fiat currency is self-destructing.  Another important thing to watch in this whole 'inflationary phase', is what happens to the relative value of the US dollar.

Syonyk

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Re: Inflation - Should We Be Worried
« Reply #3 on: January 12, 2022, 08:02:09 PM »
Americans seem addicted to the fast food version of this - I want to feel good, look cool, and be instantly gratified for as long as possible.  We don't care if it's unsustainable, we all want it and we'll all pay good old American dollars (the global reserve currency) for it.

Queen's chorus in "I Want It All" is quite applicable to American thinking: "I want it all, I want it all, I want it all, and I want it now!"

We had the whole corporate raiders thing in the 80s that would buy a perfectly reasonable company and strip it for pieces, leaving a lot of quick profit and a shattered wreck of what had once been a profitable company.

I do remain concerned about the whole "dollar as global reserve currency" thing - and the associated petrodollar.  If those end, the US is in for a world of hurt, partly from the dollars that have already been printed and spread, and mostly because I don't expect our politicians to recognize the fact, which means they'll do the only thing they know how to do in terms of monetary policy, and print more money.  When that doesn't work, they'll print yet more, because it's always worked before, so they just didn't do enough of it.  And by the time anyone has the sense to realize that it's not working, the damage will be done.

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Who would've ever thought Bitcoin would be a thing, but one of its reasons for having value is that fiat currency is self-destructing.  Another important thing to watch in this whole 'inflationary phase', is what happens to the relative value of the US dollar.

I keep meaning to put together a "priced in" website that grabs data in a variety of currencies for a variety of commodities and lets you compare and contrast their relative values - if you want the price of Bitcoin in barrels of oil, what does that look like?  Etc.

Travis

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Re: Inflation - Should We Be Worried
« Reply #4 on: January 12, 2022, 10:49:24 PM »

The general point of "As long as your investments are going up faster than inflation, is no problem!" holds, as long as you're in the "most of my wealth is investments" world and not something like the "I still work for my money and am not getting 10+% raises per year" world... I suppose "just go find a different job" is a reasonable enough answer if you can find it, but it seems a bit "Oh, yes, well, how hard can the working world be, pip pip, cheerio!" to me.  Some markets are strong, others less so, and I certainly wouldn't want to be trying to relocate at the current moment and housing bubble...

Pete did get taken to task by a handful of folks pointing out that his optimistic "just ride this inflation thing out" speech doesn't apply to a chunk of the population that either is on fixed incomes, doesn't earn much money, or can't find an affordable place to live. Housing costs will smooth out at some point, but this is a genuine problem for a lot of folks right now.  He owned up to not discussing that part of the population, but somewhere else in the article or comments threw out there that the point of his MMM persona was to get high earners to stop being wasteful consumers.

Telecaster

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Re: Inflation - Should We Be Worried
« Reply #5 on: January 13, 2022, 12:24:58 AM »
If I may blow my own horn (toot!) I've been talking about the wisdom of preparing for inflation for years on the DPOYM thread.  Owning a 3.5% mortgage in a 5% inflation world makes some sense to me. 

Should we be worried?  In my opinion no.  Not yet, anyway.  The Fed governors are all inflation hawks who are paranoid about a repeat of the 1970s.  I believe they will act in time to blunt the worst effects.  However, raising interest rates can be, and usually is, bad for the economy.   It is possible rising interest rates could trigger a recession, which is usually bad for the stock market.  But right now things are booming. 

That said, interest rates can go up a lot before they resemble something like the long term average.  So even if they go up, that might not be as good for some businesses, but history shows many others can function just fine.

So, IMO, no need to get worried just yet. 


chemistk

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Re: Inflation - Should We Be Worried
« Reply #6 on: January 13, 2022, 06:34:24 AM »
I think this forum has enough of a broad appeal to ask the question (that I enjoy asking) - if your worst fear is realized, what are you actually going to do?

There's a good chunk of people here who can quickly shift significant assets to different classes (or to different currencies) to hedge inflation. Plenty of people who can relocate or expatriate if that's the best long-term strategy.

But there's also a significant (majority, if barely I'd argue) of forum-goers who can't move enough assets to properly hedge inflation, nor with the ability to quickly relocate or expatriate. The bulk of Western society is in this boat.

Even though Pete writes his articles for the already-wealthy (relative to the rest of the country, if not the world) - the 'Circles' are always something to bring a crisis (real or perceived) into focus. What can YOU personally do RIGHT NOW to hedge inflation? We all know what the tools are, and the risks associated with leveraging them. Other than that, you could be more active politically to try and influence your local elections (which help regional -> state -> federal [obviously with diminishing returns the higher the level]). You can intentionally reduce consumption. You can make your household more self-sufficient. You can work a couple more years, or go back to work if retired.

Pete has unabashedly emphasized that he's deliberately optimistic about most things - and there's no reason not to be, if for no other reason than it's entirely out of your control. The only thing you can control is your level of preparedness, and no mater the extent of that investment (whether you're shifting asset classes or installing solar panels), you're hedging a bet on something that may or may not come to pass.

Should "WE" be worried? No. Should "WE" be aware of the tools we have to work against inflation - absolutely. 

Should YOU be worried? Depends on your risk tolerance.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #7 on: January 13, 2022, 09:18:07 AM »
... if your worst fear is realized, what are you actually going to do?
...

One of the interesting aspects of inflation is that acting after the fact is sub-optimal.  You really should be forecasting what you think will happen and act in ways that hedge the impact.  For example, we've had a few neighbors gamble that inflation was transitory and sold their homes for about 20% more than 2020 values.  They are now renting and starting to sweat the fact that building / buying their new home is taking longer and costing more than they thought... 

Cranky

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Re: Inflation - Should We Be Worried
« Reply #8 on: January 13, 2022, 12:40:44 PM »
If you are poor, this is a big problem for you - itís hard to keep up with steep inflationary increases if you donít already have resources.

Iíd say that for most people on this forum, including *moi*, itís some degree of annoying. My housing prices are stable and beyond that the big jumps seem to be travel related. But Iíve been through higher inflation than this.
« Last Edit: April 16, 2022, 08:42:47 AM by Cranky »

sui generis

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Re: Inflation - Should We Be Worried
« Reply #9 on: January 14, 2022, 07:19:40 PM »
I hope this isn't too tangential, but I heard today (on a podcast, so sorry if it's paraphrasing rather than precise) that in a recent poll, only 30-some% of Americans said the economy is doing ok, which is apparently a very poor perception as compared to rankings over time.  However, 60-some% said their personal finances were good (or maybe it was even better like "quite good" or something like that).  And that's a better ranking than most times in the history of this polling.  And that the discrepancy between the two is absolutely remarkable.

So I do have the feeling, as my EOY financial summary tells me for my personal situation, that a lot of people are perceiving and panicking more than experiencing.  Not to discount those individuals that actually *are* "experiencing" but at a population level, it seems much more like a perception of damage from inflation**. 

Added to that that *labor* is one of the things that experiences inflation and that workers have historic amounts of power right now (esp in the absence of functional unions in the private sphere).  Again, not to say that every *individual* is getting a raise that matches or beats inflation of the goods they are buying, or that through the Great Resignation they've been able to secure a new job that does so.  But, I really haven't seen as many numbers reflecting how the inflation in the price of labor compares to other goods.  Of course, it gets circular real fast, with the the laborers also being the consumers of the goods that cost more due to increased labor costs as well as materials.


**At least today, less than a year in.  I certainly share concerns about multiple years of inflation or the cure being worse than the illness, depending on how the Fed and other actors proceed.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #10 on: January 20, 2022, 02:04:43 PM »
The stock markets are stumbling and the Fed is only in the early stages of winding down QE (through March) along with expected 0.25% rate increases in March, June, September, and December.  Inflation is hitting new home affordability especially hard since mortgage interest rates are creeping up, home prices are already way up and inventory remains low.  Housing is a tough market to make over-generalizations about, but on 'average', I heard that it costs $300/month more for a buyer of the same 'average' house YoY.  Plenty of dire news if you Google it, but this statistic was thrown out on CNBC this morning.

It's going to be interesting to see how inflation looks when we get our next CPI reading Feb 10th and PPI reading Feb 15...  I'm not worried, but don't have rosy expectations either.  I believe the Fed will eventually announce that it has to do more to fight inflation.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #11 on: January 23, 2022, 06:18:32 PM »
Comprehensive piece on how inflation is a global problem (excluding China) - https://www.washingtonpost.com/business/2022/01/23/inflation-global-prices-biden/

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In the European Union, prices are rising faster than at any time since the euro currency was introduced. The annual inflation rate in the United Kingdom hit 5.4 percent in December, the highest figure there in nearly 30 years. Canadaís consumer prices are rising twice as fast as before the pandemic.

Even in Japan, where prices have been depressed almost continuously since the collapse of the late 1980s real estate bubble, the central bank in recent days revised upward its assessment of inflation risks for the first time in eight years. Among major economies, only China has a lower inflation rate today than in early 2020.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #12 on: January 26, 2022, 11:58:40 AM »
It may begin to sound like beating a broken drum, but https://www.cnn.com/2022/01/26/business/oscar-mayer-hot-dogs-velveeta-cheese-kraft-heinz/index.html

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New York (CNN Business) - The makers of top food and consumer goods brands plan to raise prices in the spring, dashing shoppers' hopes for a quick drop in their grocery bills.

Kraft Heinz (KHC) said in a recent letter to its customers that it will raise prices in March on dozens of products, including Oscar Mayer cold cuts, hot dogs, sausages, bacon, Velveeta cheese, Maxwell House coffee, TGIF frozen chicken wings, Kool-Aid and Capri Sun drinks.  The increases range from 6.6% on 12oz Velveeta Fresh Packs to 30% on a three-pack of Oscar Mayer turkey bacon. Most cold cuts and beef hot dogs will go up around 10% and coffee around 5%. Some Kool-Aid and Capri Sun drink packs will increase by about 20%.

This follows a similar announcement from consumer products giant Procter and Gamble earlier in the year...

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #13 on: February 08, 2022, 06:55:44 AM »
FIRE bloggers seem to travel in herds.  After MMM's post, I've seen inflation being discussed everywhere.  MMM did a reasonable job, but some of them (Millennial-Revolution, cough cough - https://www.millennial-revolution.com/invest/investing-during-high-inflation/), their commenters, and people posting to forums are spreading a whole lot of misleading or uniformed opinions parading as facts.  That wouldn't be a big deal, except it leads to the wrong conclusions and then the wrong plans.  In Millennial Revolutions case (and many others), it has people thinking that this inflation is transitory and dividends are a good silver bullet fix - equities should have high returns and their dividends will help offset losses to inflation.  Which isn't entirely wrong, but 100% equities has always been a suboptimal, higher risk than expected return gambit.  Now more than ever is the time to be well diversified because, in the course of fighting inflation, the Federal Reserves of the world just might send us into recession, which isn't going to be good for equities.  It's disastrous to 'lose money' (on paper, at least) when inflation is high and you need more income...

To be better informed on what actually causes inflation (things like expansionary monetary policy, fiscal and government stimulus, or more specifically, providing an overabundant supply of 'too cheap' money without increasing supply side output or increased velocity of money), I recommend listening to the latest Econtalk episode - https://www.econtalk.org/john-taylor-on-inflation-the-fed-and-the-taylor-rule/#audio-highlights

John Taylor (author of the 'Taylor Rule' which is a guide used to set Fed target rates) discusses what has happened in the past, what is currently happening, and what he believes needs to happen to rectify our current inflation.

To get people excited, here's a quote...
Quote
Let's talk about causation and what causes inflation. There used to be a big debate in the profession of economics about what did cause inflation. Most of that seems to have been forgotten--where now, it's like we're starting over to some extent. When I was in graduate school, 'Inflation,' to quote, Milton Freeman, 'was everywhere and always a monetary phenomenon'.

There were other theories of inflation, such as, you could argue, corporate greed, which many people are doing on Twitter these days, or elsewhere on the floor of the Senate. That, because corporations want to make more money, they're raising prices. Of course, the problem with that theory is that was everyone wants to make more money. Why are they able to raise prices now and not other times? Did they juust get greedy today and not yesterday?

So, there are other theories including issues about the supply side and the demand side. But, you believe, I believe, that it's money. What do you think of those other theories? Anything to them?

SwordGuy

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Re: Inflation - Should We Be Worried
« Reply #14 on: February 08, 2022, 04:53:14 PM »
Millennial-Revolution, cough cough -
They seem to be far more prolific at writing about FIRE than they are in learning the ins and outs of the material.

They posted a link about coastFIRE awhile back and completely misunderstood the concept.  Their article was chock full of errors and bad logic.   One reader tore their logic apart.  https://www.millennial-revolution.com/freedom/what-is-coast-fire-and-is-it-right-for-you/

They are no longer on my "to read" list.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #15 on: February 08, 2022, 06:30:15 PM »
Millennial-Revolution, cough cough -
They seem to be far more prolific at writing about FIRE than they are in learning the ins and outs of the material.

They posted a link about coastFIRE awhile back and completely misunderstood the concept.  Their article was chock full of errors and bad logic.   One reader tore their logic apart.  https://www.millennial-revolution.com/freedom/what-is-coast-fire-and-is-it-right-for-you/

They are no longer on my "to read" list.

Interesting...  I just casually read a smattering of blogs to see what is going on in the sphere, but that makes sense.  The fact that they are completely anti-real estate seems to be a real 'arrow to the knee' for their FIRE, but maybe the book and blog will provide enough income to make up for any shortfalls if their 'yield shield' doesn't work out.

Psychstache

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Re: Inflation - Should We Be Worried
« Reply #16 on: February 08, 2022, 06:38:57 PM »
Millennial-Revolution, cough cough -
They seem to be far more prolific at writing about FIRE than they are in learning the ins and outs of the material.

They posted a link about coastFIRE awhile back and completely misunderstood the concept.  Their article was chock full of errors and bad logic.   One reader tore their logic apart.  https://www.millennial-revolution.com/freedom/what-is-coast-fire-and-is-it-right-for-you/

They are no longer on my "to read" list.

Interesting...  I just casually read a smattering of blogs to see what is going on in the sphere, but that makes sense.  The fact that they are completely anti-real estate seems to be a real 'arrow to the knee' for their FIRE, but maybe the book and blog will provide enough income to make up for any shortfalls if their 'yield shield' doesn't work out.

So are they anti real estate or do they want to marry it?

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #17 on: February 09, 2022, 06:44:01 AM »
Millennial-Revolution, cough cough -
They seem to be far more prolific at writing about FIRE than they are in learning the ins and outs of the material.

They posted a link about coastFIRE awhile back and completely misunderstood the concept.  Their article was chock full of errors and bad logic.   One reader tore their logic apart.  https://www.millennial-revolution.com/freedom/what-is-coast-fire-and-is-it-right-for-you/

They are no longer on my "to read" list.

Interesting...  I just casually read a smattering of blogs to see what is going on in the sphere, but that makes sense.  The fact that they are completely anti-real estate seems to be a real 'arrow to the knee' for their FIRE, but maybe the book and blog will provide enough income to make up for any shortfalls if their 'yield shield' doesn't work out.

So are they anti real estate or do they want to marry it?

Sorry, I thought everyone knew that meme - https://mashable.com/article/skyrim-arrow-in-the-knee-meme-history

Tyson

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Re: Inflation - Should We Be Worried
« Reply #18 on: February 09, 2022, 01:13:02 PM »
... if your worst fear is realized, what are you actually going to do?
...

One of the interesting aspects of inflation is that acting after the fact is sub-optimal.  You really should be forecasting what you think will happen and act in ways that hedge the impact.  For example, we've had a few neighbors gamble that inflation was transitory and sold their homes for about 20% more than 2020 values.  They are now renting and starting to sweat the fact that building / buying their new home is taking longer and costing more than they thought...

That's a smart observation.  I've been thinking about what I'll do when I FIRE, will I sell my home and become a nomad?  That's actually kind of an appealing idea to me, honestly.  But then I think about 'what if I want to own a home again some day?"  Well to buy in again would be astonishingly expensive.  So I am going to hold on to my home and most likely just rent it out.  Rental prices here would already far outstrip the mortgage payments I have on it.  And I could move back if I decided I didn't like the nomad lifestyle.

I am curious for input from the others here.  All of my savings are in an 80/20 stock/bond index fund, with the stock portion at 80% domestic and 20% foreign.  Given rising inflation, is this optimal or should I consider some other approach? 

As for some of the things mentioned in this thread, I will be putting up solar panels before too long and also buying a full EV vehicle, along with backup batteries for my home that should let me survive 4 or 5 days even if there's no sun.  I'm no 'prepper', but having the ability to generate power locally just seems reasonable and a more robust option, especially here in CO where we can have weeks of freezing weather and not particularly well insulated homes. 
« Last Edit: February 09, 2022, 01:18:57 PM by Tyson »

ysette9

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Re: Inflation - Should We Be Worried
« Reply #19 on: February 09, 2022, 06:28:11 PM »
Totally off topic, but what is it with poor insulation in CO homes? I lived in a new-ish apartment back in the 2007 timeframe and the water heater (no jacket overwrap with exposed copper pipes leading to it) was in an uninsulated closet off of the porch. So it was essentially utterly exposed except it didnít get actual snow on it.

To prevent disaster the management installed a  temperature-triggered electric space heater in the closet. It went off the first night with a creepy vibrating clatter on the other side of a wall from the headboard of my bed.

I was shocked and reported what was obviously shoddy workmanship right away to the leasing office. The shrugged and said it was up to code.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #20 on: March 02, 2022, 10:52:08 AM »
Wowsers, Powell's questioning from Congress today is a whole lot more contentious than it has been in the past.  Basically, Congress is taking Powell to task for seeming to be way behind the curve.  The stock market is pretty excited that only a quarter point is on the table, rallying 2%, but the follow-up questions (including mention of the Taylor Rule which indicates that a Fed Fund Rate of 9.5% would be required to fight inflation) were finally a realization that oil prices skyrocketing and wage gains gaining momentum are becoming a larger concern, now showing up in rapidly increasing prices.  I'll throw in a link once it's available, since the testimony is ongoing currently and will also continue tomorrow.  This is a gripping time to be an armchair economist, watching history take place!  Theory and ongoing anecdotal evidence indicate that we're in for a very high and prolonged period of inflation and the Fed seems to have abandoned, or at least sidelined, the 2% inflation target.  Jerome Powell continually stressed being cautious moving forward, but pushback is that caution is now causing more harm than good.

It's likely that voters will think switching the party in control - Republicans taking the House and Senate back in the mid-terms - will fix all this.  It's an easy platform to run and win on, and maybe they even believe it...

3/2/2022 Testimony - https://youtu.be/r38K7xoBLVU?t=135
« Last Edit: March 02, 2022, 11:43:32 AM by EscapeVelocity2020 »

talltexan

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Re: Inflation - Should We Be Worried
« Reply #21 on: March 10, 2022, 07:18:32 AM »
Republicans were criticizing the Fed back when Bernanke was in charge, and Powell is now. I'm baffled as to how they don't realize that...Bernanke and Powell are Republicans who were appointed by Republicans.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #22 on: April 06, 2022, 12:19:24 PM »
There are a heck of a lot of play on the same tune of this sentiment these days - https://finance.yahoo.com/m/12c9b985-68d3-37ce-9d11-08ad11cefa72/fed-must-%E2%80%98inflict-more.html

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So much for the Fed put.

ĎItís hard to know how much the U.S. Federal Reserve will need to do to get inflation under control. But one thing is certain: To be effective, itíll have to inflict more losses on stock and bond investors than it has so far.í
ó Bill Dudley, former New York Fed president

Thatís William Dudley, the former president of the powerful New York Fed, arguing in a guest column at Bloomberg that his former colleagues wonít get a handle on inflation thatís running at around a 40-year high unless they make investors suffer.

talltexan

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Re: Inflation - Should We Be Worried
« Reply #23 on: April 13, 2022, 06:21:40 AM »
Some companies are resilient to inflation. Some will struggle in it. If you believe inflation will affect markets, can't you just work to identify the former?

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Re: Inflation - Should We Be Worried
« Reply #24 on: April 25, 2022, 09:27:51 AM »
Two trends that require us to be more sophisticated consumers and investors just to stay even -

Shrinkflation - not just packaging changes, but more fillers and portion resizing...  https://youtu.be/P4fYVxP7Vkc

US Treasuries have less buyers, and therefore pressure on Treasury yields to increase.  Foreign currency devaluation and increased exchange rate hedging costs - countries are weakening against the USD, the expectation is that the Fed capitulate and start printing again, leading to more inflation... https://youtu.be/a5J8gMrEZxg

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #25 on: May 05, 2022, 08:12:34 AM »
Now that the Fed has sternly proclaimed that their intention is to do the bare minimum and let inflation run its course, folks need to get the reality check that earning an income, as MMM himself says, is the best way to keep up...

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Why Inflation does NOT mean we are getting poorer

If the price of bananas doubles, and your salary doubles, nothing has really changed: you can still afford exactly the same number of them. And with typical inflation, this is exactly what happens: the prices of everything gradually rise, including the price of labor (aka YOU), which means your paycheck rises.

Even if youíre retired and living off of your investments, inflation is typically harmless: the prices of assets (like houses, buildings, or slices of businesses known as ďstocksĒ) also inflate right along with currency, so you are at least as well-off as before.

Even better, if you are a borrower, inflation actually helps you: If you borrowed $300,000 for a house ten years ago that is now worth $600k, the full value of the house is yours but the bank only expects their 300k back.

I tend to disagree with the other ideas that investments will keep up with inflation or that borrowing money is a good long term strategy...

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Re: Inflation - Should We Be Worried
« Reply #26 on: May 05, 2022, 09:01:03 AM »
I tend to remind myself that the current iteration of the FIRE movement has literally never seen a bear market.  It dates to sometime after the 2008-2010 housing market explosion, and developed in an era of The Market Will Never Go Down.  At least, not seriously, and Buy The Fleeping Dip!

I have often thought about this too.

Tyson

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Re: Inflation - Should We Be Worried
« Reply #27 on: May 05, 2022, 10:19:10 AM »
I tend to remind myself that the current iteration of the FIRE movement has literally never seen a bear market.  It dates to sometime after the 2008-2010 housing market explosion, and developed in an era of The Market Will Never Go Down.  At least, not seriously, and Buy The Fleeping Dip!

I have often thought about this too.

That brings up 2 questions for me - what is the best way to prepare for a bear market?  And, how much does that hurt you if no bear market is forthcoming?

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Re: Inflation - Should We Be Worried
« Reply #28 on: May 06, 2022, 09:40:42 PM »
That brings up 2 questions for me - what is the best way to prepare for a bear market?  And, how much does that hurt you if no bear market is forthcoming?

I've no idea.  I'm sure the optimum strategy for whatever's coming is something that nobody has thought about, and will be the subject of many "I Told You So!" YouTube videos and such in the decade to come, if the FIRE movement survives.

I keep some of my assets invested in index funds and such, general "market tracking" sort of things.  I keep some of my assets in "value store" sort of things that I generally don't expect to go up, but neither do I expect them to dramatically go down (and in a genuine crash, I consider holding 50% of previous value to be "doing exceedingly well" - consider cases of hyperinflation and how currency drops to zero in a hurry).  And I've been trying to get our property into a state where it can provide for a variety of our needs in terms of food/energy resources regardless of what happens.  We have a large solar install that's quite flexible, and I'm working on gardens (they're hobby scale now and I need to expand them), and, ideally, a greenhouse with fish at some point (aquaponics).  Plus chickens, though right now we just buy eggs from one of the many local sources.  I'd like some eventually.

If the markets go up steadily at 5-7% real growth every year from now on, this sort of approach is quite worse than just "shove it all in index funds."  Will it outperform market based strategies in our coming future?  I honestly have no idea.  But it limits our downside risk - our net worth may be cut by 50%, but it won't go to zero.  And I have the useful skills out of these projects that would be handy if I find myself less-employed (though I'm pretty comfortable with the security of my employment, if not with one company, with the general field - if I'm unemployable, things have gone very, very south, or we've collectively gotten over our delusion about consumer electronics, either way I've got other hobbies I can work with).

The biggest thing, though, is leaving slack in your finances.  We don't spend nearly what comes in, and that gives us options.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #29 on: May 07, 2022, 07:19:27 AM »
I tend to remind myself that the current iteration of the FIRE movement has literally never seen a bear market.  It dates to sometime after the 2008-2010 housing market explosion, and developed in an era of The Market Will Never Go Down.  At least, not seriously, and Buy The Fleeping Dip!

I have often thought about this too.

That brings up 2 questions for me - what is the best way to prepare for a bear market?  And, how much does that hurt you if no bear market is forthcoming?
This is going to be a challenging year, with the Fed still technically in 'accommodative mode' (0.75 - 1% target rate, where 2.5% is said to be neutral / balance sheet not yet rolling off).  They have a lot of work to do, unless inflation does somehow burn itself out.

I probably sound like a broken record, but Bogleheads use the phrase 'willingness, need, and ability to take risk'.  As long as your asset allocation is in-line with your goals, you just stick with the plan (whether that means you are still accumulating or in the withdrawal phase).  Problem is, most people start to think about this after the market has turned, feel locked in to their strategy, and start to get nervous because the were not as willing or able to take risk as they thought.  Folks also probably didn't need to take as much risk after the run up to 4800, but didn't diversify or adjust to match an AA, just let equities dominate their portfolio.

With all that said, this current economic backdrop is throwing not just a bear market but also sky-high inflation at FIRE.  If it were just one headwind, I'm sure folks would muddle through, but if it goes on long enough, FIRE could get melted by this potent combo, that's the historic failure scenario I linked to in my OP.  Being able to leave investments untouched during a downturn is important, but being able to do things like reallocate bonds, cash, real estate gains back in to equities to re-align your asset allocation is even better. 

For the first time in a long time, there are starting to be losers as well as winners, as opposed to winners and bigger winners...  That's kinda the way capitalism used to work before the Fed got in the business of buying Treasuries and MBS and lending at 0-0.25%...

Tyson

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Re: Inflation - Should We Be Worried
« Reply #30 on: May 07, 2022, 11:07:16 AM »
I've no idea.  I'm sure the optimum strategy for whatever's coming is something that nobody has thought about, and will be the subject of many "I Told You So!" YouTube videos and such in the decade to come, if the FIRE movement survives.

I keep some of my assets invested in index funds and such, general "market tracking" sort of things.  I keep some of my assets in "value store" sort of things that I generally don't expect to go up, but neither do I expect them to dramatically go down (and in a genuine crash, I consider holding 50% of previous value to be "doing exceedingly well" - consider cases of hyperinflation and how currency drops to zero in a hurry).  And I've been trying to get our property into a state where it can provide for a variety of our needs in terms of food/energy resources regardless of what happens.  We have a large solar install that's quite flexible, and I'm working on gardens (they're hobby scale now and I need to expand them), and, ideally, a greenhouse with fish at some point (aquaponics).  Plus chickens, though right now we just buy eggs from one of the many local sources.  I'd like some eventually.

If the markets go up steadily at 5-7% real growth every year from now on, this sort of approach is quite worse than just "shove it all in index funds."  Will it outperform market based strategies in our coming future?  I honestly have no idea.  But it limits our downside risk - our net worth may be cut by 50%, but it won't go to zero.  And I have the useful skills out of these projects that would be handy if I find myself less-employed (though I'm pretty comfortable with the security of my employment, if not with one company, with the general field - if I'm unemployable, things have gone very, very south, or we've collectively gotten over our delusion about consumer electronics, either way I've got other hobbies I can work with).

The biggest thing, though, is leaving slack in your finances.  We don't spend nearly what comes in, and that gives us options.

I'm not big on prepper type stuff, if we get to that point I'll just rely on guns to take other people's food.  Kidding!  However the bolded section above was really helpful, thank you.


This is going to be a challenging year, with the Fed still technically in 'accommodative mode' (0.75 - 1% target rate, where 2.5% is said to be neutral / balance sheet not yet rolling off).  They have a lot of work to do, unless inflation does somehow burn itself out.

I probably sound like a broken record, but Bogleheads use the phrase 'willingness, need, and ability to take risk'.  As long as your asset allocation is in-line with your goals, you just stick with the plan (whether that means you are still accumulating or in the withdrawal phase).  Problem is, most people start to think about this after the market has turned, feel locked in to their strategy, and start to get nervous because the were not as willing or able to take risk as they thought.  Folks also probably didn't need to take as much risk after the run up to 4800, but didn't diversify or adjust to match an AA, just let equities dominate their portfolio.

With all that said, this current economic backdrop is throwing not just a bear market but also sky-high inflation at FIRE.  If it were just one headwind, I'm sure folks would muddle through, but if it goes on long enough, FIRE could get melted by this potent combo, that's the historic failure scenario I linked to in my OP.  Being able to leave investments untouched during a downturn is important, but being able to do things like reallocate bonds, cash, real estate gains back in to equities to re-align your asset allocation is even better. 

For the first time in a long time, there are starting to be losers as well as winners, as opposed to winners and bigger winners...  That's kinda the way capitalism used to work before the Fed got in the business of buying Treasuries and MBS and lending at 0-0.25%...

I'm still in accumulation phase (which I seem to be stuck in much longer now, due to the stupid divorce).  So the advice is essentially 'stick to your plan'?  Roger that.  Since I'm still at least a decade from FI, I'm not too concerned about any fluctuations we have in the meantime.  Plus, nothing the market can ever do will even come close to the total nuclear destruction of a divorce.  I guess I'm pretty inured against temporary losses in the market after that financial raping I got 4 years ago.  Actually, now that I think about it, divorce happens quite often and is way more destructive to FIRE than most other things I can think of.  I wonder why it's not discussed more here....?

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Re: Inflation - Should We Be Worried
« Reply #31 on: May 07, 2022, 03:16:12 PM »
I'm not big on prepper type stuff, if we get to that point I'll just rely on guns to take other people's food.  Kidding!

Cute... a common sentiment.  I hope to not need to ever see how well "attacks against those who know their land and defenses in depth" work, but I can't imagine it will go terribly well.  I'm sure some limited success will be found, but overall, even equal for equal, defenders tend to have a serious advantage.

The past two years have been a solid case study in the value of "prepper type stuff," if you've paid any attention.  I (personally) don't think there's a need for five years worth of "storage prepper food" type stuff (though a 5 gallon bucket or two of them make good camping food), but having 3+ months of general consumables around, ideally more in a pinch (rice & beans, with enough spices around to make them interesting) seems a reasonable response to the way things have been going.  The whole JIT supply chain thing has broken, and shortages are still flailing around wildly, hitting random things.  Things like "combo meter base and outdoor panels with feedthrough lugs" are still literally not available for sale in the country...

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However the bolded section above was really helpful, thank you.

The concept of slack has been largely lost in the modern world, far as I can tell.  And that means a lot of panic when things change out from under you without warning.  "Spending 50% of what you make" means that inflation just isn't a big deal for a long while.  It's annoying.  Same as gas prices.  Diesel being at $5.50 to me is annoying, and a good reason to mess around with more trailer stuff for the car (though the cost of putting a hitch on it will never "pay off" in terms of fuel saved on the truck), but it's not that big a deal.  On the flip side, the truck is long since old enough to drink, and the car is a decade old.  They're in good shape and do what we need, but they're not exactly new or nearly so.  Were I to approach my finances in the standard marketing-driven method of "If you can squeeze the monthly payment in, you're approved!", I'd have a far harder time of dealing with price rises.  But I'd have a newer couple vehicles, probably a far larger house that I was still in debt for, etc.  I don't think the tradeoffs are worth it, but the size of new homes for sale and the mortgages to go with tells me I'm in the minority.

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I wonder why it's not discussed more here....?

I'm fairly certain it has been.

Tyson

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Re: Inflation - Should We Be Worried
« Reply #32 on: May 07, 2022, 03:57:24 PM »
Funny, you see covid as having shown that the supply chains are unreliable.  I find the opposite - they are actually quite robust.  I have to admit at the very beginning I felt the same panic everyone did and bought a bunch of non-perishables and wow do I feel stupid with a ton of crap in my basement I haven't managed to use up in the last 2 years. 

Here's my takeaway after having thought about this for the past couple of years.  Our supply lines are robust because they are global.  And the vast majority of the time, one good can be easily substituted with another.  For example, no more almonds because California shut down?  No problem, I'll switch to almonds from somewhere else (like Spain).  Or start eating walnuts.  Or pecans.  Etc..... In the end it doesn't really affect me.

Even when it comes to specialized parts, it's more a question of slowing down or delays, rather than complete stoppages.  At worst, this is an inconvenience. 

The only exception I see, from my perspective, is power/electricity.  I do think it's possible for the grid to go down and then you are screwed, especially in winter.  I plan to get some solar panels before too long to ameliorate that, although even that is not a perfect solution.  I don't see the grid going down for an extended period, and if it did then there's be a broader societal collapse to worry about. 

On a more philosophical point, I just find the entire prepper mindset to be incredibly depressing.  Being in a state of mind where you constantly half-expect society to collapse to the point where you have to live off the land is just a miserable prospect.  A better approach would be to be rich enough that you can simply move to some place better. 

Oh, and I know everything I said above will not affect your opinion one iota.  It was more of a thought-experiment for myself to figure out why I find that entire life-view so depressing.  And now I know - because it's rooted in such deeply held fear.  Fear so entrenched in people that they feel that they have no choice but to prep, and that to do otherwise would be foolish. 

Anyway, no need to respond, this was more for myself than it was pointed at your (or anyone else). 

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Re: Inflation - Should We Be Worried
« Reply #33 on: May 07, 2022, 06:30:02 PM »
A few years back when we were still living on our homestead out in the country, some new neighbors moved onto a property a half mile, or so, away (so, kinda like almost next door to us, if we had been in the city). Never met them in person, but several of us in the neighborhood noticed that the couple, for some reason, seemed to actively avoid making eye contact and never waved when passing on the narrow country road that led from our neighborhood down to the main highway. I figured they were just city folks, who weren't used to the norms of country life, until, by chance, one day, a friend of a friend, who happened to be house sitting for the couple, ended up coming up to our farm to visit. The female house sitter told me that when our new neighbor (wife) had been explaining her house sitting duties, she had specifically mentioned, "We are not friends with any of our neighbors, so please do not wave to anyone you may pass on the road, while driving in our car." When the house sitter asked why, the woman told her, "We don't want to get to know the neighbors, because that might make it harder in the event that we end up having to kill them some day." In a neighborhood where everyone knew everyone, and we all freely and regularly visited each other's houses to borrow a cup of sugar, for potlucks, to help finish a concrete slab, or for work parties to fix potholes in the dirt road, hearing that our new neighbors were already thinking ahead to a time when they might have to kill us, felt really creepy. It's pretty sad that there are actually people who live their lives in total fear like that.

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Re: Inflation - Should We Be Worried
« Reply #34 on: May 07, 2022, 07:08:49 PM »
A few years back when we were still living on our homestead out in the country, some new neighbors moved onto a property a half mile, or so, away (so, kinda like almost next door to us, if we had been in the city). Never met them in person, but several of us in the neighborhood noticed that the couple, for some reason, seemed to actively avoid making eye contact and never waved when passing on the narrow country road that led from our neighborhood down to the main highway. I figured they were just city folks, who weren't used to the norms of country life, until, by chance, one day, a friend of a friend, who happened to be house sitting for the couple, ended up coming up to our farm to visit. The female house sitter told me that when our new neighbor (wife) had been explaining her house sitting duties, she had specifically mentioned, "We are not friends with any of our neighbors, so please do not wave to anyone you may pass on the road, while driving in our car." When the house sitter asked why, the woman told her, "We don't want to get to know the neighbors, because that might make it harder in the event that we end up having to kill them some day." In a neighborhood where everyone knew everyone, and we all freely and regularly visited each other's houses to borrow a cup of sugar, for potlucks, to help finish a concrete slab, or for work parties to fix potholes in the dirt road, hearing that our new neighbors were already thinking ahead to a time when they might have to kill us, felt really creepy. It's pretty sad that there are actually people who live their lives in total fear like that.

That's so absurd. Statistics show that you are twice as likely to be murdered by a family member or close friend than you are by a stranger, so if they really want to prep, they should get to know everyone real well.

But for real though you are right, what a sad existence to frame your life around fear.

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Re: Inflation - Should We Be Worried
« Reply #35 on: May 08, 2022, 02:53:47 PM »
A few years back when we were still living on our homestead out in the country, some new neighbors moved onto a property a half mile, or so, away (so, kinda like almost next door to us, if we had been in the city). Never met them in person, but several of us in the neighborhood noticed that the couple, for some reason, seemed to actively avoid making eye contact and never waved when passing on the narrow country road that led from our neighborhood down to the main highway. I figured they were just city folks, who weren't used to the norms of country life, until, by chance, one day, a friend of a friend, who happened to be house sitting for the couple, ended up coming up to our farm to visit. The female house sitter told me that when our new neighbor (wife) had been explaining her house sitting duties, she had specifically mentioned, "We are not friends with any of our neighbors, so please do not wave to anyone you may pass on the road, while driving in our car." When the house sitter asked why, the woman told her, "We don't want to get to know the neighbors, because that might make it harder in the event that we end up having to kill them some day." In a neighborhood where everyone knew everyone, and we all freely and regularly visited each other's houses to borrow a cup of sugar, for potlucks, to help finish a concrete slab, or for work parties to fix potholes in the dirt road, hearing that our new neighbors were already thinking ahead to a time when they might have to kill us, felt really creepy. It's pretty sad that there are actually people who live their lives in total fear like that.

That's so absurd. Statistics show that you are twice as likely to be murdered by a family member or close friend than you are by a stranger, so if they really want to prep, they should get to know everyone real well.

But for real though you are right, what a sad existence to frame your life around fear.

Wow, and in addition to that the brazenness that they would tell their house sitter.  Even if they didn't contemplate that that person might have a second or third degree connection to their neighbors they are talking about killing - just saying that to out loud to someone is so anti-social and weird.  If I was the house sitter (presumably accepted into their "no kill" circle?) I wouldn't want to be around people like that for all the poor judgment they must have in many other respects.

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Re: Inflation - Should We Be Worried
« Reply #36 on: May 08, 2022, 07:46:51 PM »
Funny, you see covid as having shown that the supply chains are unreliable.  I find the opposite - they are actually quite robust.

Random things that have been in quite short supply, either for periods of time or "I literally can't get one" as of recently (the past 6 months):

- Basic steel channel.
- PVC conduit of various sizes.
- Combo meter base/breaker panels with feedthrough lugs, as are installed on the outside of almost all new construction out here.
- Trailer axles (torsion half axles).
- Trailer frames of the prebuilt variety.
- Microcontrollers of a huge range of "These are made by the millions and there shouldn't be any issue designing around these."
- Raspberry Pis of any variety, for things that have been designed around them.
- Flooded lead acid batteries of the deep cycle, off grid variety.

And that's just the stuff that's directly been a pain to me or another person I'm working on growing a business with.  We literally can't get the parts we need to build things from damned near scratch, and once you get one thing, another thing is unavailable.  I'll let you optimist-bubble about how you design PCBs for things when you can't expect your microcontroller will be available past the 50 or so you can get, or will go from $0.20/unit to $80/unit if you can get them.  I sure as hell don't know how to do that very well.  There are tricks to be flexible, but they only get you so far, and usually fall over when not only the particular model you want, but the entire related line becomes unavailable.  You can't just swap out an ST for a RP2040 without a good bit of rework, and, often, some changes to external chips (which also are a pain to find in any quantity).

So wherever you're finding reliable supply chains for things outside consumer goodies, please share.  Or ship me a couple combo meter bases, I've got some friends waiting on the parts for solar installs.

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I have to admit at the very beginning I felt the same panic everyone did and bought a bunch of non-perishables and wow do I feel stupid with a ton of crap in my basement I haven't managed to use up in the last 2 years.

Are you going to use them eventually (before they hit end of life)?  Then what's the problem?  If you bought so much they're all useless, well, that's on you.

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Here's my takeaway after having thought about this for the past couple of years.  Our supply lines are robust because they are global.

Because... I'm sorry, have you been paying any attention to the things you're blathering on about for the past two years?  The entire global supply chain has been a hot mess the past two years.  Shipping times have gone from a dead reliable "two weeks port to dock" to "Uh.  You know, please stop calling, we have no idea and can't get any updates."  This is also quite the problem for businesses who are trying to pay employees when they can't sell product because they can't build product, because they can't get one or two particular parts that, contrary to your assertions below, don't have easy alternatives, or require FCC recertification or such when you change out board designs and parts.

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Even when it comes to specialized parts, it's more a question of slowing down or delays, rather than complete stoppages.  At worst, this is an inconvenience.

Go talk to anyone who actually builds things, and see if they share your "It's an inconvenience, nothing more!" perspective.  Find a local homebuilder, mechanic, basically any trade, and see if they agree with you.  Because the ones I talk to aren't dealing with delays.  They're dealing with "There are none of these in the country, we don't know when any more will arrive, and there are no alternatives without a radical redesign of your things."

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On a more philosophical point, I just find the entire prepper mindset to be incredibly depressing.  Being in a state of mind where you constantly half-expect society to collapse to the point where you have to live off the land is just a miserable prospect.

Beat that strawman!  Flog it!  Light it on fire!

There's a huge gap between "Everything will be fine!" and "expecting to live off the land."  Though a decent review of history says, "Being able to supply a lot of your immediate needs locally is worth a lot."  Out here, I'm seeing an impressive, and quite encouraging, interest in residential chickens.  To the point that I'm halfway expecting us to be the last of our social group to get chickens...

I don't find it depressing in the slightest.  I find it rather stimulating to think through the various ways systems can fail, how to mitigate that, and what opportunities may arise out of the changes to come.  "Put it all in markets and assume nothing will go wrong!" sounds dreadfully boring to me, really.  But I also (quite willingly) live rural, repair my own stuff, etc.

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A better approach would be to be rich enough that you can simply move to some place better.

Say it with me now: "Fuck You, I've Got Mine!"  And then don't go anywhere near history books, because that whole thing has a pretty reliable outcome throughout history too. ;)

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Oh, and I know everything I said above will not affect your opinion one iota.

Certainly.  It's an interesting discussion.  You find my point of view depressing, I find yours... willingly head in the sand?  It'll work fine, until it doesn't, and then you've got nothing to fall back on.

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Fear so entrenched in people that they feel that they have no choice but to prep, and that to do otherwise would be foolish.

And I feel much the same way about people who don't set things up to buy in bulk and have a few months worth of supplies on hand in a pinch - except, it's not fear, it's a willful ignorance of reality.

One gains nothing by ignoring reality.  What you consider "fear," I consider "Trying to be able to navigate a range of possible futures," some of which involve currency collapse of various natures (heavy inflation being one), which are things that happen rather reliably and consistently throughout history - if you're willing to look past 2008 in the United States as the start of your historical window.

In any case, as long as you're not going to come knocking on my door, you're welcome to expect whatever to be there, and to expect whatever aid you'll need when that stops working (if it does) to arrive.

Tyson

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Re: Inflation - Should We Be Worried
« Reply #37 on: May 08, 2022, 08:02:33 PM »
Well, now that I've accused you of being motivated by a deeply held fear and you've accused me of being an ostrich, I think we can agree that it's not a subject we'll ever agree on. 

Syonyk

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Re: Inflation - Should We Be Worried
« Reply #38 on: May 10, 2022, 07:50:04 PM »
Indeed.  And the next decade or so should give a solid indication of who's closer to correct.

I'd post some pictures from the store today (selection of meat and cheese was... well, almost entirely absent), but I expect you'd just tell me to move somewhere wealthier.  Same for Home Depot shelves for electrical parts, or pretty much anything else.  I suppose the People's Utopian Republic of Seattle would have stuff?

Except people I know up there can't find anything I actually need either.  Seriously, got a couple torsion axles laying around?  3500 lb would be perfect, though could use some 1500-2000 lb sets too.
« Last Edit: May 10, 2022, 07:57:54 PM by Syonyk »

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #39 on: May 12, 2022, 12:58:07 PM »
This week has been rough for anyone still thinking inflation is transitory or will subside on its own, with both the CPI and PPI coming in stronger than anticipated...  With a historic surplus of job openings, employers will be competing with higher pay to fill these spots.  This is how inflation gets entrenched.

US Producer Prices Rise More Than Forecast in Sign of Persistent Inflation

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The producer price index for final demand increased 11% from April of last year and 0.5% from the prior month, driven by goods, Labor Department data showed Thursday. That followed sizable upward revisions to the March figures.

Excluding the volatile food and energy components, the so-called core PPI increased 0.4% from a month earlier and was up 8.8% from a year ago. While that measure rose at a softer-than-expected monthly pace, March was revised up to a 1.2% advance.

The median forecasts in a Bloomberg survey of economists called for a 10.7% year-over-year increase for the overall PPI and a 0.5% monthly advance.

The data, while moderating somewhat from March, suggest persistent inflation in the production pipeline will continue to filter through to consumer prices, which also slowed from the prior month. Producers are likely to continue facing higher costs as Russiaís war in Ukraine and Covid-related lockdowns in China further strain supply chains, adding to the probability theyíll pass those expenses onto consumers.

Syonyk

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Re: Inflation - Should We Be Worried
« Reply #40 on: May 13, 2022, 10:42:39 PM »
LMAO.

Quote
Excluding the volatile food and energy components, the so-called core PPI increased 0.4% from a month earlier and was up 8.8% from a year ago. While that measure rose at a softer-than-expected monthly pace, March was revised up to a 1.2% advance.

"Except for the stuff people actually need to buy, inflation is... well, actually, still gross.  But not as gross as it would otherwise be!"  Maybe they could exclude housing and communications infrastructure from that metric too.  Or maybe they just do the "adaptation" stuff done with computers and consumer tech.  "Well, really, if you compare the current price of an unlimited cell plan to long distance calling charges 30 years ago, it's basically nothing!"

And as PPI/CPI are politically loaded metrics for [whatever party is currently in power], you can assume they're being gamed in whatever manner one can reasonably get away with to make them look lower.

Local stores out here are struggling with keeping "single layer deep" meat/cheese in the refrigerated section (it's basically empty).  And I still can't manage to get any decent quantities of batteries or trailer axles.  Being adaptable is useful, but I'm not sure I want to delve into "building axles from bar stock."  The way things are going, though, we'll be trying that by next year.

EscapeVelocity2020

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Re: Inflation - Should We Be Worried
« Reply #41 on: May 14, 2022, 02:49:58 PM »
Just a fun personal anecdote, I have extended family in Ohio and there never seem to be enough folks available in the service sector around where they live.  Restaurants are hit or miss, sometimes delivering the wrong order or closed during open hours...  so this morning my Nephew applied for a job online at a local donut shop.  He was offered $14/hr on the spot and basically told that they would run his background check if he could work that day!  We were joking - 'time to make the dounts!'