The Inflation Spike Probably Won't Last

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vnatale
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The Inflation Spike Probably Won't Last

Post by vnatale » Mon Oct 11, 2021 10:03 pm

The Inflation Spike Probably Won't Last

Long-term demographic and economic trends will keep a lid on future price hikes.

https://www.kiplinger.com/investing/eco ... -wont-last

What he states seems believable and I cannot think of any strong counter arguments to his....can you?

Vinny

"What will prevent long-term, 1970s-era inflation? There is so much more competition we didn’t have in the 1970s that will continue to act as a disinflationary force. There’s a strong relationship between the growth of the labor force and inflation trends. In the 1970s, the labor force grew 2.5% a year. That’s a lot of new people getting money they can spend. By contrast, in the five years ending in 2019, the U.S. labor force grew just barely over 1%. Not only do we have far slower labor force growth today, we’ve also got a much older demographic. Older populations tend to grow more slowly and generate less inflationary pressure. Demographic trends are even worse in Japan and Europe than in the U.S., and what gets less attention is that the poster child for the emerging world, China, probably has the worst demographics of all because of its former one-child policy. Plus, U.S. global openness is so much more pronounced than it was in the ’70s. Then, we were essentially a closed economy with a small proportion of international business. Now, we’re the opposite of that. Our largest companies do more business abroad than they do here.

You’ve also cited technology as an “inflation slayer.” Why is that? In recent years, the technology sector has enjoyed its third-most-dominant period of stock market leadership of the postwar era. If you look at the performance of technology going back to 1950, whenever you had major technology runs, over the next three years you had a major pickup in productivity. I think we’re in the midst of that now. Technology connotes disruption, new products, more capital being added to the labor force—all things which enhance productivity. When workers get to use new methodologies, they can produce more per hour, causing the cost of labor and inflationary pressures to lessen.

With that in mind, how long will this period of inflation last? I think in the short term we’ve created a big mismatch between supply and demand, which is leading to higher prices. This could continue through the rest of this year and perhaps the early part of next year. However, the odds are that by this time next year, production will catch up with demand.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: The Inflation Spike Probably Won't Last

Post by pp4me » Sat Oct 16, 2021 7:43 pm

If Joe Biden had done his job then we wouldn't be seeing this inflation.

Actually, I don't believe that for a minute but I remember in one of the debates he said that If Trump had done his job your friends and relatives wouldn't have died of Covid.

So it seems fair for people to believe that based on what Jesus said in the Sermon on the Mount, that you will be judged by the same measure you use to judge others.
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Re: The Inflation Spike Probably Won't Last

Post by Kbg » Tue Oct 19, 2021 9:52 am

pp4me wrote:
Sat Oct 16, 2021 7:43 pm
If Joe Biden had done his job then we wouldn't be seeing this inflation.

Actually, I don't believe that for a minute but I remember in one of the debates he said that If Trump had done his job your friends and relatives wouldn't have died of Covid.

So it seems fair for people to believe that based on what Jesus said in the Sermon on the Mount, that you will be judged by the same measure you use to judge others.
Actually, if private enterprise wouldn't have gone totally gaga for cheap Chinese manufacturing starting in the early 90s and near 100% realignment to just in time manufacturing we wouldn't be seeing this inflation.

On the positive side, many American businesses are realizing they totally screwed themselves and are redoing their supply chains to include more production here.
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Re: The Inflation Spike Probably Won't Last

Post by pp4me » Tue Oct 19, 2021 10:14 am

Kbg wrote:
Tue Oct 19, 2021 9:52 am
pp4me wrote:
Sat Oct 16, 2021 7:43 pm
If Joe Biden had done his job then we wouldn't be seeing this inflation.

Actually, I don't believe that for a minute but I remember in one of the debates he said that If Trump had done his job your friends and relatives wouldn't have died of Covid.

So it seems fair for people to believe that based on what Jesus said in the Sermon on the Mount, that you will be judged by the same measure you use to judge others.
Actually, if private enterprise wouldn't have gone totally gaga for cheap Chinese manufacturing starting in the early 90s and near 100% realignment to just in time manufacturing we wouldn't be seeing this inflation.

On the positive side, many American businesses are realizing they totally screwed themselves and are redoing their supply chains to include more production here.
Won't having to pay workers American wages result in higher prices for goods?
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Re: The Inflation Spike Probably Won't Last

Post by Mountaineer » Tue Oct 19, 2021 1:34 pm

We went to Costco today. Zero toilet paper available. Paper towels and Kleenex limited to one package per customer and prices were up a lot. Beef and pork prices up substantially since our last trip there a few weeks ago. A 16oz container of crab meat was $45 ... Holy cowabunga!!!!! No worries, it's all good, Uncle Joe says so; but maybe he was talking about Hunter's art dealings. ;D
DNA has its own language (code), and language requires intelligence. There is no known mechanism by which matter can give birth to information, let alone language. It is unreasonable to believe the world could have happened by chance.
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Re: The Inflation Spike Probably Won't Last

Post by Mountaineer » Tue Oct 19, 2021 1:55 pm

Desert wrote:
Tue Oct 19, 2021 1:43 pm
Shipments from China have increased substantially this year, but not enough to satisfy the demand of U.S. consumers. In other words, this round of inflation and shortage is primarily demand-driven.

A wise consumer would defer purchases in this environment, IMHO. We don't need most of the crap we buy anyway.

I am worried about Mountaineer's toilet paper supply, however. I may have to ship some to you, I have several spare squares.
Desert, thank you for your concern .... and kind offer. Could you please mail the spare squares in a very large envelope? Then I can use the envelope, carefully cut into small squares, as a back up, or would that be a back side, emergency product? Thanks in advance for your kindness. ;)
DNA has its own language (code), and language requires intelligence. There is no known mechanism by which matter can give birth to information, let alone language. It is unreasonable to believe the world could have happened by chance.
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Re: The Inflation Spike Probably Won't Last

Post by pp4me » Tue Oct 19, 2021 2:27 pm

If the definition of inflation is too much money chasing too few goods as (I think) Milton Friedman put it, then why is nobody talking about the "too much money" part? The government has been running the printing presses non-stop since the start of the pandemic but you don't seem to hear many
people talk about the inflationary aspect of this any more. Or does MMT discount inflation due to the supply (of money) side of the equation altogether and I'm just an old fart who doesn't get it?

The latter is a real possibility, of course, and I hope it's true.
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Re: The Inflation Spike Probably Won't Last

Post by vnatale » Tue Oct 19, 2021 3:54 pm

Mountaineer wrote:
Tue Oct 19, 2021 1:34 pm

We went to Costco today. Zero toilet paper available. Paper towels and Kleenex limited to one package per customer and prices were up a lot. Beef and pork prices up substantially since our last trip there a few weeks ago. A 16oz container of crab meat was $45 ... Holy cowabunga!!!!! No worries, it's all good, Uncle Joe says so; but maybe he was talking about Hunter's art dealings. ;D


With all this talk about supply chain issues...I've been astounded with how much of my Amazon orders do arrive in two days. In one case the next day when it was supposed to have taken two days.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: The Inflation Spike Probably Won't Last

Post by vnatale » Tue Oct 19, 2021 5:30 pm

Desert wrote:
Tue Oct 19, 2021 5:16 pm

vnatale wrote:
Tue Oct 19, 2021 3:54 pm

With all this talk about supply chain issues...I've been astounded with how much of my Amazon orders do arrive in two days. In one case the next day when it was supposed to have taken two days.


I agree, it is pretty amazing (still) that Amazon can achieve such delivery times.


That had all gone out the window starting last March 2020 and lasted for many, many months. Cannot remember when it went back to them again being able to do the two day deliveries for Prime members.

But, in general, just about all I buy from them (which can, at times, be quite a few items) is usually available and gets to me in two days.

However, I just tried to to buy an item from them but it was out of stock. Was not going to be able to get it until October 28th. So looked at Walmart. Also out of stock. Good guess that neither has it due to the supply chain issue?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: The Inflation Spike Probably Won't Last

Post by Mountaineer » Tue Oct 19, 2021 6:43 pm

;D
Desert wrote:
Tue Oct 19, 2021 5:15 pm
Mountaineer wrote:
Tue Oct 19, 2021 1:55 pm
Desert, thank you for your concern .... and kind offer. Could you please mail the spare squares in a very large envelope? Then I can use the envelope, carefully cut into small squares, as a back up, or would that be a back side, emergency product? Thanks in advance for your kindness. ;)
:) I will do just that. I've also invented my own cryptocurrency recently, so I'll throw some of that in the envelope as well.
You da MAN! ;D
DNA has its own language (code), and language requires intelligence. There is no known mechanism by which matter can give birth to information, let alone language. It is unreasonable to believe the world could have happened by chance.
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Re: The Inflation Spike Probably Won't Last

Post by Kbg » Wed Oct 20, 2021 11:23 pm

pp4me wrote:
Tue Oct 19, 2021 10:14 am
Kbg wrote:
Tue Oct 19, 2021 9:52 am
pp4me wrote:
Sat Oct 16, 2021 7:43 pm
If Joe Biden had done his job then we wouldn't be seeing this inflation.

Actually, I don't believe that for a minute but I remember in one of the debates he said that If Trump had done his job your friends and relatives wouldn't have died of Covid.

So it seems fair for people to believe that based on what Jesus said in the Sermon on the Mount, that you will be judged by the same measure you use to judge others.
Actually, if private enterprise wouldn't have gone totally gaga for cheap Chinese manufacturing starting in the early 90s and near 100% realignment to just in time manufacturing we wouldn't be seeing this inflation.

On the positive side, many American businesses are realizing they totally screwed themselves and are redoing their supply chains to include more production here.
Won't having to pay workers American wages result in higher prices for goods?
Most likely, but then there's the whole information age/automation thing going on. So it's hard to say in reality.
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Re: The Inflation Spike Probably Won't Last

Post by Kriegsspiel » Sun Nov 28, 2021 10:01 am

I'm making my way through the newsletters I get from Peter Zeihan, here's what he had to say about inflation:
I’ve got two bits of good news and one bit of bad news.

Good1: The good news is that as high as energy prices have recently become in the United States, relief is on the way. Oil and natural gas prices have now been high enough for long enough that America’s shale operators have steadily expanded operations and fresh production is already feeding into the system. We might not feel that relief in the form of lower prices until March, but relief is still on the way.

Good2: As bad as prices seem, it is way worse everywhere else. Natural gas prices in Europe are now ten times what they are in the United States, and the Europeans have zero reasons to expect their situation to improve one whit this year. Or next year. Or the year after. Europe has next to no local oil or natural gas production, and no shale sector to speak of. Instead, the Europeans have chosen to rely on solar and wind power (on the world’s cloudiest and calmest continent, no less), with a bit of bridge assistance from…the Kremlin.

Bad1: Good1 might make you exclaim a sigh of relief. Whew! This too shall pass. Weeeeell, not really. Just because I don’t see energy inflation holding up in the United States does not mean that I don’t see us entering one of the weirdest periods of economic transition in American history. You name the sector -- finance, manufacturing, housing, agriculture, transport, commodities -- we are in for at least the strongest inflation we’ve seen in this country since the 1970s.
Sorry, European forumites :-\

He also mentioned that his next book (exciting), The End of the World is Just the Beginning: Mapping the Collapse of Globalization, might be delayed because of difficulties importing paper.
You there, Ephialtes. May you live forever.
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Re: The Inflation Spike Probably Won't Last

Post by Vil » Sun Nov 28, 2021 2:35 pm

Kriegsspiel wrote:
Sun Nov 28, 2021 10:01 am
Sorry, European forumites :-\
Thanks for sharing, but no worries, I read Zeihans every other day. Inflation is definitely not considered anymore as mild.
Investing wise - it's all-and-everything bubble. Even used cars appreciated in value in the past months. Only thing that's cheap are the crappy EU bonds. It's a tough time for investors for sure. I am only in PP, for VP - exited my momentum stocks stuff a while ago (plain luck in hindsight if markets are headed for a drop now). TIPS sold with mediocre profit (was not patient enough as they ignited afterwards), had some small slice of commodities that were again sold ago for some profit. Maybe I will sit on my hands waiting for the shorting season, who knows...
Reading again Taleb's works (now I am on Black Swan, this time the translated version in the form of good old paper book) and cannot agree more with him on the doubtful value of all those a-la-Zeihan "predictions"...
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Re: The Inflation Spike Probably Won't Last

Post by Vil » Sun Nov 28, 2021 2:47 pm

vnatale wrote:
Tue Oct 19, 2021 3:54 pm
I've been astounded with how much of my Amazon orders do arrive in two days. In one case the next day when it was supposed to have taken two days.
Sorry for hijacking the thread, but am too curious to hold my horses.. Are those 2 days considered a short period ? What about Prime members ?
At amazon.de (to which I've moved as now amazon.co.uk orders are taxable for EU folks like me) they offer a same day delivery for Prime members. But on the other hand - US is slightly larger than DE ... :D
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Re: The Inflation Spike Probably Won't Last

Post by vnatale » Mon Nov 29, 2021 11:05 am

Vil wrote:
Sun Nov 28, 2021 2:47 pm

vnatale wrote:
Tue Oct 19, 2021 3:54 pm

I've been astounded with how much of my Amazon orders do arrive in two days. In one case the next day when it was supposed to have taken two days.


Sorry for hijacking the thread, but am too curious to hold my horses.. Are those 2 days considered a short period ? What about Prime members ?
At amazon.de (to which I've moved as now amazon.co.uk orders are taxable for EU folks like me) they offer a same day delivery for Prime members. But on the other hand - US is slightly larger than DE ... :D


Amazon Prime was supposed to have been a guaranteed two days. But once Covid hit everywhere in March 2020...that was off the table. Then the supply chain issues hit...where things are supposed to be impossible to get. Thus, my comment above regarding how many Amazon orders were getting to me at the prior Prime guaranteed time period (or even sooner).
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: The Inflation Spike Probably Won't Last

Post by Vil » Mon Nov 29, 2021 2:37 pm

vnatale wrote:
Mon Nov 29, 2021 11:05 am
Vil wrote:
Sun Nov 28, 2021 2:47 pm
vnatale wrote:
Tue Oct 19, 2021 3:54 pm
I've been astounded with how much of my Amazon orders do arrive in two days. In one case the next day when it was supposed to have taken two days.
Sorry for hijacking the thread, but am too curious to hold my horses.. Are those 2 days considered a short period ? What about Prime members ?
At amazon.de (to which I've moved as now amazon.co.uk orders are taxable for EU folks like me) they offer a same day delivery for Prime members. But on the other hand - US is slightly larger than DE ... :D
Amazon Prime was supposed to have been a guaranteed two days. But once Covid hit everywhere in March 2020...that was off the table. Then the supply chain issues hit...where things are supposed to be impossible to get. Thus, my comment above regarding how many Amazon orders were getting to me at the prior Prime guaranteed time period (or even sooner).
Clear, thanks. One thing I do not like about Amazon in Europe is that starting with Britain and going east, the more you go, the more expensive it gets (for the same stuff) >:D
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Re: The Inflation Spike Probably Won't Last

Post by pp4me » Mon Nov 29, 2021 4:07 pm

The wars in Afganistan and Vietnam also lasted a lot longer than they were predicting. I'd say the war against inflation could last as long except that I think there is no war against inflation. The only thing it has in common with those wars is that it is deliberate government policy, possibly run amok.

Not only does it give the government the ability to pay off debt in inflated dollars but now we have the benefit of solving climate change with less demand due to higher prices. So hold on to your hat.
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Re: The Inflation Spike Probably Won't Last

Post by I Shrugged » Mon Nov 29, 2021 4:38 pm

My bedrock belief has been that the US Govt HAS to have inflation to pay off the debt with cheaper dollars by screwing their creditors. There is no other way. The fact that, prior to now, they have not been able to engineer it must be very unnerving for them. They will learn something from this inflationary episode, I suppose.

The problem is that once they get inflation going, they have to ride the tiger. Lots of things can go wrong. Very wrong.
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