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lilredrooster
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March 28th, 2021 at 5:16:10 AM permalink
....................


many gas stations near me have their cheapest gas priced now over $3.00 per gallon
gas prices were last over $3.00 per gallon in 2014
but if you look at the far right column - after adjustment for inflation in 2020 dollars; gas prices have not been this high as far back as the chart goes - all the way back to 1978

someone could argue that it's just gas - not other stuff - but I don't think so - not from what I've observed - admittedly not scientific



not trying to get into the policies or politics of why - please don't go there



https://www.usinflationcalculator.com/gasoline-prices-adjusted-for-inflation/
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ChumpChange
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March 28th, 2021 at 6:03:58 AM permalink
So a 90 cent drop in the price of gas between 2008-2009 doesn't even register as a penny difference in today's dollars? This chart looks sabotaged. I can tell you the price of food doubled for me around that time and it hasn't come down.
rsactuary
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March 28th, 2021 at 10:15:42 AM permalink
I look at the chart and see that inflation adjusted gasoline is the cheapest it's been since 1978. :shrug:
teliot
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March 28th, 2021 at 10:20:27 AM permalink
Gas was $4.59 here in SoCal in 2008, today it is $3.59.

https://abc7.com/archive/8838012/

Every year the gas prices spike up to Memorial day as producers create cleaner summer blends and motorists head out on vacations. This year is no different, except that the pandemic artificially drove down prices so that the current typical seasonal increase seems larger.
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Gtan
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March 28th, 2021 at 10:45:43 AM permalink
what lucky you are to have gas at 3 USD per gallon; it's 0,78 usd per litre here in Italy it's 1.8 USD per litre ... 6,6 USD per gallon!!!!!!!!!!!!!)
lilredrooster
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March 28th, 2021 at 10:50:16 AM permalink
Quote: teliot

Gas was $4.59 here in SoCal in 2008, today it is $3.59.

https://abc7.com/archive/8838012/

Every year the gas prices spike up to Memorial day as producers create cleaner summer blends and motorists head out on vacations. This year is no different, except that the pandemic artificially drove down prices so that the current typical seasonal increase seems larger.



in 2008 the country was deep in a recession - we're not all that close to Memorial Day
I'm seeing other prices going up
I might be wrong - we'll see

don't want to get political - but the U.S. Govt. is spending more money now than I ever remember
printing greenbacks is a sure cause of inflation

doesn't mean that I'm saying what they're doing is wrong


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teliot
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March 28th, 2021 at 11:58:48 AM permalink
Quote: lilredrooster

in 2008 the country was deep in a recession - we're not all that close to Memorial Day
I'm seeing other prices going up
I might be wrong - we'll see

don't want to get political - but the U.S. Govt. is spending more money now than I ever remember
printing greenbacks is a sure cause of inflation

doesn't mean that I'm saying what they're doing is wrong

The article I quoted is from June, 2008. In fact, gas prices had been rising most of the year. Rising gas prices in a recession are the opposite of what you would expect, as demand falls in a recession. But at the time the experts were calling for $150/barrel prices to be the standard for the foreseeable future and we should all get used to $5/gal gas.

As for Memorial day, it is a fact that gas prices start rising this time of year because refineries have to shut down to convert to summer formulas in anticipation of the demand. It's all explained here, along with a much better historical graph of prices:

https://www.eia.gov/energyexplained/gasoline/price-fluctuations.php

Quote:

"Historically, retail gasoline prices tend to gradually rise in the spring and peak in late summer when people drive more frequently. Gasoline prices are generally lower in winter months. Gasoline specifications and formulations also change seasonally. Environmental regulations require that gasoline sold in the summer be less prone to evaporate during warm weather. This requirement means that refiners must replace cheaper but more evaporative gasoline components with less evaporative but more expensive components. In 2000 through 2019, the average monthly price of U.S. retail regular-grade gasoline in August was about 35 cents per gallon higher than the average price in January."

As for inflation, there are only two solutions to the current debt crisis (that has been decades in the making), inflation is one of them. Inflation is also the politically less-dangerous solution. That's why I encourage investing in hard assets and TIPS. However, there are much larger issues we face than hyper-inflation and collective debt.
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lilredrooster
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March 28th, 2021 at 1:11:32 PM permalink
Quote: teliot

As for inflation, there are only two solutions to the current debt crisis (that has been decades in the making), inflation is one of them.




yes, I'm aware that you would expect gas prices to fall, not rise, during a recession
but, my point was, that a recession is so atypical that it's not worthwhile to use as an example of price movements - because of the great unpredictability a recession causes

also, regarding your link:

if you look at the graph you can see that gas prices rise only slightly in March compared to February
the much more dramatic increases were in May, June, July and August (compared to other months of the year)


please explain how inflation is a solution to the debt crisis


thanks


*
Last edited by: lilredrooster on Mar 28, 2021
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teliot
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March 28th, 2021 at 1:21:57 PM permalink
Quote: lilredrooster

please explain how inflation is a solution to the debt crisis.



If $1,000 is worth a penny in purchasing power then we have just reduced the value of the debt by 100,000 fold.

I encourage you to Google this. You can find 100 good explanations of why inflation is a solution to debt. To me it is obvious, so I'm not sure what to explain.
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lilredrooster
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March 28th, 2021 at 1:25:02 PM permalink
Quote: teliot

If $1,000 is worth a penny in purchasing power then we have just reduced the value of the debt by 100,000 fold.




the example you are giving is very exaggeratory and not at all useful

the debt is money owed

inflation will cause interest rates to rise which means that while we reduce the value of the debt we increase the numerical amount of the debt due to rising interest rates



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unJon
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March 28th, 2021 at 1:54:24 PM permalink
Quote: lilredrooster

the example you are giving is very exaggeratory and not at all useful

the debt is money owed

inflation will cause interest rates to rise which means that while we reduce the value of the debt we increase the numerical amount of the debt due to rising interest rates



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US debt is issued by and large at fixed interest rates and with fixes principal amounts.
The race is not always to the swift, nor the battle to the strong; but that is the way to bet.
ChumpChange
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March 28th, 2021 at 2:01:17 PM permalink
Banks won't even be able to figure out if they failed this April Fool's Day.
lilredrooster
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March 28th, 2021 at 2:09:00 PM permalink
Quote: unJon

US debt is issued by and large at fixed interest rates and with fixes principal amounts.




the new money that is borrowed - we're always borrowing - will be loaned at the higher interest rates

granted, if the debt crisis was so severe that it forced the U.S. to stop borrowing completely then the example would hold true
but that is so very unlikely and not at all predictable, or something anybody can count on



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unJon
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March 28th, 2021 at 2:16:39 PM permalink
Quote: lilredrooster

the new money that is borrowed - we're always borrowing - will be loaned at the higher interest rates

granted, if the debt crisis was so severe that it forced the U.S. to stop borrowing completely then the example would hold true
but that is so very unlikely and not at all predictable, or something anybody can count on



*

I’ve seen you speak intelligently and articulately on many topics. You should do some reading on this topic. It’s not controversial and it’s an important fiscal idea.
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lilredrooster
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March 28th, 2021 at 2:34:49 PM permalink
Quote: unJon

I’ve seen you speak intelligently and articulately on many topics. You should do some reading on this topic. It’s not controversial and it’s an important fiscal idea.




thanks,

what I actually believe is this - something I heard in college when I attended a lecture

as accurately as I can remember the Prof said this:

"the world economy and the U.S. economy is so complex and so complicated that nobody can figure it out or predict what will happen in the future"


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terapined
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March 28th, 2021 at 2:38:22 PM permalink
Quote: lilredrooster

thanks,

what I actually believe is this - something I heard in college when I attended a lecture

as accurately as I can remember the Prof said this:

"the world economy and the U.S. economy is so complex and so complicated that nobody can figure it out or predict what will happen in the future"


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That's why economics professors look to tenure for security
teliot
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April 3rd, 2021 at 6:59:36 AM permalink
Here is a short video on the topic from my favorite YouTube channel on finance:

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lilredrooster
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April 3rd, 2021 at 10:32:26 AM permalink
Quote: teliot

As for inflation, there are only two solutions to the current debt crisis, inflation is one of them.




the worst years for inflation in my lifetime were 1979 and 1980 - inflation was over 12%

I had a tiny job as a bank teller in 1979 - one day I turned around to look at the placard advertising the interest rates
believe it or not the bank offered one CD (I can't remember which one) with a rate of 19%
I was shocked when I saw it

anyway, here are the figures for the national debt (in billions) and the debt to GDP ratio for those years and the following years:


1979...................$827......................31%
1980...................$908......................32%
1981...................$998......................31%
1982...................$1,142...................34%
1983...................$1,377...................38%
1984...................$1,572...................39%
1985...................$1,823...................42%



https://awealthofcommonsense.com/2019/12/the-awful-economy-paul-volcker-inherited-in-1979/


https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287




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terapined
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April 3rd, 2021 at 10:56:45 AM permalink
Quote: teliot

Here is a short video on the topic from my favorite YouTube channel on finance:


WTF
1 hour is not short
Cut to the chase and let me know what small part of the video to watch
I really dont care about inflation
If it happens and my stocks keep up and still make moolah at a higher rate then inflation
Then I'm good
my investments are stocks, bitcoin and precious metals (gold and platnium
I'll be fine
Inflation does not scare me
A stock crash does
teliot
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April 3rd, 2021 at 10:58:28 AM permalink
Quote: lilredrooster

the worst years for inflation in my lifetime were 1979 and 1980 - inflation was over 12%

I had a tiny job as a bank teller in 1979 - one day I turned around to look at the placard advertising the interest rates
believe it or not the bank offered one CD (I can't remember which one) with a rate of 19%
I was shocked when I saw it

anyway, here are the figures for the national debt (in billions) and the debt to GDP ratio for those years and the following years:


1979...................$827......................31%
1980...................$908......................32%
1981...................$998......................31%
1982...................$1,142...................34%
1983...................$1,377...................38%
1984...................$1,572...................39%
1985...................$1,823...................42%



https://awealthofcommonsense.com/2019/12/the-awful-economy-paul-volcker-inherited-in-1979/


https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287




*

I was watching a rerun of a Johnny Carson on Pluto TV, and he had on a financial advisor who was talking about getting a savings account at 8% interest. I also recall CD's at about 20% in the late 1970's, in particular my bank (Wells Fargo) was offering one.
Last edited by: teliot on Apr 3, 2021
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billryan
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April 3rd, 2021 at 4:08:43 PM permalink
My Aunt had long term CDs that paid 16-18%. I bought a couple of six month notes that paid close to that but she really took advantage of it. On the flip side, she had hundreds of $50 bonds that had stopped earning interest for a decade sitting in a desk. Major pain to cash those in as they were in her and another family members name and they were both dead.
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lilredrooster
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April 3rd, 2021 at 4:30:17 PM permalink
Quote: terapined


Inflation does not scare me




inflation doesn't hurt people like you - retired (I think) - touring the country - comfortable with an investment cushion

inflation hurts people who are struggling paycheck to paycheck

their wages (at least for many) don't increase commensurate with price increases
they end up having less buying power; and they didn't have much buying power before inflation



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billryan
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April 3rd, 2021 at 10:08:04 PM permalink
Quote: lilredrooster

inflation doesn't hurt people like you - retired (I think) - touring the country - comfortable with an investment cushion

inflation hurts people who are struggling paycheck to paycheck

their wages (at least for many) don't increase commensurate with price increases
they end up having less buying power; and they didn't have much buying power before inflation



*



We've had two decades of low inflation but the working man's buying power has decreased. Many retirees expected to be getting 4-5% interest on their savings and ended up getting one or two.
Would we be better off with 10% interest on savings but 15% inflation? Would the housing market collapse with 15% interest on mortgages? It didn't seem to in the 78-82 period but I was young and in school for most of it. I remember my Social Security check went from $98 to over $120 when I getting them, and getting an 8% raise tied to inflation that first year in the service.
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Tanko
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April 4th, 2021 at 3:42:17 AM permalink
Quote: teliot

If $1,000 is worth a penny in purchasing power then we have just reduced the value of the debt by 100,000 fold.



Reduces the value of the debt, but it also reduces the value of a 401K and personal savings by 100,000 fold.
teliot
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April 4th, 2021 at 7:35:19 AM permalink
Quote: Tanko

Reduces the value of the debt, but it also reduces the value of a 401K and personal savings by 100,000 fold.

Yep. We are all much poorer than we think. When this bubble bursts, it's going to be very painful.
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odiousgambit
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April 4th, 2021 at 7:56:25 AM permalink
Quote: terapined

Inflation does not scare me
A stock crash does

https://europe.pimco.com/en-eu/resources/education/understanding-inflation

Quote:

Equities have often been a good investment relative to inflation over the very long term, because companies can raise prices for their products when their costs increase in an inflationary environment. Higher prices may translate into higher earnings. However, over shorter time periods, stocks have often shown a negative correlation to inflation and can be especially hurt by unexpected inflation. When inflation rises suddenly or unexpectedly, it can heighten uncertainty about the economy, leading to lower earnings forecasts for companies and lower equity prices.

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lilredrooster
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April 4th, 2021 at 9:59:52 AM permalink
Quote: teliot

Yep. We are all much poorer than we think. When this bubble bursts, it's going to be very painful.




the bubble last burst in 2008
there's been talk of this bubble bursting for about 10 years
quite a few short sellers have gone bust predicting an imminent burst

sure it will come - but nobody knows when or how long or painful it will be

this economist's prediction was only off by about 3 years:






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billryan
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April 4th, 2021 at 10:13:15 AM permalink
I sold a comic yesterday for $3100. I woke up this morning and it was paid for. What makes it unusual was I bought the comic nine months ago for $360. Used the same site to buy it as I did to sell it. Nine months ago, no one would bid higher than my $360 bid. Yesterday there were six individuals who outbid my winning bid from nine months ago, and three who bid over $1,000.
At the same auction, a fairly low grade X-Man 94, estimated to sell for about $300 sold for over $1200. I was actually bidding on it, but my fit of madness passed as the book got into the $700 range.
I wish I knew what this means, but people seem to be dumping cash into just about anything they can.
On ebay this week, two bidders drove a Hulk 214 up to $800. The last six sales had averaged just over $200
Interesting times.
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DRich
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April 4th, 2021 at 3:33:31 PM permalink
Quote: billryan


I wish I knew what this means, but people seem to be dumping cash into just about anything they can.
On ebay this week, two bidders drove a Hulk 214 up to $800. The last six sales had averaged just over $200
Interesting times.



I can tell you exactly what it means. It means the government is giving away free money to people that have no need for it,
At my age, a "Life In Prison" sentence is not much of a deterrent.
billryan
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April 4th, 2021 at 4:26:57 PM permalink
Quote: DRich

I can tell you exactly what it means. It means the government is giving away free money to people that have no need for it,



That's one reason I hear, but I'm not sure how true it is. $2,000 doesn't come close to explaining the jumps we are seeing. Kobe Bryant rookie cards were $25-35,000, and now they are 500,000 plus. I pulled six books out of my $3 show boxes this morning that are now $100 plus. Sometimes a book would jump from $5 to $15-20, but now as soon as a book gets hot, it's $100.
The rumor that some minor character on Gotham may be the next Batman sent the book for $3 to $250 literally overnight, although it has seemingly settled in around $100.
Another explanation(excuse?) I keep hearing is people dumped $500 into bitcoin and are cashing out a half-million or more. I've done more the last three months than the last two years before this.
The only problem is I have to start thinking about the cost to replace the stuff I sell, but if I can liquidate everything, I'll be a very happy man.
The difference between fiction and reality is that fiction is supposed to make sense.
billryan
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April 4th, 2021 at 4:27:52 PM permalink
Quote: DRich

I can tell you exactly what it means. It means the government is giving away free money to people that have no need for it,



That's one reason I hear, but I'm not sure how true it is. $2,000 doesn't come close to explaining the jumps we are seeing. Kobe Bryant rookie cards were $25-35,000, and now they are 500,000 plus. I pulled six books out of my $3 show boxes this morning that are now $100 plus. Sometimes a book would jump from $5 to $15-20, but now as soon as a book gets hot, it's $100.
The rumor that some minor character on Gotham may be the next Batman sent the book for $3 to $250 literally overnight, although it has seemingly settled in around $100.
Another explanation(excuse?) I keep hearing is people dumped $500 into bitcoin and are cashing out a half-million or more. I've done more the last three months than the last two years before this.
The only problem is I have to start thinking about the cost to replace the stuff I sell, but if I can liquidate everything, I'll be a very happy man.
The difference between fiction and reality is that fiction is supposed to make sense.
ChumpChange
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April 4th, 2021 at 6:20:31 PM permalink
I'm gonna call that hyperinflation of collectibles, and it's off the freakin' charts.
lilredrooster
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April 5th, 2021 at 5:10:00 AM permalink
Quote: ChumpChange

I'm gonna call that hyperinflation of collectibles, and it's off the freakin' charts.




I believe that is how the human mind works
i.e. - 3 people happen to have a desire for the same particular collectible and bid it way up

others see this and begin to believe that all collectibles are worth much more

it's basically:


𝘮𝘰𝘯𝘬𝘦𝘺 𝘴𝘦𝘦 𝘮𝘰𝘯𝘬𝘦𝘺 𝘥𝘰


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teliot
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April 5th, 2021 at 6:42:07 AM permalink
Quote: lilredrooster

I believe that is how the human mind works
i.e. - 3 people happen to have a desire for the same particular collectible and bid it way up

others see this and begin to believe that all collectibles are worth much more

it's basically:


𝘮𝘰𝘯𝘬𝘦𝘺 𝘴𝘦𝘦 𝘮𝘰𝘯𝘬𝘦𝘺 𝘥𝘰


*

Sorry this article is behind a pay wall but this explains a lot of what may be going on.

https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801
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jjjoooggg
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April 5th, 2021 at 9:10:57 AM permalink
I havn't had time to read the report. But it seems to be comprehensive. In 1990, a 12 hour tuition at a state university was $500. Today $5000. In 1990, a nice 2 bedroom was $375. Today maybe $2,000. But the minimum wage only increased from $4.25 to $7.25. We need a min wage increase. The market prices will correct themselves. I calculated a $2 increase in menu prices to cover $15 min wage. So it would take 1/3 hour of work to pay for a meal, instead of 2/3 hour of work. We'd sell more and make morer profit, ironically. It would stimulate businesses that are essential like food and clothing.
Part of the tuition increase was due to government subsidy of tuition. The universities saw the opportunity to increase prices.

https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf?fbclid=IwAR36KwwL6u2bVKHYPIDpFCaIcPMi_j_YMFgCfu0DvHmrs5TqXcHAi3t_u7s

https://www.npr.org/sections/codeswitch/2014/01/06/260282186/eight-reasons-why-the-rent-is-too-damn-high?fbclid=IwAR3jEoIKKoPC8U-OAqjoVTKxcJJT7wDOD8aXO7FZ-Q2lcqc9SDH3E6SCoWs
Last edited by: jjjoooggg on Apr 5, 2021
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April 5th, 2021 at 10:39:56 AM permalink
Is inflation good for retirees?

Suppose a couple is retired and has 500,000 in assets, with expenses of $50,000 a year. These days, they might get 2% on their nestegg if invested on the conservative side, so they are losing their nest egg at $40,000 year.
Now suppose rabid inflation hits and inflation increase their expenses by 15% a year to $57,500. That looks grim, but suppose that inflation now means they are getting 10% interest instead of 2%. so their nestegg earns $50,000. Now the nest egg is shrinking by only $7,500 a year.
Those numbers are based off the last period of high inflation we suffered, at the beginning of the Reagan administration.
I personally think the inflation of the late 70s/early 80s had a lot to do with Nixons decision to untie the dollar from the gold standard. Before this, the dollar was pegged to gold and gold was worth about $35 an ounce. Once untied, we saw gold triple and quadruple in just a few years. At one point in the 80s, gold was worth twenty times what it was a decade earlier. That can't be good for economic security. Was it the only reason for the horrible economy of that time? No, but it played a major role in it, imo.
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lilredrooster
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April 6th, 2021 at 4:53:25 AM permalink
..........................


decisions for older people re their finances is extremely difficult because they usually don't know when they will die

obviously, if a person knew that he would die at age 72 he would have a completely different strategy then if he knew he would die at age 95





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onenickelmiracle
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April 30th, 2021 at 2:17:37 AM permalink
Quote: teliot

Sorry this article is behind a pay wall but this explains a lot of what may be going on.

https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801


Same article, different site.
https://www.mansionglobal.com/articles/should-retirees-pay-off-their-mortgage-or-invest-the-money-it-depends-on-the-math-146466
I am a robot.
lilredrooster
lilredrooster
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Joined: May 8, 2015
May 11th, 2021 at 3:08:07 AM permalink
........................

the Fed has acknowledged that inflation is here - spotlighting data that shows rising prices on used cars, appliances, medical care, energy, food and cigarettes




https://www.washingtonpost.com/business/2021/05/10/economy-inflation-prices/


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