Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on [email protected] for help. Thanks :)
Private profiles - please note that profiles marked as private will soon be public. This will facilitate moderation so mods can view users' warning histories. All of your posts across the site will appear on your profile page (including PI, RI). Groups posts will remain private except to users who have access to the same Groups as you. Thread here
Some important site news, please read here. Thanks!

Inflation thread.

  • 10-11-2021 8:37pm
    #1
    Registered Users Posts: 2,325 ✭✭✭ Scuid Mhór


    We need a thread about inflation.



«1

Comments

  • Registered Users Posts: 8,796 ✭✭✭ buried


    In B4 the resident government fanboi $hitplanks try to pathetically claim that it doesn't even exist, let alone it spiraling upwards to a level of total disaster

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    But governments would want a level of inflation. Just not too high. Inflation gives an incentive to spend and invest and is a great social leveller over time. Personally I'd rather not have any at the minute as I have savings sitting there doing nothing (I need them liquid while I'm waiting for something to come up to invest them)

    What would you think a "total level of disaster" is? We'd be a fair bit away from that at the minute.



  • Registered Users Posts: 8,796 ✭✭✭ buried


    But it is too high, prices have risen almost triple fold for things such as shipping, which has resulted in widespread price increases across the board for every single person in our part of the world. Current indicators are proclaiming that this is going to increase, the annual change for this year has risen 3.7%, Independent European economists have stated that they believe this will rise to 5% in the next two months. That is a huge rise, and is unsustainable, well it is sustainable, but only if you want to see a near total real world economic collapse, where a large section of this zones citizens will be unable to purchase what they need to survive. This is the disaster incoming, and nobody is talking about it.

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 2,696 ✭✭✭ Timing belt


    A lot of the inflation that we are seeing around the world is due to:

    • the increase in Government fiscal spending to deal with Covid.
    • Shortages in the supply chain (The shortage of chips in the car industry has accounted for 1.25% of the 6.2% inflation in the USA)
    • People spending savings that accumulated during Covid.
    • The increase in Energy costs as economies around the world turn to using greener energy supplies

    These should all abate over time with the exception of Energy costs.



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    I think you are being a bit dramatic. 5% would not have been really considered high at all back 40 years ago. We are in the EU now and the ECB would have much more power to intervene on our behalf now.



  • Advertisement
  • Registered Users Posts: 256 ✭✭ techman1


    yea, there was a thread on askaboutmoney site on inflation recently and the moderators basically closed it down . They took exception to the argument that the CSO were deliberately not counting inflation properly.

    If inflation is fully counted well then the ECB has to tame it by raising interest rates, however all the governments are addicted to this cheap money and now they have signed up to massive spending programs got to do with the "green transition" and all that COP26 stuff. Therefore if the ECB raise interest rates they will derail all that stuff, the great game is to pretend that inflation is not happening or is "transitionary"



  • Registered Users Posts: 8,796 ✭✭✭ buried


    Inflation is all well and good if the wages increase to go with it, but that is not happening.

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    There would be a fair degree of elasticity to much of what people spend on nowadays. The big issue in Ireland is rent costs. Energy will be a problem too as that would be fairly unelastic.



  • Registered Users Posts: 8,796 ✭✭✭ buried


    Well, we will just have to see what happens in two months and see if these guys are correct. Pointless talking about 40 years ago in all fairness, there wasn't a worldwide pandemic that shook the entire global economic infrastructure 40 years ago like we currently have to deal with, which has knocked out many traditional businesses and infrastructure that existed 10 years ago, let alone 40 years.

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    If I was a government, I'd be happy for there to be reasonably high inflation (plus some increasing rates) to reduce all my debt obligations on a real basis



  • Advertisement
  • Registered Users Posts: 2,696 ✭✭✭ Timing belt


    Inflation won't start to fall till March/April 2022 as the impact of the lockdowns will still be included in the prior year figures.



  • Registered Users Posts: 8,796 ✭✭✭ buried


    Well, that's grand for you and those like you. But it is not sustainable for the vast majority of the community you have to share your actual day to day existence with, and that unsustainability will end up affecting you to go with it in the long run. It's fine for those in government who are in a gold plated gated position to ignore it.

    "Lunar South is Solar East" - W. B. Yeats



  • Posts: 0 [Deleted User]


    My motto is a year mortgage in the bank, pension and whatever you have left over half should be invested in good stocks.

    10% of your salary should be invested in crypto as well at this stage.



  • Registered Users Posts: 1,087 ✭✭✭ Peterteanh


    Some are saying it's transitory, I guess we will see over the next year or two. Right now it's not good.



  • Registered Users Posts: 10,806 ✭✭✭✭ Danzy


    Food prices will be the global story of the next 2 years.


    Fertilizer is hard to buy globally and when it can be got, it is at multiples of last year.


    The Arab Spring was the result of the last price surge in nitrogen and that level has been blown away. Add in most of the world at low grain stocks



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump


    "Those like you" - I already said I don't want inflation as I have money sitting there while I am waiting on something specific to come up. Inflation affects those with no money less and is great from those with debts.

    Any entity with already issued debt would be happy with increasing (interest) rates. I worked in fixed income for a good few years. When the levels go up, it helps the books as the value of what you have to repay goes down on paper. That's on paper. Where inflation comes in it means that it is easier to repay what you owe.

    Let me explain it to you this way with a simple example for inflation. You get a loan of 80k today. You have to pay back 100k in a lump repayment in 10 years time. You get your money, buy your house. Which scenario would you prefer:

    1) Inflation goes up to 10% y-o-y

    2) Inflation stays at 0% for the entire period.



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    100%. Fertilizer prices aren't going down for the forseeable future. Not unless economies start to tank and energy demand drops significantly. It will take a while to filter through to the shelf unfortunately because lads will still keep producing below cost for a while but people might be in line for a bit of a shock when it does



  • Registered Users Posts: 8,796 ✭✭✭ buried


    Ahh look man its pointless trying to talk to you as you can't see the bigger picture of this wild inflation increase. You are only concerned with yourself and your immediate situation, which at this current moment you believe it will benefit you in the long run. It won't because the widespread inflation rate is going to create widespread problems for the outside community that you have to inhabit this country with. It's going to create widespread problems, increasing numbers of crime for example, and who will have to pay for that along with everything else? It's going to be the likes of me and you, including your savings.

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 25,918 ✭✭✭✭ Buttonftw


    Wish I could remember the name of a lecturer I had for a couple of weeks. She'd worked on a model using mostly food data to predict civil unrest. Apparently it saw the Arab Spring coming a few months ahead of any murmurings elsewhere.

    But yeah, rents have shot up, things are still in shortage, cars are going up, electronics are going up, fuel is going up, rent has increased massively. The EU will have a massive task in its hands over the CAP next time around. They don't want wasteful food production, fair enough, but if we start having to pay anything resembling a fair price for food there'll be some serious trouble ahead.

    Electronics is something I'd be fairly price-aware on and a lot of things had been starting to creep up before the pandemic. They're still going up and for over a year every couple of weeks there'll be an article with a CEO saying "Oh it'll be another 6 months" but it's still another 6 months, though some are being honest about it being at least 2023 before supplies could be back to normal. There's still plenty of pent-up demand for a lot of things so while the Brits (and plenty in the EU) think things will just settle down and go back to "normal" because that's how things have been for a while, well, seems like little more than wishful thinking.



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    Which part of "I don't want inflation" gave you the impression that I want inflation? Sorry if it was ambiguous.



  • Advertisement
  • Registered Users Posts: 1,413 ✭✭✭ combat14


    time for workers to start looking for fair and proper pay rises ..

    no good getting 1% gross pay rise when most of this is taken in PAYE, PRSI, USC and other pension deductions etc..

    inflation 5% and rising pay rise .5% at best after tax ..

    workers may look for 10% pay rises and freeze or drop in rents to survive next year ..



  • Registered Users Posts: 256 ✭✭ techman1


    The "green transition" cuts to agricultural production and the rise in demand for metals like copper and aluminium (10 times as much as conventional power systems) is going to drive this inflation for years to come. When food prices really start rising people will get very angry. Very high rates of inflation could scupper the whole "green transition" as people revert to traditional fuel and farmers produce food for the black market like used to happen in Eastern Europe during Communism



  • Registered Users Posts: 25,918 ✭✭✭✭ Buttonftw


    What is the bit in brackets meant to mean or refer to? Copper uses more than a conventional power system???

    We grow too much food, too many people eat too much food and we simply don't pay enough for food. We've been taught that 2 hours work on minimum wage can feed someone for a week.



  • Registered Users Posts: 41,641 ✭✭✭✭ SEPT 23 1989


    It hasn’t really trickled down to the average man on the street yet apart from their energy bills but it’s coming like a tsunami

    staggering increase in the prices of materials in the last six months



  • Registered Users Posts: 8,796 ✭✭✭ buried


    Sorry man I got a bit carried away there, that is fair enough, and I apologise. But you also stated that "inflation affects those with no money less" which is totally untrue. Inflation causes widespread price increases, it can spiral to a level where these people with no money have no further option but to go to desperate measures. History has shown that widespread heavy inflation, which is happening, can result into a total societal collapse, whether it is into increased crime rates, or even worse, support for extreme political entities that will utilise the situation to grab power and literally destroy everything around them. If inflation rates continue to rise, without anybody addressing it, that's where we could all be heading. That's my main point.

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump



    Yes. I didn't mean it literally. When people whose food expenditure etc. is a large proportion of their money then of course it hits them much more and can push them beyond limits.

    I was kind of referring to me now vs. me starting out with nothing but full career ahead of me. I don't mean the global poor struggling to eat. A 22 year old Irish graduate who might struggle more for the next few years while they get their career off the ground, would probably be better off (relatively speaking) if inflation was higher.

    Think of the people in the 80's. High inflation and high interest rates. Those that could get credit bought houses for relatively very little. High rates at the start of course but by the time they hit the mid 90's their annual salary was probably greater than the mortgage they took out.



  • Registered Users Posts: 8,796 ✭✭✭ buried


    We are in a totally different situation nowadays to the inflation rates in the 80's. Prices for everything have become far more skewered. I mean in the 80's car prices weren't all that more different to house prices, you could buy a car for 2 grand, and you could buy a house for 15 grand. Big difference today when you can buy a decent car for 15 grand yet be expected to shelve out over 500 grand for a basic house.

    "Lunar South is Solar East" - W. B. Yeats



  • Registered Users Posts: 468 ✭✭ Shao Kahn


    So at what point do we start burning 50 euro notes in the fireplace to keep warm over winter?

    "Tomorrow is the most important thing in life. Comes into us at midnight very clean. It's perfect when it arrives, and it puts itself into our hands. It hopes we've learned something from yesterday." (John Wayne)



  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump




  • Advertisement
  • Registered Users Posts: 15,181 ✭✭✭✭ Donald Trump


    That's the point. The reason your house appears much more expensive is that most people buy houses with debt. Because interest rates are low, repayments are low and so people can afford to pay more. So it is really the affordability of repayments that matter rather than the notional amount.

    If interest rates increase by a decent amount (I'm talking about all rates, but even those at the short end), house prices will inevitably reduce. If you are buying in those conditions (lower prices and higher rates) and then the rates go down over time, you are left with the scenario where you owe less than you otherwise would have nd are now paying a lower rate on it. The people I mentioned who bought in the 80's and were lifted up by the 90's were in that position. They were better off 15 years into their mortgage than someone who bought in 2006 would be today. So if you were to pick a starting point for yourself, would you want to pick 1985 or 2005? (I mean only in terms of making that big investment of a house)



Advertisement