Prices, Inflation/Deflation, Interest Rates & The Fed

Blade Runner

Pelican
Yes, I think he is accurate. Transitioning to real world goods, but mostly assets of all value.

There's a reason why I recommend crypto, uranium, lithium, real estate, certain other energy sector commodities, etc.

We are about to enter a really solid commodity cycle, but it will bring many problems out we used to never think about. And the global fiat currencies will be massively debased. I then predict a significant war starts (2025-27).
 
Good question. I just work on the credit reporting side so I don't see the actual decisions, but if you have enough people with history this bad applying for mortgages then that must mean that a decent amount of these people are getting approved. If it were impossible, or at least very unlikely, for these people to get approved then you wouldn't have these huge numbers of these types of people applying.

One thing that our clients use our services for is to massage the numbers. So, lets say you have an applicant with a particular credit score but they have a bunch of outstanding balances--a couple hundred on a credit card here, a couple thousand on an unsecured installment loan there, a few tens of thousands on a HELOC elsewhere, etc--the lender will have that person make a couple extra payments on their balances or clear out smaller ones so that on paper, for the lender's internal calculations, their financial situation looks better. My company internally calls those "cosmetic changes" to the credit report. We don't actually improve the applicant's credit score because that is all handled by the bureaus, but in the short term it makes it easier for the lender to meet their own internal standards (at least on paper) and thus get the loan approved. In the end the loan will just get sold off to another servicer anyways so they don't really care. Our clients are major banks and lenders that everybody (at least in the US) knows about and many people on this forum probably have multiple accounts with.

Its mostly cosmetic because a lot of people with bad credit will repeatedly make bad financial decisions. Its all short term just enough to get that mortgage approved.

Don't get me wrong, we get people who have great credit or have had one or two negative events in otherwise good histories so its not a complete disaster, but the amount of those people with lower-tier credit is extremely concerning and kind of scary. I don't see the bigger picture, i.e. the local economy tanked and their business suffered, that kind of thing. But when you have someone with multiple civil judgments and charge-offs spanning multiple years plus years of repeated 90+ day late payments on credit cards then you know something is going on.

On a side note there's a grocery warehouse for a major retailer near me that pays really well--actually better than what I'm making now. I might just apply there since they're always hiring and I don't know how long this subprime bonanza can last. If its a choice between walking away from a mortgage and buying food, you know full well which one people will choose and which company will have more work.
 

Spearhead

Sparrow
This is what we get when we let government employees control our lives. Almost 300 percent inflation in lumber in one year. This while we’re being told that inflation is totally under control, running at less than two percent per year.

3/4” Plywood Standard:
March 2020 – $37.98 /sheet
February 2021 – $72.49 /sheet
March 2021 – $83.49 /sheet
April 2021 – $95.98 /sheet
(Copied from a Real Estate site and the price is from Canada)

Lest you think this is an isolated incident, let me quote from an article that came out just last week in my local newspaper.

Shortages of lumber and other building materials have added thousands to the cost of new homes or forced homebuyers to downsize on the home of their dreams, said the Hood County News.

“The lumber spike has added an additional $24,000 to the cost of an average, new single-family home since last April, according to the National Association of Homebuilders. The additional costs are even more for larger homes and those with more upscale amenities.

$80,000 lumber package!

A year and a half ago, a $400,000 home built by his company would involve about $35,000 worth of lumber, said Donny Couto of Couto Homes. Today, that same amount of lumber costs more like $80,000 – and is continuing to rise…. causing some clients to hold off on building or to reduce the square footage of their home.

Couto said that copper, concrete and steel rebar are seeing “significant increases” as well, and there are sometimes delays with appliances, which are often made oversees.

“Everyone is in the same position,” Couto said of fellow homebuilders across the nation. “Everyone is dealing with some kind of supply chain issue.”

Couto said that his company is currently “eating” $15,000-$18,000 per home because prices are locked in once a client signs a contract, but the cost of materials continues to rise during the construction process.

“We’re taking considerable financial hits,” said Couto.

“It’s crazy. Prices are just off the charts,” said Casey Wallace, chief operating officer for Henson Lumber in nearby Cresson.

The cost of the wood panel product Waferboard, or Oriented Strand Board (OSB) – “one of the big items used in new construction” – has risen more than 300% since COVID-19 hit, Wallace said.

The supply chain problems have caused some companies to take “force majeure,” said Wallace.

Force majeure is a clause included in business contracts to remove liability for natural and unavoidable catastrophes that cause disruptions and an inability to fulfill obligations.

In some cases home prices are 30% higher than they would have been if built a year ago, said Will Steed of Will Steed Homes, who has been building custom homes in Hood County and surrounding areas for 22 years.

 

Arado

Pelican
Gold Member
Some tweets of note - I think by now it's pretty clear that we're going to see a surge of inflation and the Fed has even primed the population to accept it as temporary.



Once the bond market panics then the Fed will either have to do yield curve control or everything crashes because we are awash in debt.


  • Inflation, based on the hitherto honest rather than current CPI scale, is factually at 9%, not the farcical 2% range. In short, inflation is already here;
  • Unlimited QE, by definition, means greater money supply, and inflation, by definition, is about precisely that: Increased money supply;
  • QE for Wall Street (and the embarrassing new reputation of MMT) is slowly being joined by “QE for the people” in the form of unprecedented, “COVID-justified” broad money creation and fiscal deficits to directing money (and the velocity of the same) straight into Main Street, a classic tailwind for rising inflation;
  • The now openly felt winds of a commodity super cycle is driving commodity prices higher in everything from corn to plywood, all further (and undeniable) tailwinds of increasing inflation;
  • Finally, and perhaps most importantly, governments around the world have never, not ever, been as deep in debt as they are today, and the only way to dig themselves out of the Grand Canyon of debt in which they and their central banks put themselves (and us) is to now inflate their way out of it. In fact, just last week, the ECB openly confessed as much.
 

Arado

Pelican
Gold Member
Continuing the thread - The elites may try to come up with wacky explanations to justify inflation


Even mainstream commentators are catching on


[

Mind boggling that MMT is still being considered.


The KEY question now is whether this is the end game - once inflation kicks in bond markets panic and the Fed has to step in to prevent a total collapse and sacrifices the currency so that the debt becomes manageable - the 'Great Reset' happens sooner than expected.

OR

The public is being juiced to expect inflation and then once everyone is fully invested we get a major rug pull later this year when the Fed is forced to either raise interest rates or cut QE due to inflation, and asset prices suffer a major collapse. The thing is the deflationary forces are still in play, and require constant printing to be offset. Will the Fed take a break from the pumping or not? Hard to say and one has to plan for both scenarios. If the deflationary scenario plays out then inflation still comes a few years later once the crash buys enough political capital for the Fed & Treasury to go full MMT and outright direct debt monetization.
 
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Good posts @Arado - I too have noticed MSM starting to do 'light propaganda' to start priming the masses for inflation.

This was the most hilarious one of all, basically 'blame the boomers!' ahahaha so laughable (and saying that as a person who has no affinity for the boomer generation at all)


The fucking Central Banks, Fed, (in all the major countries, not just US/Europe) are all going to (continue to) lie through their teeth - similar to how the whole establishment denied the cheating in the US election - while the inflation takes place. I'm seeing all the warning signs, basically the "right" people are sounding alarm and the "wrong" - basically any establishment lackey or spokesperson or MSM are either downplaying it or saying it is 'transitory'. The CPI statistics and M2 data are now basically fudged (maybe one can draw a parallel to the covid 'cases' data that come from PCR testing which is rumored to be unreliable). The elite and establishment have control over the official data.

The insidious part of this is that the masses may not notice it as easily because the inflation seems to be hitting assets primarily (for now) - more so than day to day consumer goods and grocery (although there have been some increases here also).

I have decided to start increase my portfolio allocation of crypto from 20% to perhaps at least 40% based on the warning signs I've been seeing. Not a real estate pro, but I'd guess residential real estate might also be a good bet (especially if you are exempt from capital gains tax for primary residence) .
 
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Coja Petrus Uscan

Hummingbird
Gold Member
Screenshot-at-2021-04-15-20-57-00.png


Official CPI is negative.

I cannot say if they are doing the fiddlings, but I am buying the Arab's breads for $0.35.

Screenshot-at-2021-04-15-20-56-32.png


I am buying ocean-front property with swimmings pool and the gymings for two days' income. Thank you Uncle Satoshi.
 

Arado

Pelican
Gold Member
Some more tweets on this topic:

Good to see normal hardworking people benefitting from the printing but their expenses will also go up:

I know this forum (and Bitcoiners in general) are pretty anti-vegetarian but meat prices are likely to go way up as feed prices go up and China demand continues. The paleo diet will become impossible for most of the world's population.

The printing will impact at least asset prices, and more likely everyday prices:

Entertaining exchange here - Saifedean is a thought leader in exploring the larger implications of inflation & fiat on society.
 
Some more tweets on this topic:


Entertaining exchange here - Saifedean is a thought leader in exploring the larger implications of inflation & fiat on society.

0-100 real quick lol, is saifdean always like that or is there some beef between these two? Or is he referring to Keynes as the child rapist?
 

Arado

Pelican
Gold Member
0-100 real quick lol, is saifdean always like that or is there some beef between these two? Or is he referring to Keynes as the child rapist?

He's referring to Keynes. The Bitcoin standard has a section devoted to how Keynes' theories on the need for inflation were partially motivated by his unconventional lifestyle practices and aversion to tradition. Once you go down the Bitcoin rabbit hole there's a lot to learn about the connection between sound money/deflationary money and progress in human civilization in general.
 

AntoniusofEfa

Kingfisher
He's referring to Keynes. The Bitcoin standard has a section devoted to how Keynes' theories on the need for inflation were partially motivated by his unconventional lifestyle practices and aversion to tradition. Once you go down the Bitcoin rabbit hole there's a lot to learn about the connection between sound money/deflationary money and progress in human civilization in general.
Yep. Keynes was as much GloboHomo as you can be. He did not care for the next generation, and probably was just a planted puppet by the PTB.
 
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