Prices, Inflation/Deflation, Interest Rates & The Fed

EndlessGravity

Pelican
Protestant
:( Not sure if accurate but if you're wondering when inflation will leak out of financial assets into the real economy there you go.


I saw this hit the wire a bit ago and was like "oh no." Usually I'm pretty confident in my assessments but this made me think I'm about to get royally screwed.
 

Aizen

Kingfisher
Orthodox
Is it wise to hold onto USD anymore? Or should a smart investor be parked in alternative currencies (CHF, RMB), Bitcoin, Gold, Real Estate, Etc?

A bit concerned with the reckless money printing by the Fed, runaway inflation would basically destroy any USD savings.
 

Cervantes

Woodpecker
Woman
Is it wise to hold onto USD anymore? Or should a smart investor be parked in alternative currencies (CHF, RMB), Bitcoin, Gold, Real Estate, Etc?

A bit concerned with the reckless money printing by the Fed, runaway inflation would basically destroy any USD savings.
Definitely do not hold dollars. I don't know what will win the most - but dollars are going to crash. Every smart investor is dumping dollars and going to something else.

If you can afford to finance it, I would take out the largest mortgage possible and buy real estate outside the major cities. It is a relatively safe way to short the dollar. A decade from now that debt will be inflated away to something nominal.

Also: buy established crypto like bitcoin and etherium. I'm not 100% sold on buying a ton of bitcoin all at once right now since there has been massive gains and there might be a temporary setback in the price in the next few months. A good way to get into it and mitigate risk would be to buy a fixed amount every month. This way you hedge a little bit against a temporary decline.
 

Pendleton

Pelican
A new 52 week low in the dollar today, while equities and BTC are at all time highs. The only stats that don't seem to be following the stagflation script are the inflation numbers themselves and gold prices. Both gold stocks and gold prices had a strong 2020 but are well off the August highs.

I'm on the sidelines at this stage, undecided whether we will see another March style crash or a huge takeoff in inflation. I am reasonably confident in betting against the dollar and positioning for high inflation in the long term but am not confident about how messy things may be over the next couple of months, particularly given governments' confirmed willingness to tank the economy.
 
A new 52 week low in the dollar today, while equities and BTC are at all time highs. The only stats that don't seem to be following the stagflation script are the inflation numbers themselves and gold prices. Both gold stocks and gold prices had a strong 2020 but are well off the August highs.

I'm on the sidelines at this stage, undecided whether we will see another March style crash or a huge takeoff in inflation. I am reasonably confident in betting against the dollar and positioning for high inflation in the long term but am not confident about how messy things may be over the next couple of months, particularly given governments' confirmed willingness to tank the economy.
Inflations going to soar.

Mark my words.
 

kel

 
Banned
If you can afford to finance it, I would take out the largest mortgage possible and buy real estate outside the major cities. It is a relatively safe way to short the dollar. A decade from now that debt will be inflated away to something nominal.
This idea is fascinating to me, and buying real estate for a farmstead has been my plan for the last couple years. Do you think mortgage rates will continue to be as low as they are for the next, say, year?
 

Cervantes

Woodpecker
Woman
This idea is fascinating to me, and buying real estate for a farmstead has been my plan for the last couple years. Do you think mortgage rates will continue to be as low as they are for the next, say, year?
I bet they stay low for a year at least. I think the rates have to stay low so long as they keep printing a lot of money.
 

Cervantes

Woodpecker
Woman
A new 52 week low in the dollar today, while equities and BTC are at all time highs. The only stats that don't seem to be following the stagflation script are the inflation numbers themselves and gold prices. Both gold stocks and gold prices had a strong 2020 but are well off the August highs.

I'm on the sidelines at this stage, undecided whether we will see another March style crash or a huge takeoff in inflation. I am reasonably confident in betting against the dollar and positioning for high inflation in the long term but am not confident about how messy things may be over the next couple of months, particularly given governments' confirmed willingness to tank the economy.
Gold has been flat because conservative investors that normally would buy gold have been buying bitcoin. Gold is probably getting undervalued.
 

Pendleton

Pelican
I don't know how they are cooking the books at this stage to not show massive inflation. It has gotten to a point where I worry about the increased cost of living if I move from Tokyo to a small town in Tennessee. Maybe utility costs and gasoline are still relatively cheap in the US. Everything else seems to have skyrocketed.
 

Pendleton

Pelican
This idea is fascinating to me, and buying real estate for a farmstead has been my plan for the last couple years. Do you think mortgage rates will continue to be as low as they are for the next, say, year?
Lots of people seem to have the same idea. I have been keeping an eye on larger acreages for sale in the US over the last year and inventories have disappeared over the past couple of months. The same is true for housing in white enclaves with good schools. The new construction seems to be selling well in advance of completion.
 

NoMoreTO

Hummingbird
Catholic
I just moved all my savings into Gold and Silver ETFs. Denominated in CAD & USD.

Spot Price Gold USD: $1953 / ounce
Spot Price Silver USD: 27.28 / ounce
 

NoMoreTO

Hummingbird
Catholic
A little bit of a counter argument to long term low interest rates.

10 year t bill interest rate just went up.

I agree with the Uneducated Economist that in a Capitalist system like we have had, that interest rates MUST go up at some point. Everyone should be careful of this when taking on a big loan to "get their piece while they still can". I have found this to be the mentality of many local rural buyers in my area. The counterpoint is that instead of staying with the classic capitalist society, we move to the great reset and eat bugs.

 
RIP US Dollar.

3 trillion in new spending + 7 trillion in treasuries coming due in 2021 + little foreign interest in US treasuries = a LOT of money printing.

Joe Biden is considering asking Congress to help suffering Americans in two steps: give them the balance of their coveted $2,000 coronavirus payments, followed by a $3 trillion tax and infrastructure package.

Why it matters: Biden is confident he can get multiple packages through Congress after Democrats won both Georgia Senate elections. The president-elect's team also wants to get cash in Americans' hands as quickly as possible, according to people familiar with the matter.

The big picture: In July Biden rolled out his Build Back Better plan, which includes billions of dollars for caregivers, incentives for manufacturers and some $4 trillion for green jobs and infrastructure spending.

 

Sam Malone

Ostrich
Catholic
Gold Member
I had hoped to be near the end of the process by now.

I was planning to have my house ready for the market last month, but a couple of unavoidable things came up. As it stands now, I should be ready to list sometime the middle of next week.

I'm also in a position to be out of the house pretty quickly (been donating and getting rid of things), and already have a temporary, possibly permanent place to stay (so my house sale isn't bound by my finding a place).

With the election having gone the way it did, how long can the interest rates stay as low as they are right now ?
 

NoMoreTO

Hummingbird
Catholic
I had hoped to be near the end of the process by now.

I was planning to have my house ready for the market last month, but a couple of unavoidable things came up. As it stands now, I should be ready to list sometime the middle of next week.

I'm also in a position to be out of the house pretty quickly (been donating and getting rid of things), and already have a temporary, possibly permanent place to stay (so my house sale isn't bound by my finding a place).

With the election having gone the way it did, how long can the interest rates stay as low as they are right now ?

I think you'll be fine. My guess is they won't hike in 2021, and this is the guidance they have provided.
 
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