Bidenflation reaches 30 year record high

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Doctor CamNC4Me
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Re: Bidenflation reaches 30 year record high

Post by Doctor CamNC4Me »

Gadianton wrote:
Sat Oct 02, 2021 8:36 pm
Last year I had a backyard project going on. When I started, a 2x4 was like, $3.50. Nearly 6$ by the end.
I had something similar happen at another property. We brought a dude in to build a couple of privacy screens and our agreed upon price was blown up. Materials, like what happened to you, nearly doubled in the week he was working and it was shocking. Developers all over the Wasatch front went into turbo build mode and inventories in every HD, Sutherlands, and Lowes were flying out the door as soon as they got in. In fact, here in my small town there are new home builds going up all over the place. Big homes, too. Demand is insane, and I ain’t never seent nuthin like this before. Can we blame Trump and Dems for handing out cash a few times? I dunno. A bit, I suppose. However, the math doesn't work out, so something else is at play. $4k so poor people can make ends meet doesn’t translate to our current hyperproductive economy.

- Doc
Hugh Nibley claimed he bumped into Adolf Hitler, Albert Einstein, Winston Churchill, Gertrude Stein, and the Grand Duke Vladimir Romanoff. Dishonesty is baked into Mormonism.
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Gadianton
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Re: Bidenflation reaches 30 year record high

Post by Gadianton »

I personally haven't done the studying I need to on the topic, you know, all of the factors to current inflation. The loose money both fiscal and monetary are factors. If you look at the Nasdaq's marvelous trendline and trace it back, it goes to October 2018 when the federal funds rate started dropping like mad. So things were in the works back then and not just with the latest "stimulus" of billions. But then you have the shutdowns. The shutdown, reopening, and pressure on supply chain in conjuction with all this free money; that's a big part also. But there's additional factors. To heck with crypto, marijuana, and clean energy vehicles, the big money has been in shipping and oil, and raw materials. I can speak a tiny bit to shipping; charter rates for container ships are off the charts. Since 2010 or so, it's been a horribly depressed industry. I'm not totally up on all the reasons, one reason is bad calls by fleet owners in terms of fuel futures. Ships burn lots of fuel, hedging with futures is a way to mitigate but that could go wrong. Also, not a super high-tech industry and if you have enough boats to cover things then profit margins are small. Stock prices were depressed to virtually nothing, and a big boat could be sold for scrap for better money than running it. And then there was the shutdown, and then a reopening. Suddenly, demand outstrips supply significantly. There aren't enough boats. If you think building a semi-conductor is hard during a shortage, try building a container ship. In the best of times, it's 2 years to build one. stock prices are up 1,000% since September of last year, but interestingly, this is small bump compared to the value these stocks have lost since 2010 or so. Things probably weren't nearly as bad as stock prices suggested they were, but in today's investing world, people want to throw their money at the next tech marvel and not wait around for a depressed industry to rebound. That just drives and industry into the ground all the worse.

P.S. It wasn't just the 4k, but all the money to businesses, renters etc...
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Re: Bidenflation reaches 30 year record high

Post by ceeboo »

Gadianton wrote:
Sat Oct 02, 2021 7:49 pm
Hey PG,

Just wanted to let you know, for what it's worth, that I really enjoy your posts on the board (this one included.) They usually force me to think and they are typically presented in an organized and meaningful fashion. Truth be told, much of what you write in this particular post is a bit over my head - but I still find it interesting and thought provoking.
------
I just need to let everyone know that what Ceeboo really means to say is that he appreciates Physics Guy's congenial manner of posting, while he doesn't appreciate invective-laced posting styles such as mine. As self-badged tone police for the board, Physics Guy makes his life much easier.

Notice that Physics Guy's depth and clarity of thinking coupled with his kind manner is not enough to elicit a conversation with Ceeboo. It's "over his head" and so, goodbye. I mean, Ceeboo could ask questions about the parts that were over his head to try to understand them, if he were really so interested in the material. Just as he could continue with Canpakes and his information-only non-political discussion on climate change.

(don't worry Ceeboo, this is a one-time mention so that you're aware that I'm aware of your career here as tone patrol. I'm not going to follow you around and keep bringing it up)
Gad,

Is there anything that is off the table for you that you won't take and use as a weapon against someone - because this one is astounding!

Over the recent past, I have been shocked while reading some of your board contributions. This one, while shocking as well, is more than just shocking. It's vindictive. it's an outright personal attack directed at me. The obvious purpose was to express your personal feelings about me to the entire board. Your "I just need to let everyone know that what Ceeboo really means...." is a need of yours that I will never understand. It's dripping with your arrogance, it's rooted in your personal desire of revenge, and it provides tremendous illumination about what position you think you have on this board among this community. It's as if you believe you were addressing your subjects as a king.

In short, I am extremely disappointed that you posted this. I will do some more reflecting and thinking and I will consider my options at this point. One of the options that I will be chewing on, for what it's worth, will be to refrain from engaging you on the board any more. It might be the best option for both of us.
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Doctor CamNC4Me
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Re: Bidenflation reaches 30 year record high

Post by Doctor CamNC4Me »

Ceeboo, point to the doll and show us where Professor Gadianton hurt you:

Image

- Doc
Hugh Nibley claimed he bumped into Adolf Hitler, Albert Einstein, Winston Churchill, Gertrude Stein, and the Grand Duke Vladimir Romanoff. Dishonesty is baked into Mormonism.
honorentheos
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Re: Bidenflation reaches 30 year record high

Post by honorentheos »

Doctor CamNC4Me wrote:
Sat Oct 02, 2021 8:19 pm
honorentheos wrote:
Sat Oct 02, 2021 6:53 pm
Anyway, back to yard work. Replacing a fence and digging holes kinda sucks. The price of society...
Excellent post again, Honor. How much more have you paid for materials, in your estimation, this year than, say, last year? I had a fence built by a local, and prices were in such flux he asked me to hold off for a month or so because he thought lumber prices would drop a bit. So I did and he was right. I actually saved ~ $1500.

- Doc
Right at the start of Covid quarantine I had Home Depot deliver some sheetrock and studs for a room renovation project I had thought I'd have time for given quarantine sounded like it would lead to slow downs with no where to go. I don't recall the unit prices for the materials but I don't recall any sticker shock. It was only just under $400 in materials anyway. Between the ramp up and extra coordination required transitioning everyone to work from home, the slow down didn't happen for me. Not only did we experience accelerated deadlines but we kept adding projects resulting in an intense period of months without a true day off. So the project didn't get started until winter with the materials taking up space in my garage, apparently appreciating in value though I was dumb and used them instead of selling them I guess. When I finally had time to begin I ended up needing to go pick up a few extra studs and some more sheetrock mud. The studs were over $7 each which blew me away. But the reality is my home projects aren't so imposing so I put things on the back burner through the spring and just got back to them. The concrete for the fence posts I just bought were about $4.50 / 50 lbs bag for the quick set post mix. High but not terrible.

My job involves design of sites such as parks, commercial site development, infrastructure projects, and the like. I interface with contractors, owners, municipal clients, and others in the business of getting things built more or less every day. When we develop our plans we also include our opinion-of-probable costs which we develop using estimating tools and recent bidding history. It also involves reaching out to contractor contacts to check on pricing. From sometime around 2016 to 2020, overall project costs were running around 15% higher annually. But concrete and steel were volatile. Concrete could spike from project to project depending on the availability of labor at the time. We saw one project in 2017 where the winning bid included standard concrete sidewalk at $22 per square foot. That''s more than double, Imagine walking down the street and taping $20 bills ever square foot...outrageous. That was caused by numerous factors from material availability internationally, local skilled labor shortages, and a few major construction projects going on at the time so almost every concrete crew had other work. The winning bidder's concrete sub gave it a price that he knew was ridiculous but figured if he won he'd figure it out.

One of the shortages that seems surprising to clients involves plant materials for landscapes. Everything is doubled in prices, unavailable, and undersized. 24-inch boxed trees are costing $600-$800 compared to $350-$400 two years ago and $200 just six years ago for example. And the tree itself was probably in a 15-gallon container days before it was sold.

This last spring my contractor contacts were forecasting 30% increases over a couple of months, and only holding prices for 30-45 days. Lead times for fabricated items like light poles or playground equipment? Over 16 weeks or more for items that used to have 7-8 week lead times. Light fixtures which were usually around 12 week lead are effectively "you'll get it when you get it". 16 weeks is on the low end.

So what does this rapid inflation look like on the ground from my experience? It's more than higher project costs. It's issues with contractors having to delay projects, constructed work having to be removed and replaced due to less skilled labor causing issues, value-engineered projects being less than they could have been because the budget was set in 2019 and there aren't pockets to be dipped into to make up the difference in many cases.

We all seem to acknowledge that some degree of inflation over time is beneficial. I read Physics Guys post and agree with the general content. I just view the downplaying of the "moderate" descriptor as missing something critical because we aren't experiencing moderate inflation right now. It's rapid inflation.

Now the Federal Reserve appears to believe the shortages are the primary cause and aren't going to move on interest rates to try and curb it. Chairman Powell said they believe it will taper off in early 2022 so any reaction to it would be premature and potentially backfire in cooling off the economy too much. He's possibly right, though it's economics so they'll certainly be better are positing explanations for why what did happen, happened. Nature of the game I guess.
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Re: Bidenflation reaches 30 year record high

Post by Alf'Omega »

Hawkeye wrote:
Sat Oct 02, 2021 1:11 pm
If an employer isn't offering raises, despite taking in more dollars from selling products at higher prices, then why don't the employees all quit and go work for a rival who is prepared to pass on some of the extra dollars?

It could be that the labor market in some industry isn't really free. If so, that's the problem—not inflation.

Or it may be that an industry is changing, and the real value of its workers' work is falling, for example because robots or foreigners can do the same work more cheaply, or because people just don't want this industry's products as much any more. In a case like that the industry may only be able to stave off collapse by cutting workers' real wages. In a market economy it's one of the advantages of inflation that it lets companies do that without the legal and political trouble involved in cutting salary dollars.

During inflation a company can cut its labor costs, in real terms, just by not giving raises. So healthy industries offer raises in times of inflation, while troubled industries don't, and over a few years of inflation the relative wage scales of different industries adjust to new economic or technological conditions. In the long run that's a good thing. Higher wages attract more workers to the work that people most want. It's the free-market alternative to central planning, and modern history seems to show that it's a lot more efficient. Inflation is an important part of how it works.

If you're caught in a declining industry with a stagnant salary while prices are rising faster than you can re-train for a new career, though, you're in trouble, all right. Periodic moderate inflation might be good for us all in the long run, but for you right now inflation is bad.


This is the great argument against pure free-rein capitalism and in favour of social safety nets and state regulations that try to keep people from being crushed when the pitiless market changes abruptly. Preventing inflation isn't the only tool in the box for doing that, though. Periodic moderate inflation has enough good effects that it's often worth letting it happen and finding ways to help people deal with it.
Interesting points. I think trying to go back to school to retrain for a different career would kill me pretty quickly at this point in my life. But that is life and that's the market. So I can't call it unfair.
You really should go back to school.
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Re: Bidenflation reaches 30 year record high

Post by Alf'Omega »

ajax18 wrote:
Sat Oct 02, 2021 1:32 am
Physics Guy wrote:
Fri Oct 01, 2021 8:46 pm
If you get all your money in return for what you do or provide, then inflation means you will get more money for your work, in the same proportion that it will also cost you more money to buy things from other people. So the numbers of dollars in your life will change, but the goods and services that you get in return for your goods and services will stay the same.

If instead of selling goods or services you have a bunch of money, or other assets that are of no particular practical use besides their value in money, or if your income consists of a fixed amount of dollars per year, then inflation reduces the amount of goods and services you can get for your money. Inflation is basically a collective downward reassessment of how much we all believe in artificial economic abstractions like money, compared to concrete goods and services.

Rich people and people with fixed incomes hate inflation. It's not so bad for working people with something to offer that people actually want. A lot of macroeconomics is accordingly based on maintaining a certain amount of inflation, so that people have an incentive to work rather than just sit on their dough.

Like most things that are fine in moderation, inflation can definitely become bad in extremes. Conversely, though, like a lot of things that are bad in extremes, inflation can be fine in moderation.
How many of us have seen pay raises equal to the recent price increases?
Price increases on what? Inflation isn't the same across the board. Wages are rising at a 35 year high, by the way.
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Re: Bidenflation reaches 30 year record high

Post by Alf'Omega »

Cultellus wrote:
Sat Oct 02, 2021 1:11 am
Gorilla
Yeah, I'd edit your post away too if I were you because it was really that dumb.

Yes, the price of gasoline is directly tied to the supply and demand for crude. You say it isn't just demand, I say you're right because it is high demand coupled with low supply. Don't believe me? Just look it up. Oil production has been down during a time when demand has skyrocketed. Production plummeted during Trump's final year in office and has been gradually picking up since Biden got elected. but we're still well short of the production levels pre-pandemic.
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And US production dropped even more dramatically early 2020. Biden's fault too I guess.
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crude2.jpg (98.13 KiB) Viewed 907 times
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Re: Bidenflation reaches 30 year record high

Post by Alf'Omega »

Hawkeye wrote:
Sat Oct 02, 2021 1:06 pm
Offsets the higher prices? How do you figure that? My house has appreciated an enormous amount in my state. But unless you're moving out of state and plan to sell it, all this does is raise your property taxes. Hence my mortgage has gone up.
He's likely referring to the fact that if you take out a mortgage in 2020 for $300,000 your principle balance is fixed regardless of inflation. So if in 2021 inflation rises 6%, then you're still paying on $300,000 and not $318,000. Meanwhile, you own a $318,000 home which you paid only $300k. And this doesn't even address appreciation due to housing market indicators. The point here is that inflation lets debtors pay lenders back with money that is worth less than it was when they originally borrowed it. I'm not sure why this is hard to understand. Most people I know are struggling to pay off their mortgage, many have taken out second mortgages. Inflation benefits these people for reasons already stated.

As mentioned already, wage growth has hit a 35 year high. Overall inflation is slightly higher than wage growth, but not everyone is getting an effective pay cut because it all depends on what it is you're buying. If you're poor and your main expense is food, then the wage increases in 2021 means you're not losing money here because the costs for food have risen only 2.5% in June, whereas wages had risen over 3%.

On the other hand, things like used automobiles have jumped a whopping 45%. This one expense is the largest contributor to overall inflation. This is because new car production was cut dramatically due to COVID and also because of a chip shortage.

But that doesn't affect you unless you just absolutely need to buy a used car this year. Most people don't. I would never buy a used car in this scenario, and in fact because the values of used cars have skyrocketed this may encourage me to sell the one I have. Even car lots are willing to buy used cars well above blue book value at this time. I could probably get as much used as I paid for my car new two years ago!

There is opportunity in every market, if you know how to be smart with money. Like right now, I wouldn't even think about trying to renovate or flip a home with the way lumber prices have been going.
Cultellus

Re: Bidenflation reaches 30 year record high

Post by Cultellus »

Gorilla
Last edited by Cultellus on Mon Oct 04, 2021 9:34 pm, edited 1 time in total.
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