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Hyperinflation starting? What's happening in your area? Post your ground reports.

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MJ DeMarco

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I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two.

Meanwhile, the Fed continues to say inflation is under control. :rofl:

I've extracted some of the posts from the other INFLATION thread -- please use this thread to POST YOUR EXPERIENCE in your area/country/city of higher prices.

The mainstream narrative is that inflation is under control -- I contend that it is running in the double-digits and as always, the media and their sycophants are lying.

Of course, if you have a local experience of LOWER PRICES, feel free to post that too.

The only place I've found lower prices are in consumer electronics like televisions. Got make that propaganda easily accessible!
 
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Envision

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Talking about inflation... Im in Idaho, probably the gnarliest housing market in the country.

I almost bought this POS warehouse for 3M last year, owner got called feet... Sold it 1 day on market this past week for 4M... 3m was absolutely batshit

The house I bought last March for 230 I could sell tomorrow for 530.

Houses go 50-100k over asking with 10+ offers within the first week here. Im not exaggerating.

Own assets.... businesses, crypto, real estate, stocks. Cash is literally 50% more worthless than it was a year ago
 
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MJ DeMarco

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? we will find out within the coming years, every major player on the chessboard is making power moves and executes a sinister plan at the moment.

LOL, America is run by children in adult bodies.

America no longer plays chess, heck, they don't even play checkers either. They play Candyland.

Only a matter of time before we suffer the same demise as Veruca Salt.

"I want the world. I want the whole world. I want to lock it all up in my pocket. It's my bar of chocolate. Give it to me now." ― Veruca Salt
 

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I believe we are witnessing a massive hyperinflationary event underway as prices continue to skyrocket in all asset classes. Of course, this doesn't happen in 1 day or 1 week, but over the course of a year or two.

Meanwhile, the Fed continues to say inflation is under control. :rofl:



Which means absolutely nothing.

When government/politicians who make the laws are not subject to their laws, allowing themselves to go bankrupt would be seen as a means to an end to leverage the crisis for more power, and likely a new fiat debt scheme. Simply put, Kings and Queens will allow whatever they want to happen because in the end, they're the ones the hold the puppet strings. People who control the rigged game won't allow themselves to be the losers.

Kinda like arbitrarily releasing and ending all student loan debts simply because you find it prudent to do so.

They'd do the same for themselves.

I'm guessing the end game here is a massive crisis resulting into the emergence of a new fiat while bitcoin would undergo either a ban, or a massive government regulation to take it over - Americans and Canadians!! Introducing, the New Ameridollar! Exchange 1000 of your old dollars, for 1 new Ameridollar! Stores will no longer accept your old USD starting Jan 1, 2023! Convert your dollars now!
As someone who lived a fair share of time in South America, I've seen this happen. I've also seen what 40-50% inflation means.
This is EXACTLY how it goes down. They just scratch a bunch of zeroes from the former currency, call the new one a fancier name and, of course, profit from all the suckers that were holding either the currency or any kind of credit denominated in it.
Which goes again to what we were discussing above: as long as you are able to hold anything different than the devaluated currency, then you'll be a winner. If you had outrageous levels of debt in said currency, you'll also be a winner as you will be able to pay it back at a heavy discount.
For eg. If you had 1000 sh*t coins at 1 USD, you now have 1M Ameridollars and if you had a debt for 1000 USD, you now only owe 1 Ameridollar, which should be relatively easy to pay with your sh*t coins.
You'll also be able to buy A LOT of defaulted assets from people, as not all debt is denominated in the now defunct currency and not all interest rates are fixed (specially inflation adjusted loans will be FUBAR).

Having said all of the above, inflation at the beginning always boosts the financial markets, as people try to park their money anywhere other than their wallets. Eventually it hurts companies, as there is no real growth and they start 'underperforming' expectations.

Guess we'll have to wait and see. As the saying goes: markets can remain irrational longer than you can remain solvent.
 
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MJ DeMarco

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So, is there a safe place to store a bunch of cash?

I'm looking to dump cash into a large property that I can deem my primary residence, not as an investment, but merely as an insurance policy. If I get caught buying at the top, I don't mind losing a few million since it will be home I plan to live in for the rest of my life.

Unfortunately, here's just a little insight into how CRAZY the RE market is.

Saw a house in SLC that came up for sale. Mind you, it was listed for $4.8M and these higher price ranges (at least in the past) tend to stay on the market for a few weeks. It was a bit out of my budget but I'm chomping at the bit to unwind cash so I decided I would go look at it. Before I could even book a flight and get more details on it, it went Under Contract.

Even in these high prices ranges, houses are flying off the market. Bidding wars are not happening just at the $500K level, it is now transpiring in the mid-7 figure range.

In similar vain, I saw houses that didn't sell two years ago listed @ $2M now being relisted at $3.5M. Why not? If you can make $1.5M doing nothing in two years, can you blame them? But inflation is well contained.
 
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MJ DeMarco

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A 2X4 from Home Depot now costs $6.94 when it cost $2.84 just a few years ago doesn't mean inflation is 244%.

LOL, according to gangsters in Jackson Hole, it's only 1.5%.
 

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Read Big Debt Crisis by Ray Dalio.

In the book he describes exactly what is going on and how deleveraging will need to occur.

The scary part is what normally happens through a deleveraging is war and social unrest.
 

MJ DeMarco

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Hey MJ, what is your rationale behind purchasing the Swiss Franc? Is it really a good hedge in an inflation / hyper-inflation scenario?

It comes down to a matter of which government/banks do I trust the most, especially in a crisis, when in reality, I trust none of them.

Kinda like choosing which criminal do I want to partner with? What a choice!

All G7 currencies are trash and COVID exposed these governments and their politicians as untrustworthy, authoritarian, and unable to make decisions based on logic over emotion. The Japanese government is the only G7 government I have a smidgen of faith in, and hence, the Yen and the Franc seemed to be better places for a cash conversion.

Also, by proxy real estate, do you mean ETFs or REIT stocks?

Yes. I own a ton of LEAPS on REITS and ETFS, as well as REITs.

Risk wise, I'd rather "buy at the top" and lose money, than have reckless politicos and bankers use inflation to turn my fortune into nothing while they continue writing blank checks to citizens who produce nothing, and contribute nothing to society other than a good retweetable tweet.
 

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Shake-ups like this one, are usually more of a "shake-out" than a tragedy. Those who cannot cope -- those who are NOT prepared -- lazy people who are sliding along -- those who are over extended and living on thin ice -- and the inexperienced -- end up on the wrong side of these situations. I had no idea it would be global pandemic, but I've been preparing for the next cycle for the last few years. I'm not saying you can foresee and be prepared for anything every time. I am saying that I'm old and wise enough to meet these moments head-on. I know how to make a whole pitcher of lemonade out of a single, old, ugly lemon.
Over the course of more than 40 years in business I have seen quite a few recessions, some truly major. My businesses survived them all.

With each recession I saw friends and business associates go under. The reason was that they had over-capitalized and operated with big overheads, much of which was completely unneccessary and was simply to feed their egos with a display of wealth.

On the other hand, probably due to growing up in poverty, I worked on minimum overheads, with only the necessities. This enabled me to weather the downturns.

Hold on to that single, old, ugly lemon.

Walter
 
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Risk wise, I'd rather "buy at the top" and lose money, than have reckless politicos and bankers use inflation to turn my fortune into nothing while they continue writing blank checks to citizens who produce nothing, and contribute nothing to society other than a good retweetable tweet.

Here is one of my favorite quotes from one of my favorite documentaries. Money Masters 1996.

"The central bank scam is really a hidden tax. The nation sells bonds to the central bank to pay for things that it does not have the political will to raise taxes to pay for. But the bonds are purchased with money the central bank creates out of nothing. More money in circulation makes your money worth less. The government gets as much money as it needs, and the people pay for it in inflation. The beauty of the plan is that not one person in a thousand can figure it out, because it's usually hidden behind complex-sounding 'economics' gibberish."
 
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Just took every fiat dollar I have, levered it 9:1 on a 5.5% 10 year note - and bought a manufacturing business to complement my existing ecomm/retail business.

$5.5M in play for me, biggest move of my life.
Margins are outstanding, no competition in the US, import shipping prices build a moat around us.


Not trouble free, lots of cultural work to do adding 20 more staff to existing 20...
Should be intense - and a lot of learning.

--
Hopefully hyperinflation will make the debt payments tiny in 18 months (!!) and this will be the best inflation hedge of my life.

Could also lead to fiscal ruin if interest rates explode before I can pay it down.
Only one way to find out. :)
 

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Far-fetched? Or common sense corporate strategy, from their POV?

Doesn't ATT own CNN?

Would it be in their best interests to scream and cry "inflation!" like they did C0VlD-19 for the last year?

Probably not.

The corporate media only reports what is good for their stakeholders, not for the general public. The fact that people call it "news" is laughable. . . it's nothing more than a mouthpiece of the political class.
 

MJ DeMarco

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I think we put in a market top on Real Estate and here's my sign:

Two months ago I flew to Utah to look at this house. It was listed for $2.79M.

I liked it and considered making an offer, but had a few more houses to look at. Before I could make a decision, it went under contract and sold for list.


Fast forward to today and the new owners put it up at $3.79 -- in short, they want to make $1M for doing nothing other than buying a house, sitting on it for 45 days, and relisting it. They didn't even stage it or anything, just reposted the original pictures from the listing.

Uh, no.

Insanity like this is why we've reached a top.

I don't think people are this stupid, especially when they have $4M to blow.
 

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At the 7-Eleven where I buy gasoline and sugar-free rockstar, the retail clerk was telling me how stressed out the employees are. She said that every single week every single item in the store the price goes up, and that every single week they get the list of every single price increase on every single item in the store and every single week they have to replace every single product. She said two or three years ago it would’ve been maybe a dozen items per week with price changes. Now, it is every item increasing in price every single week.

So is your income increasing every week? If it’s not, then as each week passes the value of your income is decreasing when used as a metric for what you can exchange your income for goods for.

Said differently, with every week that passes you are getting poorer.

if you are locked into a job where are you trade your hours for a fixed income, you have no chance to scale your income to match the weekly inflationary increases. You can’t possibly keep up. Eventually, nobody will be able to keep up anyway once we truly hit the accelerator into hyper inflation.

Debt vaporizes in hyperinflation.
 
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MJ DeMarco

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GROUND REPORT:

I looked at a house in Scottsdale in 2018 that was listed for $1.39M. As you can see it sold it for $1.375.

The new owners painted the walls and changed the flooring. Nothing else was done. No kitchen upgrades, no new appliances, no walls torn down, nothing.

They relisted it for $4.5M and wanted to make $3M in 3 years for essentially doing nothing but sitting on their a$$.

Forced to reality, they now are being reasonable and have lowered the price, only wanting to make $2.5M in 3 years. Why have a job or a business? Just paint some walls and you can be a multimillionaire in just a few short years! :rofl:


1618502290308.png
 

MJ DeMarco

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Time to go vegan because you can’t afford to eat meat!

My grocery bills definitely are a lot smaller. I can roll out with 6 shopping bags for $50. And Costco is a lot cheaper.

And just think, if you invest all those meat savings in an index fund, you'll be rich in 50 years! And be alive to enjoy it!

:rofl:
 

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French gov just announced they would cap energy prices to face price increases. Interestingly enough, like real estate, the cost of energy is very much underestimated in the official calculation of inflation. Of course, the problem will still show up elsewhere. Funny how they try to sweep the dirt under the carpet. At least they'll be able to tell how they are here to help the good people of France, while they created the problem in the first place.

The government never learns. Price controls always leads to shortages. The next step if for the government to start rationing the public. Rationing leads to terrible terrible outcomes that are often not predictable but always cause human suffering in some form.

This cycle has repeated over and over again. Painful as it is to the wallet, allowing prices to surge to short supply or rising demand incentivizes companies to find creative solutions to produce and deliver more, which ultimately will drive prices down from their highs.

Listening to politicians talk, the World Economic Forum, and the UN…I’ve come to believe that a lot of this is actually intended and desired by these people. They don’t talk about things returning to normal, they talk about a new normal. The way they describe this new normal is dystopian and nothing like we are use to living.

While people here are interested in prosperity and what that entails, they appear fully invested in control and domination. Which always leads to a loss of prosperity.
 

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I've put a lot in the Swiss Franc and allocated to both physical and proxy real estate.

btw, for anyone reading this and want an easy way to do this:

Set up a Transferwise account.

You'll be able to convert your USD and hold in other currencies from there, and easily convert back to USD when you need it.

I have an equal amount in a dozen or so currencies, including the Franc.
 
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MJ DeMarco

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April core inflation the highest since 1981, FORTY YEARS AGO.

Folks, remember, you read it here first.

I've they're ADMITTING these rates with these ineffective measurements, can you imagine the real number?

 

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We have semiconductor parts in our products. Our manufacturer started urging me to stock up a few weeks ago.

Four weeks ago, I took his advice for the most important parts, although reluctantly, because we already increased inventory levels last year after the supply chain chaos and I would prefer to not have so much cash tied up. Price increase was 10% compared to about 12 months ago, so already noticeable.

Last week he called me again and - déjà-vu - urged me to stock up because of upcoming serious shortages. He has friends in the German automotive supply sector, who are apparently buying up everything they can get their hands on in full panic mode and don't care about the price. He said he is worried that if we don't order now, we might not be able to get these parts for 12-24 months, as these are already the delivery times for other similar parts.

So, again, I took his advice and ordered a volume of those parts that equates to about 24-30 months of sales for these products.

Price increase was another 25% compared to last month. Thankfully, these semiconductor parts, while being a critical component, only make up a small portion of our total cost, so it's still affordable.

The next day I read some news articles, one of which is an interview with the CEO of Infineon (top 10 semiconductor manufacturer worldwide), who says the current shortages could last until 2023.

Good timing on the order and good to have a manufacturing partner with their ear to the market...
 
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Walter Hay

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I see a lot of manufacturing coming back to the USA. But, it's going to be manned by a lot of robotics rather than human hands. It will take time and money to get it all set-up. And a lot of the manufacturing won't take up as much space as we're used to seeing. I think it's a great opportunity for us as a nation. Why do I see this? China has lost its luster and I think that business owners are going to be a lot more head shy about the Asian countries. And Mexico has a cartel problem that hurts their safety factor. But, maybe I'm wrong. We will see.
It's important to view the wider picture. I posted about offshoring starting to be reversed as far back as October 2014.

In the interim, many US companies have sold the family jewels (their brand name and logo) to Chinese manufacturers. That is not offshoring it is betrayal of their loyal customers, who were unknowingly buying lower quality Chinese made products bearing their trusted brand.

I still grumble about buying sub standard Stanley products MADE IN CHINA. GRRRRR.

At the same time, reshoring has gathered pace, and I am now pleased to see big US companies returning production to the USA. The Covid pandemic led to a realization by the public and corporations that over-reliance on supplies from distant countries was a bad idea.

Supply chains were too stretched, unreliable, and delivery times too slow when essential life saving items took a month or more to arrive. Even then those US companies that had greatly boosted profits by offshoring could not meet their regular customers' needs.

A sense of urgency has now been evident in some board rooms and steps taken to right what was (with hindsight perhaps) a serious wrong. More and more US companies are opening factories again. Foreign investors are also putting their money into US production facilities.

Many jobs have been opened up, exceeding 2019 estimates by 50% to around 160,000 .
A great example of how successful reshoring has been is Craftsman, which is now owned by Stanley Black & Decker. They have manufacturing plants in 14 states, with two more in the pipeline.

So all is not doom and gloom, but I expect it will be a long process to get the economy back to a reasonable position.

Walter
 
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I’m not sure either of those statements are true.
Automation means fewer jobs, meaning less employees making money to prosper. That’s the big issue with automation.
But if you add education and training for the newer and higher paying jobs + automation, then I agree.
That’s the popular opinion.

The reality is very clearly painted throughout history, technology (not in the modern sense, but the productive progress sense) creates prosperity.

We have never had more technology that makes jobs easier and less burdensome than we do right now… It also takes less labor than ever before to buy a home, have two cars, go on vacation. People find their place, and their place will be less and less burdensome for more and more pay.
 
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MJ DeMarco

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Also, which fiat currency do you deem the safest/most stable? I keep most of my fiat in EUR.

I've put a lot in the Swiss Franc and allocated to both physical and proxy real estate.
 
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The new mainstream dog-whistling narrative is "transitory"... kinda like "10 days to slow the spread" which is now approaching 2 years.
 

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@WJK you probably missed my question, but I was wondering as you've been through this before, any tips on how do you manage the conflicting information?

I mean, on one hand, cash is king in such a crisis, but on the other hand, high inflation and the potential of USD losing the status of reserve currency would make cash worth less and less?

What's the middle-ground that you believe would keep you doing well both extremes?
I like to run counter to the market. I'm not a FOMO (fear of missing out) type of person. When others are on a buying binge, I'm selling. When others are selling, I'm looking for some carefully selected stud-card deals to buy.

I don't worry about hitting the exact peak of the market, either up or down. My gut is NOT that fine-tuned and this is NOT an exact science. I DO worry about waiting too long and missing the trend due to analysis paralysis. I can feel the earth moving under my feet when the market starts to move, so close to the top or the bottom is good enough for me. Like I've said before, humans are herd animals. The tipping point leaders start in a direction that creates a stampede of the followers. The speed of that change of direction can be dizzying, -- which leaves a lot of investors in the dust.

I know there is always another good deal out there. It's a matter of looking for it hard enough.
I know that the market will turn toward the other direction in its own good time. We're always somewhere in that cycle time. I like to pay attention to where we are.
I know that the rule of the 3 D's is always in play. That rule is that someone out there somewhere must dump his assets fast and cheap due to Death, Divorce, or Debt. Think of how much Bill Gates must shell out in his split. I know people who came out only with the clothes on their backs. This rule is also how I know that debt will make you a dead duck as it works its evil magic. I always want to be on the right side of this heavy-duty rule.
I know cash talks and BS walks. Either you have the cash and/or the hard assets, or you don't. There's a lot of people walking around there that present themselves well when times are good. But when the chips are down, they are nothing but a pile of bills and a chain of poor-me stories.
Note: And boy toys don't do it. They don't count. When the markets turn ugly, and they will, those shiny boats, cars, mansions, and planes are a rock around your neck. And the cute little office bimbo is right there on the list with the other boy toys. All of these "shiny objects" cost you money and attention while you're trying to keep yourself financially afloat.
I know I must have Plan B through Z for that rainy day or banner day -- which will come. I have lots of grit and I thrive in any business climate or cycle.
Note: 2020, with the virus effect, was unexpected. BUT, since we've had a change of administrations in January, and this last business cycle was unusually long -- this current financial malaise was to be expected. A lot of the indicators have been out there for a long time languishing to pounce at this moment. I prepared for this current trend during the last 4 years by retiring debts and selling off everything I could. The world around me was buying and I was selling. I think it's entirely possible that this round of inflation is going to be followed by stagflation and then some deflation. The US government and the Feds have put themselves in a box canyon that's going to be hard to climb out of. The situation is strong enough that the inflation figures are going to spook some people. I don't share their fear, but I am carefully monitoring the market trends.
It's little things. I had to raise the price of the brownies in my candy vending machine last night. Their cost has gone up when I bought more this week. And I raised a few of my rents on my rentals this last month. I know there is too much money in the economy out there, so inflation is a natural result. But, overall, I'm doing just fine.
Does that help you? I've probably told you too much, but it what is on my mind right now...
 
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Girlfriend noticed prices of groceries going up last trip to the store. Cars are expensive as f*ck but that is other factors.

I think it’s primarily an effect of opening back up and running into supply problems, but inflation is still a concern.

Gives you more and more reasons to build a business. Prices go up, so do ours. We are doing business in today’s dollar, paying in today’s dollar, profiting in today’s dollar. Time to take out big loans lol.
 

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