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

[MJ DeMarco]

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.

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]

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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[PeterBoss]

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.



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.

 

[MJ DeMarco]

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.

 

[MJ DeMarco]

? 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

 

[WJK]

Because they include different goods, it is a weighted average. Check your country statistics office and their methodology. Sometimes they include odd things like locomotives other times their prices don't match what we see in our local grocery store....

Not saying it is 11% (I would say it is always double what the officals say, at least).

What is 'funny' though it is, what I would call 'deferred inflation' - all these empty FED dollars stuck into empty and meaningless 'investments' like paper gold certificates, bitcoins shitcoins etcc.....

The last time we had inflation like this, it was in the late 1970s. Early in 1980, we woke up one morning to mortgage interest rates going from 9.5% to 22%. Then they were 24%. The economic world stopped for a long time.

I owned two real estate offices with a partner. We closed one and sold the other one. No, we never got paid for the second one -- so both were a total loss.

The office we closed specialized in creating new housing tracts. We lost 2 years of projects that we had in progress. Our contractors lost their financing so none of them could close their escrows and/or build out the projects. It was a total loss of front-end expenses, time, energy, and potential profits for everyone involved.

So, I had to start over from scratch. It was heartbreaking. My biggest failure was that I never saw it coming. This time I was ready. The RE investors around me didn't see it barreling toward us like a freight train, but I did. Those experiences gave me the gift of vision.

 

[WJK]

Nice. Great to hear you turned it into wisdom I hope more people are like this

The best thing I can tell you is to watch the cycles. People are herd animals. They do everything in a stampede. When they are selling, I am buying. When they are buying, I am selling. Being contra to the trends has been one of my secret investment weapons. I don't try to perfectly time the market. I'm happy to be close to the peaks and valleys. Yes, there are times when I leave some money on the table by missing those pivotal moments. No reasonable person assumes that she can pinpoint that exact tipping point when the whole goes sideways. It's enough to recognize the trends and act on them.

I also believe that God blesses the girl who has her own... Leverage is good only during good times. When the market turns, those debt payments quickly sink the whole lifeboat. YOU MUST HAVE YOUR OWN LIQUID MONEY, IN YOUR HAND, AND READY TO WORK FOR YOU! I believe that doing a good deal out of pocket is better than doing a bunch of wonderful deals with borrowed funds. The markets change on a dime without notice or consideration for the hapless guy trying to finish up his deals. I like to sleep at night. I like to be safe rather than sorry.

Yes, by nature, I'm NOT impressed with owning a lot of stuff. If it has to be dusted, hand-washed, polished, loved, or kissed, I leave it at the store for someone who wants it more than I do. I don't have collections of precious items that cannot be used day to day. I gave those collections away years ago. I live simply with a few creature comforts. I'm a minimalist. Big fancy houses must be cleaned and maintained even after they are paid for. Ug! Leave me out of all of that. I tried retiring 20 years ago and it was totally boring. So, I spend my days doing my little RE deals and property management, and doing small acts of kindness for the people around me.

 

[MJ DeMarco]

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%.

 

[Envision]

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]

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.

 

[Walter Hay]

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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[MJ DeMarco]

My group health insurance costs went up 18% this year.
My personal insurance costs (auto, umbrella, etc.) went up 17% in one year.
My property taxes, 60% in 2 years.

Folks, when it comes to reality and what the Federal government, the Federal reserve, and the media is shoving down your throat, never believe them.

Truth is not on your TV or in some government report. It always sits right in front of your face.

 

[socaldude]

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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[WestCoast]

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.

 

[MJ DeMarco]

I know you talk about owning your home outright, owning some bonds and being clear of any debt ...but with this particular temperature of things have your thoughts shifted on anything?

I don't own my home outright, I put 66% down and took a loan at cheap money, 2.25%. I did that because of the inflation prognosis. Safe to say I got an interest rate perfectly picked at the rate bottom.

As for my temperature on things, I'm having solar panels installed on my home, inflation was a concern there. But overall, I'm a big believer in hard assets and things that can float with inflationary issues... that means business assets, rental real estate assets, and other tangible goods. Inflation was a big reason why I spent more on a home than I originally budgeted -- I needed to get out of cash. I'd rather have $5.5M in bricks, wood, drywall, and land, than $5.5M in a Federal Money Market. The utility of having cash VS having cash invested in something with daily utility is a no-brainer for me, especially as am at the back third of my life.

 

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[Anon05554]

This is pointing to a strong need for Fastlane agriculture businesses, in my opinion.

It's not new, it's not sexy, but farming is sorely needed, can be run profitably, uses a lot of advanced (and complicated) technology, and is grounds for seemingly endless more innovation!

Where are the farming entrepreneurs at?

One thing I am thankful for is my family's foresight when we chose to sink whatever coin we earned into buying land. Covid 19 and inflation have taught us that he who can feed his family at all times is wealthy indeed.

In Uganda,maize flour has tripled in price and so has the price of beans and groundnuts. The prolonged drought in the North Eastern region coupled with locust invasions have worsened the situation. People are dying like flies in the Karamoja region while the government is struggling to send them food relief.

I totally believe that Agriculture is the business to do based on CENTS, but few of us in developing countries can afford to do so because it calls for a lot of capital, which most of those who are willing to practice it have a hard time raising.

Personally, inflation is hurting my family mainly in the area of fuel($2 a litre). Otherwise, our beans, millet, fruits, bananas and potatoes are home grown and the surplus is fetching us previously unheard of prices.

For the first time, we have grossed 2143$ from coffee(remember my annual salary as a teacher is $2880!

I therefore agree with you that those who can should go the Agriculture way since there will always be need for food .

I have read posts from people on this forum complaining about the presence of weedkiller in some of the foods they eat. I have watched my family grow food organically for as long as I can remember.

Could the importation of organically grown foods from the third world become a fastlane business for a forum member? Just me asking in the hope of a partnership.

Good day members.

 

[Timmy C]

 

[MJ DeMarco]

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]

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.

1689 N Chimney Rock Rd, Heber, UT 84032 | Zillow

1689 N Chimney Rock Rd, Heber UT, is a Single Family home that contains 2820 sq ft and was built in 2020. The Zestimate for this Single Family is $4,196,000, which has increased by $225,894 in the last 30 days.The Rent Zestimate for this Single Family is $15,560/mo, which has increased by...

www.zillow.com

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.

 

[Vigilante]

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.

 

[MJ DeMarco]

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!

 

[MJ DeMarco]

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!

 

[GIlman]

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.

 

[MJ DeMarco]

But tHeRe'S nO iNfLaTiOn:

Yes, there is no inflation. Absolutely none.

See, here's a link to the Federal Reserve that proves it!

 

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[GuestUser4aMPs1]

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.

 

[MJ DeMarco]

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?

April Core Inflation Rises At Fastest Pace Since 1981; Dow Futures Tumble

Core inflation rose at the fastest pace since 1981, while headline CPI posted its fastest increase since 2009, BLS data indicated Wednesday.

www.thestreet.com

 

[Timmy C]

POWELL: POSSIBILITY INFLATION COULD BE QUITE LOW GOING FORWARD

 

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[theag]

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...

 

[Walter Hay]

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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[GIlman]

Ever notice whenever there are price changes for items you use, it is never at or near the stated inflation rate? But always double or triple?

Government: Inflation is 6%!
Me: Then why has X, Y, and Z gone up 18%?

The government numbers have been a lie since the 1980's. The problem is that the government started using inflation measurements to create a target, which results in the metric being manipulated so the number gives the target the government wants. This is called Goodhart's Law. Goodhart's law - Wikipedia

I do not personally pay any attention to official government data like the CPI, because the calculation is constantly being manipulated. Instead I use the shadow stats site which calculates current inflation and other parameters based on the historical methods from when these metrics were established.

Alternate Inflation Charts

www.shadowstats.com

Based on shadow stats, current inflation is about 17-18% if calculated using 1980's methods. This seems to be more in line with the real world experience that I am seeing.

Remember that inflation data is presented year over year, so since 2020 cumulative inflation is well over 25-30% according to shadow stats.

Another worrying thing to me, based on shadow stats, is that GDP has been negative since 2020. To me when I look at this there is a significant chance that this is the lead point of a prolonged financial depression. I sure hope not, but it's hard for me to look at the current state of the economy, true unemployment, and other factors and not see that we are on the precipice of something possibly on order of the great depression.

For the first time in my life, at the beginning of end of April I 100% devested from all my stocks at went 100% to cash, there is just too much risk in the market at the moment for me. I could easily miss out on some bump, but at least I'm protected on the downside which I think really is the bigger risk at the moment. I am still trading options and also dabbling in commodities futures cautiously (since this is new territory to me), but I'm able to play both directions of the market with options and can profit from inflation with commodity futures.

 

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