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

[Kak]

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]

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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[Kak]

“No one that makes over 400k will get a tax hike.”

Proceeds to make 400k as valuable as 75k was previously.

 

[MJ DeMarco]

The new mainstream dog-whistling narrative is "transitory"... kinda like "10 days to slow the spread" which is now approaching 2 years.

 

[WJK]

@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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[Johnny boy]

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.

 

[MJ DeMarco]

Good news here...

Lumber Prices Are Falling Fast, Turning Hoarders Into Sellers

Prices have dropped from record highs spurred by the economic reopening, potentially pointing to an eventual return to normalcy.

www.wsj.com

 

[MJ DeMarco]

Bought this 3 years ago, if I remember correctly I paid $26,000 plus tax license etc.



The dealer just offered to buy it from me at more than I paid.

So I used it for 3 years for FREE, and actually "made" money? Ain't inflation wonderful?

PS: No, I'm not selling it!

 

[GIlman]

Kind of . I am talking about index funds like VTSAX or S&P500, not individual stocks or small funds. Past performance can't guarantee future performance but data of 100+ years is as good a guarantee as you are gonna get. It's at minimum no less of a guarantee than predicting real estate either. Every single boom and bust there are people that say its different this time. To their credit, IT IS different every time, but it always ends the same. A boom that goes for an unpredictable length of time, then a bust, which is followed by a boom again. Human ingenuity continues and the economy rebounds and grows. The next best thing to owning a business is having a steak in others businesses! As long as your time horizon is decades and you don't need your investment money tomorrow, history shows that it doesn't matter what the market is doing. Even putting in money at the worst times in history (lets say bottom of great depression) leads to a positive portfolio in real terms 10 years later and a spectacular one decades later. If the stock market doesn't keep growing over the long term, we have much more serious issues and your real estate bet aint worth it's weight either.

Volatility is high, but volatility doesn't mean risk in actual loss. Just temporary fluctuations. The key is only to use money that you don't need to touch for 10 years or longer (or have a calculated withdrawal plan ahead of time). If you can't stomach temporary low's then the market isn't for you. But then I have no idea what you can do with your money to prevent it being eaten alive by inflation. Real estate also comes with risks and volatility. Wait till the idiots in charge decide rent control everywhere is great or the CDC declarers a public health emergency on poverty and does another eviction moratorium lol

Historically the stock market has done very well, I’m skeptical that it can show returns like it has in the past very long into the future. Given current economic conditions we could easily enter a depression and stocks can be depressed for decades.

Here is why, prior to 2000, if companies were unprofitable they failed. When this happened significantly in the market there was a recession where bad companies went out of business and their assets and book of business was bought by a good company. In 2000 during the dot com bust the fed swooped in lowering rates and bailed out lots of companies.

Again in 2008 the fed jumped in, pumped the maker full of cash, and propped up the market.

This resulted in a bunch of zombie companies, that did not have profits that survived on debt accumulation.

In 2020 this process accelerated and now about 1/5 publicly traded companies are zombie companies that exist because the fed is buying corporate bonds and injecting basically free (near zero interest) into the market. These companies would go bankrupt without government cash infusion. The total debt load is around $3 trillion dollars.

There is also a massive amount of leverage in the stock market, cryptos, and paper commodity markets.

With all of these factors in play, one prick could bring pain in the markets like we have never seen before. The fed has been burning up it’s available tools, so we are on a much bigger cliff than we were in 2000, and then in 2008.

On top of this we are experiencing rapid inflation, and the only way to fight inflation is dramatic increases in interest and to slow the velocity that money is turning over.

But there is the run, killing inflation will cause conditions where leveraged positions have margin calls. Zombie companies won’t be able to borrow money at near zero interest to float operations.

The fed has but 2 real options left in the next crisis, negative interest rates where you actually pay companies to borrow money, and direct stock purchases to prop up stock prices. Everything else is already deployed.

It’s impossible to predict when the pin will prick the bubble, bubbles can go on much longer than one would expect, but when it pops there is ample fuel to drive the market into a full on depression.

Right now my portfolio is heavy in land, commodities, and highly profitable, high dividend paying stocks that are super boring but have no real completion and are difficult to compete with. These companies may lose stock price value, but so long as they are able to continue returning dividends, it’s better than following a stock down hoping it will rebound as the only way to recoup some capital for reinvestment.

I also have a fair bit, maybe 30% in cash. When the markets do crash, whenever that is, I want capital to work with if rare opportunities present. Yes cash has inflation risk, but if the markets do tumble it gives me options without liquidating assets I’m a fire sale to try and but something else.

One interesting commodity play, is gold streaming and royalty companies. Read up on these to understand why they will be hugely profitable if gold sees an outsized rise in price.

Remember, wealth does not evaporate, it just shifts between different classes of assets. Money is just a medium of exchange for purchase, it has no REAL value, wealth is control of assets.

 

[MTF]

A German woman burning tons of legal paper money during the hyperinflation of German currency in the 1920s. The paper money was cheaper than wood or coal, and families used it to fuel their fires during the crisis.



A woman uses banknotes to light her stove. 1923.



“The King of Inflation”, a man clad in worthless coins. 1923.



Currency became worthless with kids using it like Lego bricks.

I know it's easy to look at it today and think that it's just some archaic funny currency but these people, a few years prior to these pictures, looked at this piece of paper the same way as we do today at US dollars, euros, etc. It's mind-blowing.

All from Rare Historical Photos

 

[GIlman]

Looking at the news today, I wonder if the new VX mandates will be the accelerant that triggers out of control hyperinflation in the US.

If we look at the labor issues right now, it’s causing low supply issues all over. Businesses are responding by raising wages & at the same time raising prices.

In the medical field we are seeing terrible labor shortages. I am seeing nursing and technologist positions listed for $7,000 a weeks to get people from other states to travel onsite. To put that in perspective, that’s more money than a significant proportion of physicians currently make.

I believe this is significantly due to medical personal quitting or being fired for not getting VX’d. I have heard from a lot of people in different fields that plan to get fired instead of taking the V. For instance in Houston one hospital fired 150 people for refusing the VX, that’s a huge number of staff for a hospital system all at once.

https://abcnews.go.com/Health/wireS...orkers-fired-resign-C0VlD-19-vaccine-78430061

The narrative on TV is that nurses are overworked from CVD and burnt out. From my experience and talking to nurses and techs this is not true. I’ve spoken to no one that intends to leave because of workload, I know dozens of people that intend to leave if forced to get the Vx.

Certainly some un-v’d people will comply, but if the current situation in the medical field holds for other industries, we are looking at a significant reduction in the already struggling labor market. If this happens, businesses will either close down further restricting supply of goods or dramatically increase wages to compete for the decreasing limited pool of labor and will be forced to jack up prices to offset their costs.

If these things happen, and there is a significant chance they will…expect hyperinflation like we have never seen before.

Never underestimate the governments incompetence or ability to screw things up

 

[biophase]

What is the reason for this? Several years ago, there was a glut of supply of cargo containers. I remember hearing that a bunch of them were dormant. Are they no longer operating? Fuel cost is definitely higher, but has it really quadrupled?

I think a whole bunch of things that all added up together. The shut down during the pandemic, the increased shipping with everybody trying to get back their inventory to a normal amount.

People are talking about containers going even higher up to $40,000. If you do a Google search on container prices you will see many articles about people talking about raising their consumer goods prices.

I think many companies have been absorbing these costs hoping that they would go down but I feel that they can’t keep doing it

There are many companies that have basically shut down, and not will not ship anything over from China until the prices become lower because they can’t make any money.

I think we will see shortages on many consumer goods in the next six months which will cause their prices to go up in addition to the shipping price is going up. So we could see huge price increases.

I mean if you imagine I was selling a $50 dog bed last year with a $5 shipping cost, and this year it’s a $20 shipping cost. I would have to sell that same dog bed at $65 to make the same amount of profit that I made last year. Or I could’ve made the choice to not order any dog beds this year.

So imagine that I am one of the companies that decided to import the dog beds. And now my shipping cost is higher plus there is a shortage of dog beds because other companies decided not to import them. What is this dog bed worth now to people who want them? $100?

 

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[MJ DeMarco]

I would buy the hardcover as a collectors item, like vinyl.
Then a 39.95 or higher price would be very okay. I don’t know if there is a market for this, but TMF is a classic that changed many lifes.

Maybe you could do something special with the cover design and marketing? And maybe make it extra special with a goodie? In those dvd collectors boxes they added making-of material and special interviews. Then you can really higher the price.

Yes, I might have all hardbacks in black cloth with gold lettering, all copies signed. Very minimalistic, perhaps limited edition.

 

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[GIlman]

If 40% of all USD was printed this year, why would inflation be more than 40%?

Inflation is impacted by two primary things. The quantity of liquid capital in the market, and the velocity of money. It is the velocity that you really have to watch. What is velocity, it is how quickly money changes hands.

As inflation increases, people start to lose faith in the ability of the fiat to store their "value" over time. When this happens, people start spending money quicker and quicker when they receive it. If you study history, such as the Weimar republic, you find things such as workers demanding to be paid daily because the money would lose too much day to day. You find people when they went out to eat would insist on paying before they were served because the prices could and would increase during the duration of their dinner. These are examples of extreme velocity, when money becomes a hot potato and literally people try to spend it as quickly as they receive it.

If this happens, then inflation from a 40% increase of money can be almost unlimited bounded by the ever increasing velocity that money takes on as peoples faith in it holding value evaporates.

This is the tipping point event to watch, look at the sentiment of people holding money. As you see that sentiment get worse and worse you would see inflation accelerate, which can be to unimaginable levels. Again looking at the Weimar republic, they say that all of the money in circulation at the before the inflation was not enough to purchase something basic (I don't remember what it was but say a sandwich or a radio, some common object) at the end of the inflation.



Am I claiming this will happen in the US, no, but it very well could and there are many other examples of this in history. So yes it's something to be aware of and it's smart to invest at least a portion of your net worth in hard assets that will go up significantly during a hyperinflation.

 

[Kak]

 

[JordanK]

I think in Europe especially people's reactions to this whole crisis are dependent on how their parents generation lived.

For example, in the 1980's Ireland was the "poor man" of Western Europe. My mothers house didn't even have central heating and the bathroom was an outhouse. Someone like me who was born in the late nineties has known nothing but good times really (2008 was tough but not on a societal level) but there is still that thankfulness instilled in much of the population. Both the parents who grew up in a poor society who live in a developed one now and the kids like myself who are grateful to have opportunities that our parents didn't.

Compare and contrast that to places like the UK, France and Italy. All of which have seen massive rises in populism on both the left and the right over the last 10 years. In these countries the grandparents built the place, the parents benefited from the good times and people over the last 20-25 years feel like things are slowly getting worse. Elderly people are seeing their purchasing power diminish and younger people don't have as easy opportunity as their parents.

It'll sure be interesting to see how it all plays out.

 

[MJ DeMarco]

I'd love to hear more about the whole "measured properly" piece there. What is that referring to?

Alternate Inflation Charts

www.shadowstats.com

Suggests that real inflation is more like 15-19%, which IMO, is more reflective of the reality on the ground. Every price increase I encounter is not 6%, it's 15-20%.

 

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[MJ DeMarco]

Inflation is getting under control right?

If you believe that, I have a $12 peanut butter and jelly sandwich to sell you.

 

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[GPM]

The Canadian prime minister just announced that he is going to fight food inflation at the grocery store level by..... drum roll please.... instituting new taxes.

 

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[RadicalShift]

through a reputed ETF or is physical really the best option for gold and silver?

If you plan on holding Gold or Silver, PHYSICAL ONLY! Anything else is fantasy because you own NOTHING! It's akin to holding Cryptocurrencies on Robinhood or Webull (i.e. you don't "hold" anything).

 

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[RadicalShift]

Got it - but in your opinion would something like this MNT.TO also qualify as 'physical' where you own an 'exchange traded receipt' - Canadian Gold Reserves - Canadian Silver Reserves - Royal Canadian Mint | Réserve d'or canadienne - Réserve d'argent canadienne - Monnaie royale canadienne ?

My only concern with holding physical gold / silver is the risk of a black swan event of a break-in or such - guess I could get a bank safe deposit box as well though.

If you can't hold it in your hands, you don't own it. I wouldn't trust this or any other ETF that "acts" as a custodian/holder of your metals.


And I wouldn't trust any bank safety deposit boxes whatsoever! In a SHTF scenario, they could easily raid the boxes and leave IOU's for their "funny money". Safety deposit boxes aren't so safe.

Get a safe.

 

[GuestUser4aMPs1]

You know...I really, really hope we're wrong about the hyperinflation narrative.

Not because I'm being naive, but because it would be very bad for a lot of people.

I have my own SHTF holdings in Metals, Crypto and a basket of Foreign Currencies so I'm less exposed to downside, but I'm not looking to get rich off a collapse and won't bet on a dollar crash for at least another 8-10 years.

I think prices can get wonky in the short term that's eventually corrected, but due to the USA's reserve currency status, I don't think we'll see Venezuela-style hyperinflation until an extreme, cataclysmic event shifts global power in its wake.

The reason being is that there's still a lot of dollars held in foreign central banks. So, I'd be more worried about hyperinflation if/when the USD loses its reserve status against a competing Yuan or (maybe) Crypto — At which point, lots of dollars stacked in foreign central banks will flood back into the USA and crash the value of the USD. But again, it'd take another extreme event for that to happen.

tl;dr Nobody knows what will happen, and I won't dwell on it. There's a lot of fear-mongering to go around. But it doesn't hurt to understand history and hold a little bit of SHTF assets ¯\_(ツ)_/¯

 

[Kak]

April core inflation the highest since 1981, THIRTY 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

That’s actually 40 years.

Not to be some corrective douche, but it proves your point even further.

 

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[PizzaOnTheRoof]

I just want to say, for those of us who don’t own any large amount of assets or are otherwise broke AF...

The Fastlane is more important now than ever...

 

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[MJ DeMarco]

Edit -- and Biden extended the eviction moratorium yesterday without extended the moratorium on foreclosures -- which means that property owners cannot evict tenants but they can be foreclosed on for not making their payments. Go figure.

Ah yes, another systematic tool for "wealth redistribution" -- take from those evil rich people, and give it to those poor folks down on their luck who can't afford the newest iPhone and the latest X-Box release.

 

[GIlman]

It seems people have a gross misunderstanding of previous metals. The whole point of precious metals is preservation of purchasing power. Gold may rise and fall within a range but over time the relative purchasing power of gold remains relatively the same. As such you should think of Gold as money, it is not really an investment because there is no return on capital. It is the capital reserve asset itself.

As such, anyone who has previous metals could easily convert a coin into cash at the going rate and then spend that cash on what ever items they wanted. That’s of course assuming the fiat system is intact but inflation has ran rampant. If the fiat system is not intact then precious metals would be the default form of money. The only other alternative would be direct barter of goods.

To me the purpose of gold is maintaining purchasing power and an escape hatch if needed. If things ever got so bad that people were bartering in precious metals, I would want to be long gone and somewhere else. Any gold purchases are made and held in other countries, Singapore and Switzerland are two of the safest at the moment.

The purpose to me is if shit hits the fan, so long as I can get out I can find a place and rebuild - any precious metals I have are safe and waiting for me in a different country. Or if hyperinflation strikes I have some preserved purchasing power without selling other assets in a fire sale. If gold were to be crazy high and other assets crazy low, then you have the option to buy on the cheap.

But like everything, I would never be 100% in any one asset. Start a small reserve and then add a little every month, quarter, or year. It’s a good idea to diversify across a couple 3 countries too. 3 years ago I would have had stuff at the Perth mint vaults, now no way in hell.

I don’t think of gold as an investment, it’s more like an insurance policy against hyperinflation or SHTF. Many people will see gold as stupid, until the moment that they don’t, which is usually the point in time that it’s impossible or ridiculously expensive to buy.

 

[MJ DeMarco]

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.

This type of story is a true reflection of what is really going on. A shopkeeper would know the domain details that you won't hear on the news. Believe me, my grocery trip always has the same type of items bought weekly ... I'm guessing in the last 2 years that "basket" of usual goods has gone up 20% for me. I honestly don't know how wage-earners are keeping pace...

 

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[DoingDeals]

You down with CCP? Yeah, you know me.

In all seriousness we should flip the script & start manufacturing things to sell China. Can you imagine everything saying "made in the USA" stamped on all of their products? Switching from a consumer nation to producing, one of the founding principles in The Millionaire Fastlane . This could be an opportunity.

 

[JunkBoxJoey_JBJ]

I read a book back in the future called the Billionaire Fastlane

 

[MJ DeMarco]

As some of you know, I like cheap cigars, namely Swisher Sweets. In the last 6 months, I've had a terrible time finding them. Even the online cigar shops have them backordered.

I recently moved and need to buy furniture. Looks like I'll have to enjoy this new home without furniture -- everything is backordered 3-5 months.

Went to look for some stereo speakers.... same outcome: backordered.

Not only are prices going up, but stuff that was once easily purchased has become impossible to buy. I want to spend, but cannot.

 

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