sportchampps;1136706 wrote:Perception is reality

It's applying a historical average to a current reality. It's meaningless outside of economic textbooks.

Automatik;1136707 wrote:Yeah $10/gallon gas. That will happen. :rolleyes:

Why do people continue to take this guy seriously?

No one does.

Automatik;1136707 wrote:Yeah $10/gallon gas. That will happen. :rolleyes:

Why do people continue to take this guy seriously?

http://research.stlouisfed.org/fred2/series/BASE

I provide exhibit A. Increasing the monetary base and then expecting prices to stay stagnant is beyond ignorant. I realize this is above your intelligence level, so kindly STFU.

LJ;1136711 wrote:No one does.

Remember, he's actually a really cool guy in person and just does this for a laugh. :laugh:

sleeper;1136713 wrote:http://research.stlouisfed.org/fred2/series/BASE

I provide exhibit A. Increasing the monetary base and then expecting prices to stay stagnant is beyond ignorant. I realize this is above your intelligence level, so kindly STFU.

A lot of the inflationary pressure from increases in the money supply are being offset by other global deflationary forces. We have seen higher prices in products with lower labor costs and relatively fixed supply (i.e. oil, copper, etc). We've seen higher rents due mainly to increased demand despite low interest rates. We've seen lower prices on many other goods. We've seen lower prices on natural gas and, to some extent, electricity.

The average consumer is not seeing much inflation because aside from gasoline (which itself has been pretty volatile bouncing around a large range over the past half decade or so) there really isn't any, and if you own a home you have a literal windfall from historically low interest rates (that OTHER issue aside, which isn't a truly realized gain or loss until you exit the market via either downsizing or switching to renting). You can't look at a simple money supply curve any more because there are many other factors driving prices. One of the big components of inflation are wages, which have been basically flat and why we aren't seeing rising prices among goods and services because a major cost input is not moving.

You also need to consider the liquidity that's been pumped into the system since the bursting of the internet bubble. Since the financial crisis, leverage ratios are way down and reserve requirements also up, so there's been a tremendous draining of actual capital even while the fed is pumping in more cash trying to reflate things. That understanding is critical in discussing inflation, current or future, because the speed and multiplier of money matters in terms of how much buying power is actually sloshing around to cause inflation.

Say what you want about the calculation of CPI, but it's a consistent measure for years and years and comparable over decades. Yes, the bulk of the inflation has come in food and energy, which are excluded. But there simply is not massive inflation that is being hidden. There may be, and likely is, a bunch in the pipeline, but it simply hasn't really hit us. I don't think it's any real secret the fed would like to see 5-6% controlled & sustained inflation to boost wages and help restore housing prices to normative levels, not to mention helping inflate our way out of debt. Central banks, not just the Fed, have had a hell of a time battling just to keep inflation as high as a desired 2-3% the past decade or so.

Current gas prices is one of the main reasons why I just purchased a motorcycle.

gut;1136731 wrote:A lot of the inflationary pressure from increases in the money supply are being offset by other global deflationary forces. We have seen higher prices in products with lower labor costs and relatively fixed supply (i.e. oil, copper, etc). We've seen higher rents due mainly to increased demand despite low interest rates. We've seen lower prices on many other goods. We've seen lower prices on natural gas and, to some extent, electricity.

The average consumer is not seeing much inflation because aside from gasoline (which itself has been pretty volatile bouncing around a large range over the past half decade or so) there really isn't any, and if you own a home you have a literal windfall from historically low interest rates (that OTHER issue aside, which isn't a truly realized gain or loss until you exit the market via either downsizing or switching to renting). You can't look at a simple money supply curve any more because there are many other factors driving prices. One of the big components of inflation are wages, which have been basically flat and why we aren't seeing rising prices among goods and services because a major cost input is not moving.

You also need to consider the liquidity that's been pumped into the system since the bursting of the internet bubble. Since the financial crisis, leverage ratios are way down and reserve requirements also up, so there's been a tremendous draining of actual capital even while the fed is pumping in more cash trying to reflate things. That understanding is critical in discussing inflation, current or future, because the speed and multiplier of money matters in terms of how much buying power is actually sloshing around to cause inflation.

Say what you want about the calculation of CPI, but it's a consistent measure for years and years and comparable over decades. Yes, the bulk of the inflation has come in food and energy, which are excluded. But there simply is not massive inflation that is being hidden. There may be, and likely is, a bunch in the pipeline, but it simply hasn't really hit us. I don't think it's any real secret the fed would like to see 5-6% controlled & sustained inflation to boost wages and help restore housing prices to normative levels, not to mention helping inflate our way out of debt. Central banks, not just the Fed, have had a hell of a time battling just to keep inflation as high as a desired 2-3% the past decade or so.

Agreed. Especially with the bolded.

sleeper;1136736 wrote:Agreed. Especially with the bolded.

No to mention growing default risk. All you can do is attempt to hedge that risk by investing in commodities and foreign securities (non-dollar denominated), and to a lesser extent large multi-nationals with significant revenues from overseas.

But it's a tricky game - historically the markets have actually done well with inflation. But it's a different ballgame when you are talking about an ever weakening dollar. The only other play for the average person is buying a house, especially at these rates. If inflation takes off in the US and hits high single digits or worse, it would be awfully nice to have a 30-yr locked in at 4%. Hard to say what housing prices themselves do in that environment - mortgage rates doubling or tripling would not be good for prices, but higher wages would be. Regardless, in that scenario renters are going to feel some serious pain.

gut;1136749 wrote:No to mention growing default risk. All you can do is attempt to hedge that risk by investing in commodities and foreign securities (non-dollar denominated), and to a lesser extent large multi-nationals with significant revenues from overseas.

But it's a tricky game - historically the markets have actually done well with inflation. But it's a different ballgame when you are talking about an ever weakening dollar. The only other play for the average person is buying a house, especially at these rates. If inflation takes off in the US and hits high single digits or worse, it would be awfully nice to have a 30-yr locked in at 4%. Hard to say what housing prices themselves do in that environment - mortgage rates doubling or tripling would not be good for prices, but higher wages would be. Regardless, in that scenario renters are going to feel some serious pain.

All I buy is commodities and a few index funds. LJ wants to put all his money into US century bonds. What a buffoon!

sleeper;1136792 wrote:All I buy is commodities and a few index funds. LJ wants to put all his money into US century bonds. What a buffoon!

Where do you come up with this stupid shit?

sleeper;1136792 wrote:All I buy is commodities and a few index funds. LJ wants to put all his money into US century bonds. What a buffoon!

Oh, I'm almost strictly ETF index funds myself. Individual stock picking is really kind of a fool's game, but fine if someone enjoys that and knows some portfolio management basics. I find it challenging enough to identify sectors and countries/regions where I want to be overweighted.

Gas is going to keep going higher as long as refiners keep closing because they can't afford to compete with the vertically integrated oil companies in this country.

We have had a shit house full of refiners closing in this country which is really constricting supply, but with oil at $100+ there is not enough margin in 3rd party refining to be profitable.

The big oil companies can pull it out of the ground for a fraction of what it costs to buy on the market (if you are a mom and pop refiner), so they can make big money refining it. Not to mention it helps the books to make it look like you are earning less of a profit than you really are because you can "sell" it to your refining division at an inflated cost to keep your profit margin down. It is one of the slight of hand accounting tricks used by big oil companies to make it look like their profit margins are only 10% or so, instead of what they really are (much higher than a balance sheet will show in reality).

Gas prices can't/won't come down as long as supply is being constricted by refineries closing. Big oil will continue to drive mom and pop refiners (who don't pull the stuff out of the ground) out of business until only a few players are left, a trend that has been going on for a few decades now.

gut;1136806 wrote:Oh, I'm almost strictly ETF index funds myself. Individual stock picking is really kind of a fool's game, but fine if someone enjoys that and knows some portfolio management basics. I find it challenging enough to identify sectors and countries/regions where I want to be overweighted.

I've always said picking individual stocks is for the birds.

IggyPride00;1136814 wrote:It is one of the slight of hand accounting tricks used by big oil companies to make it look like their profit margins are only 10% or so, instead of what they really are (much higher than a balance sheet will show in reality).

Not really. Either they show the profit on drilling or they show it on refining, but the bottom-line to the parent is the same. Also, it seems perhaps you are confusing profit margin with other profitability measure such as ROE and ROA.

Woohoo, down 1 cent to 3.76!

Sam's Club in Toledo this morning....$3.67

$3.99 all over Gahanna and Easton this morning

It has been $3.76 here in Findlay for a couple weeks now.

$0.76 near me

Bought gas this morning at $3.67. Went up to $3.99 at most of the stations around here....it is Thursday.

dlazz;1137403 wrote:$0.76 near me

Where's that, Pleasantville?

vball10set;1137439 wrote:Where's that, Pleasantville?

He's in Cupertino because he's mega-super-fist-in-the-ass gay for Macs.

Fab1b;1135789 wrote:Personally I don't care what any expert says or anything, I think the price of oil is a straight sham to keep the people poor, and class lines where they want them, etc......its not the whole piece but a piece of that!

This is a joke, right?