Inflation: How Bad Is This Going To Be?
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Apr 1, 2011 at 7:05am
I was born in '77 so I don't really remember the US's last bout of inflation. I would be interested to hear from Ricochet members who lived through the era what it was like? What sorts of things did you do to cushion the blow?
Related: wal-mart ceo expects inflation
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Re: Inflation: How Bad Is This Going To Be?
I'm living through inflation right now--not hyper-inflation, but more inflation, particularly food inflation, than is reflected in official Turkish government statistics--at least in my neighborhood; I don't want to claim that I'm going all over Turkey and sampling commodity-baskets.
And it is awful. What I earn is never enough. Every trip to the grocery store depresses me. I can't save. It's like having taxes go up every single day.
There may well be things sensible people can do to cushion the blow, but I haven't figured them out.
Oct '10
Re: Inflation: How Bad Is This Going To Be?
As a married couple with two children, there was little we could do except cut back and cut back and do whatever we could to make it. At the time our apartment building owner literally saved us from homelessness by being gracious even when we were four months behind on our rather modest rent payments. We even endured the humbling experience of having a vat of left over spaghetti from the church ladies luncheon, and a box with a thanksgiving meal, including the 15 pound turkey, left on our doorstep.
Welcome to the future. But, once you've been there, the second time won't seem as bad.
We learned to depend on God and His people, and know that being there wasn't so bad.
Feb '11
Re: Inflation: How Bad Is This Going To Be?
My husband and I bought our home in 1981, and we thought we were getting a great mortage rate at 11.75%. I remember trying to save money throughout 1980 (in preparation for the wedding, etc.), so I'd go without lunch (wouldn't even pack a lunch, but I would drink a cup of boullion), and I remember crying once because I had to throw some food out that had gone bad.
Aug '10
Re: Inflation: How Bad Is This Going To Be?
It will be very bad. The stock market will drop as interest rates rise to compensate for inflation. All confidence in our system will be lost. People have already forgotten about the Carter years. Before that there were the Nixon/Johnson years, and shocking mismanagement of the economy.
There was a time (the early '60's) when gold and silver backed up our currency, and it constrained the Federal Reserve; kept them from issuing worthless paper. It's criminal that we don't have that insurance anymore. You must invest your savings in gold, silver, and other hard assets to preserve your wealth.
Jun '10
Re: Inflation: How Bad Is This Going To Be?
Try starting building a house when mortgage rates were 11% (good in its day), but by closing they had rised to 13.75%. We made it somehow.
Inflation creates a huge disincentive to save--if the money is worth less tomorrow, spend today. This in turn has large consequences on capital formation.
Then, there's that little thing about the national debt. Think of the amount we'll be shelling out to service the debt when government bonds are issued at, say, 7% (as opposed to essential 0% today).
You get the picture and it's very, very ugly.
May '10
Re: Inflation: How Bad Is This Going To Be?
This is happening here, even at Walmart. It's depressing. And yet the Goverment says that there isn't inflation. Riiight and the sun doesn't come up everyday either.
Jul '10
Re: Inflation: How Bad Is This Going To Be?
Sweaters.
Re: Inflation: How Bad Is This Going To Be?
Fed official heckled: ‘I can’t eat an iPad’
May '10
Re: Inflation: How Bad Is This Going To Be?
We learned to depend on God and His people, and know that being there wasn't so bad. · Apr 1 at 5:19am
So it's a fait accompli. We should just accept the inevitable, move on and declare nothing to see here. That kind of attitude is not what made America great and I refuse to go down without a fight.
Feb '11
Re: Inflation: How Bad Is This Going To Be?
Well, the Chinese are rushing to buy soap...(I hope this link works!)
http://online.wsj.com/article/SB10001424052748704559904576230242184560216.html?KEYWORDS=china+inflation
Nov '10
Re: Inflation: How Bad Is This Going To Be?
It was surreal. Mortgages were 13% however, so were CDs. Isn't that bizarre? You got 13% per annum just letting your money sit in the bank. Contrast that with zero today.
Dec '10
Re: Inflation: How Bad Is This Going To Be?
If you really believe there will be inflation, the best thing to do is borrow lots of money at a low fixed rate. You will pay the money back with inflated dollars.
Jul '10
Re: Inflation: How Bad Is This Going To Be?
Peter "Winston" Orwell
We learned to depend on God and His people, and know that being there wasn't so bad. · Apr 1 at 5:19am
So it's a fait accompli. We should just accept the inevitable, move on and declare nothing to see here. That kind of attitude is not what made America great and I refuse to go down without a fight. · Apr 1 at 7:43am
I don't think anyone here is giving up but I believe we are going to have some rough times coming. I also don't think the Government is serious yet about doing what needs to be done to address our economic problems. If inflation is coming I don't want to be blindsided. I want to be ready to ride out the storm and thrive. I really value hearing the stories and experiences of people who lived through times like these before.
Feb '11
Re: Inflation: How Bad Is This Going To Be?
Some random thoughts:
If you're living on a paycheck, it's hard. Things are good if you're a speculator. The temptation will be for those living on a paycheck to become speculators. And that's when you know that the inflationary period is about to come to an end.
Commodities are great and the volatility in commodity markets are always a first sign of the inflation to come. We're there. One difference between then and now though is there are no price controls on gasoline.
The other thing to always remember about a non-hyper inflationary period is there probably will be an economic boom that follows after it.
Mar '11
Re: Inflation: How Bad Is This Going To Be?
I was a child in the 70's, and I learned about the firsthand effects of inflation directly. I was an absolute nut for comic books as a kid, and in a span of 5 years, I saw the price on them double. How many 8 year olds have you ever seen at a checkout counter complaining about inflation? That was me. "What? They've gone up another 5 cents???".
Hey, laugh, but that was a great example of how inflation eats your money to a kid.
Feb '11
Re: Inflation: How Bad Is This Going To Be?
I know you asked about US inflation, but it's also valuable to look at the experiences of other countries. One of the most vivid descriptions of the famous German inflation (circa 1922) was provided by Sebastian Haffner, then a teenager, in his memoir which I review here. Haffner believed that the inflation discredited age, savings, and experience in a way that destroyed to balance between generations and helped pave the way for Naziism.
I don't think we are going to see Weimar-level inflation, but even a return to 1970s-era inflation would have much worse social effects now than it did then due to the depth of other problems in the economy.
Oct '10
Re: Inflation: How Bad Is This Going To Be?
Peter "Winston" Orwell
We learned to depend on God and His people, and know that being there wasn't so bad. · Apr 1 at 5:19am
So it's a fait accompli. We should just accept the inevitable, move on and declare nothing to see here. That kind of attitude is not what made America great and I refuse to go down without a fight. · Apr 1 at 7:43am
I am surrendering to nothing except a realistic understanding of where we once were, and a recognition that we will survive. Inflation is entirely a government created problem, and I am no less in the fight because I understand that war is hard. Every soldier who has ever been shot at knows two things... he survived, and he never wants it to happen again. But he will still go into the next battle expecting to again survive.
Re: Inflation: How Bad Is This Going To Be?
I'd like to point out, E. Andy, that within the excellent USAToday piece you linked to, is this money quote:
That John Long guy sounds pretty smart, doesn't he?
Jun '10
Re: Inflation: How Bad Is This Going To Be?
Grandma and Grandpa sold their farm in Gainesville, Texas when they got too old to work it, but they kept the mineral rights which yielded a nice oil royalty for their retirement. Better than fixed income, right? When inflation increases prices, your oil royalties go up, right? But, if politicians decide to control oil prices and to impose a "windfall profits" tax then your production can get shut in as not worth pumping. I thought President Carter's first name was G-D, not Jimmy.
Jun '10
Re: Inflation: How Bad Is This Going To Be?
Robert, you need to have a grand latte with Foxman. He's the guy who borrowed your money from the bank.