Uggh, the news, I wonder if we all just stopped buying stuff then the fed would cut rates?

[LuvOrlando]

I'm gonna cut to the chase and just wave farewell to this thought at it's creation...

I don't think the prices are inflation from too much money in the system increasing scarcity, there is no scarcity in it's truest sense like people in State A have too much money so they are buying up all the corn so there is less corn thereby making corn more expensive -that is not what is happening.

I do think we have a bunch of businesses who are exploiting a lack of competition so there is gouging, but even if it was inflation the dynamic is off. We don't really make anything we use so a sudden drop in demand and surplus in supply still wouldn't hurt the US workers, people in other countries would get a kick due to any manifesting surplus but here would not like it used to be - nothing is like it used to be. For it to be a cause and effect the circle needs to be small, the circle is waaaaay too big now and there is leak everywhere.

No judgement, I do think we have about a half million new people out in US markets taking up housing and buying stuff but the way measurements are designed all this is attributed back to everyday population, which just isn't true. I do not think American's are having a rally that needs to be curtailed, which is the function of interest rates being high, rates go up so people spend less. I do think the system and its checkpoints are NOT equipped to account for massive influxes of outside consumers with expenditures being drawn from outside the economy, meaning public money is doing the buying for all the influx so ALL the system readings are entirely out of whack. I do think there needs to be a change in the measurements used and how they are used and how they are defined, it is all too muddy right now.

I wonder if we all stopped buying more than necessities, if the fed would stop acting like we are all partying, no-one is partying right now, we still need growth.

 

[MyDogTink]

Excellent write-up, especially about the amount of government /publuc spending. I find it interesting that banks (I’ve seen two) cut interest rates in HYSAs claiming the Fed anticipates cutting interest rates. Market and inflation news says otherwise.

 

[LuvOrlando]

Excellent write-up, especially about the amount of government /publuc spending. I find it interesting that banks (I’ve seen two) cut interest rates in HYSAs claiming the Fed anticipates cutting interest rates. Market and inflation news says otherwise.

I think banks struggling after the crisis last year jumped the gun and went too far with yanking up interest rates in an effort to capture profits.

 

[longboard55]

I just do not think we will ever reach 2% again. We had very low inflation for a long time with a full labor pool, lowering costs by sending manufacturing to overseas, big box retail, amazon and the big one companies saving trillions by switching to computerized book keeping and administrative tasks. Those days are over, what is new that will lower costs other than putting people out of work. No one will be working for a 2% raise a year, those days are done.

 

[MICKIMINI]

If rates would drop, people would take new jobs, move, buy new homes, furniture etc and contractors would be busy again. Perhaps young couples would start having babies who will grow up and pay into social security. So much of a vibrant economy depends on interest rates. Moderate rates at even 5% or so would facilitate growth. We are being held back artificially IMO. Each day wasted "waiting" over a lifetime of hard work and desire to move forward compounds and cannot be recovered for most.

Remember the banking crisis? Many people lost equity in their homes by being foreclosed and never recovered. Many started over from scratch losing decades of hard earned equity and only partly recovered. Different situation but taxpayers lose again and again...

 

[sam_gordon]

Isn't this sort of like the "no one buy gas on <insert date>. That will show Big Oil who's in control and they'll lower prices!"?

Sorry, OP, I want to spend extra money and enjoy life. Just buying "necessities" isn't going to cut it. And who gets to decide what's "necessary"? Heck, water is necessary, soda, coffee, and alcohol isn't NEEDED. I'm sure others will disagree with that.

There's a lot that goes into pricing, supply and demand and greed would be the big ones.

 

[LuvOrlando]

I just do not think we will ever reach 2% again. We had very low inflation for a long time with a full labor pool, lowering costs by sending manufacturing to overseas, big box retail, amazon and the big one companies saving trillions by switching to computerized book keeping and administrative tasks. Those days are over, what is new that will lower costs other than putting people out of work. No one will be working for a 2% raise a year, those days are done.

But if we go back a few steps hat 2% happened because the US was like a breath from gone after the banking collapse in 08, the whole country was on life support and that became a good thing. Like the whole country was in a coma, we start to wake up and some seem to want us back in a coma, it is bananas

Did you know that 2% goal is absurdly based out of data from New Zealand, a place fraction of the population and nothing at all like the US? I keep wondering why that whole thing stuck, and how it became some sort of standard - it is just silly to me, like just how?

I think the big boxes and automation have been and will be disruptive but it doesn't seem sustainable. At some point the travel costs will become too much and things will stop being instant and people will revert to in person. I am so annoyed at all the stuff that shows up broken or not as described , someone is paying for it to be taken back and the boxes and the delivery fees, gotta just be some kind of an experiment. Best guess is eventually some people will just accumulate things and sell to friends and so we'll go back to flea markets and then corner stores

Andy Griffith Show I think

 

[LuvOrlando]

If rates would drop, people would take new jobs, move, buy new homes, furniture etc and contractors would be busy again. Perhaps young couples would start having babies who will grow up and pay into social security. So much of a vibrant economy depends on interest rates. Moderate rates at even 5% or so would facilitate growth. We are being held back artificially IMO. Each day wasted "waiting" over a lifetime of hard work and desire to move forward compounds and cannot be recovered for most.

Remember the banking crisis? Many people lost equity in their homes by being foreclosed and never recovered. Many started over from scratch losing decades of hard earned equity and only partly recovered. Different situation but taxpayers lose again and again...

I agree with you, the US should be bubbling with life and energy.

 

[LuvOrlando]

Seems an odd choice

https://www.reuters.com/markets/mouse-that-roared-new-zealand-worlds-2-inflation-target-2023-01-30/

From the article,

"
"It was a bit of a shock to everyone, I think," said Roger Douglas, the Labour Party finance minister at the time who worked with the Treasury and Reserve Bank of New Zealand (RBNZ) to pioneer the policy. "I just announced it was gonna be 2%, and it sort of stuck."
"

 

[MICKIMINI]

We did our part and built a new home last year!

 

[longboard55]

Inflation is not high, it is 3.5%, that is what it is. Its not moving. What we do have is a massive housing shortage which is not being helped by high mortgage and borrowing costs

 

[Cogswel_Cogs]

Pretty sure that wouldn't help.

 

[3rd_time_the_charm]

I feel weird. Just took a much higher paying job that was newly created. We are buying a bigger home. We survived the 2005 crash even taking a hit on selling our home in 2008. Maybe we are lucky, but any issue/recession in the past 20 years just passed us buy. Thankfully and grateful.

 

[barkley]

contractors would be busy again

there are places where they are not in the u.s.? around us there's a minimum 1 year wait to get on a calendar for a planned build project or home reno. urgent repairs or rebuilds might get you at least started more quickly if your homeowner's insurance company has a few local companies on retainer (but it does'nt guarantee the full job will be finished any faster). i know we are not alone in this judging by the number of dis'rs that have posted about wanting to do stuff to their homes, having cash in hand but finding no professionals available.

Remember the banking crisis? Many people lost equity in their homes by being foreclosed and never recovered. Many started over from scratch losing decades of hard earned equity and only partly recovered.

there were many factors that contributed to the banking crisis but the housing market was unrealistic at the time and some consumers were also taking out unrealistic mortgages that they in no way, shape or form could afford. there was no way on god's green earth that the area we then lived in should have had our home values double in 4 years and triple by year 6 but the values were driven up by consumers who were willing to gamble that they could pay very little on loans for a handfull of years and somehow some miracle would occur that would elevate their incomes when they had to start paying at a higher rate, a balloon payment or something other than just the interest. the lenders were predatory but no one held a gun to any consumer's head to purchase a home they KNEW they could not afford.

 

[Cannot_Wait_4Disney]

If everyone stopped buying things, we'd be in a recession. That's far worse than a little inflation.

 

[MICKIMINI]

there are places where they are not in the u.s.? around us there's a minimum 1 year wait to get on a calendar for a planned build project or home reno. urgent repairs or rebuilds might get you at least started more quickly if your homeowner's insurance company has a few local companies on retainer (but it does'nt guarantee the full job will be finished any faster). i know we are not alone in this judging by the number of dis'rs that have posted about wanting to do stuff to their homes, having cash in hand but finding no professionals available.


there were many factors that contributed to the banking crisis but the housing market was unrealistic at the time and some consumers were also taking out unrealistic mortgages that they in no way, shape or form could afford. there was no way on god's green earth that the area we then lived in should have had our home values double in 4 years and triple by year 6 but the values were driven up by consumers who were willing to gamble that they could pay very little on loans for a handfull of years and somehow some miracle would occur that would elevate their when they had to start paying at a higher rate, a balloon payment or something other than just the interest. the lenders were predatory but no one held a gun to any consumer's head to purchase a home they KNEW they could not afford.

#1 We bought gutters for our home a week ago. 15K and a national firm. They would come the next day! We scheduled for next week. They can not be that busy, just saying...

#2 In NH back in the 2000's there were many good paying manufacturing jobs that went overseas. Our neighbors, nor my husband or I were expecting entire plants to close. Many of them high tech. NH is not a big state, so any manufacturing plant is a huge loss, not to mention the ripple effect. People took any job they could get and skilled workers were bagging groceries to make ends meet. I saw hard working people lose their homes and they were devastated.

Have some mercy, please. It was a crisis and different situations played out in different areas. Final word from me with all due respect.

 

[LuvOrlando]

Pretty sure that wouldn't help.

I think I was kidding

 

[NFLDERS]

This Canadian isn't buying it! IMHO Corporate Greed is the issue. They want to keep their Shareholders excessively happy. Our Grocers, Banks, well..

 

[Christine]

If rates would drop, people would take new jobs, move, buy new homes, furniture etc and contractors would be busy again. Perhaps young couples would start having babies who will grow up and pay into social security. So much of a vibrant economy depends on interest rates. Moderate rates at even 5% or so would facilitate growth. We are being held back artificially IMO. Each day wasted "waiting" over a lifetime of hard work and desire to move forward compounds and cannot be recovered for most.

I disagree. We had high rates for YEARS. My first home was bought at 13% interest, I refinanced at 8%. Current home bought at 8% and I refinanced to 2%. I spent most of my adult life at an interest rate that would burn your eyeballs out. We still had kids, we bought homes, we spent money.

The job market right now is CRUSHING it. But we have a serious housing shortage in most areas which are driving up prices, which are hurting younger people starting out. We have certain sectors that seem to be gouging prices. Insurance rates are up and outpatient medical services are up. Food prices actually dropped this month. Day care costs are out of control. Education costs are out of control. I don't know what is fueling all that--shortage in daycare workers for sure. This all impacts people doing anything.

Furniture and contractors have just been hard to get since 2020. Where I live there are long waits for anything.

 

[MillauFr]

Current interest rates are high compared to the last 20 years. Compared to the last 100 years they are normal if not slightly below normal.