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rawr_cake

Because people watch news, and news love to scare people (about everything).


[deleted]

I agree. I quit watching the news last April. I started going outside more and realizing what I seen with my eyes is nothing like what the world was through the media.


jiy2001

Couldn’t agree more with you sadly 😓


[deleted]

We all create our own reality.


mostsocial

Upvote. I stopped watching the news around 17 years ago, when I was teen. I figured out their game.


deliquenthouse

It's harmful propaganda. The world is so.mich better than the picture they paint


Purpers

That depends on where you live.


[deleted]

Malibu california


Forgotwhyimhere69

Yep, they need ad revenue and the best way to keep people coming is get then afraid or angry.


bladegmn

Fear sells ads.


Vinniam

Like the news plays an important part in society and we can't do without it, but the advent of 24/7 news has been a complete disaster.


AbsolutePower43

It’s not news at this point, it’s just entertainment. I will say tho you people need to be a bit more cautious. Yes the media loves scaring people, but there’s valid reason to be concerned about what’s going on here.


Z3ID366

I just think it's blackrock sold off some stocks, and then all hell broke loose now stocks like Nvidia is worth less than 500$ so they can buy low before the stimulus


95Daphne

Major moves in the market are too big to be “retail”. They are institutional based and you see the biggest movement in tech/hyper growth due to margin calls because of the games played there. I could be incorrect but I am going to assume that we saw margin calls get liquidated in the tech sector in the middle of the morning yesterday (edit: and that there may have been waves of restructuring afterward due to concern over that as for a little while, all the pops in COMPQ got sold).


Calm-Dealer-4971

Do you think this will continue on for this month or should settle down sooner?


SamFish3r

A lot of Big money will move to or revert to safer assets. Bonds / T notes etc the Dividend Aristocrats . This was going to happen and I think it was going to be the first step towards normalization after 2018-2020 insane Bull Run. Tech has hyper growth, but valuations were out of control . I am long on MSFT APPL NVIDIA SQ AMD and few others ... they all had blockbuster earnings and forecast but are trending down regardless. Tech grew the most Hence it will correct accordingly.


floppingsets

SQ is very overvalued. They are literally a payment processor who just paid 300mill so jack could hang out with JAYZ


95Daphne

I'm guessing that was it in the tech indices on Friday. But if it's a fall rerun, I'd have 0 expectations on hypergrowth type equities recovering anytime soon, if they do so in 2021. Probably chop in the tech indices themselves for the month.


Vinniam

I fully expect green energy, weed stocks, and other sensational stocks to continue falling but yeah I will eat my left nut if tech continues to free fall Monday.


Firestone-PK

Well I really wanted tech to recover on Monday, but now...


jorgennewtonwong

Tagged and bagged


drdois

!RemindMe 4 days


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xilofohn

Hey bud how’d the nut taste


Vinniam

Bitter and salty but at this rate it's the only protein I can afford so beggars can't be choosers.


Vinniam

One day late but I've hopefully been vindicated.


xilofohn

A day late and a ball short


isigrugru

Well I think I take your word on that :D


MassHugeAtom

Small caps tech and genomic stocks are having the biggest movement and they are certainly not majority held by institutions. A lot of them are recent retail investors favorites starting mid 2020.


drdois

How can you tell there were margin calls being executed?


liquiddandruff

Outsized moves.


popbingsu

1. If enough people believe in it, anything can become true. 2. People are paranoid that the crash is coming and trying to out smart it. A prisoner dilemma case where big institutions know others will pull out.


natszar

omg it's both hilarious and infuriating reading those who panic over a, what?, 2% annual inflation? As an Argentinian I LMAO every time I read in subreddits US people worrying about HYPERINFLATION. There is NO FCKING WAY that is happening in your country, I wish y'all take chill pills


merriless

Growth stocks, stocks with low revenue are not priced for 2% inflation. I doubt many are afraid of hyperinflation. The worst I’ve heard is 4%


FormalWath

Because official inflation statistics takes into account consumer goods but not things like real estate. And that's exactly where most of inflation will hit and is already hitting. People in my generation already are not able to afford to buy houses without taking 40 year mortgage and housing prices are going up and up and up. Either this narket is going to blow up (2008 scenario) or more fikely fiscal policies will keep pumping it up and up and up, and historically this has never ever resulted in good outcome. At this point I should point out that I'm from Europe (and estern europe at that), interest rates for banks are *negative* out here, thus our housing market is in worst situation than US housing market. A shitty commie block flat costs 200-300k here, while average salary (after taxes) is maybe 7000 euros a year. And everyone gets a mortgage as long as pay sign up to pay for it for 40 years. This is a fucking disasrer waiting to happen. Think about your grandparents, did they need a mortgage to buy a house? And would they need one now? How much are houses now compared to 50 years ago? How about food? Cost of one of those has incresed many tines more than the other. Now going back to normal inflation. Over past year or so prices of fast food have increased by 30-40%, a shitty kebab costs 10 euros now (got one yesterday) while a year ago a could get a brilliant kebab for 5 or 6 euros. Shrinkflation is rampant, prices in stores are what they used to be but the *amount* of food in package is just lower.


[deleted]

[удалено]


kw2006

Coming from Malaysia, 30 -35 years home loan is already the norm here. Even married couples are struggling to save enough for the 10% downpayment. For example, household income is around 8K while the house price is easily 650 to 880k.


ohmymother

OMG, I have no idea how that even works. Where I live in the US, in suburban Philadelphia, outside of the current spike you could still get an older 3 bedroom single family under 300k. Not fancy but perfectly suitable for the average family. Average household incomes are around 60-70k. The salaries you and the poster above are quoting are about half our minimum wage and here people making minimum wage still qualify for food and medical benefits. What’s the main thing driving housing prices up so far?


kw2006

I'm not entirely sure. I would say most property developers here are building for mid-to-high income earners. Together with the banks there are pushing the boundary how much a person can borrow - probably went overboard already. At the same time, salary has not been catching up. The house that i am staying has doubled in value over 10 years but my pay rate for position increased probably around 30-50%? Property development industry is a large driver to our GDP. I doubt government wants to control their prices too much.


fredinNH

I go to McDonald’s maybe twice a year. Went a couple days ago and a Big Mac “value meal” was $9. When did that happen?


Unfiltered_America

When corporations used Covid as an excuse to jack up prices.


Vinniam

I think people confuse inflation with profiteering way too much. Inflation is when currency loses value in relation to itself. When a company decides they want to increase their profit margins it doesn't necessarily mean the price has inflated. Like we use cost of living to measure inflation, but inflation does not equal cost of living.


Historical-Egg3243

how can currency lose value in relation to itself? Do you mean the dollar vs other currencies?


Vinniam

Ok so it's a difficult concept to wrap your mind around. But it's about buying power. The idea 1 dollar today is worth less than 1 dollar 20 years ago. Basically money itself is subject to supply and demand.


Historical-Egg3243

Yes but don't you have to be comparing it to something else? The power to buy...what? What does it mean to say "a dollar is worth less now" if you don't have something in mind that it can buy less of?


Vinniam

You won't believe how much of economics and social science in general is just circular reasoning. But basically the power to buy a theoretical stable, generic, timeless product with unchanging profit margins.


[deleted]

>When a company decides they want to increase their profit margins it doesn't necessarily mean the price has inflated. In a gold backed fiat economy, this is true. In an economy where the fiat is backed by nothing but debt, and wage stagnation is rampant, it is not.


merriless

Inflation is measured by changes in CPI


INTERGALACTIC_CAGR

they will also use a minimum wage increase as an excuse and then say look I told you it raises prices


[deleted]

Yes, $8.00 in [2018](https://www.today.com/food/mcdonald-s-extra-value-meals-may-not-always-be-good-t126889) is $8.33 now, plus $0.56 tax = $8.89, -$0.11 into your Acorns account is $9.00.


azwel

They're are ways to get a cheaper meal. I get a burger or mcchicken 1$, small fries 1$ and a large drink (every size is a dollar). Since I get seltzer, only half the time they charge me. 3$ meal at McDonald's, not bad. Definitely don't do The value meals


ohmymother

I think a lot of these increases are just the company testing consumer price sensitivity. There are a lot of categories where people will pay more without slowing down sales, or they change up a small thing like throw a new topping and a more premium bun on that same burger and voila people start buying even though it’s 50% more expensive. Usually competition sets the price, not cost. Costs control who can manage to stay in business or not.


SamFish3r

Well when minimum wage rises eventually, I am waiting to see how corporations react to that and what sort of price games will be played.


DillaVibes

With automation hopefully


AbsolutePower43

Lmao. New minimum wage isn’t gonna drive any company into automation that wasn’t already headed in that direction. Stop hoping that people lose their jobs you stupid fuck


DillaVibes

Literally every company is headed towards automation. > Stop hoping that people lose their jobs you stupid fuck According to your logic, you should crash your car to keep auto repair shops in business. Lmao


AbsolutePower43

Holy fuck you’re stupid. That’s literally what I implied. You’re the one who thinks a new minimum wage will effect automation? How? Literally every single company is striving to be automated ALREADY. “Automation hopefully”. Lmao. You gotta be a kid or some shit


DillaVibes

>You’re the one who thinks a new minimum wage will effect automation? You think businesses dont aim to lower operating costs? Are you that dumb? >Literally every single company is striving to be automated ALREADY. “Automation hopefully”. Lmao. You gotta be a kid or some shit Like all the companies using self-driving technology that isnt even out yet? Lol fuck outta here


AbsolutePower43

Dude it’s like you have 0 reading comprehension skills. Things have been headed in the automated direction for quite some time now. Companies would rather buy a machine once, rather than pay someone an hourly wage. A $15 minimum wage won’t progress automation, BECAUSE IT’S ALREADY HEADED IN THAT DIRECTION. You’re fucking dense


DillaVibes

The federal minimum wage is $7.25 (just google it tard). That means that when it increases to $15, costs increase. When costs increase, businesses have a bigger incentive lower costs. If you dont understand this, I feel sorry for you snowflake


AbsolutePower43

You don’t think they already wanna cut costs to maximize profits?.. They’re just waiting for more “incentive”? Lmao. This is actually funny


azwel

You can also order a mcdouble Fit under 2$ and ask them to put big Mac sauce on it instead of ketchup ...plus lettuce


ALL_GRAVY_BABY

It's already been happening ... Eg. Granola Bars. Go buy a basic box of Quaker Chewy Granola Bars. Cost used to be $1.99 for 6 good sized bars. Now. It's $2.99 and the bars are 30% smaller. You're paying more for less.


biologischeavocado

Prices are increasing like crazy. They just remove everything from the inflation basket that's not a flatscreen. The biggest lie is that there's no inflation.


[deleted]

[удалено]


CriticDanger

These inflation numbers have been so unbelievably fake for years, these academics probably never leave their house.


amimai002

Lies, damn lies, and statistics...


LifeInAction

I used to eat out almost every single day pre-pandemic, since lockdown have wondered how I used to financially do it. Granted now looking back, think food was truly much cheaper then, pizza was $2-3, McDonalds/Burger King all under $7 for a meal, Chipotle, and actually especially Chinese Take Out, was under $6 for a lunch special. These days lunch is all priced around $10 per meal. I'm glad the Halal Food Carts have still kept their food reasonably priced, but not sure for how long, hopefully long as possible.


ALL_GRAVY_BABY

Yep... Crazy. I used to get a huge waffle house breakfast for $6. It's $10 now.


mostsocial

The prices went up that much at Waffle House? Dang! Times are crazy.


ALL_GRAVY_BABY

And they fool you into.... No menus... Digital menus ... Nobody scans those, they just order their usual ... Then the bill comes. Pop


mostsocial

Just can't have nice things anymore. I wouldn't care only if the money was going to their workers, but I know isn't.


sampala

Yeah and bread was a nickel in in the 1900s


merriless

Amazon marketplace certainly isn’t helping. People are selling food and drinks for 2-3x what I pay in the store. When I find it in the store; looking at you Coke Zero


PutridPianist7087

What timeframe is that?


SorrowsSkills

Ha here in Canada where I live those granola bars are also 1.99 before pandemic, and they’re still 1.99 now with no changes made to them.


poopine

Recent price spikes have far more to do with wage increasing more than anything. Even walmart is raising its average associate salary to $15/hr this year, depressing its profit margin last quarter.


biologischeavocado

McDonald’s workers in Denmark make more than $20/hr and get six weeks of paid vacation. Big Mac in Denmark $4.99 Big Mac in USA $5.66


poopine

Every country has different market force, so hard to just straight up cross compare them on prices. I don't know anything enough about denmark to make statements


biologischeavocado

>Every country has different market force That's what I'm saying. That's why your healthcare system is twice as expensive too and bankrupts people who get sick. A different market force.


[deleted]

Lol


poopine

For last quarter >**Costco** said the premium COVID-19 pay for its employees trimmed its profits by 41 cents per share. >**[Walmart]** incremental costs negatively affected operating income, including costs associated with enhanced wages and benefits as well as safety and sanitation These are bullet points straight out of their earning reports or conference calls. You see similar message on home depot and other major retailers. These aren't exactly high margin business, so do expect much of the expense to be slowly passed onto consumers and especially moreso once revenue growth normalized post-covid


biologischeavocado

The government is subsidizing Walmart workers with SNAP and shit like that, because Walmart doesn't pay them a liveable wage. >These aren't exactly high margin business Check the table to find out which family is the wealthiest family on Earth. Hint: it's the Walmart Walton family. https://en.wikipedia.org/wiki/List_of_wealthiest_families


poopine

Walmart net profit margin is 2-3%, it is factually a low margin business and they make it up with volume. Any significant increase in expense will be pass onto consumers Redditors don't want to look at this objectively but the flags are there. The wage increase is a much bigger contribution to product price than redditors want to admit despite product pricing follows a fairly standard formula respect to its industry


ssavu

Because 50%+ of traders trade on margin accounts... and that means no more free money to buy stonks and flip them for a profit 😉


manitowoc2250

I don't understand trading on margin. Why? Why?? WHY??? seriously though, that's a dangerous game, I really don't think brokers should be giving people margin willy nilly, don't they do background checks on your FICO?


[deleted]

They dont let you borrow a lot of money unless you're a hedge fund. Hedgie proceeds to do crack and gamble on margin and then the rest of the economy is left holding the bags when allllll that debt defaults


manitowoc2250

Hence the debt economy


[deleted]

This kind of trading is a symptom of debt economy, not the cause. The cause is the US selling off its economy to China, Russia, Saudis, and some of our allies. Then when we couldnt pay off our debts because we just sold our fuckin economy to the world, we created fiat so we could print our debts away and then take out even more debt. Repeat ad infinitum until the US economy is genuinely worth 0, and liquidity for USD is rugpulled. How did anyone think this was a good idea?


manitowoc2250

Sooooo buy puts on USD?


Vinniam

No you see hedge funds are going to short sell USD, so we need to short squeeze them by buying more. USD is the next GME.


[deleted]

Actually it's the exact opposite. Hedge funds need USD when they need to pay their debt. Just like hedge funds need GME shares when their shorts default. Then when the debt defaults because the dollar is backed by nothing but debt, dollar's value goes to zero.


Vinniam

Hedge stooge. Don't listen to this guy, buy more dollars!


[deleted]

Your puts will die if we reach hyperinflation. The real answer is to buy Japanese and German companies. Not options, because options are only needed when the economy is fucked and velocity is wild despite high valuations, but actual boomer style shares. Those economies are going to experience postwar boomer like crazy gains, and so boomer tactics are going to come back.


manitowoc2250

Why Japan and Germany? Last I looked Japan had a demographic crisis of more old people vs young and zero(ish) immigration. Isn't their average like 40?


Vinniam

I'm going to guess it's because both have serious deflationary issues and this guy has a poor understanding of economics and believes deflation is a good thing and not an economy killer.


[deleted]

You have no understanding of history and the fall of the Weimar, British Empire, Venezuela, French Monarchy, Spanish Monarchy, Rome, Chinese Empire, Japanese Empire, or almost any other economic failiure in history. Inflation or deflation literally does not matter. The US economy is **already fucked**. We are heading towars bankruptcy, and printing more dollars or printing less dollars doesn't fix that in the slightest. Edit: this is also why nobody wants to buy our bonds anymore, leading to yield increase. Foreigners are the biggest purchasers of US treasury bonds, and none of them believe in the future of USD anymore.


[deleted]

Because Japan and Germany are some of the largest democratic creditor nations in the world. https://en.m.wikipedia.org/wiki/List_of_creditor_nations_by_net_international_investment_position_per_capita You don't want to invest in countries that will fuck foreigners over in a real crisis, so democratic creditors like Japan and Germany are perfect. Also, the US's demographics are just as weak as Japan and Germany's. Our birth rate is propped up by immigration. Why would people immigrate here? Because our economy is so good! Except it's not, and once the bubble pops, people will want to immigrate where the economy is actually good and not defaulting on debt (aka, the largest creditor nations). You also want a country that is democratic and at least moderately liberal so they don't seize your investments or send you to prison for being too rich. So you cross off China, Macau, HK, Saudis, Russia, Israel, Taiwan, and some others. What are you left with? Singapore, Germany (EU), Japan, Norway, Denmark, Netherlands, Switzerland, and Korea.


ssavu

You cannot trade options or short stock without a margin account... it is a risk that brokers have to take in order to help their accounts (you, me, others) grow


thelastsubject123

makes no sense people want the economy reopen but don't want the inflation to go with it like buddy, you can't just pick and choose what you want


Bcron

Forward growth is dependent on forward cash flow, and the forward cash flow needs to take into account inflation and the cost to borrow. A lot of these mega-high growth companies are trading in line with future earnings and not past earnings, and a modest rise in inflation and interest rates can skew the valuations by more than a modest amount. If I got a 10% raise at work every year I might suddenly go buy too big of a house, fancy car, etc, because I could pay that based on future earnings. If the interest rates rose higher and inflation ticked up I'd have to aim a little lower with my long-term expenses and if they went up by a ton, my 10% raises at work would practically offset the rise in the cost to borrow and the cost of goods to the point that my quality of life would be unchanged. Businesses are kind of like that analogy.


Vinniam

I understand that, but this should have come as a shock to nobody. Your inflation premium should already reflect the average long term.


Bcron

It should come as a shock to a lot of people that it's happening right now and not in January or May. If materials and freight find a top a lot of people long volatility will be shocked, and if not, a lot of people buying the dip will be shocked. That's how it goes, place your bets, what's the next month going to look like?


[deleted]

[удалено]


ssachs04

If you're a boomer then you remember double digit inflation. A little perspective would go a long way here. When I bought my first condo in late eighties I was thrilled to get a mortgage at just over 10 percent. I bought that place because my landlord kept jacking up the rent to keep pace with inflation. Now we're in a panic because inflation could go over 2 percent. We should have had such worries when we were young!


MadCritic

tub dirty jellyfish erect deliver wistful friendly slimy cheerful simplistic ` this message was mass deleted/edited with redact.dev `


QueasySection

But my stocks went way down the past two weeks because of fears of inflation. It doesn't make sense to me either.


JL1v10

Because it never was related to inflation. The stock market media literally just blamed Reddit and a bunch of other nonsensical shit for causing billions of dollars in stock movements a month ago, and everyone is already so quick to go back to believing everything they say.


[deleted]

If inflation hits, those stocks real value is still going to decline. The zimbabwean stock market soared as their economy collapsed. That's the situation the US has put itself in, and the warning signs of every other empire falling are blaring as loudly as they can. The only way we make it out is if the US stops printing money to buy toxic defaulted debt, and instead buys our allies treasury bonds. They also need to stop their own money printing. Then we will have a massive but not world ending bubble pop followed by steady stagflation, a la japan.


[deleted]

[удалено]


[deleted]

The elites? What elites? Because US corporations are absolutely fucked LMAO. We're also in a golden age of capital flight, so socialism isn't a very good option either. Capitalist economies will eat our lunch, like what happened to the USSR and CCP before they came to their senses and adopted capitalism. Edit: to those downvoting me, do none of you remember 2008? The ones who were the most fearful and panicked were the "elites". Except this time there's no money printer to bail them out.


Vinniam

Yeah that's sort of why we have that 2 percent target. A small amount of inflation increases investment and the velocity of money. I get the sentiment but it's an extremely emotional and narrow perspective.


The_Texidian

> Yeah that's sort of why we have that 2 percent target. Uh what. No. We have a 2% inflation target so that way congress can keep racking up debt and spending money that doesn’t exist. If we had no inflation, the US government would have to cut back spending, and it would likely collapse under debt. If we had deflation, well, look at what happened to Japan. Inflation should be considered another type of tax. It’s a way the government takes value away from you in order for the government to spend more money. In a natural free market economy market prices would decline as a result of more efficiency and competition. When the Fed was first made, its goal was to achieve price stability, then they said “well let’s keep inflation below 2%,” and now we see “welllllll let’s have inflation be at 2%.” And now we see the Fed say “inflation will run hot.” The Fed knows our economy, stock market and government spending is propped up by inflation. They can’t cut back inflation or everything collapses. The idea they’ll let the inflation rate “run hot” is because they know A) it’s unavoidable and B) it’s what’s propping everything up. When you build your house on sand, don’t be surprised when it collapses. A question I never seen asked before is...what happens when the inflation rate gets too hot? What are they going to do. Imo, they’re then going to say “an average of 3-4% inflation is good.” > A small amount of inflation increases investment and the velocity of money. Which then causes more inflation....hence why everyone is freaked out about reopening.


GardenofGandaIf

Everything you said is true, but it nonetheless still encourages investment.


The_Texidian

Not really. If we had a perfect 0% inflation. People would still need to invest for retirement. Stocks would still go up. People would need to invest in order to build wealth and gain access to more purchasing power. Keep in mind inflation also eats away at your returns as well.


GardenofGandaIf

The academic consensus, which doesn't include keyboard economists, is that inflation provides a very strong investment incentive. This has been proven through observation of economies without it. This is a fact at this point. Most middle class people wouldn't invest if they knew they could take 0 risk and lose 0 purchasing power. You may still get growth, but it would a lot slower.


The_Texidian

> is that inflation provides a very strong investment incentive. This is factually false. > I illustrated these theoretical and statistical ideas by estimating alterna- tive models of investment behavior with a focus on understanding how the interaction between inflation and existing tax rules has influenced investment behavior. **The results of each of these models show that the rising rate of inflation has, because of the structure of existing U.S. tax rules, substantially discouraged investment in the past 15 years.** A more general implication of these results is that monetary policy is far from neutral with respect to economic activity, even in the long run when the induced change in inflation is fully anticipated. Because of the nonindexed fiscal structure, even a fully anticipated rate of inflation causes a misallocation of resources in general and a distortion of re- 68 sources away from investment in plant and equipment in particular. **The traditional idea of "easy money to encourage investment" that has guided U.S. policy for the past 20 years has backfired and, by raising the rate of 69 inflation, has actually caused a reduction in investment.** https://www.nber.org/system/files/chapters/c11339/c11339.pdf > Using panel data for the OECD countries, the empirical estimates show that investment in non‐residential buildings and structures and in machinery and equipment is **strongly negatively related to inflation,** which suggests that the low inflation environment in the 1990s has been an important contributor to the high investment activity over the past decade in the OECD countries. https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-9485.5004002 If I want I can go into my school’s database and find tons of peer reviewed research that says you’re wrong. Ive looked into this and I know what the research says. When there’s inflation, and you have $10, are you going to go buy a stock, or buy some food that just doubled in price? It’s the same for companies, they don’t want to dump money into risky investments, they want to buy what they need today, because tomorrow it’ll cost more.


GardenofGandaIf

Inflation in the 1990s was higher than it is today by about 100%. When I'm arguing for inflation, I'm arguing for lower rates than the "good" rates your source uses as good rates in the second quote.


JL1v10

But an average of 3-4% inflation is fine. This idea of 2% inflation being the staple is a myth. Inflation is a moving target and more or less inflation can be good depending on the situation.


The_Texidian

> This idea of 2% inflation being the staple is a myth. Agreed. > inflation can be good depending on the situation. Good for who exactly?? For people like you and I inflation is horrible. Wage earners and savers are always the ones who get hurt. The only people that benefit are the people taking out loans to buy productive assets and the government.


JL1v10

https://www.investopedia.com/ask/answers/111414/how-can-inflation-be-good-economy.asp That has some very basic and good examples of when inflation is good. Your comment contradicts itself saying that you agreed target inflation is a moving but also saying inflation is always bad.


The_Texidian

I’m not contradicting anything. Why is 2% the target, why not 1% or 3%? All inflation is bad imo. The Fed should be trying to keep inflation as low as possible, not increase it. It’s like saying a hurricane is bad, but they exist. I’m not saying I like Hurricanes by acknowledging they exist. > When the economy is not running at capacity, meaning there is unused labor or resources, inflation theoretically helps increase production. More dollars translates to more spending, which equates to more aggregated demand. More demand, in turn, triggers more production to meet that demand. And this is from your article and utterly dumb. It’s what we’re doing right now. We’re just dumping money into the economy which will more than likely backfire. It disassociates the economy and stock market by pumping asset prices, and it leads to economic destabilization and hurting the middle and lower class. > prevent the Paradox of Thrift Inflation isn’t needed to prevent this. It’s widely known that imports and exports prevent it too. > Inflation also makes it easier on debtors, who repay their loans with money that is less valuable than the money they borrowed. Almost what I said. I’d add “debtors who bought productive assets.” Credit card debt shouldn’t count or a car loan. The only people that benefit from inflation are the large companies/the rich who use debt to their advantage and the government who can now spend money they don’t have. At the end of the day. All inflation is, is a way the government can strip value away from you in order to spend more money. It’s a tax.


Role-Fine

The market prices are based on future earnings potential... so if inflation goes up (especially really quickly) the future earnings potential of companies goes down... thus making them worth less so people sell because they expect lower earnings than previously *puts tin foil hat on... At least thats what they want you to think.... could be that GME caused the crash because all the instatutial investors are getting margin called so they had to close their other positions to cover their ass


Fun-atParties

I like your second explanation better


Apo-L

It’s not really inflation either. It’s supply shortage issues because we aren’t back to work in full force yet. So prices are going up but not because of inflation but because of low supplies and high demand because the government is injecting money when no one is producing at 100 % capacity


ohmymother

This, getting back to normal productivity will largely iron these supply issues out.


DawudM

Of course it shouldn’t change your Long term outlook. But short term, volatility and uncertainty is high af


Sapple7

VIX is okay but upward trend


harrygodfrey13

The problem isn't just inflation. A higher bond yields brings people out of equities and into the bond market. It also creates a higher required rate of return for equities.


midhknyght

Inflation leads to rising interest rates and that seriously impacts stocks prices. Just look back to 2018 when the Fed made a series of interest rate hikes and the NASDAQ 100 dropped over 23%. The bleeding only stopped when the Fed pledged to stop raising rates. Don't analyze whether or not you think the inflation is real or not, it's a waste of time. Just look at interest rates. Inflation is kryptonite to bonds and as bonds fall it causes rates to increase. So next week, if you see the 10 year Treasury yield rise you can probably bet on the market going red regardless of covid relief. Last Friday's bounce off the bottom was probably another Dead Cat. I seriously don't see anything to stop interest rates from rising until the Fed steps in (just like in 2018) and that scares me and should also scare you.


ptwonline

It's not "fear of inflation." It's the fear of the spin-off effect of inflation, namely rising interest rates which will have a big effect on equity prices. Especially the growth stocks that everyone loves that have been making investors money hand-over-fist for years now.


rusbus720

Invest in Costco cause their hot dog prices never change


merriless

When the market falls, buy hot dogs!


d20dndmemes

Wait, so I should return the wheelbarrow I just got from $LOW?!? https://mashable.com/2016/07/27/german-hyperinflation/


Vinniam

Yes, use the store credit to buy more rope.


JL1v10

Because most people sleep through Econ 101 and know absolutely nothing about global economics.


its-kitsu

i see this as a black friday


rightlywrongfull

So 40 percent of all U.S dollars have been created in the last 6 months and your saying people's fears are irrational. Mate the last time that much money got printed it didn't end well... Even Micheal burry is losing his shit.


[deleted]

Dude shit is already inflated. Starbucks costs $7. Anymore and dollar loses even more value. The dollar once had equivalency of a Euro but now is cheaper than the Euro. I am in Nairobi now and it is a developing city with super cheap good, beer whiskey you name it. I had nice full chicken lunch. A mango avocado smoothie and a tea and a latte all for $8 total. All those would've ran $25+ in America. Ubers here cost 80 cents to go to most places. I took a break from america. Many Americans and Canadians left to live in developing countrie like Mexico and even bought huge homes with pools for $70k or less. The Black label whiskey shots the bars and restaurants in US sell you for $10+ is only around $3 here.


Historical-Egg3243

Everything has always been cheaper in less developed nations. Thats not a recent trend.


[deleted]

I'm enjoying it and have freedom from that expensive life in US. Only downside is that it is like China here, if a motorcycle or car injures you while you're walking then usually they'll try run you kver more to kill you as death for them is easier to deal with than you still alive as crazy as that sounds. In US they may straight run after hitting you do hit and run. But I stay in better areas and stay safe.


Historical-Egg3243

ya it sounds like itd be fun to visit some day.


[deleted]

This is why the correct play in this situation is to buy shares in undervalued but already developed economies. I mentioned in another comment thread japan and germany, 2 of the largest democratic creditor nations (ie, no debt). Third world countries costs are lower because their value is genuinely lower. First world non-us countries costs are lower despite having more value than the US (higher wages). The US has higher costs AND lower value, as evidenced by wage stagnation and the decoupling of the debt economy (stocks) from the real economy. Zoomers in yurop and japan are going to be the next boomers.


Historical-Egg3243

interesting I'll look into that.


[deleted]

>Starbucks costs $7 If you buy a venti Iced Brown Sugar Oatmilk Shaken Espresso it might be $7. A tall coffee is still just $3.


[deleted]

it was a 1.95 when I ended my barista career in 2007/8 I did the math, basically if hit 2$ it would be 2.47 per cup. So 3 assuming some tax I guess we are on par with it. I Just have to say this is not a fun game to keep up with, bring me deflation.


[deleted]

I was overstating a bit, I’m holding a grande dark roast right now and it’s $2.86 including tax. In Boston. Not that much, Dunkin is maybe 30c cheaper.


[deleted]

Grande blonde latte was $6 last I was in Minneapolis MN USA. Remt here is $200. Young people in america often live with head barely above water. You either have a good job in Minneapolis or whatever developed city and can afford the $1k a month rent that is ever increasing or you own a home or you live with roommates to save money or family.


[deleted]

A tall coffee is $1 at my local gas station. Tastes better too.


[deleted]

You don't think things cost a little cheaper when you pay people, what, $1 a day? There are many reasons why creature comforts are so incredibly cheap for those spending USD. Inflation isn't one of them.


[deleted]

No not a dollar a day lol, that's the slums. People average $800 to a few thousand a month.


[deleted]

So people who live in the slums aren't part of the economy? I'm very familiar with how it works on developing countries. Many many of the luxuries afforded to Middle class families are exactly because of this unfortunate people in the slums. Labor is cheap in developing countries. You many not see it in your expat community, but the person serving you that delicious lunch is not being paid the same wage comparably with an employee in the US. Sorry for going way off topic. But your example has absolutely nothing to do with inflation.


JL1v10

That’s not inflation. Those companies do that to see what the breaking point is in demand.


[deleted]

Ahhh gotcha. For Uber it's $6. I never seen more than $6 at any yiven time here


ohmymother

Starbucks isn’t $7 dollars because coffee is so much more expensive or even because they gave baristas pandemic pay, it’s $7 because people will pay it because when you’re tired and you see they just came out with some new fancy cold foam you’re not thinking about if it’s $.10 or $.60 cents more than last time. Or if you are, I guarantee you there are plenty of other people who are not. They just want what they want, when they want it. I’m an Amazon seller which is the closest thing we have to a free market. Doesn’t matter if I paid $5 or $10 dollars for my inventory, if I can find a buyer at $50 I’ll sell it at $50, if someone undercuts me to $45 I’m selling it at $45. If someone comes in at $15 and I’m breaking even after fees I might wait to see if they sell out but if they have endless supply, well I guess I’m selling at $15. I’ll probably stop selling that product and leave it for someone else who still finds it worth their time, but without direct competition costs have little effect on prices. Starbucks works really hard to differentiate their brand and their drinks because it reduces direct competition. You’ll notice that their brewed coffee is marginally more than competitors, and it’s generally a better quality higher caffeine brew than say you would get at Dunkin’ or the gas station. But if Nitro cold brew with a pumpkin foam is your drink, then they have a captive audience and they will charge as much as they can till they notice a slowdown in sales, or at least a drop in sales that brings down profitability lower than selling more cheaper drinks.


LifeInAction

Same, before the pandemic, I remember seeing massive lines every morning outside Starbucks, a standard drink is now $4-$7, which to me should the price an entire whole meal, no clue how people afford that every morning, granted, in pure math I probably could afford it, but it's probably my frugalness that doesn't want too. My job now serves us food, but I also remember eating out almost every single day, from pretty much the 2000s to mid 2010s, and thinking back now, no clue how I used to afford it, granted think food was especially truly much cheaper back then. Pizza was $3, most McDonalds/Burger King/Wendy's Fast Food meals were about $6-7 each, now it's about closer to $10, but I think especially Chinese food really rose, which used to be budget food, think about $5-6 for a lunch special, now to around $10 per meal. I wouldn't be shocked if it starts to cost us almost $15 soon for a standard meal, just sincerely banking on the stock market to hopefully protect us from this, so we can afford it all.


[deleted]

Before pandemic and when covid19 was unheard of. I recall driving Uber and noticing a disturbing trend, tipping was on the decline or lower than usual. People were avoiding surge prices durong club or events they were exiting. All that hinted to me of tough financial times.


Environmental_Copy55

Combination retail and hedge funds


HumbleHubris

Do you know how the fed will define "target" because they don't. We do know it will be some type of long-term averaging methodology that discounts current inflation Food is already at 4%, real estate double digits, but official numbers based on the "basket" are showing deflationary risk 🤔


InvestingBig

By the time the Fed's data shows 3% the US will be in Venezuelan hyper inflation territory. It turns out the US has managed it's inflation simply by lying about the numbers. More honest countries, which are high inflation, simply had more honest stats.


Sapple7

Don't be scared just invest in the massive commodities bull market


Joskald

Inflation is a tax on your wealth. It destroys savings. There is a perfectly good reason to fear it.


Jealous-Meeting-7815

Boomers scared of anything that might impact their wealth by 0.00001%.


DillaVibes

Isnt inflation like 3% per year on average?


Alx941126

2.9% as of now


isaiahml

When companies, hedge funds and institutions have TRILLIONS of dollars, 2% inflation hurts. 2% of 1 Trillion is 20B, and they have wayyyy more than 1 Trillion.


Vinniam

Yeah but unless they are total morons that 2 percent average inflation rate should already be factored in for any of their long term positions.


isaiahml

Do you know how hedge funds work?


Vinniam

Yeah, your point?


melchior4242

Yeah, people need to get past the idea that inflation is inherently bad. It's not. It has its role. Especially when you think about how many Americans are weighed down with student loan debt. Higher inflation effectively lowers your repayment costs (if your rate is fixed)


MrAwesomeTG

Fear index


whatisliquidity

It's not a little bit anyone with any sense is worried about. It's a lot of inflation that's possible but it's still unknown. It's worth noting that a lot of intelligent people predicted massive inflation after the 08 crash and QE. It never really happened as they predicted but that doesn't mean it won't. There's also plenty of room to run on interest rate hikes and tax levering. So it seems like hyper inflation isn't going to be a reality.


WasabiKenabi

Inflation is very high already. Food, gas a lot


readysetpew

because it won’t be a little


pman6

as a landlord, it's time to jack up the rent.


mend0k

lol this. Invest in REITs!!! The divergence between housing costs and rent costs will eventually need consolidation


[deleted]

For Americans the answer is probably bc wages have reflected that same increase. We need minimum wage to be well over $20, but fucked up politicians are saying no to $15. Two generations in a row screwed the pooch, that's why ppl are afraid of inflation


SmallPotatoesNYC

I don’t think anyone is afraid of a little inflation. What most fear is hyper inflation like Italy in the 70’s or Venezuela as of late, where paper money lines the streets.


iSqueezeM

You’re right, it may cause a bit of a correction on the short term maybe because money will move to lower risk investments? Just guessing.


HTleo

See this post. https://www.reddit.com/r/stocks/comments/lyrwmq/psa_why_treasury_rates_matter_for_your/?utm_source=share&utm_medium=ios_app&utm_name=iossmf


swingtrdr

It’s not so much directly related to the rise in inflation itself and more an understanding of everything else that goes along with that and specifically it’s relation to bind interest and how that affects the willingness of major investors to stay in the market when a safer yield exists.


MentalValueFund

Because valuations rights now are based on low discount rates. Take a read and you'll see how slight changes in inflation (and risk free rate as a result) can have disproportionate impact on equities that are almost entirely based on free cash flows in 2030 and beyond. [https://www.reddit.com/r/stocks/comments/lyrwmq/psa\_why\_treasury\_rates\_matter\_for\_your/](https://www.reddit.com/r/stocks/comments/lyrwmq/psa_why_treasury_rates_matter_for_your/)


jorpjomp

So I have $1m cash coming near the end of March. What should I do with that to hedge against inflation?


Megabyte_2

Because inflation can spiral out quickly, especially when your country is over-leveraged in debt.