Why i'm not too concerned about INFLATION...
2011 Jan 24, 4:31am 2,049 views 7 comments
by LAO follow (0)
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zzyzzx
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2011 Jan 26, 3:05am
Inflation is when all your average Joes get more money. This isn’t happening. Market for salary isn’t very competitive. Most people are competing their skills vs someone in China/India… so salaries aren’t going to be going up. So I’m not concerned about it that much.
We are going to have bubbles though in the system because of the low interest rate the Fed is holding. But no inflation. Really I just cannot justify envisioning inflation in our current envornment.
I can see price inflation in commodities and imports without wage inflation in the US.
LAO
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2011 Jan 26, 7:15am
I can see price inflation in commodities and imports without wage inflation in the US.
Yeah, it still wouldn't inflate home prices though... hence my fear of inflation in home prices isn't very high... YET.. Although the higher gas prices go... The more expensive metro areas near places of work could rise. I currently rent within walking distance to my work and rising gas prices don't affect me much.. But they would affect someone living 15-20+ miles away.
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Every refinance... every write down a bank does... every personal bankruptcy... every loan not repaid and written off is money destroyed. So, any money being pumped back into the economy is just filling the giant gaping hole from the crashing home values and consumer credit crisis.
There are ONE MILLION more foreclosures due in 2011... MINIMUM! That's a lot of dollars being destroyed... Sure most of this wealth destruction is occurring in the middle/lower class... But it's still dollar destruction... If I burn a dollar bill one day and print a dollar bill the next day.... can inflation occur?
#housing