This is the rock/hard place they now find themselves in - it's no longer inflation vs recession, it's how much stagflation do you want?Yep it's going to happen, the question is how much and for how long. Ultimately interest repayments will be the limiting factor for rate rises, unless central banks are actively trying to cause a deflationary enviornment/recession...
Rate rises are meant to combat inflation, so hopefully the rises you mention will be dampened by the interest rate increases.the problem ISN'T mortgage repayment rises , it will be all the OTHER cost rises , power , fuel , food , government fees and charges which will be running well ahead of mortgage repayment increase AND there is a fair chance property values will drop ( much like a margin call on your share portfolio )
You're half correct divs - it's BOTH. If everything else rises then interest rates will rise too and thus there's both rising costs of living AND rising mortgage repayments at the same time.the problem ISN'T mortgage repayment rises , it will be all the OTHER cost rises , power , fuel , food , government fees and charges which will be running well ahead of mortgage repayment increase AND there is a fair chance property values will drop ( much like a margin call on your share portfolio )
Another musing:
If crypto crashes to the point of non-profitability to mine, a lot of mines will be shut off, which will drop energy demand significantly. This will then ease inflation, and thus quite possibly actually pump crypto again. Which might make mining it profitable again...
And so on and so forth.
I was more thinking from a trading/playing the trend perspective.So this is how crypto will replace central banks - with inflation targeting
firstly since we are facing the potential of multiple bubbles popping , i am wondering if what we face will defy ( current ) definitionsYou're half correct divs - it's BOTH. If everything else rises then interest rates will rise too and thus there's both rising costs of living AND rising mortgage repayments at the same time.
Hence my constant mentioning of STAGflation, not INflation.
Considering the overall situation I do think there's a fair chance we'll see situations where products, including direct substitutes, simply aren't available at any price before all this over.now governments DO have a second weapon as well as interest rates ... price controls ( and/or rationing ) this normally creates it's own issues , but it MIGHT be used
using my family's WW2 memories , those desired products will most likely be available from 'unofficial ' ( illegal) sources , and THIS time i will have little sympathy for the government trying to regulate such activitiesConsidering the overall situation I do think there's a fair chance we'll see situations where products, including direct substitutes, simply aren't available at any price before all this over.
I've only encountered it with one item thus far, which is proprietary with no alternative brand or supplier available that fits the machine, but I can foresee more of it certainly given the overall situation with supply chains and economics. And that's without government stepping in.....
That is why the boomers had it good in the 70s to 90s in France where home loans are 25y fixed rate..inflation paid the loans .not so great for places with variable rates..aka OzDumb question but doesn't inflation make debt go away in the sense that the average income was $100 and you have a debt of $10 then due to inflation you now have an income of $1000 so the original $10 is "less" money comparative to your current income.
It's why everyone laughed in Austin Powers when the out of touch bad guy stuck in the old days threatened world leaders with a ransom of a million dollars and they all laughed in his face at the once astronomical ransom value has become an unimpressive figure - the leaders all talk in trillions now.
That is why the boomers had it good in the 70s to 90s in France where home loans are 25y fixed rate..inflation paid the loans .not so great for places with variable rates..aka Oz
or savers..especially now that we have heavily negative real term rates.
And while it is great for government debt being wiped by inflation, not so good on commoners as salaries pensions etc are always a step behind.
Inflation is the greatest universal tax on people.
In a flash,your parttime cafe waiter is taxed at 50%, and he will indeed be a filthy rich bastard as most will have no job at all.
With inflation the only ones who really get hurt, are those who can't carry their debt over the re adjustment and those on a fixed income. The rich love it, because bargains really present during inflationary re adjustments.Makes sense why government worldwide are so addicted to printing money and calling it MMT like it's something big brained and more than monkeys printing money.
It follows that gov has to keep growing in order to spend all the funny money into the real economy.
Their will never be accountability because the working population won't figure out the trick that's been played on them until they retire and the younger ones won't care as they are to busy being the beneficiaries of the funny money stolen from their own future.
Brilliant set up really, throw in price fixing, bank bail-in's and central bank digital programmable currency for all the fools stupid enough to work and accumulate wealth and assets and you have the perfect scam.
The bad guy in Austin Powers is an amateur compared to this level of fukery.
Those with $x in retirement usually have it in super or in term deposits, the ones who have saved a sizable sum are those workers who lean toward investment, so they usually are able to adjust. What I found that happened talking with the workmates over my career, when interest rates on savings became appreciably higher than dividends, most would rather take 10% term deposit, than risk the capital.What about the people that have managed to save $x to spend in retirement, unless it has been invested successfully at a gain that $x dollars over time has lost value so it affects a lot more people than you mentioned.
That's true, I was using a general term to refer to those on welfare or self funding, welfare lags inflation and those whose only income is from investment have to grow their returns which isn't as easy as it sounds.Fixed income is a bit misleading because wages always increase and so does welfare. They may or may not increase as fast but no income is fixed according to history.
That's always been the case and always will be, even in China where the cultural revolution decreed everyone was equal and the wealth should be shared equally has now got the super rich and the super poor and that has happened over 20-30 years.The winners are the rich investors picking up the carnage of those gone broke and the poor who spend every cent they get and save nothing.
The majority in the middle lose usually because they spend everything they earn, they buy the 4X4, the trips to Bali, the eating out, unfortunate but true.The majority in the middle lose because they save instead of spend and lack the means to buy up the carnage left by defaulters.
I know with my own kids I shake my head at the amount of money they earn and how little they save
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