Actually, it did for most of American history. From the founding of the country in the late 1700’s to about the 1930’s prices would spike during times of war or scarcty and then come back down.
Inflation is a modern phenomenon. But i agree that it isn’t going away anytime soon. That is, unless population growth slows even more dramatically than is forecast.
I thought the conclusion was pretty obvious if you look at the frequency and severity of the busts. Apparently you think busts don’t impact savers, since savers are immune to job loss and other consequences of downturns.
It is pretty amazing you consider yourself the definitive authority on what’s an acceptable return and determining the level of risk. I guess you’re smarter than everyone else on earth that evaluates those things. You realize if you were then your investment performance would outweigh the average by so much you wouldn’t care about a small amount of inflation.
Caused by fiat or fractional banking or central banking system?
Adaptation, is what human species very good at.
Exactly. Jim Cramer already commented 1 day before. @manch is high strung.
I have placed many GTC purchases, have to since I have sold off quite a bit of holdings last week. I am long only, not long short like @Jil
I think we are going in tangent. BTW, I consider myself authority on nothing.
Anyway, The following two have been common and persistent theme in my writing:
(1) Protecting the of purchasing power of money.
(2) Not forcing a saver to be an investor.
Saving and Investing are two different kind of activities. A saver spends less than income and keeps the balance to spend some other day. A saver expects that the money saved will not loose purchasing power over the time. This is how the money has worked for thousands of years before the governments (through the central bankers) learned to debase currency and steal from the purchasing power of savers. Inflation is a taxation by stealth.
An investor spends money into assets (financial or non-financial) in hope of some returns on the amount invested. Investors, by definition, understand the risk and willingly put money at risk.
The governments over the world, by design, have been killing the purchasing power of the money. Thus unwilling savers are forced to be investors, and most of them do badly, either through poor returns or loss of principle. Actually, most people would benefit if money retained purchasing power. For them, the gains through investment does not compensate loss.
I did not bring economic contraction and expansion into this discussion because these have existed even before central banking and fractional banking came into being.
Why should a saver expect the money to not lose purchasing power? Purchasing power is always going to fluctuate with market forces. Goods and services don’t have static prices. They are subject to supply and demand.
Innovation has historical lowered prices which increased purchasing power. Once farmers could buy tractors to replace horses food got cheaper. The weaving loom made clothes cheaper. The moving assembly line was created, then cars got cheaper. Increasing semi conductor yields and Moore’s have made electronics cheaper while getting more powerful. All of those changed purchasing power independent of what a dollar is worth.
Do you think purchasing power is constant during economic expansion and contraction? The economic state impacts demand which will determine prices. The reason a plumber charges way more now than in 2009 is because they can. It’s not because the dollar changed. There’s not enough supply of plumbers, and there’s a lot of demand. You get far more purchasing power variance during extreme economic booms and busts.
The dollar has actually changed from 2009 and it can purchase lot less these days (about 50%). When government prints more money, it does not give new money to everyone, it only gives those to selected people. That is why some people benefit from money printing and others loose.
But, you do have a point that purchasing power fluctuates. But, deflation and inflation cycles bring the prices back to the historic levels. In the process, new goods and services are created, and some obsoleted ones are permanently removed from economic system. For example, there was no cell phone in 1950, and there is no horse buggy left in 2020.
Actual inflation from 2009 to 2020 is 20%. That’s way less than your arbitrary 50% from measuring a single data point.
You and I can pick and chose whatever number for inflation we can relate with. But, the number itself is not the point. The point is FED failing in protecting the function of money and causing unintended consequences on economy, society, and individuals.
Added 2 min later: The people of investor and related class (like the innovators, pioneers, visionaries ) have existed before creation central banks (like FED). Investing as an activity has existed since the start of civilization. Just added this line so that someone mistakenly does not attribute innovation and improvements to central banking.
Have you looked at savings data? There is no saver class. It’s investor class and debtor class.
Why is that a fed function? It’s not part of their mandate, so I’m not sure why you think it’s their function. If they do their job and keep unemployment low, then there will be inflation. That’s because companies can only hire by paying people more than their current job does. That’s inflationary.
If productivity increaes wages can rise without sparking inflation. The longest sustained expansion in the US was the so-called “Gilded Age.” I say so-called because more Americans rose from poverty to a middle class existence than at any time prior or since. And it happened without inflation. Or central banking.
1 Like
World About to Learn If $1 Trillion Tech Rally Was a Good Idea
Apple will release quarterly figures on Tuesday, and analysts are focused on how the firm fared during the holiday season and dealt with uncertainty around tariffs. Microsoft, up 62% since the start of 2019, reports Wednesday. Investors will see whether the demand for its cloud-computing programs remains strong.
Exciting week. What will Mr Market do? Kickstart a correction?
Maybe just punish Apple for its poor performance? 
That would kickstart a correction.
China has put the novel Coronavirus in the SARS category because it is a new strain that have not been identified before and hence has no curing drug and patients are treated symptoms only. WHO has not declared it as a global emergency because cases are mostly limited to China, and only isolated cases elsewhere. Btw, common flu is a Coronavirus and while the new strain is…
…mysterious, so far its impact pales in comparison to the common flu virus, which has already killed between 8,200 and 20,000 Americans this winter, according to the U.S. Centers for Disease Control.
Is why Jim Cramer and @Jil are confident that WS is exploiting the event to take down the weak hands. US economy is strong and the bull market is based on real fundamentals and not vapors as in 1999.
2 Likes
Stocks were UP (at exuberantly) with year-end Santa-Clause Rally for a longer time expecting trade deal to come which was signed Jan 15th.
Market makers were waiting for some opportunity to correct either 3% or 10% (which I do not know at this stage) and they need a scapegoat which will be Coronavirus.
Stocks work sinusoidal ways, UPs and Downs, market makers must bring down suddenly (or slowly) without a hint to retail investors. Suddenly will normally happen within 3 days, slowly may happen within a month.
At this stage, all stocks, including AAPL is priced in with refinitiv consensus estimate, but they do not know what is the future growth rates. This will only be known during results time and prices will react based on future growth potential.
Since US economy is strong with indirect QE (FED pumping REPO $100 billion/month) is effective, we do not foresee any big fall until election results. Trump has the lucky star to continue the stock growth !
Market makers (Mainly WS/big banks/funds) must bring down so that they gain and retail investors lose money. It is a typical gambling happens in stock market. We see this twice (easily) or thrice in a year.
Remember Ray Dalio hedge against market fall so that he protects hedge fund net worth !
BTW: I do not know what will happen tomorrow !
I may be right or wrong, viewers must do their own analysis.
This is a pretty good summary.
I heard from one person a long ago that thing in the favor of small investors is that they can come in and out of the market without affecting the market price. Big players cannot do that without causing a visible price move. Big investors takes months to do what retail will do in a day. It will be interesting to see how it pans out.
1 Like
100% correct.
If a big player, like WB (or mutual funds/Hedge funds) needs to buy $5B worth of AAPL, his brokers (multiple) need to slowly accumulate the shares for many days. The brokers(or BRK) hedge with calls(buy side)/puts(sell side) first to lock the rate and then exercise the option. The option premium is tiny compared to the stock price move. This is handled by broker’s trading desk.
As investment worth increases, it is hard to handle the investment and esp outsmart S&P. We need to know more about what we are buying/holding/selling.
1 Like
Exactly why it gets harder and harder for Buffet to beat the market. He’s admitted as much over recent years.
It also why some people just screen for unusual options activity and piggy back in those trades. It’s not insider trading, since the trades are public knowledge.