S&P 500 officially in a bull market

[Boom Boom]

Supply has always been a piece of it. I always admitted that. If you can produce more than the market demands prices decline. Vehicles are a perfect example.

Couldn't get chips for new cars so everyone bought up/bid up used ones. But at the same time, if we don't put thousands of (if not 10's of thousands) of excess dollars in people's pockets and drop Fed Funds rates to zero, it would only go up a little before people couldn't afford them.

It's very clear to almost everyone that supply chain disruption deflated certain supply side channels and equally clear that fiscal and monetary policy inflated purchasing power.

So are you and I finally at place where we are not debating whether free money had any effect? The more intelligent debate would be:

Was the cumulative inflation 20% supply chain disruption and 80% free/easy money as I would posit. Or is it 80% supply and 20% excess demand as someone in your camp might suggest.

The arguments I am seeing is that fiscal policy drove inflation up to around 4%. The rest was supply chain plus corporate profiteering. That would come out to about 33% free money.

Part of this, as I've said before, is that the change in price due to supply/demand, and the change in price due to devaluation of the currency, are NOT the same thing yet commonly get treated as so. Nearly all of the INFLATION! talk at that time was based on beliefs that we were devaluating the dollar. We didn't. We just had a temporary supply/demand effect.

The other is the chart below. I had no idea M2 went up that high. If I had, I would have been less critical of some of the inflation arguments. I thought it was more in line with past events.

 

[Seinfeld]

We need a recession so that people will
start working. If that doesn’t make sense, then look at our national employment data. Force the boomers out of retirement. Force the teenagers/college students to get off ***. And, perhaps, most importantly, force the welfare kings and queens to work by not indexing payments to inflation or another formula that continues to give raises.

While we’re on this subject, can someone help me understand why we signed a provision into law for Social Security that requires cost of living increases? Payments increased by 8.7% in ‘23 in order to keep up with inflation, and my question is… why the 17 is this a requirement? Maybe I missed it, but did the rest of y’all either get raises or tax breaks to help you keep up with inflation?

 

[dorndawg]

Supply has always been a piece of it. I always admitted that. If you can produce more than the market demands prices decline. Vehicles are a perfect example.

Couldn't get chips for new cars so everyone bought up/bid up used ones. But at the same time, if we don't put thousands of (if not 10's of thousands) of excess dollars in people's pockets and drop Fed Funds rates to zero, it would only go up a little before people couldn't afford them.

It's very clear to almost everyone that supply chain disruption deflated certain supply side channels and equally clear that fiscal and monetary policy inflated purchasing power.

So are you and I finally at place where we are not debating whether free money had any effect? The more intelligent debate would be:

Was the cumulative inflation 20% supply chain disruption and 80% free/easy money as I would posit. Or is it 80% supply and 20% excess demand as someone in your camp might suggest.

I'm not sure I'd call it free/easy money, so much as money flowing in divergent directions than in the past. Not that there wasn't PPP/stimmy dollars flowing.

 

[dorndawg]

While we’re on this subject, can someone help me understand why we signed a provision into law for Social Security that requires cost of living increases? Payments increased by 8.7% in ‘23 in order to keep up with inflation, and my question is… why the 17 is this a requirement? Maybe I missed it, but did the rest of y’all either get raises or tax breaks to help you keep up with inflation?

Some years there isn't a COLA https://www.investopedia.com/ask/answers/100214/cost-living-adjustment-cola-mandatory.asp

But the answer to your question is because oldheads VOTE

 

[Boom Boom]

Some years there isn't a COLA https://www.investopedia.com/ask/answers/100214/cost-living-adjustment-cola-mandatory.asp

But the answer to your question is because oldheads VOTE

Well, that and it's intended to pay the cost of living. To do that you kinda have to, ya know, account for increases to the cost of living.

 

[Perd Hapley]

I don't know if I'd call it hurting, but we are significantly worse off than we were before inflation took off and I would assume we're not uncommon. We would have needed to increase our pay by over 13.5% over the past 24 months to keep up with inflation and 18% over the past 36 months and we unfortunately haven't come close. We're probably extreme in how poorly we've done, but I don't feel like most people that have climbed up the ladder much have been getting 5.75% annual pay raises the last three years (which is what you'd need just to keep up with inflation). I think the the lower end of the payscale have mostly gotten pretty big raises, but not sure they've been enough to make them better off. And I feel like most salaried people have been steadily losing ground, getting 3 or 4% pay raises. That's enough for a 5-7% income drop in real terms. Not that that's going to cause a crash or anything, but with so many consuming at the limits of their earning, I feel like that's a significant enough hit to cause a real recession.



I think people (including me) are going to ***** about inflation until they are able to get their income in real terms back to where it was in 2019/2020. And for a lot of people that won't change jobs, that's going to require inflation to be sub 2%.

The big hit for us has been the house. We wisely refinanced in 2021 at near rock bottom rates. But my mortgage payment has gone up nearly $300 per month due to escrow shortages from both insurance premium climbing by a very disproportionate amount to cover a much higher replacement cost, and property tax increases for the same reason due to the housing craziness. That alone was probably enough to completely cancel out the raise I got last year and maybe the last 2 put together, haven’t run the numbers on that. Add in the temporary gas price spike last year, the new normal in much higher eating out costs and grocery costs, and other things, and I’d say our household spending power hasn’t increased at all in the past 2 years.

On the positive side, we still have the same 2 vehicles we had then, and they are fully paid for. So we haven’t taken any major hit there. But as PooSocks would say, car insurance is now “high as giraffe p***y” also, so that hurts too. Probably paying $40/ month more now for no reason whatsoever. Same cars which are now worth less than 2 years ago due to higher mileage, no tickets, and no wrecks since then.

 

[johnson86-1]

The big hit for us has been the house. We wisely refinanced in 2021 at near rock bottom rates. But my mortgage payment has gone up nearly $300 per month due to escrow shortages from both insurance premium climbing by a very disproportionate amount to cover a much higher replacement cost, and property tax increases for the same reason due to the housing craziness. That alone was probably enough to completely cancel out the raise I got last year and maybe the last 2 put together, haven’t run the numbers on that. Add in the temporary gas price spike last year, the new normal in much higher eating out costs and grocery costs, and other things, and I’d say our household spending power hasn’t increased at all in the past 2 years.

If your spending power just hasn't increased (as opposed to dropping), I'd say that's pretty good for the last two years if you're a salaried worker. Our saving grace has been our housing expenses being more or less fixed and having made several big purchases before or early in the pandemic. Knock on wood but we shouldn't need to buy any cars or toys for the next four or five years and things like roof, HVAC, appliances, etc. are all pretty new.

On the positive side, we still have the same 2 vehicles we had then, and they are fully paid for. So we haven’t taken any major hit there. But as PooSocks would say, car insurance is now “high as giraffe p***y” also, so that hurts too. Probably paying $40/ month more now for no reason whatsoever. Same cars which are now worth less than 2 years ago due to higher mileage, no tickets, and no wrecks since then.

You're paying for more car insurance because we keep adding expensive and easily breakable things to cars. Had a friend have his wife's insurance get hit for like $1200 for bumping into the car in front of her. No visible damage, and the owner wasn't being an ***. They just wanted to check to make sure the back up sensors and camera and everything weren't messed up and it was apparently cheaper to just replace a bunch of stuff than test it and repair it.

Not sure if this is really hitting rates yet, but I've been told by a broker that electric cars are getting totaled from what would be minor collisions because they are worried about liability if they don't change out the batteries after a collision.

 

[johnson86-1]

The arguments I am seeing is that fiscal policy drove inflation up to around 4%. The rest was supply chain plus corporate profiteering. That would come out to about 33% free money.

Crazy how corporations got greedy the last few years. Hope they go back to normal soon.**

 

[mcdawg22]

 

[Boom Boom]

Crazy how corporations got greedy the last few years. Hope they go back to normal soon.**

Crazy how we deregulated them and expected them to regulate themselves, while also eliminating anti trust and letting them grow to obscene size and expecting no consequences.

 

[johnson86-1]

Crazy how we deregulated them and expected them to regulate themselves, while also eliminating anti trust and letting them grow to obscene size and expecting no consequences.

Well, no consequences until the last couple of years when they suddenly got greedy and started driving inflation.

 

[Boom Boom]

Well, no consequences until the last couple of years when they suddenly got greedy and started driving inflation.

In past inflation periods we did not see massive profit increases. In this one, we did. That drove a significant chunk of this "inflation". Never happened before. But please, keep minimizing that. Real helpful and insightful.**

 

[PooPopsBaldHead]

If your spending power just hasn't increased (as opposed to dropping), I'd say that's pretty good for the last two years if you're a salaried worker. Our saving grace has been our housing expenses being more or less fixed and having made several big purchases before or early in the pandemic. Knock on wood but we shouldn't need to buy any cars or toys for the next four or five years and things like roof, HVAC, appliances, etc. are all pretty new.

It's hard to shake out who is where honestly. When you see reports from the Atlanta Fed's wage tracker shows wages are still up 5.8% YOY in May for job stayers. It's up 6.8% for job changers.

My guess is this is driven by lower income brackets though. Teachers for instance. I know Mississippi had big teacher raises last year and we are having them again this year. A starting teacher in Idaho will get $47,300 this school year vs $35,800 in 2019-20. So that's like 32% worth of pay raises in 4 years.

There's also some regionalism to it. Fast growing places are just getting ridiculous wage growth because of the scarcity of labor for service type jobs.

 

[Perd Hapley]

You're paying for more car insurance because we keep adding expensive and easily breakable things to cars. Had a friend have his wife's insurance get hit for like $1200 for bumping into the car in front of her. No visible damage, and the owner wasn't being an ***. They just wanted to check to make sure the back up sensors and camera and everything weren't messed up and it was apparently cheaper to just replace a bunch of stuff than test it and repair it.

Not sure if this is really hitting rates yet, but I've been told by a broker that electric cars are getting totaled from what would be minor collisions because they are worried about liability if they don't change out the batteries after a collision.

So in other words, in my case they have increased mine for no reason whatsoever. We have two vehicles with no such issues with things being difficult / expensive to replace, nor have there been any claims or instances where anything needed replacement.

If its expensive as hell and high failure risk for various components on electrical vehicles to need replacement, then jack up the rates for the folks that own those, or at least those who drive in areas with a high density of those types of vehicles. Don’t screw over the folks with outstanding driving records who also have 8-10 year old ICE vehicles with replacement parts galore available on Amazon. My home insurance doesn’t go up because some dude 3 streets away puts up solar panels on his roof, and neither should my car insurance for basically the same reason.

And also, I’ve price checked my car insurance rate against competitors, and its almost double what I could pay elsewhere in some instances. But for whatever reason, the total bundle price with the home insurance remains mostly competitive. But I still plan to check some more competitors very soon. Unfortunately getting multiple bundle insurance quotes is a huge pain in the ***.

 

[Seinfeld]

Well, that and it's intended to pay the cost of living. To do that you kinda have to, ya know, account for increases to the cost of living.

**supplement

I get that a lot of Americans depend on social security today for a lot more than a small boost to their retirement, but when the entire rest of the country is having to deal with this inflationary shitshow, I don’t get why we’re all good with singling out 20% of the population and saying… “don’t worry about all this guys, we got you”

 

[Boom Boom]

**supplement

I get that a lot of Americans depend on social security today for a lot more than a small boost to their retirement, but when the entire rest of the country is having to deal with this inflationary shitshow, I don’t get why we’re all good with singling out 20% of the population and saying… “don’t worry about all this guys, we got you”

I don't get why you don't get it. First, the whole deal of SS is that people can retire and then have cost of living covered. It would be pointless to have inflation eat that to not covering what it was created to cover. 2nd, damn Boomers get every good deal possible because they are a disproportionate share of the electorate. Why would this be any different?