Monetary Policy

[J. Barron DeJong]

‘Inflation’ to the average person seems to be whatever the price of gas is doing. FWIW, it’s now lower than it was before RU invaded UKR:

[Core Shot]

Here’s headline and official core CPI from the release two days ago:

Attachment 438376

https://jabberwocking.com/inflation-...e-in-november/

(wages are in the first chart I posted)

Edit:

Here’s wages and headline CPI, indexed such that they both equal 100 at the start of 2020, so you can see the changes clearly.

Attachment 438379

I like that last graph. It shows the fed is doing a good job.

Or. It also shows that desperate employers are giving raises to keep up with the inflation.

Or both.

But sadly. I don’t buy the official CPI.
“Substitution” is bullshit.

[J. Barron DeJong]

I like that last graph. It shows the fed is doing a good job.

Or. It also shows that desperate employers are giving raises to keep up with the inflation.

Or both.

But sadly. I don’t buy the official CPI.
“Substitution” is bullshit.

By substitution, you mean chained CPI, where if, say, the price of beef goes up but chicken doesn’t, then consumers will cut down on beef and buy more chicken, thus partially negating the increased price of beef?

Edit:

Here’s chained vs non-chained measurement. Not a huge difference since 2020:



The previous chart showing wages vs inflation was using the non-chained CPI.

[Hood26]

Monetary policy does play a role in the National Debt. Debt hawks can relax though.

The below is pre-inflation getting above target, but still helpful in helping understand that national debt is not like household debt.

https://www.stlouisfed.org/publicati...al-debt-matter

Inflation bites, but high unemployment and deflation suck worse, so let’s not all go calling for full austerity measures and get an over correction here voters.

[Hood26]

A good easy read:

https://hls.harvard.edu/today/the-pa...o-a-recession/

[byates1]

50% of Americans making over 100k per yr are living paycheck to paycheck. Thats just fucking great. I hate everyone.

[Bunion 2020]

^^^ That is by choice. How many of that 50% have overspent themselves into living paycheck to paycheck?

In June 2022, over a third of high-income consumers making over $250,000 were also living paycheck to paycheck.

https://www.businessinsider.com/amer...aycheck-2023-1

[byates1]

I agree thats why I hate everyone. Except you. You are the best

[Bunion 2020]

Awww shucks.

[XXX-er]

50% of Americans making over 100k per yr are living paycheck to paycheck. Thats just fucking great. I hate everyone.

It probably a different thread but i never made 100K and the only time i ever lived paycheck to paycheck were the times i was married

I was just reading where 20% of the people with mortgages in Canada will not be able to afford them reason being most mortgages are amortised over25yrs but on of a 1/ 2/ 3/ 5yr or variable period so with the rise in interest to combat inflation a whole bunch of people are going to have to renew at rates they can't afford

of course the low interest rates were going to go on forever so people buy the biggest house they can afford at lowest rates and now some of the will have to sell in a falling market

[fastfred]

I pay attention to lots of little things out there
I play an idiot on tv

Here is my hot take, my business is starting to go downhill. For the first time in 12 years I'm slightly concerned. On one hand I could actually care less, on the other hand riding the gravy train is so nice. Customers are still beating down the door wanting projects completed. The issue is now cost, prices have spiraled out of control in the construction industry, lack of productivity, wage demands, cost of materials, and the complexity of projects these days have contributed to these cost increases. Once people are provided an estimate they balk. The lack of cheap free money that has been holding our country hostage for so long is drying up.

A fellow contractor who is at least 20 years older than me pulled up his costs for a "custom" home built in summit county in the early/mid nineties. He is now remodeling this home. The cost of construction was $280 sq ft. Today $600 sq ft is the starting base cost. For a fully custom pimp home, those costs are around 900 - 1200 sq ft.

Due to poor monetary policy to help support growth as well as the boomers comfort and quality of life as they die off has created many of these issues. As well as the obscene shut down and handing out of trillions of dollars of non existent government money due to covid.

People who have recently purchased cars with sub 700 credit score are now starting to default, housing costs have escalated, the cost of food is crazy. And for some reason we are allowing two of the largest grocery chains to merge to create an almost absolute monopoly/price fixing of the food supply in this country. Corporate profits have maintained to some degree even as inflation soars. Most of this makes no sense for the average American.

My point is, it is going to be a slow crumble down hill mostly due to inflation/resulting stagflation. This stagflation could last ten years as we pick up the pieces and fight the man over the need to constantly prop up wall street, failed hedge funds, and investment banks. The greatest failure was the deregulation of the insurance, investment, and banking industry. Corporate bail outs as needed by the end of 2023 with government money that doesn't exist. Absolutely no over haul of the deficit, current healthcare system, welfare system (which needs expanding, thankfully the republicans have backed off on cutting social security/medicare due to most of their constituents relying on these "hand outs"), and corporate monopolies that have been allowed to flourish.

As long as people are addicted to facebook ticktok and every other bullshit social media out there, the idea that anyone is going to lift their head away from their phone, truly educate themselves on fiscal policy, we are doomed. The revolution will never take place because we are satiated by this false sense of being created by the internet.

[byates1]

^ what he said...

[JimmyCarter]

“TikTok is the opiate of the masses” -Marx

[Ted Striker]

As long as people are addicted to facebook ticktok and every other bullshit social media out there, the idea that anyone is going to lift their head away from their phone, truly educate themselves on fiscal policy, we are doomed. The revolution will never take place because we are satiated by this false sense of being created by the internet.

Heavy physical work, the care of home and children, petty quarrels with neighbours, films, football, beer, and above all, gambling, filled up the horizon of their minds. To keep them in control was not difficult.

It was not desirable that the proles should have strong political feelings. All that was required of them was a primitive patriotism which could be appealed to whenever it was necessary to make them accept longer working-hours or shorter rations. And even when they became discontented, as they sometimes did, their discontent led nowhere, because being without general ideas, they could only focus it on petty specific grievances. The larger evils invariably escaped their notice.

[byates1]

https://youtube.com/watch?v=yQQQgl9O...SIkaIECMiOmarE

[MagnificentUnicorn]

It probably a different thread but i never made 100K and the only time i ever lived paycheck to paycheck were the times i was married

I was just reading where 20% of the people with mortgages in Canada will not be able to afford them reason being most mortgages are amortised over25yrs but on of a 1/ 2/ 3/ 5yr or variable period so with the rise in interest to combat inflation a whole bunch of people are going to have to renew at rates they can't afford

of course the low interest rates were going to go on forever so people buy the biggest house they can afford at lowest rates and now some of the will have to sell in a falling market

They don’t have fixed rate mortgages in Canada?


Sent from my iPhone using TGR Forums

[J. Barron DeJong]

They don’t have fixed rate mortgages in Canada?


Sent from my iPhone using TGR Forums

No. Or at least not as an American would recognize.

30-year fixed rate mortgages in the US exist due to government backing.

In Canada a fixed rate mortgage is only fixed for a short period of time (a few years) not for the whole amortization period. At the end of that period the rate re-adjusts to current rates.

Not sure if there is anywhere else in the world doing what US does, where you can lock in rates for 30 years, and also refinance without penalty if rates go down.

[XXX-er]

No. Or at least not as an American would recognize.

30-year fixed rate mortgages in the US exist due to government backing.

In Canada a fixed rate mortgage is only fixed for a short period of time (a few years) not for the whole amortization period. At the end of that period the rate re-adjusts to current rates.

Not sure if there is anywhere else in the world doing what US does, where you can lock in rates for 30 years, and also refinance without penalty if rates go down.

https://www.cbc.ca/news/canada/londo...mare-1.6750229

Gotta get in that market ^^ a FOMO story that is playing out all over Canada ^^ a nice couple is paying almost double the mortgage rate they signed for 1 years ago and the house is worht 150K less

So fully 20 % of canadians with mortgages are on track to not be able to pay them, So the housing market is tanking

[MagnificentUnicorn]

No. Or at least not as an American would recognize.

30-year fixed rate mortgages in the US exist due to government backing.

In Canada a fixed rate mortgage is only fixed for a short period of time (a few years) not for the whole amortization period. At the end of that period the rate re-adjusts to current rates.

Not sure if there is anywhere else in the world doing what US does, where you can lock in rates for 30 years, and also refinance without penalty if rates go down.

Gotcha. I’ve never used a variable rate mortgage. Just 15 year fixed rate.


Sent from my iPhone using TGR Forums

[Mustonen]

Yeah, that’s why your bank (usually) doesn’t keep the mortgage. Nobody wants a fixed rate 30 year asset on their books. The interest rate risk is too high and will put your balance sheet under water.

[MagnificentUnicorn]

Sounds like most people bought more house than they could afford with 30 year variable rate jumbo loans.


Sent from my iPhone using TGR Forums

[Mustonen]

Sounds like most people bought more house than they could afford with 30 year variable rate jumbo loans.


Sent from my iPhone using TGR Forums

Well, 20% maybe. And “jumbo” has a specific meaning that likely doesn’t apply here.

[XXX-er]

20 % of all the mortgages in Canada is not nothing but 30 yrs was just the amortiztion period, I duno if its jumbo but it might as well be for someone who can't pay it, the low rates were suposed to go on forever and the problem was when they did not

i can still get a 10yr from one of the banks i deal with but I don't think they wrote too many of those, there used to be more of a spread depending on the term of the mortgage, I'm remembering a 2% difference between a 5 yr and a 1 yr so most people went short term and alot of them went variable but i wonder how many of them were really able to think criticaly and work it out on a cocktail napkin ?

my parents took out a 6% 25 yr mortgage in the 60's so the 25 yr terms were around in cancuk land, they paid it off early when interest rates were hitting 18%, of course i tried to tell them it was silly but mom said " we feel we should have the mortgage paid off so we can own our home" and there was absolutely NO convincing her

[::: :::]

I pay attention to lots of little things out there
I play an idiot on tv

Here is my hot take, my business is starting to go downhill. For the first time in 12 years I'm slightly concerned. On one hand I could actually care less, on the other hand riding the gravy train is so nice. Customers are still beating down the door wanting projects completed. The issue is now cost, prices have spiraled out of control in the construction industry, lack of productivity, wage demands, cost of materials, and the complexity of projects these days have contributed to these cost increases. Once people are provided an estimate they balk. The lack of cheap free money that has been holding our country hostage for so long is drying up.

A fellow contractor who is at least 20 years older than me pulled up his costs for a "custom" home built in summit county in the early/mid nineties. He is now remodeling this home. The cost of construction was $280 sq ft. Today $600 sq ft is the starting base cost. For a fully custom pimp home, those costs are around 900 - 1200 sq ft.

Due to poor monetary policy to help support growth as well as the boomers comfort and quality of life as they die off has created many of these issues. As well as the obscene shut down and handing out of trillions of dollars of non existent government money due to covid.

People who have recently purchased cars with sub 700 credit score are now starting to default, housing costs have escalated, the cost of food is crazy. And for some reason we are allowing two of the largest grocery chains to merge to create an almost absolute monopoly/price fixing of the food supply in this country. Corporate profits have maintained to some degree even as inflation soars. Most of this makes no sense for the average American.

My point is, it is going to be a slow crumble down hill mostly due to inflation/resulting stagflation. This stagflation could last ten years as we pick up the pieces and fight the man over the need to constantly prop up wall street, failed hedge funds, and investment banks. The greatest failure was the deregulation of the insurance, investment, and banking industry. Corporate bail outs as needed by the end of 2023 with government money that doesn't exist. Absolutely no over haul of the deficit, current healthcare system, welfare system (which needs expanding, thankfully the republicans have backed off on cutting social security/medicare due to most of their constituents relying on these "hand outs"), and corporate monopolies that have been allowed to flourish.

As long as people are addicted to facebook ticktok and every other bullshit social media out there, the idea that anyone is going to lift their head away from their phone, truly educate themselves on fiscal policy, we are doomed. The revolution will never take place because we are satiated by this false sense of being created by the internet.

Blahblahblah
So, what part does gravy train construction pricing play in this fiscal policy conundrum?
#ohnopricesarehigh

I had a shit year last year because all the construction pricing was still in gravy train mode. Projects that should have moved forward got paused as clients said fuck no I’m not paying what appears to be a 500% motivator bonus to just show up

Glad that shit has trickled back to the build side

Maybe we’ll see some attempts to right size pricing again as they wonder when that next job is coming in

[fastfred]

^^ I appreciate your comments, here is my rebuttal.

Gravy Train Definition: I do not have to hustle for work, I do not have to justify my prices, work just flows to me.

Myself as well as some other contractors and subs I know were actually not hitting their marks, I aim for 14% profit. I have actually been slightly under that number for the past three years even though my revenue is up.

I wanted to buy an 84 Toyota RWD manual, fun little truck to have. Seller wants 4k at least, bottom dollar. I am in for $1,800.00, because I don't need a 40 year old beater car. So costs are screwed across the board. Up until 10 years ago I used to buy one beater after another spending only 1,500 to 2,500. Days of cars being priced like that are long gone.

Construction prices will not go down, unless it is taking place in some shit part of the country. The market may try force it to happen but I don't see it happening. If you goto any job site the majority of the work force is well over 40 years of age. This next down turn will be my third time, I have told myself for ten years if that happens I'm out. So are thousands of others. There is no one filling the void. Young kids willing to learn a trade such as a mechanic or carpeted, yeah. Nope. Few and far between. 2008 created a vacuum of skilled workers, that vacuum is only going to suck more. Trades people finally know what they are worth and are demanding it.

Sit down and compare grocery costs from 2018 to 2022. Car costs. Heating bills have just decimated some people this year. My provider xcel energy just posted a 1.74 billion dollar profit. Yet they will gladly turn the heat off on someone who hasn't paid their bill in four months. The CEO of xcel just wrote a pretty op-ed in the Denver post about how much he and his company cares. It was absolutely obscene.