Wolf Richter on “This Week in Money,” at HoweStreet.com, recorded on April 14:
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Wolf you have to think in Bitcoin as Ross Stevens put it. In Bitcoin houses,vacations, education are becoming cheaper.
Overnight in the US (last night), the purchasing power of Bitcoin plunged something like 15%, which is a HUGE amount of inflation for just a few hours, and I’d have to pay a whole lot more bitcoin for the same house :-]
This is why, in reality, bitcoin is useless except for money laundering.
Right on about Bitcoin!
Bitcoin as a replacement for fiat because it is decentralized and not under the authorities boot is the best argument in favor of it I have heard.
However, it shows everyday signs of being the biggest Ponzi scheme ever (intentional or not) and it appeared on the scene to play its dicey role these maniacal financial times.
There will be Bitcoin billionaires to be sure, but lots of wiped out suckers too to balance it out. Part of the Ponzification of our economy.
I like to look at the crypto market like this:
Let’s assume Bitcoin is a store of value, a future currency, etc. What’s the argument for the other trillion dollars in sh!tcoins? The entire space is a giant PONZI, with zero intrinsic value. It’s going to zero.
I would like to hear an explanation of how it could be used for money laundering. Not that I want to do that, but when I hear statements like this I can’t help but wonder.
There was a big article on it in businessweek a few years ago. I was thinking about actually buying some Bitcion ATM until I read the article.
I looked in my city were all the Bitcoin ATMs were located. They were all in the hood. The article also said most of the these type of ATMs in Chicago were in the hood. Actually there were turf wars between the ATM owner for the best drug infested locations.
Essentially, there is a law that an ATM has a daily cash deposit limit of something like $3000 and they are supposed to validate your id. The author went to a machine, put in $15k and showed a fake id. These ATM took a 10% to 15% transaction fee cut. One of the BTC ATM owners would collect 30k of cash out of the machine weekly. He was profiting almost $30k to $85k in transaction fees per BTC ATM a year. He said he was starting to hire ex-army people to collect the cash as the could be up to 30k to 40k in a machine in just a week. Remember, this was low income and high unemployment areas.
So you street drug dealers could essentially take the days worth money they collected. Deposit into the ATM and send it directly to the cartel boss in Mexico.
No need to trying to have a runner move thousands of dollars across the boarder in a car or plane. Just use a Bitcoin ATM machine. 222
“bitcoin is useless except for money laundering”
And bilking suckers with pump and dump.
How is Bitcoin any different than non-dividend paying stocks? You NEVER get any revenue back from non-dividend stocks. Price only goes up if more people think the price is going up, and buy. Both are a type of Ponzi scheme.
Having said that…I buy stocks of all types. sigh.
Jim Y, it’s not different from stocks that never make money, but that people only buy because they think they can sell to a greater fool.
And to a large degree, that’s all stocks where the prices drastically exceed their profits based on normal valuations.
Bitcoin is great for speculating. Sorry, I meant gambling. Also for buying useless ephemeral kitsch on the internet.
The same can be said about buying stocks at this current valuation.
Money laundering is such a dirty term. Call it money freedom. The global economy needs to get beyond the Forex system which is rigged to the max. A chicken in China is worth what a chicken in the US is worth, same thing. Wall St makes a ton of money by exploiting cheap labor in foreign sounding places, and then propping up its currency (financed on massive deficits). Bitcoin makes free trade possible. The IMF would address this issue with SDR if only they didn’t have an insiders formula which favored the most powerful nations, for handing out their universal currency. Their debt is distributed on a 1:1 basis however. The people buying bitcoin are telling you, the system stinks, we are voting with our feet. Interesting that many people who think of it as Bit-con, regard the entire US financial system as a ponzi scheme. For years Wall St has been paying lip service to the developing nations. Ironically China (not exactly an enlightened nation) is rolling out digital. We just have to wait and see if they are for free currency and payment exchange in the third world and how that will play out.
The FBI can trace Bitcoin transactions.
Bitcoin requires huge amounts of electricity to stay afloat. Now the Chinese want to float a crypto issue so they might sell it to foreigners and get rich.
How does the FBI do that?
The Chinese crypto will be used to monitor what their “people” buy. If one says something wrong against the “gov”, he can be stripped of his crypto and lashed with a wet noodle (or worse).
Anyone can trace Bitcoin transactions, as every Bitcoin transaction is written to a public blockchain.
The blockchain contains a history of all transactions ever made. There are block explores that allow anyone to examine the details of any transaction.
You’re right about electricity, it’s churning the massive processing power needed for BTC. However, by luck, it’s not all bad news. For renewables to contribute meaningfully to base electricity demand, installations need to have massive over-capacity in off peak periods. Effectively this means the electricity is wasted or burned off or shut down.
BTC gives a very effective means of turning this surplus into ‘value’ and could become an intrinsic part of a more efficient green energy chain than batteries which spew energy.
I get you’re sceptical about BTC.
Repeating from an earlier post, I’m too old to care about Bitcoin and I don’t, but:-
By the Math, the 21millionth bitcoin will cost an infinite amount of money to produce. Therefor it can’t be produced, even if it sucks in every dollar in existence like a black hole.
Compare this situation to the dollar which can be produced as fast as printing presses can be made to run for ever. Gold is valuable because it’s difficult to produce but it lacks the easy exchange ability of BTC. (needs a forklift)
So BTC at least has more intrinsic value than gold.
You’re dead right about the volatility, of course, but that’s because it’s caught up in the Casino Gulag where everything is crazy at the moment as Max would say.
I personally think it’s ultimate problem will be the processor power needed to cover all the world’s transactions. They’ve cornered Nvidia Game chips already and they’re only doing a tiny fraction.
BTC is seeing the network effect and the FOMO effect. It could go much higher and the odd are that it will.
But the narrative keeps changing.
2009 to 2017 = Cryptocurrency that could reduce the need for banks and their fees. Instant transactions across the world. yada yada
2018 to 2020 = Slow transactions and high fees pretty much doomed the currency narrative so then it became a store of wealth.
2020 = Michael Salyor, the CEO of Microstrategy, borrowed money to buy a “store of wealth”. What company borrows money to be used as a store of wealth? Thus he has labeled this transaction now as an investment. So now the BTC narrative is that it is an investment. An investment that does not produce income? You have to count on asset appreciation.
What comes next.
I am guessing eventually a good crytpo will come out. What I do not understand is Google, Facebook, Microsoft, IBM, Oracle, never pass up on a good money making industry. Why are they not creating a cryptos?
It is no good for money laundering. The blockchain records all transactions faithfully and permanently. One needs the opposite to happen for money, so to speak.
There are ‘randomising’ exchanges, but, against someone with the capabilities that the NSA has … “They” will have “your number and colour of underwear (brown)” within minutes.
Against someone with the capabilities that the FBI has … well, one will get done for whatever one of all those other crims did, and then one can grass up some friends to maybe negotiate that down closer to what one actually did :)
BTC is running at the extreme limits of current processor power. By co-ordinating 1000’s of PC’s all over the inet they effectively have at their disposal more power than Govts in even a few super computers which cost tregabucks.
The math and encryption is so complex that only super-geeks can comprehend it. It is truly a miracle of the computer age. As a former engineer I know nothing is perfect and I think their ultimate need for processing power will run ahead of their ability to obtain it, even if they can ultimately afford super computers.
All the delays and time lags that are spoken of are due to too slow computers and not to the design of the math.
Bitcoin is burning its CPU cycles on a meaningless problem, the “proof of work” (that also makes it very hard to falsify bitcoin and interfere with the blockchain).
The NSA is burning CPU cycles on another problem entirely:
Unwinding and collating all the transactions in the blockchain and assigning them to individuals.
The blockchain was designed to preserve the full transaction history. The NSA will simply be *using* the blockchain exactly as it was designed, a much simpler proposition than breaking its integrity.
For someone like the NSA, the worlds worth of blockchain is just a huge distributed database over transactions, weirdly formatted perhaps, but, no worse than using the unstructured data from antivirus file signatures to track “who/what talks to whom”.
Those agencies have a lot more ressources available to them than just dumb CPU power. They have university departments, researchers, professorships, infinite supply of PhD students, as the last resort, legislators and kinetic enforcement.
I would not think it impossible that something like the NSA, or someone sponsored by something like the NSA, to be the actual designers and founders of Bitcoin. The US intelligence complex have been remarkably creative and “future-engineering” in the past and probably still are.
When one wants to see where the rats are, one spread some powder around that attaches to their little paws and leaves a trail – Bitcoin can serve the same purpose in the digital realm.
Would the bitcoin network be valuable as a payment network equivalent to Mastercard, Visa and the entire Banking payment rails with decentralized ownership (through ownership of Bitcoin/BTC).
In some places, would it be an effective store of value (though seen as illegal, because it is against government capital controls and forced devaluation of currency – seen alternatively as opting out?)
It is not a currency and will never be – no sovereign country will permit it. It’s value will depend on its utility as payment rails and store of value.
Money laundering is a big slice of the economy though. Bitcoin is like cocaine. I would personally not even like to touch it.
However, I can see how it enables asset-hiding and money laundering, so it may retain some “value” even if not its current inflated value. After all, how can corrupt judges, corrupt politicians, corrupt police, corrupt SEC officials, etc., hide their bribes if not for the digital coins? 97% of LA county judges would quit if their bribe-savings could not be safely hidden.
They are really great too for crooks like the “Federal” Reserve banksters and the US is flush with crooks. Corruption is our one, growing, US industry. Be proud.
Take my word for it, because I am a lawyer. Bar association meetings for me now are like a fairy tale: Alibaba and the Forty Thieves. I bet they have a lot of bitcoins even if I have none.
The CCP crooks love digital coins too and for the same reasons. Is international brotherhood not grand? Sacks of gold are so bulky, anyway. Silver sacks have the wrong, guilt-producing connotation for the crooks, reminding them of Judas and all.
P.S. I hope that the juicemedia does a video on the coins. They are so hilarious that I wish that they were US-based but like Assange, they would already have been prosecuted, for revealing state secrets: that we have so, so, so many crooks and morons. If you disagree, you can guess which one you are.
K – Peculiar that you would state: “I would personally not even like to touch it.” Bitcoin, after all, is untouchable.
Lisa, I was speaking metaphorically. To all adorable bitcoiners, ready like teenage Bernie Madoffs to go out and make their mark on the world (or maybe bruise on the world given the electricity that all miners of coins are burning), whom I undoubtedly annoyed, because any whiff of the truth is bad for the value of the digital coins, rest e a s y.
Sleep well. Because your digital wallets are safe. They can never, ever, ever be hacked. They utterly safe.
What experts say that the only unhackable computers would be those whose storage you wipe with security software then you first crush with a trash compactor, burn until only ashes remain, then shoot the ashes into the sun, is probably wrong. :-) Nasty, annoying experts always saying things that always come true, like cigarettes will kill you morons!
The bitcoins are safe even if the CCP develops advanced quantum computers that enable it to crack any encryption. They are safe even if CCP or Russian hackers manage to make all of the major bitcoin exchanges their b___s.
They are safe even if the CCP or Russia or another large, state actor could take over the blockchain by creating/financially controlling enough miners or enough exchanges. They would not do that, would they, not even if the “value” of bitcoin were to reach a trillion in the banksters’ “Federal” Reserve monopoly money — oh I meant to write a trillion in US dollars. They are fundamentally “nice” people.
Rest easy. Your investments are safe like gold nuggets hidden deeply in some far off cave, on top of a hard, unclimbable mountain in the distant Himalayas ——— surrounded by Thugees and other crooks, who will respect your rights to your gold nuggets of course, because they are basically decent — aside from all the murders– ok, decent murderers who only rob OTHER people.
You know that is true, because they will tell you that if you ask. Ditto for the bitcoiners, so you know that they are trustworthy. Do not drink their tea though!
To anticipate your comment, I meant the Thuggees’ tea, dear Lisa. I cannot opine as to the bitcoiners’ tea. God forbid that I leave any ambiguity or string untied in my prose.
Even if all of the vast organized crime sums held in the digital coins, the coins of the utterly corrupt CCP or corrupt LA judges or politicians, or police or SEC agents, the coins of bitcoin originators like “Satoshi Nakamura,” and all other digital coins whose owners have hid themselves (for perfectly legitimate, non-criminal, reasons, surely) were suddenly sold, other crooks will jump up, arise valiantly and save the value of bitcoin from crashing. Sure, that will happen.
Just ask the tulip investors. THEIR garbage was also inherently worthless at first then it rose and rose in value (until later on, it became again utterly worthless.) However, of course, that will never happen to your beloved bitcoin. L.O.L.
So goodbye bitcoiners and sleep easy because encryption like marital fidelity is forever and no one will ever crack your blockchain just like no one will ever do the same to your wife.
Harrold above is correct, every transaction is recorded as an immutable electronic record which cannot be altered or tampered with in any way ever.
Compare that to paper dollars which can be used for absolutely anything with no record whatsoever after being paid out by a bank.
Bitcoin is a defence against chicanery. The reported scandals are in the money on the way into BTC not after its in BTC.
When any digital coin is a minor holder of value in society, that would be true. However, now that is no longer true. They no doubt have North Korean and Iranian and Chinese (CCP) professors working on crack your protections.
These actors can intercept or bug communications illegally. You may want to ask the NSA about how they were hacked. See “The NSA Hack: What Happened To NSA?” in idstrong. Those were non-state actors.
Are the protections in the various digital coins sufficient to overcome the efforts of state actors? I doubt it.
Correct me if I am wrong, but, the cryptocurrency exists because of internet.
Then, AWS and GOOG could decide who can have access (think Parler).
It isn’t a comforting thought.
The whole point of BTC is that it’s peer to peer distributed on individual PCs all over the internet.
To shut down BTC you would have to shut down the internet, then you would have a lot more to worry about than BTC. Being hit by a stray drone comes to mind. It’s not going to happen.
Of course ”it” is going to happen old one!
Question is WHEN,,, not IF.
Soon as the next EMP/Carrington event happens would be one when,,, unfortunately, nobody really knows for sure when that might be..
Just exactly as no one/body really knows for sure when our next ”crash” will happen, even with the tons of events currently happening SO similar to the events that lead up to the last few dozen ”crashes.”
And equally ”of course” ”’IT”‘ will be different this time… LOL
Of course you are right .
I forgot the Engineer’s Golden Rule.
“If it can go wrong it will go wrong”
All I would say in my defence is that the internet is the most resilient system ever put together by man and the probabilities of failure are astonishingly low compared to previous technologies.
Read today, a town in Canada was without internet for hours because beavers dug up and stole a buried telecoms cable.
You should never say anything about anything ever, should you? Put 2 cables in next time.
People are expecting hyperinflation or yearly 100% stock gains so they think all their debt will be incredibly easy to pay off. Also, some people are expecting ubi soon, which a small one wouldn’t cause inflation if govt spending was paid for by taxes on the aristocrats, but since we have the Fed…
They also forget they still have to compete with cheap international workers. The raises will still be meager unless we get a currency war.
I really doubt the average person is expecting hyperinflation. Most probably think, it’s simply a boom time (period of prosperity).
As for their wages, a major recession here in America, will hit the rest of the world too. Right now, all the large economies are piling up debt and there is not currently any workable replacement for the US Dollar. Eventually, there might be ways and systems put into place, that would allow counties to simply bypass a global currency. But, there is no available replacement at this time. The euro is closest, but, the always there talk of the eurozone collapsing and the burden of bailing out underperformers like Greece and Spain, prevents it from being a real replacement.
As for competing against cheaper labor, that will depend on whether America employs some level of protectionism. In order to maintain a global reserve currency, you must import more than export, however, not necessarily uncontrolled.
“whether America employs some level of protectionism”
That will never happen when those who greatly benefit from a lack of it own “our” government. Trump didn’t actually do much in that area and look how they worked so hard to get rid of him.
China has proved the great truth of the old commie adage, “A capitalist will sell you the rope you hang him with.” That flaw of capitalism can only be stopped by governments looking out for their citizens which only happens when those governments aren’t BOUGHT like “ours” is.
Corporations ship our jobs to China, fund and provide the IP for their “rope” factories, then we buy the rope: “Do you have the latest laptop, HDTV, and smart phone you don’t really need because your old one works just fine?” The corporations foolishly hope they’ll get a piece of the 1.4 billion person Chinese market when, in fact, they’ll be replaced by native Chinese manufacturers using stolen IP.
Many things have to go very far, until backlash happens and then change can happen. Yes, many things will be outsourced for foreseeable future, but, China is no longer the primary destination of such factories. Most less advanced things have been slowly relocating to cheaper countries for over 10 years now. Electronic factories are also now relocating elsewhere. Samsung has already fully pulled out. Apple has started partially pulling out.
China’s place in the global supply chain is much smaller than people think. Some parts and final assembly usually happens in China, but nearly all raw materials, most more advanced components, much of the machinery used to make everything, and the ships (south Korean) going in and of out of China, come from places outside China. China can be replaced with other countries, but, China is missing too many pieces of the puzzle to just start making everything. The Huawei phone everyone kept praising is made from foreign parts and Hauwai OS is just a fork of Android (android is made by Google and is open source, anyone can make their own version without having to ask for permission).
The value of consumer electronics will plummet before China could ever hope to take over. Notice how nobody cares where TV’s are made, that’s because they got so cheap, there’s very little money to be made. Phones will plummet in price over next 10 years. $100 to $200 phones will be the norm. With Samsung and some namebrands getting upto $300 or so. Apple because they are the only one who owns their OS will get a premium above the others. Phones will be made in more places as well, but certain critical components such as the CPU being made in certain richer countries for a longer period of time. Current Samsung phones bought in America are made in Vietnam, iPhones sold in America will soon say, made in India. Many other large tech companies are also relocating.
After China, none of the smaller countries, including India, will be able to grab enough of the supply chain to try to take things over.
The current level of outsourcing is actually currently sustainable (certain critical things like pharmaceuticals need to move back though) if they relocate enough outside of China and the wealth gap in America were to be shrunk though tax reforms and actual marketplace competition including in professional services (medical, law, and much more). The cost of doing business in China is growing, because of CCP greed and average Americans would benefit from outsourcing if actual competition existed in America. Certain critical things though would have to remain/relocate back to America though.
As far as the supposed switch to advanced manufacturing in China is concerned, it isn’t happening. While, western companies can occasionally make cars in China for developed markets (some foreign parts are involved). China’s domestic auto manufacturing hasn’t been able to match quality of West and they will be behind for the foreseeable future. Even if China could supposedly catch up, other countries could make their cars in countries cheaper than China and beat China on price and quality. For things like airplanes, while boeing isn’t currently upto proper standards, boeing planes are still safer than anything aircraft related possibly coming out of China. China was supposed to build aircraft with Russia, but, China has been destroying all their foreign relations and I seriously doubt it will still happen. Russia was going to have to build all the more advanced parts of the planes like the engines, landing gear and more. I’m not sure what these supposed advanced things China is making that replaces all the lower level stuff are. Also after ripping off everyone else’s IP, the CCP cannot expect other countries to respect their IP, if they actually started to innovate. The China market dream is a bubble that will deflate or pop.
Nah. I think people are expecting that it will become harder to borrow in the future, f.ex. when they have lost their jobs. It is a somewhat rational response to that notion, that they want to get their borrowing in early, before the crunch hits.
They are also right in expecting to not pay of those loans, though. Debts are someones assets. Destroying those assets value, through bankrupcy and price discovery is just un-possible unless one wants a re-run of 2008.
Most will get to keep their new cars and their loans!
For a while you’ve predicted that the rental car companies would sell their old cars into the used car market, lowering prices. Here you say (57:00) that they are not getting rid of the old vehicles. Why not? Do you think they will in the near future?
sorry to hear you are in-communicody
USED prices are 20% higher than 2020
I paid up to get good vehicle – $50k for 5 year old vehicle
it was WHAT I NEEDED not what I WANTED(otherwise it would be $75k)
I love my 5 year old vehicle – and we’ll see performance soon(within 30 days)
YOU GET WHAT YOU PAY FOR – cheap today, expensive tomorrow
“The bitterness of poor quality remains long after the sweetness of low price disappears.”
In the high price space, it is now more common, to get both high price and low quality. Upscale isn’t what it used to be.
To whatever petunia said
Hah, yeah. Unless it’s a Lexus.
Why buy a Cadillac when you can have a loaded Kia for less money with less issues? Unless it’s just the badge you care about. I’m not even joking.
German luxury cars are money pits, and not just when you buy them new and sell them heavily depreciated. The vaunted quality and reliability is an outdated myth.
I’m not spending that kind of cash supposedly to impress people I don’t even like.
why should they, things are looking like they’ll open back up. In theory that means travel will start to happen again. It may not be the same crowd, but I’ve heard of rental car joints that are now charging more than they had prepandemic because of demand.
Their fleet is now suddenly an asset, not a liability with no demand. Thanks to the excess of free money out there.
I think it’s also that, if their plan was to sell off the oldest of the “used” fleet, they might be holding off doing so due to the unavailability of new cars to replace them with. And since the cars were barely driven last year anyway, the 3 year old cars have the mileage you’d expect from a 2 year old car, so it’s not such a big deal.
The prediction that Hertz would sell many of its units was made last May or so. And they did some of that after the bankruptcy judge agreed to let them. So that then started in August/September. And last fall, wholesale prices started backing off for a while, but not enough, before turning around and going back up.
What all rental car companies did was not ordering new vehicles (which I also said a year ago would happen because that was obvious). And in one or two of my interviews last year, I speculated that this shortage of supply in 2021 would likely put some upward pressure on prices. But I didn’t expect anything as brutal as this.
Free money and FOMO are a worrying combination for price discovery.
Expect brutal price moves in both directions as emotional humans get all emotional.
But Danielle Park speaking about increasing productivity in Canada, and economy for 21. century, priceless.
That ship had sailed away. Federal secretary for housing clearly stated that even 10% correction is unacceptable.
Canada is a real estate agency masquerading as a country.
2021 Chevrolet Trax LT for about $19,884. at a dealer near me (excluding tax, title and destination).
A 2021 Ford Ranger pickup truck starts somewhere near $25k. The 3/4 ton pickup trucks are more expensive. These truck assembly line shutdowns may be temporary.
In 1989 I bought a new Toyota pickup truck in Phoenix on sale for about $7500.
obvious you are NOT PULLING
need actual pulling capability = diesel or forget about it
btw ranger pulls = nothing
I beg to differ
My Ford 460 could pull your house off the foundation.
It was a manual transmission model. I did not plow snow with it or pull a trailer.
Actually Joe, the new Ford Ranger is able to pull 6500 or is it 7500lbs? It’s a heckuva of a lot of pulling power for a “mid size” truck.
The mid size Chev Colorado is the same physical size as my full size 1995 Chev Silverado 1500 pickup was. They have downsized the upsized pickups to be the same size as the old full sized pickups!
7500lbs is what their website says. With a 2.3L 4 cylinder?
I’m curious to see how those trucks do in the long run.
I work at a dodge dealership and it is crazy. The $60k jeeps fly off the lot hellcats and special editions fly off. People buy a jeep or truck and turnaround and to add leather of a lift kit and rims.
I could see twice the parts but the backorders and chip shortage are killing it. last week i sold 45 windshields alone.
I wonder how much of that is due to expectations of price increases ? Or that they can finance over 7 years now ? Thoughts ?
You think Jeep/Dodge buyers are pondering vehicle inflation?! *lol*
As Ol’ Joe says, “COME ON MA’AAN”.
PEOPLE GOT MONEY TO BURN, THEY CANNNNNNOTTTTT HOLD IT. FACT.
PREPARE YE THE WAY FOR MORE.
Things are only “flying off the lot” because people are going into debt up to their eyeballs. These people aren’t paying cash. I talked to a salesman. He told me he hasn’t had a single person who was declined a loan in the 5 years he had been at the dealership. This is a bankers credit orgy.
You nailed it DC. Finance monkey business. Low end customers will buy ANYTHING AT ANY PRICE if someone is silly enough to give them credit. They are not concerned with making the payments. Either the repo man is working his butt off or he is out of business. They are fracking vehicles out the door with the Santa Claus providing the funds.
yes but bank loans are declining, who is giving this credit to people?
Santander. Look them up. Subprime city.
Throw5-6- trillion around of course everything goes up devaluation of fiat common sense my son in law put 100$ on dogecoin at 5 cents told hom to sell replied it’s going to 100$ pigs get slaughtered guess will learn the hard way
Highest total corporate profits ever in US was $2.25 T in 2019 so government throwing around $5 T is a lot of money. Nobody really knows what economy is going to be in the future yet.
Demographics, debt and low productivity means most will be lucky to hang on to lifestyle they have.
So the same mechanism in other supply chains (e.g. lumber, meat processors).
Rapid consolidation of bottlenecks (here, dealerships) which allows them to control pricing beyond just supply/demand, and customers are unwilling to call their bluff with a buyer’s strike.
Alternatively, maybe traditional buyers like yourself are on a buyer’s strike, but because of all the stimulus and demographics (hello millennials, crypto millionaires), there are new entrants into the buyer pool.
I wouldn’t say customers are unwilling. I’m on a buyers’ strike and I have a friend who is as well. A lot of us are not interested at these prices. I’ll happily wait a few years if I have to, to see how things shake out. It is not what I’d want, but I could actually make my truck last the rest of my life if I wanted. I don’t HAVE to buy a new vehicle.
When the stimmies end, the “new” buyers will disappear.
The corollary of, and support for a buyer’s strike, is second hand sales activity.
The extra things you’ve accumulated from nice clothing to building material is sold for the money and to get storage space, or just given away to friends or charitable organizations that have a need for it. This replaces their new purchases and saves them a lot.
If you live in a place that cost you a fortune per square foot to buy, or rent, and you are wasting a hundred square feet of it with hoarded objects that have a potential value of a thousand bucks were you to buy them new, but that you wouldn’t and probably won’t use, and you were to sell them for a hundred at a garage sale or on Craigslist, etc, you are still coming out ahead.
Which is why I will be considering paying cash for a gently used, year old vehicle should I trust that the original debtor didn’t get angry and try to hurt it, which is surprisingly common with the types that can’t afford the debt they signed up for. Once they know they can’t afford it, they start abusing it. Like the people from the last housing bubble who were flushing concrete down the toilets, etc.
Have you seen the price of tires?!
We found a neat way to save. Our rubber was getting pretty thin. An older neighbor hardly drives anymore, so we swapped his wheels with his newer tires and put our old, still legal, ones on his vehicle. He got in cash, half what we would have paid for new tires at retail, and we got newer tires. Everyone happy.
Most tire shops sell used tires with a lot of life left on them. This is a great solution for those who barely drive anymore and want to save money. That said, it is false economy to run tires down to the cord, it’s illegal, dangerous and may cost one a lot in safety and costs of a wreck.
“That said, it is false economy to run tires down to the cord, it’s illegal, dangerous and may cost one a lot in safety and costs of a wreck.”
You are so right Barbara!
In 1975 I was 12 years old. My family and I went on a summer vacation. My dad knew that the tires on our car needed to be replaced but he decided to do it after our vacation. We had a blow out on Interstate 80 in Nevada. The car careened down a freeway embankment and it cost my dad his life. My mom, brother and me walked away from it, but our lives were forever changed.
Most independent tire shops, but by no means all, sell used, but they’re rarely the bargain they once were. Even small chains won’t risk the liability, one local won’t return them to the customer, the sidewalls are slashed and they go into a special dumpster. And that’s in a poor red state. Retreads were popular in Texas when I was poor there, never hear of them for sale anymore. Ten-ply truck tires are good for a few years unless you want to spend a lot. With bad roads and future municipal and state budgeting looking bleak in general i don’t want to spend a lot.
Once you are old enough to have seen a few cycles you realize being patient is a pretty good strategy.
About 12 years ago cars, houses and stocks were cheap. I bought stocks and was rewarded. Wouldn’t consider buying a car, house or stock now unless a special situation comes up.
In 2002 we bought a beautiful giant land barge convertible Buick Wildcat convertible, leather seats, giant engine, low miles, that nobody wanted, for $500 cash.
Great for tooling around town in pure luxury, the horrible mileage not mattering at all b/c of short distances. Got bored with it and sold it for ten thousand a decade later. Patience, a virtue that nobody teaches to their children, anymore, except some Asian immigrants, I have noticed.
I think the audio equipment quality is medium and/or you must work on a podcast voice and pace. C nam sayn…
Did he said howlstreet? got ‘m.
This was a telephone interview.
My lease expires next month and I called Land Rover requesting an extension they granted me six months. I asked for the buy out which normally above market price. Well pricing is so out the money I can literally turn a 10% profit buying the car and just selling it which I have zero interest in doing because nothing is that simple and im not in the car business.
Things are just bonkers.
I’ve got an even better one for you: The lease on my wife’s relatively loaded 2018 Pathfinder expires in a couple of months. Buyout is $23,700 and we could turn around ans sell the truck for $30-$31K. We’re gonna buy out the lease and keep it.
Wolf, when I purchase a car, I take my phone calculator and back into net present value, from the payments they offer. Usually I find some other fees. Once I found a consulting fee. Ugh. But the salesfolks are talking monthly payment and people are receptive. I think the 7 year payment plan is a huge success for dealerships and most people can’t tell the difference. It could be true that there will be an inflationary bump to everything. But I can’t believe the masses know that. They just like shiny objects. So I am staying with my hypothesis that the Fed has pumped money everywhere and the SPACs and there Ilk are taking advantage. It is temporary. Take a look at lumber futures. There is no reason to justify that price.
“inflationary bump to everything. But I can’t believe the masses know that. They just like shiny objects.”
Hahaha. Thanks for the laugh.
Easy on the unwashed masses who don’t frequent Wolf Street. Besides, who doesn’t like shiny things?
Listened to a couple of good Jim Chanos long interviews. He said something that rang true with me that when there is a lot of excess money around Wall Street is going to come up with “product” to soak it up. So money losing IPOs and SPACs and leveraged loans are acceptable fraud that no politician is going to be interested in until people lose their life savings.
Low interest rate (and longer term) for financing a car purchase means that people can “afford” a lot more Vehicle. Why not buy the more expensive toy? Play now, pay later /s
2 years ago Dr sibling purchased newer mansion in the country.
$TIMULU$ BUX INFLUX has her itching to knock walls down and reno it.
Brand new $50k SUV added to garage — THANX FOR THE BUX!
5 years ago was complaining about student loans??????
We got to install microwave ovens
Custom kitchen deliveries
We got to move these refrigerators
We got to move these color TVs
Money for nothin’
Money for nothin’, ~chEcks~ for free
I want a new coun-try!
Student loan payments are optional right now and probably much of $1.7 T will be forgiven. Student loans are biggest asset US government has. Can’t make this up.
Dumbest thing I did last year was not put my Fannie-owned mortgage into forbearance. Could have sequestered the cash from what would have been monthly payments. And then dropped the full amount in a single balloon payment at the end of forbearance, which would be applied to the priciple. That was the smart move, and you bet more than a few people are doing exactly that.
Foregone interest is added to principal?
Don’t ppl in forebearance have to show proof of income or joblessness? If not, then I guess ppl have additional income from not paying their mortgage.
Seems like I read someone had problems because forbearance is a negative credit event. Best not to get entangled with Godzilla big government unless it’s a last resort.
Delbert McClinton has been my inspiration with the song Too Much Stuff. I probably would have figured it out on my own eventually.
Lyrics below, but you can watch it on YouTube:
Enjoy Delbert along with John Prine and Lyle Lovett
Big house, big car, back seat, full bar
Houseboat won’t float. Bank won’t tote the note
Too much stuff. There’s just too much stuff
It’ll hang you up dealing with too much stuff
Hangin’ out on the couch puttin’ on the pounds
Better walk, run, jump, swim. Try to hold it down
You’re eatin’ too much stuff, too much stuff
It’ll wear you down, carrying around too much stuff
Hundred dollar cab ride, fogged in, can’t fly
Greyhound, Amtrak, oughta bought a Cadillac
Too much stuff. Too much stuff
It’ll slow you down, fooling with too much stuff
Well, it’s way too much
You’re never gonna get enough
You can pile it high
But you’ll never be satisfied
Rent-a-tux, shiny shoes, backstage, big schmooze
Vocal group can’t sing, won awards for everything
Too much stuff. Too much stuff
They just keep on going, rolling in all that stuff
Got hurt, can’t work, got a lot o’ bills
But the policy don’t pay ‘less I get killed
Too much stuff. Too much stuff
Just my luck, counting on too much stuff
Well, it’s way too much
You’re never gonna get enough
You can pile it high
But you’ll never be satisfied
Running back can’t score till he gets a million more
Quarterback can’t pass. Owner wants his money back
Too much stuff. Too much stuff
You know, you can’t get a grip when you’re slipping in all that stuff
Women every which-a-way messing with my mind
You know, I fall in love every day three or four times
Too much stuff. Too much stuff
It’ll mess you up, fooling with too much stuff
Yeah, too much stuff. Too much stuff
Too much stuff. Too much stuff
You never get enough ’cause there’s just too much stuff
You know you can hurt yourself, fooling with too much stuff
Yeah, it’ll tear you down, fooling with all that stuff
Dire Straits, great song
This will not end well.
People are in a “buying” frezy to get in before prices go higher.
And they will go higher, but in do time, it all falls apart and comes crashing down on them.
The term “under water” has not been in the news recently, but hang tight. People buying now, even with low interest rate, will be underwater selling for less then what they expected.
It is going to crash soon. Market, home prices, auto prices. Things can not be substainted at the level we see today.
Bizarrely appreciating auto prices reflect just another data point pointing to this manic phase of a crack-up boom. As the cliche sign board guys (from apocalyptic sci-fi movies) would say: “The end is nigh”.
When reading “The Death of Money” about the great German Hyperinflation, I was struck how long people viewed the Mark as stable, and thought all prices were going up.
Right now I see inflation nearly everywhere. (The everything bubble). Farm land is rising rapidly, houses, even in places like hard hit las Vegas are going up. Food prices are going up. Stocks are going up, now automobiles are going up. Last year most Ag. commodities went up. Gas is going up. Electricity is going up. Interest rates at 1000 year low = money worth less to loan out. Even Gold is up year over year.
My question is: Will the everything bubble ever pop, or will these prices be the new normal to a currency just worth a lot less?
Let’s ask a psychic
Car prices EXPLODING? Housing too? Well at least there’s no inflation to speak of so we can afford it.
As best I can tell, many have entered the mindset that things will never get back to pre-Covid normal. All sorts of things are disappearing from stock, and even the guys who know a particular industry will tell you they have NO idea either when more stock will arrive or things will return to normal. Lumber up 4x, ABS piping all gone, try ordering a complete kitchen, etc. My last Amazon package arrived on my doorstep before they told me it was shipped, and my bank was unable to process a simple change for 9 months, so the computer systems are failing too. My friends abroad tell me the same is happening in Europe and Asia, so this isn’t just North America. Add to that the fact that prepper-type stuff like hand grain mills have been unavailable for over a year and my local seed supplier (he tells me) had 548% more sales last year, and we have entered an unknown and for most people unforeseen situation. Some are buying beans and battening down the hatches, whilst others are ordering big trucks and swimming pools.
The massive distortions in both demand and supply can of course become a self-fulfilling prophecy.
“As best I can tell, many have entered the mindset that things will never get back to pre-Covid normal.”
Which screams “MASSIVE BUBBLE” to me. It’s never “different this time.” Have people magically become wealthy? No. Are these free stimulus checks going to be sent out forever? No. The virus numbers are waning. Big .gov isn’t going to have justification for this nonsense much longer. There is no free lunch. Anybody who believes there is doesn’t understand math.
indeed prices of vehicle are rising and it change the people mindset
The Fed has created DISFUNCTION in many markets.
Take Real Estate.
Because the Fed is promoting these fake and immoderate long rates, the 30yr mortgage at 3% is right about where the under reported inflation sits now. In previous times when the CPI YOY was 2.6%, 1999 and 2006, the 30yr mortgage was 6%…TWICE what it is now.
The Fed has SKEWED every market.
The screaming higher costs of building materials prevent building cost estimates, bidding, etc. People who own homes realize the replacement costs of their current home just increased about 35% in 5 months!!
And the buyers are out there trying to buy with rates at or below REAL inflation. Result, market lockup. Sellers pull back, builders cant build as would be the normal supply generator. And buyers are trying to buy all they can at prices from 5 month ago….before the materials inflation.
Nice job J Powell.
Short lumber futures, properly hedged,, may be the most obvious risk-adjusted trade available right now.
A Realtor just sent me a flyer and told me to sell my home becasue it was functionally obsolete. She said builders were building better quality homes tearing down these old 1950’s era homes and new buyers wanted all the amenities. In other words, you need to move to Flordia or NC and get the hell out of the neighborhood.
I told the Realtor that they should tear down the homes they just built. They are made of cardboard and the cheapest building materials on the planet. The windows are the bottom of the line and leak energy left and right. My house may be obsolete, true, but it is made of brick and mortar and is very energy efficient. I’m happy where I am and ain’t movin.
I realized our newish house was “functionally obsolete” when the single garage door spring broke and trapped our car in the garage. Builders think this kind of thing is okay because the buyer doesn’t know to look for a second spring and because the problem only manifests years later.
The repair people always like to point out how this or that was caused by the builder cutting corners and being cheap.
…and there was the time when our water heater expired, flooding the living room because the builder was too cheap to pay for a drain pan.
I like my house but in the future I’d feel more comfortable buying an older remodeled home (remodeled by owner, not flipper).
Meh. I just bought a 1950’s town house as a vacation home / bolt hole and I basically intend to restore it back to the 1950’s.
This kind of house were originally designed and built for the new “factory workers just coming out from the farms and into some money”.
They used simple materials and construction techniques, as well as robustness in the constructions because the wages, the borrowing opportunities and supply lines back then did not allow for a lot of maintainance work.
We had rationing and exchange restrictions up to 1959 or so (DK), there was no Chinese Plywood or even Asbestos avaiable (which is good, they would have used the asbestos materials if they could)!.
The original tiled roof from 1955, for example, is going to be good until 2055, according to the surveyers report. That is a pretty good run for a roof, IMO.
The energy rating is good for a 1950’s house, of course not as high as a modern house, but, central heating has been installed, which is very cheap in that area because is is running on biogas.
I am looking forward to spending my summer vacation there.
The new homes are so full of defects that the new homeowners have to spend 6 months or more fixing all the problems. I see major contractors back on the street with full crews working day and night fixing problems on these new houses after closing and the new owners moving in. The one next to me was built with a basement below the water table. The whole basement flooded with 6 feet of water and the dude had to put all his furniture on the street. Threw it all out. He moved after one year. He said he was moving because his wife could not walk his dog on her lunch hour.
I’m not making this up.
When my parents settled on a piece of land to build a home on, it was across the street from a small pond. The water table on our lot was 2 meters below ground.
That’s why it was still not built on in 1969 and available. Solution? Build on 40 foot long piles and use a shallow crawl space instead of a basement. The house is still standing and doing fine.
It must make you crazy, and make you laugh at the same time when you see people do foolish things like you describe!
George Carlin said: “You can’t have everything.
Where would you put it?”
If you own all the land as well, you don’t need to move it ;)
No one owns land, they just lease it from a government.
You may want to change your call name from Sailor to something else. When I was in the Navy they had a sign on the lawns of many residents at the Norfolk Navy base, and still do from what I have heard. It Read:
“SAILORS AND DOGS KEEP OFF THE GRASS”
I’m not making this up
That’s amazing. I grew up in San Diego and there was none of that. I don’t get why I hear about this kind of treatment treatment in Virginia. What’s different? Or maybe I misunderstand.
They called us Navy dudes “haulies” in Hawaii, statesiders in Guam. We were considered the lowest scum on the earth.
I believe that was Steven Wright
Consider the moral hazard that will result from the current $60k student loan forgiveness proposals ($50k plus another ~$10k in imputed income tax forgiveness). With consumers being fully conditioned to believe their debts could eventually be forgiven, why not purchase an over-priced new or used vehicle with a 7-year loan. This is not the way it was supposed to work.
This student loan forgiveness sham is not going to fly. All of the people who worked hard and paid off their loans are going to be extremely pissed, and that’s a lot of people. When you look into who benefits, it’s mostly skewed towards the wealthier families.
This says nothing about the fact that there are millions who skipped college altogether because they could not afford it. Or that a lot of that debt never paid for tuition in the first place, but instead paid for $6 Starbucks lattes and $30 wood-fired pizzas on Friday at the pub.
The government is full of disgustingly corrupt politicians who couldn’t run a corner lemonade stand. But even they’re not stupid enough to wipe a bunch of student loans clean. They’ll enrage too many people.
The only fair and equitable way to do something like this would be to assign a number, say $50,000, and then wipe all that clean for every US citizen in debt, but then put that same amount in a retirement account for every US citizen who doesn’t have the debt. If you have $30,000 in debt, you get a $20,000 retirement account, etc.
And at the exact same time you’re forgiving this debt, you end the ability for lenders to saddle any future borrowers ie, NO MORE LOANS. That’s never going to fly. But there’s not enough money for any of this anyway. In fact, there’s NO money.
That’s really close to the money already churned out to debt burden our grandchildren. Can’t remember where, but $57,000 is what every man, woman and child in the U.S. would have gotten if all the debt money created by the unelected Fed were evenly distributed to human beings.
“And at the exact same time you’re forgiving this debt, you end the ability for lenders to saddle any future borrowers ie, NO MORE LOANS.”
Just like we were promised border enforcement in exchange for amnesty in 1986, and we got the amnesty, but no enforcement. Meanwhile, the problem has gotten much worse.
“But there’s not enough money for any of this anyway. In fact, there’s NO money.”
Yes. I’m curious to see what happens when the Treasury’s account runs out and trillions new Tbills have to be issued.
A acquaintance just put $100K into his kitchen.
Then he tells me about the student debt his children have.
He told them, “don’t worry, it will be forgiven.”
Liberal. And now I know why they vote like they do….to get the forgiveness.
Second story…..A man’s daughter marries into a family with two homes and a sail boat. The daughter’s new husband is saddled with substantial student loans. And again, the loans were taken with the expectation of forgiveness.
How many people who have more than one home, take extravagant vacations, and drive the fancy big money cars have saddled their kids with debt they could have paid and chose not to pay…so they could live their lifestyle.
Then there are those who worked two jobs, did without, and paid in full. And those who didnt go to college because it was to expensive.
Totally UNFAIR to forgive that debt which is nothing than overcharging for education!
Nobody said life is fair.
But, these despicable grifters are skating on thin ice if they think personal debts will be simply be forgiven without consequences.
True, the man or woman of integrity, who played by the rules and paid their dues, is certainly getting hung out to dry in these Topsy-turvy times.
Yet, I do believe doing the right thing is rewarded in the end. Let your conscience be your guide.
These stories make me sick to my stomach.
Who in their right mind assumes the debt will be forgiven? Your friend sounds like either an idiot or an anomaly
The government forgiving debt really just means putting it on someone else, maybe someone who’s already paid for their own. It’s sad but we’re shockingly socialist now, aren’t we?
The government bailed out banks and let the people suffer. What would you call that? Malignant capitalism?
I see some pretty enticing car lease ads, course the small print rolls by pretty fast. Most of the good offers are cars. Question when a truck maker offers cash back, does that mean the buyer pays full price, and rolls that into a seven year loan, and gets handed 5 or 10 grand cash up front? So its like a payday loan at low rates and a long time horizon. A deal like that is way better than a stimmie? What happens if you spend the money and default on the loan?
I need to rent a car in Hawaii in July and it’s 800. For one week.
Luckily I booked my car in AZ for next week back in Feb. at a rate of 135. for the week. Two weeks of renting a car in HI will be 1800. I can’t believe it.
What is the purpose of going to Hawaii?
Just paid 600 for 5 day car rental in AZ last month…there’s not enough cars available to rent. Huge missed opportunity for both rental car companies and automakers. Couldn’t build more cars if they wanted to, no semiconductor chips to put in them.
Yep….looking to rent a car in the panhandle coast in June. $1000 for 6 days
Eviction moratorium = no mortgage payments/no rent payments necessary. Utility payments moratorium. Student loan payment forbearance. But the average Joe is still working, if not he’s receiving unemployment, and either way he’s getting juiced with stimulus checks. You think he’s banking $$ or paying off debt? LOL. He’s already bought a new car, a new laptop, a new giant tv, etc etc. Taking on MORE DEBT to do it. Prices can’t keep going up if the Joes aren’t willing to pay. But they are more than willing, they are emotionally compelled.
Fortunately, we have many geniuses at the helm who will certainly be able to glide us in for a smooth, feather-soft landing. Like always. No need to put your tray tables up, keep on sipping that Dom (that you put on the Visa along with the airfare and the car from GougeU RentaCar). Enjoy your trip, and when you get back to work your 50% raise will take effect. All is well!
The key to life is being happy with very little. While I appreciate nice things, I realize my needs are actually very little when it comes to consumption. Most of my enjoyment comes from free activities – walking, hiking, going to the lake with my dog, etc.
All of these people who are currently going apesh!t buying everything they can are attempting to fill some void inside of them, or trying to keep up with the Jones’. I’m not sure who coined the term, but “you don’t own stuff, it owns you.” I am pairing down in life, tired of maintaining things and what not. My ideal retirement would be myself and one bag with some clothing and personal items, destination unknown.
I noticed the millenials that move in these monster homes come in with a pile of junk the likes of which I’ve never seen. They usually fill up their entire garages with all this “stuff” and don;t have room for their cars, which they park on their driveways and the street. Then they complain when after a storm their cars get hit with flying debris and get all bent out of shape about it.
I am with you, but we are the minority. My main goals now are staying healthy and having financial freedom. I don’t even budget.
I check my monthly spending rate from time to time and it’s about $1,000. Computer says my spend rate could be about 4X that, but I think I will just keep going the way I am.
We need an income tax filing moratorium. This after anyone with half a brain files an exemption from withholding so that you the worker, owe them at the end of the year, not the other way ’round.
Just what could the IRS do if say, 5% of the population simply refused to file the paperwork?
I asked once before “Who are the idiots that are buying 30 year Treasury bonds? I never got an answer. However, in this latest recording I heard Wolf say something to the effect that it was coming from foreign buyers who were fed up with negative interest rates over there. If that is true then we know who and where the dumbest investors on the planet are located.
In order to get 1% more yield, they are risking their entire principal. They could lose another 20% capital loss if interest rates start spiking due to the Inflation or tightening. If they are buying 30 year Corporate Bonds they have the added risk of default added to the mix.
As P.T. Barnum once said “There is a sucker born every day”
Not to mention that they’re taking on risk via exchange rate. If the dollar drops by 10% against the yen, for example, they’ve lost whatever yield benefit they made and then some.
That’s 4 risks factors just to get an extra 1%. Stupid.
Foreign buyers? German banks. After the loss they took the last time around (2008), it’s nice to see those suckers back in the market. What will we do without them?
Didn’t he say “customer”? :)
Gary Schilling PhD in economics has been long 30 year treasuries for a very long time. I think he even like strips so he can bet that rates are going further down like Japan.
I think he is short stock market as well. I guess he thinks we are in deflationary death grip because of excessive debt.
Why is the Fed essentially lending money to the Treasury at UNDER the real inflation rate?
The last times YOY CPI was 2.6% (1999 and 2006) 30yr mortgages were 6%.
The Fed bought lots of MBSs in the 3% and under rate…yet they PROMOTE an inflation rate of 2-2.5%. That goal if reached would/should make their purchases a loser. Maybe that’s the idea.
The Fed has created an inverted world…where the lender is slave to the borrower, where they promote inflation when they are INSTRUCTED PER THEIR MANDATES to FIGHT INFLATION….and they promote “immoderately low” long term interest rates when they are INSTRUCTED per their mandates to “promote MODERATE” long term interest rates.
Inverted, manipulative, free market interrupting machinations of Central Bankers bent on assisting one group at the expense of another.
Used cars are not the only commodity in demand these days, as the latest ‘Red River Farm Network’ email newsletter says.
“Prices for good condition used farm machinery have skyrocketed. Now, the higher commodity prices ramped up farmer demand for new and used equipment. The inventory level on dealer lots is sharply down.”
I just sold a house I built in a small town where the vocal majority would scream for student loan forgiveness and mortgage forbearance forever, just on principle. Pre-pandemic the town had a low proportion of people who worked, and the 2020 unemployment bonanza was well above average wages for the actual workers.
I am extremely anxious about housing inflation, hoping I will be able to afford something else. The remote worker, second home and speculative housing inflation is incredible in the places I have had my eye on for a long time. Domestic US-grown money laundering had previously been legal and illegal pot farmers putting their cash into rental real estate. Currently there is massive speculation even in communities where nightly rentals are banned. The 30-day or 90-day vacation rental has replaced nightly in these places, whatever the HOA allows.
In this year when I want to wait out the real estate craziness, rents have rocketed up 30-40% in desirable places. A worker shortage and homelessness are the results. I am on a renter’s strike and a buyer’s strike in this market, and while I would like a new used vehicle, I have watched those prices skyrocket too. Many, many people will justifiably reach the conclusion that there is no point doing honest work for average pay anymore. Yet landlords and speculators think it will last as people continue to pay huge proportions of their income to rent.
Naturally wages need to increase to compensate for the increasing costs, and if they don’t it may require a move to where the wage to cost of living balance is more rational. I had to leave Vermont and move to the Boston burbs to achieve it.
Sure the rents are higher here and home ownership is out of the question unless I want a really long commute, but the wages are so much higher I’m now maxing out both my 401K and Roth IRA and still managing to squirrel away several thousand more in taxable brokerage accounts.
While the quality of life near Boston pales compared to Vermont, that’s the trade off. Once I retire in another decade or so, then I can relocate again to someplace more pleasant.
The point is none of this retirement savings would have been possible remaining in Vermont with its low wages.
Seems like the right play. Make money in high wage booming area and retire early in low cost, low tax state.
I think the housing market is locked up…..and here’s why
The Fed has ignored their instructions to “promote MODERATE long term interest rates” and have instead pushed them down to historical and relational all time lows.
The last times CPI was circa 2.6% up, YOY….1999 and 2006. 30 Yr mortgages were 6%!!
Now they are circa 3%. So the Fed has created a situation where money is available for 30yr mortgages that is most probably UNDER the REAL inflation numbers.
Add in what has happened in the past 5 months to construction materials like lumber and copper and asphalt shingles….and now the current house replacement cost likely rose 35% in those 5 months.
So, you have 30yrs at half the historical norm in relation to inflation AND you have replacement costs due to material prices shooting up (INFLATION) also exploding. Both as a result of fake interest rates. Nice job Fed.
Now contractors can’t lock in their prices for bids for new construction or rehab because they are moving around too quickly. People with homes realize the lumber and brick, etc that is in their homes is now worth much more than it was pre election. Nice job Fed.
Current rates of asset and price inflation are unequivocally unsustainable to anyone thinking with a clear head, so you can take comfort in that.
FOMO and inflation anxiety are becoming the Zeitgeist of these clownish times– but– these emotions will run their course in due time.
Often in the recent past you talked about a change in mindset concerning inflation.
People got a lot of free money in last time. That was money they not had to work for hard. So they not value this money as much as money for which they have to work, spend their time for something they often do only in order to ,get paid for. But when they get it without effort lets spend it also easily. That is it what they planned when handing over the money to consumers. More easily spending than wage increases ever could. And then of course new times are coming, now the world is changing, things are changing. That is exactly what Alan Greenspan said in 1999, little time before dot.com was bursting.
On a good day, Bitcoin is like a zero coupon bond with no sinking fund, or a consol, perhaps. But the days are evil, and the bad days are like a Texas flood- can’t run, can’t hide, can’t make it stop. Some days it’s PlaytexCoin- no visible means of support. Other days it’s huffing-oven -cleaner-euphoric. And leaves the headache. So what? It’s young and frisky, and it’ll settle down soon enough, or a new kid in town will displace it. There’s plenty of technical problems, and plenty of smart people finding solutions, technology is too bright and shiny and enticing to keep from playing with it until you figure some pertinent stuff out. Plenty of other cryptos that work differently, negating some issues. But none of it will scale yet. It will mature and grow in acceptance as a function of its reliable profitability, if nothing better comes along. And none of the crypto products bear comparison to physical metals, different tools to different ends. One cannot replace the other. If TPTB are gonna stomp the cryptosphere flat as some think, it’s getting late, close to critical mass in big corporate investment, beyond which they might do better to cut their losses and learn to stop worrying and love the Bomb. They’ve got a launch window to meet for their CBDC projects, and it’s closing as regular people figure their scam out. For me, A couple hundred bucks worth of hbar or nano or something paid for with profit from constitutional silver bought five years ago won’t make or break anything. And insignificant compared to what I spend on numismatic interests. this assumes a well stocked larder and reasonable stores of things you might not want to be without. The Suez Canal traffic jam made my coffee late, but I’ve got a stash. And this is hurricane country, it’s only prudent. Also prudent to figure on delays, shortages, and higher prices until free markets are allowed to come home and make some money for those who risk theirs. It was never public policy in this country to look after the welfare of the public until recently when it became politically expeditious. I’m glad FEMA showed up after Katrina, but I was much more grateful for the National Guard. They’ve got better guns than I do. And are much better shots. Plus, I helped pay for their ammo. Nice when an investment has a return.
You got me.
We don’t have an NSA like yours. I love learning about USA.
I overlooked the lengths that paranoia can drive folks to.