Deconcentration of wealth and resulting inflation.
MGLICKER
Posts: 7,995 ✭✭✭
The last generation has witnessed huge increases in income and wealth, accruing to the top 1%.
An NFL coach, lets say, earned perhaps $300,000, 25 years ago. The same position pays $5 to $10M today. Similar income escalations occur for a number of elite careers, including medicine, corporate C level execs and professional athletes.
Not being critical of whether this is a good thing or not, just considering the inflationary effects going forward.
Short of a Mike Tyson, most of these folks save and invest a large part of this wealth. Logic would say that this would prop up high end real estate, equity and maybe top collectible prices, but not have a huge effect on everyday items like Pork Chops and Chevy Impalas.
Moving ahead a decade of two, things will no doubt change. Divorces and estate distributions will put this money in to more hands. $50,000,000 split 10 ways is no longer a generational fortune, but perhaps play money for an insolent heir or spouse, they can burn it in a few years.
As the 1% fortunes are redistributed, the Federal Reserve's dream of 2% inflation will be a long lost concept, in my opinion.
An NFL coach, lets say, earned perhaps $300,000, 25 years ago. The same position pays $5 to $10M today. Similar income escalations occur for a number of elite careers, including medicine, corporate C level execs and professional athletes.
Not being critical of whether this is a good thing or not, just considering the inflationary effects going forward.
Short of a Mike Tyson, most of these folks save and invest a large part of this wealth. Logic would say that this would prop up high end real estate, equity and maybe top collectible prices, but not have a huge effect on everyday items like Pork Chops and Chevy Impalas.
Moving ahead a decade of two, things will no doubt change. Divorces and estate distributions will put this money in to more hands. $50,000,000 split 10 ways is no longer a generational fortune, but perhaps play money for an insolent heir or spouse, they can burn it in a few years.
As the 1% fortunes are redistributed, the Federal Reserve's dream of 2% inflation will be a long lost concept, in my opinion.
0
Comments
*sarcasm(?)
(Is it possible that high end coins are due for a correction?)
I have been noticing that as well. The good stuff keeps costing more, creating distance between the product and the middle earners. I noticed this while planning a vacation, looking for a new car, and starting the upgrade on the kitchen. It used to be that most people could travel out of country for a reasonable cost, could get a new or relatively new car without much financial pain or fix up the kitchen or bathroom if they saved up a little. Now, it takes more money than you are going to pull from your disposable income pile so you better have some kind of stash of cash.
On the other hand, the cheap stuff seems to stay about the same price; in strong supply and in strong demand and made in some other country. Now, the middle is chomping away at the cheap stuff as the nicer things escape their reach and the poor are still poor but they also still can afford the cheap stuff.
The redistribution situation seems to have been very successful, now the middle class and the poor people can afford the same things.
The strength of its middle class and the strength of its dollar.
Interesting in these times that both of these two groups are quickly eroding.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
(Inflation is when everything goes up. When prices for just some things go up, that's called market economics)
Liberty: Parent of Science & Industry
I do find it interesting that talk of "immediate" inflation is now being discussed as a possibility decades from now.
Knowledge is the enemy of fear
<< <i>I do find it interesting that talk of "immediate" inflation is now being discussed as a possibility decades from now. >>
We have already hit 6 or 7% on consumer goods, less of course the 99" Sony Plasma that has dropped by 95% in price.
Trying to see how the mega inflation will unfold though. The situation where another currency is used as a basis and retail goods are repriced daily. Has happened before in South America.
And we all get worked up because a box of Wheaties went from $3 to $4. What if in 5 years the Wheaties still cost $4? What was the inflation?
Knowledge is the enemy of fear
<< <i>You are assuming something is going to happen because it happened in dictatorships with severe disruptions in the supply/demand equation.. >>
I see similarities today.
<< <i>You are assuming something is going to happen because it happened in dictatorships with severe disruptions in the supply/demand equation..
And we all get worked up because a box of Wheaties went from $3 to $4. What if in 5 years the Wheaties still cost $4? What was the inflation? >>
When the box contents are smaller by weight, there's your inflation. This is what we have now and it's going to continue. It should be counted as inflation but some completely ignore it as they like to account for the box costing the same but not the 2oz less cereal in it.
Don't ignore the growing air in your tube of toothpaste.
Of course not! Spend all day wringing your hands and shaking with fear of it! That 2 oz. of cereal or little gap of air in the package is the start of a slippery slope that ends with you chained to an oar in the hold of a galley being whipped by an OverLord.
Liberty: Parent of Science & Industry
<< <i>Don't ignore the growing air in your tube of toothpaste.
Of course not! Spend all day wringing your hands and shaking with fear of it! That 2 oz. of cereal or little gap of air in the package is the start of a slippery slope that ends with you chained to an oar in the hold of a galley being whipped by an OverLord. >>
Being self employed, I have some control over my income. Many long term employees do not (unless they want to start a venture, which is dicey at best).
A friend has not had a wage increase in 5 years, still making $50k a year. Must get frustrating to see the value of his paycheck shrink on a monthly basis. Even using a 3% inflation rate over the 5 years, that is about a 20% decline when compounded.
Many good, hard working folks are in that predicament.
Ask him about the "package deal" that he stays with, even though he receives no raises. He must like the work, the people, the benefits, the location, the stability, etc.
otherwise, why not make a change?
Liberty: Parent of Science & Industry
<< <i>there must be other things he likes about his job, else if the salary was all it was about, he'd leave for greener pastures.
Ask him about the "package deal" that he stays with, even though he receives no raises. He must like the work, the people, the benefits, the location, the stability, etc.
otherwise, why not make a change? >>
He is in his mid fifties. Probably wants to end his career where he is at. Problem is not the job per se, it is a system of government that believes that free money is well, free money.
Yeah Baley, right. This is just the economy for everyone that wants a 20% pay raise to simply find another job every 5 yrs. It didn't even work for 90% of middle america when the economy was good.
A couple of people here don't seem to live in the real World. They must still be living at home with no expenses. Jeesh Something totally fishy about some of the postiions taken on this board.
Point is there is opportunity out there, just have to be in the right place at the right time with the job skills at the right price.
Like its always been.
<< <i>...Point is there is opportunity out there, just have to be in the right place at the right time with the job skills at the right price.
Like its always been. >>
Congratulations on your new job. You are to be commended for doing well and having the skills needed to succeed. However, for much of America it is no where close to, "Like its always been". Some are doing very well but most are not. Corporate greed and our greed driven culture have resulted in a massive concentration of wealth in the hands of a few and it actually gets worse every day. Wall Street owns D.C. and runs the show. The media is owned by the 1% and reports a rosy scenario while 75% of the country struggles. We have resolved none of the issues that led to the 2008 financial crisis and have rewarded many of the greediest with more money, pouring trillions of dollars into the black hole and hoping it fills up but knowing it won't. It's like watching a train-wreck in slow motion with many refusing to look. C'est la vie.
Sorry, not trying to be a downer, just a realist. The piper will be paid in the long run. Continue to do the best you can is all that can be done because none of us can stop the river. Just don't get caught up the creek without a paddle.
<< <i>I don't really understand the inflation deniers. Are they concerned that acknowledging the facts will cause interest rates to rise and the stock market to fall? Or are they worried that higher interest rates will cause the economy to further sputter, or is the concern that 30 plus years of incompetent fiscal political leadership has not provide the cushy outcome that we had hoped for? >>
I dont think anyone denies inflation, but some of us dont get all worked up when our corn flakes go up 50c or the box is a bit smaller. Some of us dont buy into the whole "you gotta spend $7 for a loaf of organic bread" nonsense. If you want to spend $7 for bread then go right ahead, but dont preach this is inflation. These are lifestyle choices made possible by the folks who want to scare you. Organic bread will not make you live longer. Marketers tap into those emotional fears, just as the bullion sellers tap into your fears.
Health care costs are going up BECAUSE MORE PEOPLE ARE GETTING OLD and demanding care, not because of Bernanke or evil banksters. Home prices are the same as 6-8 years ago. Food commodities are the same price as 4 years ago. Energy--OMG my gas bill is up 50%--prices are still at the same or lower levels than 6 years ago. Many automobile models are the same price as 6 years ago. We can go on and on about costs, but the fact is the more something is in demand the higher the price will be. We have a lot of people of a certain demographic all chasing the same goods and services and prices for those are increasing.
Some people think that box of corn flakes will soon drop to single serving size and cost $10. Really? Who is going to pay that? No one. So guess what, the price isnt going there.
Or that gasoline will be $10/gallon. Are you gonna pay that? Of course not. So guess what, gasoline is not going to $10.
And interest rates....mark my words, if the 10yr yield goes to 4% then the DOW will be at 20,000, maybe higher. And the G will not choke on its own interest payments and investors will not turn away from Treasuries. Instead, a 4-5% yield will attract more money, from all over the globe. Banks will finally issue more loans and the economy will do just fine.
Or you can crawl back into your bomb shelter that you built in 1975, im sure the canned foods are just fine. The rest of us will look for opportunity, and the truely brilliant will look for ways to exploit your fears. Maybe they can convince you to pay $20 for "organic" corn flakes.
Knowledge is the enemy of fear
George Washington was one of the wealthiest Americans ever and he got a Presidential salary equal to 2% of the US GDP, has it really gotten worse everyday?
Knowledge is the enemy of fear
<< <i> Some people think that box of corn flakes will soon drop to single serving size and cost $10. Really? Who is going to pay that? No one. So guess what, the price isnt going there.
Or that gasoline will be $10/gallon. Are you gonna pay that? Of course not. So guess what, gasoline is not going to $10. >>
Gas prices tripled from about 2000 to 2006. Plenty of people said they'd never pay $2 for a gallon of gas... now they're happy to pay under $4. If you need it you'll pay for it, and will cut out other things instead. We're not talking about frivolous luxury goods. Food and fuel are two essentials in life.
<< <i> Some people think that box of corn flakes will soon drop to single serving size and cost $10. Really? Who is going to pay that? No one. So guess what, the price isnt going there. Or that gasoline will be $10/gallon. Are you gonna pay that? Of course not. So guess what, gasoline is not going to $10. >>
$3.50 gas. Really? Who is going to pay that. No one. So guess what, the price isn't going there.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>there must be other things he likes about his job, else if the salary was all it was about, he'd leave for greener pastures.
Ask him about the "package deal" that he stays with, even though he receives no raises. He must like the work, the people, the benefits, the location, the stability, etc.
otherwise, why not make a change? >>
He is in his mid fifties. Probably wants to end his career where he is at. Problem is not the job per se, it is a system of government that believes that free money is well, free money. >>
Well, there's your answer right there... He wants to stay put. Why should his boss give him a raise? He probably won't quit that job, even if he has to take a pay cut, and they know it.
"problem... is a system of government"... Really?!? Is it the government's fault that one kid gets As in school and another kid gets Cs? Is it the Fed's fault that one product is a success and another fails? Is it the fault of JP Morgan or Wall Street or the 1% that I paid $1800 an ounce for some gold that's now worth $1350?
really?
Liberty: Parent of Science & Industry
<< <i>
<< <i> Some people think that box of corn flakes will soon drop to single serving size and cost $10. Really? Who is going to pay that? No one. So guess what, the price isnt going there. Or that gasoline will be $10/gallon. Are you gonna pay that? Of course not. So guess what, gasoline is not going to $10. >>
$3.50 gas. Really? Who is going to pay that. No one. So guess what, the price isn't going there.
Dooh, I just paid $2.949 per gallon....which btw included 40 cents off a gallon...accumulated Safeway points.
<< <i>
<< <i>
<< <i> Some people think that box of corn flakes will soon drop to single serving size and cost $10. Really? Who is going to pay that? No one. So guess what, the price isnt going there. Or that gasoline will be $10/gallon. Are you gonna pay that? Of course not. So guess what, gasoline is not going to $10. >>
$3.50 gas. Really? Who is going to pay that. No one. So guess what, the price isn't going there.
Dooh, I just paid $2.949 per gallon....which btw included 40 cents off a gallon...accumulated Safeway points.
What you saved on gas you spent on higher food prices at Safeway.
Just returned from the auto parts store - motor oil 22.50 a gallon.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Some of us dont buy into the whole "you gotta spend $7 for a loaf of organic bread" nonsense. If you want to spend $7 for bread then go right ahead, but dont preach this is inflation >>
I do not see where anyone here has made that argument. Switching from $2 Wonder bread to $7 artisan bread is obviously not a comparison made by any intelligent poster. Comparing a dozen commercial eggs or a pound of pasta or a loaf of bread are important components of measuring inflation.
Are you telling me that those have stayed stable over the past 5 years?
Has the change in prices of eggs made people newly impoverished?
Now, same question for the average precious metals forum poster
Liberty: Parent of Science & Industry
Liberty: Parent of Science & Industry
<< <i>I'll answer for me, due to the high cost of eggs, i stacked two fewer silver dimes in 2013... oh, the humanity! >>
You seem to make light of a real problem going forward for working households and formerly hard working retirees that are losing ground to rapidly rising food, energy and medical costs.
Guess we all see things through a different prism.
Liberty: Parent of Science & Industry
<< <i>What I'm making light of is the idea that any of these problems are new, specific to our generation, or in any way worse than the past... also the idea that any one's predicaments are independent of the decisions they have made or continue to make >>
Show me a time in your lifetime that the federal reserve has quadrupled the money supply in a 5 year period.
<< <i>What I'm making light of is the idea that any of these problems are new, specific to our generation, or in any way worse than the past... also the idea that any one's predicaments are independent of the decisions they have made or continue to make >>
They are new to a whole generation that is watching their jobs disappear, their savings shrink and their dependency on Washington growing. This is what is different.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
YOU will not pay $10 for gasoline---unless average wages double, which might take a generation. Sorry to disappoint.
Knowledge is the enemy of fear
<< <i>
<< <i> Some people think that box of corn flakes will soon drop to single serving size and cost $10. Really? Who is going to pay that? No one. So guess what, the price isnt going there. Or that gasoline will be $10/gallon. Are you gonna pay that? Of course not. So guess what, gasoline is not going to $10. >>
$3.50 gas. Really? Who is going to pay that. No one. So guess what, the price isn't going there.
If $3.50 is the same as $10, then please send me all your $10 bills and I'll send you $3.50 in return. I keep hearing that some people must live in another world, and now im beginning to believe them.
Knowledge is the enemy of fear
<< <i>There is a big difference between paying $2, $4 or $10 for gas.
YOU will not pay $10 for gasoline---unless average wages double, which might take a generation. Sorry to disappoint. >>
US wages or world wages? As demand soars for petro in India and China, the American driver will continue to compete for a gallon of fuel. We no longer exist in a cocoon.
<< <i>
<< <i>What I'm making light of is the idea that any of these problems are new, specific to our generation, or in any way worse than the past... also the idea that any one's predicaments are independent of the decisions they have made or continue to make >>
Show me a time in your lifetime that the federal reserve has quadrupled the money supply in a 5 year period. >>
1940 - 1945?
<< <i>
<< <i>
<< <i>What I'm making light of is the idea that any of these problems are new, specific to our generation, or in any way worse than the past... also the idea that any one's predicaments are independent of the decisions they have made or continue to make >>
Show me a time in your lifetime that the federal reserve has quadrupled the money supply in a 5 year period. >>
1940 - 1945? >>
National debt certainly soared to fight the Axis. A bit of research is in order, though it was outside of my lifetime.
<< <i>
<< <i>There is a big difference between paying $2, $4 or $10 for gas.
YOU will not pay $10 for gasoline---unless average wages double, which might take a generation. Sorry to disappoint. >>
US wages or world wages? As demand soars for petro in India and China, the American driver will continue to compete for a gallon of fuel. We no longer exist in a cocoon. >>
I can't wait for the US to be an exporting Nation of petroleum products and it will happen, I believe, before gold hits $2500 an oz. That should put a lit on the price of $10 per gal., along with less consumption of gasoline, based on hybrid modes of transportation.
<< <i>
<< <i>
<< <i>
<< <i>What I'm making light of is the idea that any of these problems are new, specific to our generation, or in any way worse than the past... also the idea that any one's predicaments are independent of the decisions they have made or continue to make >>
Show me a time in your lifetime that the federal reserve has quadrupled the money supply in a 5 year period. >>
1940 - 1945? >>
National debt certainly soared to fight the Axis. A bit of research is in order, though it was outside of my lifetime. >>
Not mine
<< <i>
<< <i>
<< <i>
<< <i>What I'm making light of is the idea that any of these problems are new, specific to our generation, or in any way worse than the past... also the idea that any one's predicaments are independent of the decisions they have made or continue to make >>
Show me a time in your lifetime that the federal reserve has quadrupled the money supply in a 5 year period. >>
1940 - 1945? >>
National debt certainly soared to fight the Axis. A bit of research is in order, though it was outside of my lifetime. >>
When in your lifetime did you experience a large segment of the population transitioning from net contributors to the economy to net takers due to increasing age?
The vast majority of boomers benefited from their own demographic weighting in the economy. Now they must accept the consequences of that large weighting as they get sick and die. If only they had more babies......
Knowledge is the enemy of fear
<< <i>I can't wait for the US to be an exporting Nation of petroleum products and it will happen, I believe, before gold hits $2500 an oz. That should put a lit on the price of $10 per gal., >>
We are net exporters for farm products. Does not seem to put a lit on surging food costs.
<< <i>
<< <i>I can't wait for the US to be an exporting Nation of petroleum products and it will happen, I believe, before gold hits $2500 an oz. That should put a lit on the price of $10 per gal., >>
We are net exporters for farm products. Does not seem to put a lit on surging food costs. >>
Stop eating so much damn food. I just heard that Americans waste about 1/3rd of our food. If you dont buy, then the price will not go up. Or blame Bernanke and evil banksters.
Knowledge is the enemy of fear
They are the deciders! There's no one holding a gun to their head insisting they eat salty, crunchy, hot fried foods and creamy frozen desserts and be obese.
Liberty: Parent of Science & Industry
<< <i>
<< <i>
<< <i>I can't wait for the US to be an exporting Nation of petroleum products and it will happen, I believe, before gold hits $2500 an oz. That should put a lit on the price of $10 per gal., >>
We are net exporters for farm products. Does not seem to put a lit on surging food costs. >>
Stop eating so much damn food. I just heard that Americans waste about 1/3rd of our food. If you dont buy, then the price will not go up. Or blame Bernanke and evil banksters. >>
That may be true of the processed, packaged foods that contain a nickel or dime of real ingredients. Kraft and Pepsi would be forced to reduce margins to compete for market share.
Best way to promote that is an elimination of food stamps as many of the recipients feast on junk. Also the $100B savings would reduce the deficit and lessen the need to print an ungodly amount of fresh currency.
<< <i>The average American eats way too much overall, and too much rich/fatty food, and wastes too much of what they buy .... and then they have the nerve to complain about it!
They are the deciders! There's no one holding a gun to their head insisting they eat salty, crunchy, hot fried foods and creamy frozen desserts and be obese. >>
10 4.....and throw out approx 1/3 of what they purchase in the tune of $160 billion
"Getting food from the farm to our fork eats up 10 percent of the total U.S. energy budget, uses 50 percent of U.S.
land, and swallows 80 percent of all freshwater consumed in the United States. Yet, 40 percent of food in the
United States today goes uneaten. This not only means that Americans are throwing out the equivalent of $165
billion each year, but also that the uneaten food ends up rotting in landfills as the single largest component of U.S.
municipal solid waste where it accounts for a large portion of U.S. methane emissions."
<< <i>If you dont buy, then the price will not go up. >>
Typical supply and demand dynamics do not apply to price equilibrium of vital products or services that are "necessities," particularly when suppliers privately conspire to agreed upon prices.
This price fixing is illegal of course so I'm sure it does not occur. Ever notice how Pepsi and Coke take turns with their grocery store "specials" instead of a head-to-head price war.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>If you dont buy, then the price will not go up. >>
Typical supply and demand dynamics do not apply to price equilibrium of vital products or services that are "necessities," particularly when suppliers privately conspire to agreed upon prices.
This price fixing is illegal of course so I'm sure it does not occur. Ever notice how Pepsi and Coke take turns with their grocery store "specials" instead of a head-to-head price war. >>
Constantly...one week coke will have their 2 liter bottles for $1.00 each with Pepsi going for 2 for $3.00. In a couple of weeks later, the tables will turn with Pepsi @ $1.00 each and coke 50 cents of for a 2 liter bottle. So they do have "sales" at the same time, but alternate with the best price sales. I suspect, that the stores do have some say as far when, due to limited allocated space for each product.