The last time we discussed this you stated that inflation was at 5.5% or so because of money printing.
You look back at the posts.....you'll see the term I use....."monetary inflation".
Money is the price measuring stick, the measure is diluted 5.5% pa. The effect of this is, let's say a bad price for Iron ore would have been $55 four years ago. Instead today the same real low price will be $70 instead.
Prices can still rise and fall in real terms even though the measuring stick is continually diluted.
However although the price of petrol was 8 cents back in 1969, we don't expect to see that price again because of monetary inflation.
By mega inflation around the corner I mean (and the banks mean) the price of labor and common goods rising (bad inflation). And asset inflation (good inflation) stagnating!
Something got your goat Stinkbug? Something upsetting the Bulls outlook on life? Time for some Bear bashing?
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
Something got your goat Stinkbug? Something upsetting the Bulls outlook on life? Time for some Bear bashing?
You've misunderstood. I'm not trying to argue with you, but rather trying to understand your point of view. Sometimes your posts can get a bit rambly (as can everyone's).
I agree with the part about monetary inflation, the bit we got stuck on last time was the increase in the underlying economy that the 'money' represents.
What do you see as being the relationship between monetary inflation and price inflation? They can't diverge forever.
You've misunderstood. I'm not trying to argue with you, but rather trying to understand your point of view. Sometimes your posts can get a bit rambly (as can everyone's).
I agree with the part about monetary inflation, the bit we got stuck on last time was the increase in the underlying economy that the 'money' represents.
What do you see as being the relationship between monetary inflation and price inflation? They can't diverge forever.
"Price inflation" means general price inflation. Specific goods will only follow the line if their supply and demand remains constant. The modern motor car was created in 1900 by Daimler Benz and was very expensive. So many years later Ford began spitting out his model T and when the last of them was made in the 20's they were going for about 4 months US wages. The supply rose enormously hence the price fell. However they called this the deflation that led to the G. Depression in new consumer goods. That's because investors funded on the premise that they could spit out a lot of cars and similar and still get the same high price as when the good was rare. That spat the dummy in 1929.
The reason I think grand scale common price inflation is around the corner is too many are retiring on their super thinking they are set for life. Something will come along to erode the value of their savings.
One of the reasons I like gold is the supply per world capita remains at the same 3/4 ounce it was in the year 1900. Which is why it is such a good constant.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
So where this leaves us, then, is that monetary inflation drives price inflation, at least to a degree, as those with more money can (and will) pay more for a desirable object or service. Property is a very good example here, I think.
Perhaps something else to consider is the increase in population and the effect this has. Increasing monetary supply by 5.5% per year will have a different effect when population is increasing as opposed to when it is decreasing. At the moment we have population increase of what - 2-3% pa? The additional money supply has to be shared amongst these extra people, although obviously not evenly.
Your point about superannuation is an interesting one. I don't think the super pool, despite looking big, is actually very effective for most people. I don't know of many retirees that live in wealth and comfort, even the self-funded ones.
Perhaps my dream of early retirement is just that...?
So where this leaves us, then, is that monetary inflation drives price inflation, at least to a degree, as those with more money can (and will) pay more for a desirable object or service. Property is a very good example here, I think.
Yes but, always remember general price inflation. A cruddy B/W TV went for 6 weeks basic wage in 1970. LED flat-screens were $4,000 to $5,000 a decade ago, where as today they are $250 from Aldi's.
Quote:
Perhaps something else to consider is the increase in population and the effect this has. Increasing monetary supply by 5.5% per year will have a different effect when population is increasing as opposed to when it is decreasing. At the moment we have population increase of what - 2-3% pa? The additional money supply has to be shared amongst these extra people, although obviously not evenly.
I've already taken into account. The increase in dollars on average pa is about 7%. The population growth is about 1.5% average pa for Aus.
So 7% - 1.5% = 5.5%.
This is a simple model, other concerns would be the stratification of population ages and wealth. However this figure is double the official inflation rate given by the ABS. This is also domestic because that's were the AUD is used. But the other main floating currencies are similar.
For example there was about $95 in circulation for each person in Aus in 1970, today there is $2,700. The good is more common so its bid price is lower.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
The banking system creates extremes of deflation and inflation. We've had deflation since 2007, so don't worry. Jigabot inflation will most likely follow!Take heart, all is not lost!
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy