Inflation -> recession

jtr1962

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The problems started with COVID. It shut down the entire supply chain. When we started to get things up and running again, someone decided it would be a good idea to force 100 million workers to get a shot they may not have wanted or get fired.
The converse of that is without vaccine or mask mandates another portion of the work force would simply have refused to return to work for their own safety. That includes myself if I had a job requiring me to work on site. Either way you lose people. If the entire planet had the discipline to handle covid the way China still is, this would have been over by summer of 2020. We would have killed covid in the wild and gotten back to normal. Instead, our response was like picking at a scab. Numbers go down a little, loosen restrictions, they go back up like clockwork. The US failure at handling covid was epic. It's a blueprint of what NOT to do in future pandemics.

Those that remained in the workforce were forced to wear masks all the time and some chose to be lazy at work or quiet quit. All this has dropped productivity to record low levels. Less production, less goods produced.
Do you blame people for doing barely enough to keep their job if there's zero chance of advancement or raises? Businesses got so used to people doing extra, "free" work above and beyond their job description that they built it into their business model. When people finally saw that the extra effort wasn't rewarded they reverted to doing the bare minimum. Here's a hint. If businesses want more productivity from their workers pay them more. And also give them more time off to recharge. If a business can't afford this, maybe they don't have a viable business model and deserve to fold.

To "help", the government was paying people to do nothing for so long, people decided to get a government check rather than work. All that government spending, including stimulus payments has caused too many dollars to chase after too few goods. The result is inflation.
You're giving way too much credit to that few thousand at most in stimulus payments. Most people didn't get anything beyond that. Besides, my understanding is many people simply tucked any extra money away in savings accounts. If they weren't spending it, how did it contribute to inflation? Other countries which give their citizens less or no money are also experiencing inflation. How do you square that away with your theory?

Interest rates are simply returning to historical norms (7% or 8% for mortgages, hopefully eventually 5% on savings accounts). All this easy money at very low interest rates for well over two decades fueled asset bubbles, and inflation. It was bad policy. We propped up asset prices in 2000, 2008, and 2020. Some people said just let it all burn instead. More pain in the short run but less in the long run.
 

bykfixer

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My first mortgage was 8.75% and that was great. My pop got a mortgage in 1953 for 4.75%. My next one was 6% and man it just didn't get no better than that, or so I thought. Then came the big burst of 08 when for the first time houses lost value. Banks suddenly shut off the money supply except to those who had it.

Much of my life the interest rate for a savings account meant you'd actually see a decent return. To get 5 cent return on the dollar, compounded meant something. At one point 10% interest was not unusual. That was 10% guarenteed, not some sketchy roulette wheel stock market mumbo-jumbo but cash in hand annually. I'm ok with the return of that foe-show. But.....

The knuckleheads running the planet these days are bound to screw that up. Either through burdensome taxes meant to soak up every drop of revenue they can get their greedy paws on or just through more bad ideas as usual.

My most recent mortgage was less than my pop's was in 1953, but my money is worth practically zero to a bank. At one point less than 1 tenth of 1 percent. I shopped around and one bank said "for a 1 million dollar investment we'll pay you 1.00%"
88BFAFF2-B22C-4390-B494-03BFF54D094D.gif

Oh happy days!!

So today it appears we are back on the road to normal interest rates.
 

Hooked on Fenix

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The converse of that is without vaccine or mask mandates another portion of the work force would simply have refused to return to work for their own safety. That includes myself if I had a job requiring me to work on site. Either way you lose people. If the entire planet had the discipline to handle covid the way China still is, this would have been over by summer of 2020. We would have killed covid in the wild and gotten back to normal. Instead, our response was like picking at a scab. Numbers go down a little, loosen restrictions, they go back up like clockwork. The US failure at handling covid was epic. It's a blueprint of what NOT to do in future pandemics.


Do you blame people for doing barely enough to keep their job if there's zero chance of advancement or raises? Businesses got so used to people doing extra, "free" work above and beyond their job description that they built it into their business model. When people finally saw that the extra effort wasn't rewarded they reverted to doing the bare minimum. Here's a hint. If businesses want more productivity from their workers pay them more. And also give them more time off to recharge. If a business can't afford this, maybe they don't have a viable business model and deserve to fold.


You're giving way too much credit to that few thousand at most in stimulus payments. Most people didn't get anything beyond that. Besides, my understanding is many people simply tucked any extra money away in savings accounts. If they weren't spending it, how did it contribute to inflation? Other countries which give their citizens less or no money are also experiencing inflation. How do you square that away with your theory?

Interest rates are simply returning to historical norms (7% or 8% for mortgages, hopefully eventually 5% on savings accounts). All this easy money at very low interest rates for well over two decades fueled asset bubbles, and inflation. It was bad policy. We propped up asset prices in 2000, 2008, and 2020. Some people said just let it all burn instead. More pain in the short run but less in the long run.
The way China handled Covid is lock people down in their homes until they were all screaming for someone to bring them food because they were starving to death. How they did things didn't allow anyone to get sick so there was no natural immunity when they got to the worse strains that were vaccine resistant. They ruined their economy in the process. I wouldn't consider that a model to follow.

Businesses are there to make money. Employees are there to make them money. If an employee doesn't think a task is part of their job and won't do it when it is required of them to do, they are making themselves obsolete. Ideally, a good worker is always learning new skills that make them more valuable to the company. That's the employee that gets a raise or promotion. When times are tough for a company, sometimes you don't get what you think you deserve. You can either tough it out and help the company succeed showing loyalty and hopefully giving you job security if it pans out, or do the minimum, possibly getting fired, replaced, or ensuring the company goes under.

I said all that government spending, including stimulus checks. The government spent several Trillion dollars in the past few years, only part of which was stimulus payments. All of it contributed to inflation.
 

bykfixer

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America does not guarentee success. Just the opportunity to be successful. With a little luck and a lot of sweat the chance is there to be successful provided fate dictates it. No matter what, not everybody is going to succeed at anything they choose. Sometimes it just aint meant to be an all star quarterback or a successful landscaper. Talent plays a part too ya know.
 

orbital

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A 'hard landing' is basically a full blown recession that isn't good for any average American.


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add:: my Dad started a Real Estate company in the 70s' which was a terrible time for interest rates and home sales or to even keep milk in the fridge.
Yet, both my parents actually worked seven days week to make it work.
 
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jtr1962

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The way China handled Covid is lock people down in their homes until they were all screaming for someone to bring them food because they were starving to death. How they did things didn't allow anyone to get sick so there was no natural immunity when they got to the worse strains that were vaccine resistant. They ruined their economy in the process. I wouldn't consider that a model to follow.
You're cherry picking the worst part of their response. If we had acted immediately and mercilessly towards the virus, lockdowns might have lasted under a month. You could have had workers delivering food packages to those who needed them. Anyone who wasn't in lockdown would have had to wear an N95 respirator. Or better yet, it's possible the virus could have been contained in China.


Lack of natural immunity is irrelevant if the virus is stopped from spreading the wild.
Businesses are there to make money. Employees are there to make them money. If an employee doesn't think a task is part of their job and won't do it when it is required of them to do, they are making themselves obsolete. Ideally, a good worker is always learning new skills that make them more valuable to the company. That's the employee that gets a raise or promotion. When times are tough for a company, sometimes you don't get what you think you deserve. You can either tough it out and help the company succeed showing loyalty and hopefully giving you job security if it pans out, or do the minimum, possibly getting fired, replaced, or ensuring the company goes under.
There's two very simple ways all that can happen. First one is to simply pay workers more, especially if the job has few or no advancement opportunities. Workers might go the extra mile if there's a clear path for advancement and higher pay. Note the operative word "clear". In other words, they put in the extra effort, they definitely will advance. No maybes, no praying the boss will actually notice your extra effort. Have it in writing, and document the extra stuff you do. The other way, if there are no real chances for advancement, is to simply pay people well even if they're at the bottom. Nothing wrong with that. I love how we've called some people "essential workers", but what we paid them said otherwise.

The second way is so deviously simple it should be enshrined in law. The CEO should make no more than ten times the lowest paid worker. That includes all compensation, including stock options. This makes the entire work force invested in having their company do well. If it does better, they know it all won't go to the CEO or a handful of highly paid executives. They'll make more as well. There's nothing in this model either which keeps CEOs from earning $10 million or more. They simply would need to make the company successful enough to afford to pay the janitor $1 million. On the flip side, if the company falls on hard times, everyone, including the CEO, will share the pain. It really rubs me the wrong way when companies tell employees to share the pain, but when things were good, the employees didn't share the gain. They just got their usual cheap raises which often don't even keep pace with inflation.
I said all that government spending, including stimulus checks. The government spent several Trillion dollars in the past few years, only part of which was stimulus payments. All of it contributed to inflation.
Here's a great breakdown of all the stimulus spending and some analysis of its effects:


Economists largely credit these financial jolts with helping the U.S. economy recover more quickly than it otherwise would have from the largest downturn since the Great Depression: The pandemic recession was the shortest on record, lasting only three months.

"What the money did was to basically make sure that when we could reopen, people had money to spend, their credit rating wasn't ruined, they weren't evicted and kids weren't going hungry," said Louise Sheiner, an economist with the Brookings Institution. "It is a lesson that if you don't want a recession to have really long-lasting bad effects you spend a bunch of money and you prevent it."
 

jtr1962

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America does not guarentee success. Just the opportunity to be successful. With a little luck and a lot of sweat the chance is there to be successful provided fate dictates it. No matter what, not everybody is going to succeed at anything they choose. Sometimes it just aint meant to be an all star quarterback or a successful landscaper. Talent plays a part too ya know.
On a macro level that's true. Within a company though it shouldn't be. Good managers should know who's more capable, and reward them appropriately. In many cases by the nature of the business there's not much chance to advance position. In that case just pay your top performers more, even if they never get promoted, with regular reviews and raises. If there's one constant for why workers are unhappy and "quiet quit", it's bad managers. In this country we often equate hours spent at the office with greater productivity, while failing to see who actually does more work. The ones who stretch 6 hours of work to fill 10 get raises, while the person who works fast, doesn't BS with their coworkers, and never puts in extra hours is bypassed as lazy.

As a country, we're also really bad at connecting people with appropriate jobs. This is especially true for college graduates who are often left to their own devices. Colleges, even governments, should have databases to match jobs to skill sets. Most good jobs are never advertised. That's where these databases would come in. Most recent graduates just don't have the connections to find an appropriate job on their own. End result is mass underemployment. I went through this myself. So did my sister.
Much of my life the interest rate for a savings account meant you'd actually see a decent return. To get 5 cent return on the dollar, compounded meant something. At one point 10% interest was not unusual. That was 10% guarenteed, not some sketchy roulette wheel stock market mumbo-jumbo but cash in hand annually. I'm ok with the return of that foe-show. But.....
Yeah, my first savings account in 1989 paid 8.5%. Then it kept dropping. I thought when it got down to 5% that was it. I was conditioned for so long to savings accounts paying 5% that I thought it was required by law. Turns out it wasn't. Down it went. 5%...4%...3%...2%...1%...0.1%.

I hope we have some return to normal interest rates. At this point I'd be thrilled to even get 3%.
 
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bykfixer

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Don't like your employer? Start your own business.

I did it twice. Neither worked out but I don't blame the system. I blame fate. My timing was off or I just didn't go about it correctly. Either way it was fun trying. I've worked for the gubment, I've been my own boss and worked for rich people.

With the gubment a promotion may be due to talent or it may be to throw ballast off the ship. Surrounded by mediocre to lousy efforts by fellow coworkers and people who do just enough to get by.

My own boss days I never got a day off. Lots of freedom but the hassles that go with it and constantly sweating the details. Great if it works out though. But I made the mistake of turning a hobby into a job.

Working for rich people has been the most rewarding by far. Do your job, they keep you around. A promotion comes from being better than the competition and I get vacation pay every year whether I use it or not. I work for a rich guy named Ralph along with 28,000 other people. Ralph don't know me. He never promised me a rose garden either, but he has provided a whole lot of talented people I can network with to provide the customer a better product than I was able to provide the taxpayer when I worked for them.
 
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jtr1962

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Don't like your employer? Start your own business.
That's exactly what I did after I got laid off in late 1990. I wasn't super successful for most of those years but it sure beat working for others. Setting my own hours/days was pretty high on my list of priorities, but fortunately the nature of my work allowed me to do this.
I did it twice. Neither worked out but I don't blame the system. I blame fate. My timing was off or I just didn't go about it correctly. Either way it was fun trying.
I ended up getting most of my work through people I know. That included some clients I got from CPF. In retrospect I probably could have grown my business more if I was aggressive, but I didn't care. It was good enough for me. My main goal was to earn more per hour than I could doing the same work for someone else. I accomplished that from day one.

Never had any jobs from rich people so I can't say if your experience is the norm, or an aberration.

Some examples of the bad bosses people hate:

 

Monocrom

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What no one likes to admit.... Starting in 2002 America hit an on-going and massive recession. Not a Depression! But just an on-going R. that we have never fully recovered from. Yes, there have been big upswings here & there. But never a full recovery. Never full economic prosperity as existed in the 1990s. How do I know? Lived through it. People talk about things like the 2008 recession. There wasn't one in 2008. We never fully recovered from the one started in 2002. Slight upswing in economic times dipped in 2008. That's all. But economists pretend otherwise because it would be horribly depressing to admit America's last great economic Boom was at the tail-end of the 20th century. With zero real prosperity during the last 20 years into the 21st century.
 

jtr1962

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What no one likes to admit.... Starting in 2002 America hit an on-going and massive recession. Not a Depression! But just an on-going R. that we have never fully recovered from. Yes, there have been big upswings here & there. But never a full recovery. Never full economic prosperity as existed in the 1990s. How do I know? Lived through it. People talk about things like the 2008 recession. There wasn't one in 2008. We never fully recovered from the one started in 2002. Slight upswing in economic times dipped in 2008. That's all. But economists pretend otherwise because it would be horribly depressing to admit America's last great economic Boom was at the tail-end of the 20th century. With zero real prosperity during the last 20 years into the 21st century.
Honestly, I think for much of the population, we've been in a defacto recession since the 1980s. Everyone I know, even those with degrees, have struggled. There was a time when if you finished college you could write your own ticket. Even people with just a high school diploma, like my late father, were able to afford to raise families and eventually buy a house.

You're correct that there's been no real prosperity in a long time. People increased their standard of living by borrowing from the equity in their homes, not from earning more. The ridiculous increase in home prices in turn was the result of decades of easy borrowing. Unfortunately, when you borrow from the equity in your home, that means you leave less, or nothing, to your children. Inheriting a home is one major way intergenerational wealth is passed on. Those about my age or younger are the first generation to have a lower standard of living than their parents.
 

Monocrom

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Honestly, I think for much of the population, we've been in a defacto recession since the 1980s. Everyone I know, even those with degrees, have struggled. There was a time when if you finished college you could write your own ticket. Even people with just a high school diploma, like my late father, were able to afford to raise families and eventually buy a house.

You're correct that there's been no real prosperity in a long time. People increased their standard of living by borrowing from the equity in their homes, not from earning more. The ridiculous increase in home prices in turn was the result of decades of easy borrowing. Unfortunately, when you borrow from the equity in your home, that means you leave less, or nothing, to your children. Inheriting a home is one major way intergenerational wealth is passed on. Those about my age or younger are the first generation to have a lower standard of living than their parents.
Definitely a lower standard of living. And, it's clearly going to get worse for future generations. Colleges and Universities nowadays, except for the top 1%, have become a scam. I now tell anyone who asks, the very same thing I wish someone had told me when I was a younger man....

Don't waste your time or money with college. Look into Trade Schools and the programs that various local ones offer. That's what you should be attending. Unlike college, you'll actually be working at the sort of money-making careers you've actually studied for. And, you won't need 30 years to pay off your student loans, unlike college.
 

bykfixer

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In my 20's I lived way better than my parents did in their 20's. My kids lived way better than me in their 20's.

My parents had one car. I had 2. My house had ac, there's did not. I had a washer and dryer. They hung clothes outside. I had tv in several rooms. They had 1. I bought my kids clothes, my parents made many of mine. I went to college (pay as you go until dropping out), they did not. Lots and lots of ways I had it better.

My kids drove better cars than I did at that age. They made way more money than I did at that age and made wise decisions with it. They gradjeated college.

Now the most mitigating factor is all three generations took up a trade, started at the bottom and slowly worked our way up to a comfortable position before moving to the next.

Blue collar is frowned upon anymore but it's still a great way to earn a living.
 

Poppy

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Yeah, I am happy that I live in a first world country.

Inflation, recession complaints IMO are first world problems. I think that we will recover. We may have to suck it up for a year or two, like our ancestors had to, but we will recover, and be better for it.

This morning on Fox News network (where they are always complaining about inflation and immigration crisis at the border) there was a 15 minute segment of a - point... counter point. They both agreed that to counter inflation, we need more immigration!

IMO we need to see ourselves on a "war footing" and be willing to pay higher prices at the pump, and to heat our houses, so that we, the US, can pay to refill our stockpiles of weapons and ammunitions, as we give/lend lease them to Ukraine.
 

jtr1962

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Don't waste your time or money with college. Look into Trade Schools and the programs that various local ones offer. That's what you should be attending. Unlike college, you'll actually be working at the sort of money-making careers you've actually studied for. And, you won't need 30 years to pay off your student loans, unlike college.
I say pretty much the same thing. Only difference is if you're fairly smart, and can graduate without loans (either via a full scholarship or parents able to foot the bill), then I recommend college. But I also recommend a major which at least has some potential to earn a decent living, like engineering or medicine or science. Unless your parents are rich, forget the idea of picking a major you might have interest in but which has little job potential. You can just do that interest as a hobby in your spare time.

Student loans though are verboten in my book. It's a bad enough idea loaning large sums of money to barely adult people who never managed anything larger than their allowance. It's even worse once you realize the entire student loan system is predatory lending at its worst. These people make loan sharks look good. There's no real way to get out of a student loan if you fall on hard times. If you're unable to start making payments by the time the grace period after graduation is up, you go down the rabbit hole of default. At that point you're an indentured servant. The collection fees are added and compounded. You'll never pay it off. That debt will follow you until you die.

As for trade schools, they're not for everyone. The hard fact is many of those jobs are highly physical. Some people just don't like physical work. A lot of people trying to do them will be literally falling apart by their 30s. I was forced to do some jobs which required constant use of my hands out of college. By my late 20s I had such severe CTS that my days of working full-time were over. I've done things like electrical work around the house. After a day or two of that, my body needed a week off to recover. No way could I do that occupationally. But if you're lucky to have a strong, resilient body, trade schools can be a pathway to earning a good living.
 

raggie33

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It's so bad for us below the poverty level as said before I eat pasta every day. Once in a while I'll find meat. That I can afford but then the people on my street get upset with me. Turns out it was pet cats . Ok I'm joking in case anyone don't know lol
 

Hooked on Fenix

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It's so bad for us below the poverty level as said before I eat pasta every day. Once in a while I'll find meat. That I can afford but then the people on my street get upset with me. Turns out it was pet cats . Ok I'm joking in case anyone don't know lol
At least you can eat pasta. My favorite food was spaghetti and now I have celiac disease. I keep hearing about all these people who are trying to scrape by trying to just afford bread and pasta. At least that's an option for you. I've had to do my own cooking at home mostly for years now because almost everything in restaurants has gluten in it. Gluten free food costs 3-4 times more than normal food. Now with the shortages, it's getting harder to find anything I can both eat and afford.
 

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