Off-Topic Stock Market & Crypto Discussion

[90scane]

That’s why people need to pay down principal for ARLs and start paying cash for future purchases. Or if you don’t have that kind of cash on hand, expect to make advance payments on any future fixed interest loans. All of this contributes to a reduction in multiple home ownership and stocks.

Sorry…that is private debt.

Public debt needs to be addressed by reducing and trying to eliminate the budget deficit.

That will decrease the money supply that leads to inflation.

Private debt isn't the issue this time. We have a ton of 30yr fixed loans with very limited variable rate loans unlike Canada, UK, Australia, China... This is why those central banks can't raise rates as they know it would cause real estate crashes.


Trying to not get into politics and just speak on the realities.

Inflation helps reduce the budget deficit but truly doesn't address the DEBT just like rate hikes don't address Supply-side issues. The government has to freeze spending to let inflation reduce our debt. The increased revenue from inflation will be used to pay down debt as we should have a revenue surplus.

As of now, the government is also looking at increasing our public debt by $500B with student debt forgiveness. We have already cut oil supply and increased subsidies for EV/alternatives which means more public debt with no short to mid-term relief for inflation.

SS is adjusted to inflation so we can't freeze it without changing that law which no one in Congress will do! R's aren't willing to let Medicare/Medicaid (don't know which one) get lower prescription costs.

 

[PanteraCanes]

That’s why people need to pay down principal for ARLs and start paying cash for future purchases. Or if you don’t have that kind of cash on hand, expect to make advance payments on any future fixed interest loans. All of this contributes to a reduction in multiple home ownership and stocks.

Sorry…that is private debt.

Public debt needs to be addressed by reducing and trying to eliminate the budget deficit.

That will decrease the money supply that leads to inflation.

If only our federal government was interested in that second option. Then people wouldn’t need to be paying the price for the other option.

 

[mr.h]

only tax revenue and cuts, together, will lower debt.
I never hear anyone propose a fair way to tax.

I also believe we will have a soft landing..without putting millions of workers out of work.

 

[90scane]

only tax revenue and cuts, together, will lower debt.

in the simplest way, sure.

Now imagine for a second inflation running at 8% for 5 years. IF they don’t over spend and don’t give everyone massive pay increases, the tax revenues will jump by roughly 47% while spending could be on a much lower growth path thus paying down debt as we wouldn’t be in a deficit.

This is how we lowered our deficit to 770b this year.

Even if they simply cut back a little as inflation ran hot, they likely could drop our debt by the amount of Covid money introduced in 2020.

Fun fact, the last time the US Government had zero public debt was likely some of the worst economic conditions in the USA, 1835 under Andrew Jackson. I’m not a fan of zero public debt but also don’t want debt to GDP to be so unbalanced.

 

[hotshot]

The current interest rates are historically normal. We’ve been spoiled for nearly 20 years of absurdly low rates and nearly non existent inflation.

First house I bought in 1980, my mortgage rate was 12.5% or thereabouts -- the going rate at the time. Buyers like me didn't think twice about it then.

 

[JD08]

First house I bought in 1980, my mortgage rate was 12.5% or thereabouts -- the going rate at the time. Buyers like me didn't think twice about it then.

How much were your cell phone, cable, and streaming bills back then?

People have gotten spoiled by conveniences.

 

[hotshot]

How much were your cell phone, cable, and streaming bills back then?

People have gotten spoiled by conveniences.

No Cable TV in the neighborhood I bought in back then (was put in a year later), no brick of a cell phone either. Didn't get a home computer/hookup until 1994 or thereabouts.

 

[JD08]

No Cable TV in the neighborhood I bought in back then (was put in a year later), no brick of a cell phone either. Didn't get a home computer/hookup until 1994 or thereabouts.

You were lucky, we didn't get cable until the early 90's. Life was simpler back then. People weren't paying as much for phone, tv, and internet as they were for their car payment. We've gotten used to the luxuries that cheap money can provide.

 

[JD08]

 

[90scane]

First house I bought in 1980, my mortgage rate was 12.5% or thereabouts -- the going rate at the time. Buyers like me didn't think twice about it then.

With inflation at 18% around that time, they were paying you to take out loans at 12.5%. Right now, loans are at 7.5% with inflation at 7.7% so the variance is small. I'm saving cash to decide between equities or more real estate.

My first loan was around 7.5% in the early 2000s. I even had rentals at 7.5-8% and we didn't think twice about it.

 

[hotshot]

You were lucky, we didn't get cable until the early 90's. Life was simpler back then. People weren't paying as much for phone, tv, and internet as they were for their car payment. We've gotten used to the luxuries that cheap money can provide.

Truth! That new house in 1980 cost me $89,000. Even with the 12.5% interest, think my 30 yr fixed mortgage payment was in the $700-800 monthly range.

Today, my Comcast/Infinity bill (Cable TV/Phone/Internet) is a ridiculous percentage of that old monthly mortgage payment.

 

[SpikeUM]

As @90scane wrote above and I have warned/whined about multiple times, we have a supply problem almost across the board. Until that is solved, inflation will not be tamed without demand destruction.

 

[90scane]

Truth! That new house in 1980 cost me $89,000. Even with the 12.5% interest, think my 30 yr fixed mortgage payment was in the $700-800 monthly range.

Today, my Comcast/Infinity bill (Cable TV/Phone/Internet) is a ridiculous percentage of that old monthly mortgage payment.

I have rentals worth 2-3x your new home in the 80s with similar PITI payments. HA Gotta love 3-5% rates!

Cable TV/Hulu/Services = $100
Phone = $350 with 10 devices/split between Mint Mobile for kids' phones and Verizon for the parents' devices.
Internet = $50

18% of my monthly mortgage payment.

 

[hotshot]

I have rentals worth 2-3x your new home in the 80s with similar PITI payments. HA Gotta love 3-5% rates!

Cable TV/Hulu/Services = $100
Phone = $350 with 10 devices/split between Mint Mobile for kids' phones and Verizon for the parents' devices.
Internet = $50

18% of my monthly mortgage payment.

Sweet.

By the time I paid that first house mortgage off (early), my rate was like 3%, and had been very low for years. My point was when purchasing that first house in 1980, we wanted and needed it and woulda likely paid as high a rate as we could afford (think rates did go to around 14-15% after we bought, and we woulda/coulda paid that).

 

[90scane]

Does anyone have thoughts on the workforce participation percentage changing due to rates increasing and inflation?

My thoughts:
Inflation helps SS retirees as it is attached to CPI and they likely own their homes outright. Thus, we aren't likely to see them come back to work.
Inflation and high rates will likely force the stay at home mom/dad back into the workforce as the single-income home will likely need more income to keep the home afloat. This will drive up unemployment as they start grabbing some of the new jobs while others get laid off.

 

[hotshot]

As @90scane wrote above and I have warned/whined about multiple times, we have a supply problem almost across the board. Until that is solved, inflation will not be tamed without demand destruction.

That said and acknowledged, a nice day for the DJIA yesterday. What was it up, 1,200 or so?

 

[90scane]

Sweet.

By the time I paid that first house mortgage off (early), my rate was like 3%, and had been very low for years. My point was when purchasing that first house in 1980, we wanted and needed it and woulda likely paid as high a rate as we could afford (think rates did go to around 14-15% after we bought, and we woulda/coulda paid that).

I agree. When we purchased our first homes, we dated the rates and married the homes (most are still owned by my Ex).

 

[SpikeUM]

That said and acknowledged, a nice day for the DJIA yesterday. What was it up, 1,200 or so?

Yes, but for me, the bigger news was rates dropping so much. Lets hope the bond market is right.

 

[mr.h]

consumer sentiment down..which I guess is good, because consumers will spend less
5 year consumer inflation expectations @3%

 

[TheEye]

Private debt isn't the issue this time. We have a ton of 30yr fixed loans with very limited variable rate loans unlike Canada, UK, Australia, China... This is why those central banks can't raise rates as they know it would cause real estate crashes.


Trying to not get into politics and just speak on the realities.

Inflation helps reduce the budget deficit but truly doesn't address the DEBT just like rate hikes don't address Supply-side issues. The government has to freeze spending to let inflation reduce our debt. The increased revenue from inflation will be used to pay down debt as we should have a revenue surplus.

As of now, the government is also looking at increasing our public debt by $500B with student debt forgiveness. We have already cut oil supply and increased subsidies for EV/alternatives which means more public debt with no short to mid-term relief for inflation.

SS is adjusted to inflation so we can't freeze it without changing that law which no one in Congress will do! R's aren't willing to let Medicare/Medicaid (don't know which one) get lower prescription costs.

Our budget surplus didn’t last very long. However, if you are proposing a reduction in the national debt we would likely need to have a budget surplus for not only years but decades as opposed to months.

Time to revisit how we ever saw a budget surplus in the first place.