Investing

Is (hyper)inflation coming up?

  • Last Updated:
  • Apr 5th, 2021 12:40 pm
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Poll: What do you think is going to happen within the next couple years?

  • Total votes: 107. You have voted on this poll.
Hyperinflation to the moon! 🚀
 
22
21%
Moderate inflation 🔥
 
45
42%
Average inflation (2-3%) 👍
 
36
34%
Deflation 👎
 
4
4%
[OP]
Newbie
Jan 2, 2021
67 posts
76 upvotes

Is (hyper)inflation coming up?

What do you think and why?
32 replies
Penalty Box
User avatar
Dec 16, 2015
2805 posts
2474 upvotes
Toronto
To the moon!
To the moon
Banned
Feb 18, 2021
67 posts
227 upvotes
Government has to keep printing to stave off deflation these days. They'll get a bump up to a couple % from all the COVID printing but it will be short-lived. Definitely won't see wage inflation occurring as the economy is even more in shambles than prior to COVID, plus jobs are being lost to automation and improved efficiency. No hyperinflation in the near term unless they really get reckless, which I don't see happening.

In the long term, I could see hyperinflation occurring if Asia surpasses the West and ruins faith in Western currencies.

I could also see governments pulling the plug and allowing deflation to occur, just to wipe out the masses or end the party. If that's what they want.

But it's pretty hard to predict where we are heading. War could happen over this as well. In the near term, I don't see anything to change the status quo.
[OP]
Newbie
Jan 2, 2021
67 posts
76 upvotes
But are people still hoarding cash?

Last year they were, but this year it seems like every other Joe is buying utilities, commodities, real estate etc. I've heard many people say "cash position is the worst" lately due to inflation fears.

If everyone shares the fear of inflation and ups spending, wouldn't it cause actual inflation?
Member
Sep 25, 2009
433 posts
335 upvotes
The only place to push cash on hand is stocks & investments right now.

Renovation people are all booked straight to August. Graphic Cards / PS5 are OOS perpetually. Lumber prices are through the roof. There is nothing people can spend their money on right now.

Everything that I want to buy as a consumer is either sold out, or jacked up 10x in price.
Deal Guru
Oct 7, 2010
10189 posts
1982 upvotes
Hyperinflation if there are too much money supply and it going to everyone. These days, money is printed to pay of their wealthy friends.

Money that doesn't get circulated in the economy will not cause hyperinflation as no one has money to spend.

For example, these African and Eastern European and South American countries has hyperinflation causes they print money amd giving it all for the people. Eg. Venezuela. In society where income inequality, there most likely wont be any hyperinflation as no one really have money to spend.

Medium salary for house hold income in Canada is 80k a year. Pure joke. 1 person is already 100k club, how can they be so low pay?
Banned
Feb 18, 2021
67 posts
227 upvotes
TwinkoStar wrote: But are people still hoarding cash?

Last year they were, but this year it seems like every other Joe is buying utilities, commodities, real estate etc. I've heard many people say "cash position is the worst" lately due to inflation fears.

If everyone shares the fear of inflation and ups spending, wouldn't it cause actual inflation?
People only have so much money to spend, so I don't think it matters much. They are currently spending more due to forced savings during COVID and extra stimulus from CERB. Supply chains are also suffering due to COVID. So we see a temporary rise in prices. Once supply chains are back up and people run out of extra savings, we'll see things go back towards normal. I suspect some price increases will be here to stay, but that will be based on increased government taxes and regulations (eg. carbon tax) making everything more expensive.

In my view, we are in a situation where the government has to stimulate more and more (via printing money or encouraging people to take on more and more debt) to stave off deflation. Most of the money in the system is borrowed and has to be paid back, so new money needs to be continually added or borrowed to keep blowing the bubble bigger. Eventually, this could lead to hyperinflation if the government decides to start printing exponential amounts. Alternatively, they may decide to allow deflation to occur. That's hard to predict. But in the meantime, I expect the status quo to continue.

Most of the money in the system seems to be going into housing rather than productive investment. This money is just going to sit there and not circulate. For that reason, high house prices will cause our economy to suffer and stagnate which will probably exacerbate this problem. I think we're really nearing the point where people can't borrow much more, so it will be interesting to see where we go from here.
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Dec 12, 2009
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Redsanta wrote: To the moon!
Is there anything not on the moon as yet?
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Wormwhole wrote: People only have so much money to spend, so I don't think it matters much. They are currently spending more due to forced savings during COVID and extra stimulus from CERB. Supply chains are also suffering due to COVID. So we see a temporary rise in prices. Once supply chains are back up and people run out of extra savings, we'll see things go back towards normal. I suspect some price increases will be here to stay, but that will be based on increased government taxes and regulations (eg. carbon tax) making everything more expensive.

In my view, we are in a situation where the government has to stimulate more and more (via printing money or encouraging people to take on more and more debt) to stave off deflation. Most of the money in the system is borrowed and has to be paid back, so new money needs to be continually added or borrowed to keep blowing the bubble bigger. Eventually, this could lead to hyperinflation if the government decides to start printing exponential amounts. Alternatively, they may decide to allow deflation to occur. That's hard to predict. But in the meantime, I expect the status quo to continue.

Most of the money in the system seems to be going into housing rather than productive investment. This money is just going to sit there and not circulate. For that reason, high house prices will cause our economy to suffer and stagnate which will probably exacerbate this problem. I think we're really nearing the point where people can't borrow much more, so it will be interesting to see where we go from here.
I tend to agree with this, particularly in a country like Canada where people gravitate to home ownership. It is hard to lay blame as the tax system makes this a worthwhile long term investment. In the end, we are all house rich, cash poor.
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Oct 7, 2010
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will888 wrote: I tend to agree with this, particularly in a country like Canada where people gravitate to home ownership. It is hard to lay blame as the tax system makes this a worthwhile long term investment. In the end, we are all house rich, cash poor.
Housing is way too not liquid.
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Dec 12, 2009
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spike1128 wrote: Housing is way too not liquid.
Depends on the market. Today, it is very liquid in some markets which is why the multiple offers and the crazy y/y price increases. Generally compared to equities, it is an illiquid asset. In the meantime, it offers great utility that stocks don't.
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spike1128 wrote: Hyperinflation if there are too much money supply and it going to everyone. These days, money is printed to pay of their wealthy friends.

Money that doesn't get circulated in the economy will not cause hyperinflation as no one has money to spend.

For example, these African and Eastern European and South American countries has hyperinflation causes they print money amd giving it all for the people. Eg. Venezuela. In society where income inequality, there most likely wont be any hyperinflation as no one really have money to spend.

Medium salary for house hold income in Canada is 80k a year. Pure joke. 1 person is already 100k club, how can they be so low pay?
Pretty much this, the inflation in the US pretty much go into the net worth of the billionaires and millionaires so it isn't felt as much in the average consumables.
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Banned
Feb 18, 2021
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Sepiraph wrote: Pretty much this, the inflation in the US pretty much go into the net worth of the billionaires and millionaires so it isn't felt as much in the average consumables.
Yea, most of the money is quickly going to the top 1% who are not spending it in a way that circulates much or causes inflation to the goods the 99% are purchasing. That is why we can double the money supply without seeing much rise in prices. If the top 1% did start spending those trillions, we would see major inflation and major societal problems, but I doubt that will happen.

The top 25%, however, are spending money buying up housing in an attempt to become rich from being slumlords, which is causing unaffordable housing prices and is creating a problem. Hopefully the government lets deflation occur to wipe these assholes out or regulates it to put an end to their strategy. But it's a tricky situation as so much of the sad economy in Canada is based on housing at this point that they don't want to do anything meaningful about it, even though it needs to be done or the economy will end up in the gutter anyways and it will be even worse the longer it goes on.

I suppose hyperinflation is a way out, probably the preferred way out of the speculators because it rewards them, and for the same reason my least preferred way out. Maybe I'm just biased but I don't see it coming imminently. For it to occur we'd need to print a ton of money and distribute it to the masses. Something like CERB (UBI?) but much higher and of indefinite duration ought to accomplish it.
[OP]
Newbie
Jan 2, 2021
67 posts
76 upvotes
So all that money printed just goes straight to Walmart, Costco and Amazon and all those megabillionaires. Who knew Jeff Bezos was protecting us all from inflation all this time Face With Tears Of Joy

Just as a mental exercise, say if the stock market were to crash tomorrow and everyone bails. What would happen? More real estate craze?

I see collectibles, luxury, lumber, appliances, and even restaurant food going massively up in price. Really hard to imagine that as temporary...
[OP]
Newbie
Jan 2, 2021
67 posts
76 upvotes
Some more pondering -

Say during covid, half the hair salons, nail salons, travel services, retail clothing stores and sit-down restaurants went bust. Many manufacturers have shifted gears to produce masks and other "home" lifestyle products. Once the pandemic ends, there will be massive demand for these services with low supply. If every hair dresser and restaurant has a wait list of 50, wouldn't they jack their prices up? Surely there will be some trickle down effects?
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Dec 12, 2009
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TwinkoStar wrote: Some more pondering -

Say during covid, half the hair salons, nail salons, travel services, retail clothing stores and sit-down restaurants went bust. Many manufacturers have shifted gears to produce masks and other "home" lifestyle products. Once the pandemic ends, there will be massive demand for these services with low supply. If every hair dresser and restaurant has a wait list of 50, wouldn't they jack their prices up? Surely there will be some trickle down effects?
We all need haircuts, but we don't need more haircuts than in the past. In fact we have probably grown more tolerant to longer intervals between haircuts. Sure the barber shops could raise prices in the short term, but what are they going to do when business goes back to a new normal? With restaurants, there might be this pent up demand initially. Will that last? I have to say that my eating habits are likely to be forever altered. I used to rely on restaurant food a lot. I am not sure I will end up going back to the old ways or perhaps over a very long period of time. This is what the US Fed alluded to that if there is inflation, it will likely not be enduring.
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TwinkoStar wrote: So all that money printed just goes straight to Walmart, Costco and Amazon and all those megabillionaires. Who knew Jeff Bezos was protecting us all from inflation all this time Face With Tears Of Joy

Just as a mental exercise, say if the stock market were to crash tomorrow and everyone bails. What would happen? More real estate craze?

I see collectibles, luxury, lumber, appliances, and even restaurant food going massively up in price. Really hard to imagine that as temporary...
Most of the wealth in the stock market would just evaporate if the market crashed.

I don't think the top 1% have a desire to buy up all the physical assets like houses. It would likely cause major social unrest or political backlash. They don't need to be parasitical slumlords for money as they have successful businesses.

Prices can't go too high as incomes are not increasing. People are getting squeezed. The economy will further stagnate.
Deal Guru
Oct 7, 2010
10189 posts
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Wormwhole wrote: Most of the wealth in the stock market would just evaporate if the market crashed.

I don't think the top 1% have a desire to buy up all the physical assets like houses. It would likely cause major social unrest or political backlash. They don't need to be parasitical slumlords for money as they have successful businesses.

Prices can't go too high as incomes are not increasing. People are getting squeezed. The economy will further stagnate.
The government would just bail out the market. Also stock market is made up of a lot of rich people's money and institutional money. They would not pull put hence the market wont crash. Even if they are close to crashing, there will be bailouts.

It is a non issue.
Jr. Member
May 29, 2020
131 posts
204 upvotes
TwinkoStar wrote: Some more pondering -

Say during covid, half the hair salons, nail salons, travel services, retail clothing stores and sit-down restaurants went bust. Many manufacturers have shifted gears to produce masks and other "home" lifestyle products. Once the pandemic ends, there will be massive demand for these services with low supply. If every hair dresser and restaurant has a wait list of 50, wouldn't they jack their prices up? Surely there will be some trickle down effects?
Could be in the short term, but the market will balance itself out fairly quickly. Businesses closed because there is no profit to be made. Once profitability returns, new businesses will open up again.
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Dec 23, 2012
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RICHMOND HILL
Wormwhole wrote: Most of the money in the system seems to be going into housing rather than productive investment. This money is just going to sit there and not circulate. For that reason, high house prices will cause our economy to suffer and stagnate which will probably exacerbate this problem. I think we're really nearing the point where people can't borrow much more, so it will be interesting to see where we go from here.
but it does circulate. there are two sides to every transaction, the money doesn't just "sit there". the only ways for money to be removed from circulation are if it's kept in physical cash, in government bonds, or paid as federal taxes.

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