World, Writing, Wealth discussion

Ian wrote: "The question then is, do they get value for their taxes? Health and education, probably. Regulations? Probably not."

As a low tax guy, nope, not for what they pay.

We need to hear from them. What do they think, because they keep voting in the guys that levy the taxes.

Ian wrote: "The question then is, do they get value for their taxes? Health and education, probably. Regulations? Probably not."

Health definitely (however inefficient the NHS can be), education arguable. Social care a huge argument at the moment with a NHS type scheme continually being proposed.

UK out of EU regulations allegedly only not really as we have to have comparable to continue trade - some regulations e.g. consumer rights, product safety are good to have.

The alleged purpose of some of the tax is to reduce use - same approach as on cigarettes. Where the money goes is lost in government spending plans. It does not go on roads.

Anyone seeing 'shrinkflation,' were things cost the same - but you get less?

It happens here in a number of grocery products. Chocolate bars get smaller. Toilet soap bars are not only smaller but they have not had so much water and glycerol squeezed out of them so they don't last anywhere nearly as long.

Graeme wrote: "Anyone seeing 'shrinkflation,' were things cost the same - but you get less?"

An old trick from "con the customer" game. Somebody's gotta measure that toilet paper to make sure they don't make it shorter :)

After trying austerity, then quantitative easement, we seem to enter a shock therapy faze, boosted, leverage or co-synchronized with corona. Fueled by (artificially?) post lockdown re-igniting of the economy and increased moollah in the circulation the inflation will likely cause raise of interests from Fed to commercial, returning some value to the money and bringing some of loose trillions back to bank deposits.. Banks might've lost some power with money not making money because of low interests..
With headlines occupied with people dying physically of corona, many dying economically will go unnoticed. And how could they possibly complain after receiving a few thousands bucks here and there?

Nik, I disagree with banks "not making money because of low interests." They may lend cheap, but they borrow much cheaper and their margins are very similar in magnitude (at least they are here) but it is a much bigger fraction of their costs so they are making money hand over fist. Here they have record profits, helped by the cheaper borrowing encouraging much more. No need to worry about them, providing they have lent soundly.

Inflation is starting to ignite here as there are rounds of wage pressures. Unemployment is at a record low but prices have gone up and workers are demanding increased pay. The Reserve Bank is making noises about increasing interest rates.

Sure, banks here celebrate every minute too. I believe in many places regulators require capital adequacy, so having deposits back will dramatically increase their lending capacity

Graeme wrote: "Anyone seeing 'shrinkflation,' were things cost the same - but you get less?"

Yep

Anyone --- does inflation have any coorelation to the problem of finding employees?

It came to mind early Sunday morning at Walgreens. I was looking for an item, but only 1 person working on the floor, there were some empty shelves, and contrary to their usual policy, no one came out to help when the line was over 3 persons long.

I was last in that little rush. In speaking to the cashier it became apparent she was a manager. Because of not being able to find enough employees and her 1st person on shift not showing up, she hadn't been able to do anything managerial. Stock may have been delivered but she didn't know.

I don't know what Walgreens pays. I wonder if inflation has made it more economical to stay home. I don't mean simply because of the most recent round of supplemental checks and increased unemplyment, but because that inflation also results in the costs of being employed - from gas for the commute to child care. How far has increased cost of materials and shipping spread?

Lizzie wrote: "Anyone --- does inflation have any coorelation to the problem of finding employees?

It came to mind early Sunday morning at Walgreens. I was looking for an item, but only 1 person working on the f..."

I hear proprietors complain about being understaffed and needing to pay more to hire. They raise prices too. One thing feeds another..

It seems most hospitality pay is just at minimum wage and has been for years. Despite furlough in UK restaurants still fired staff and now can't hire them back. Amazon pays a couple of pounds over min wage to delivery drivers so many have voted with feet leading to a shortage of vans for other professions and thus price increases there.

Lizzie wrote: "Anyone --- does inflation have any coorelation to the problem of finding employees?

It came to mind early Sunday morning at Walgreens. I was looking for an item, but only 1 person working on the f..."

If it is widespread, difficulties in filling staff positions will generally cause inflationary pressure as it causes wages to rise without an associated rise in productivity.

It may ebcome widespread in NZ. We have a labour shortage, and the government, because of Covid, is limitin immigration, and to do this it has said that it will only approve immigrants if they are guaranteed a certain salary - and that has been written so higvh that harldy anyone qualifies. However, it may have the effect of locals seeing this aqs what they should be paid, and take industrial action.

At least for the United States it is not really about inflation, but the combination of generous unemployment and COVID. Companies are having trouble finding employees at a certain level and not higher up. so when one can stay at home with the benefits, why work? On top of that, it gave plenty of people the idea they do not have to return to a job they hate that treats them poorly. so nobody really wants to return to these low end jobs. Right now wages are going up to get people and personally I think it is time for those to take the better pay while they can. Benefits run out in October and then people are going to have to return. With the influx of people, wages will drop again.

UK labour shortages COVID and Brexit blamed not poor pay and conditions by employers. Many Europeans returned home during COVID and with Brexit uncertainty and have yet to decide if they want to return. If they do not we currently have nearly 1 million job vacancies waiting which I suspect other immigration will fill including 50,000 Afghans according to news reports today

Our central bank issued a fresh prognosis of inflation for 2021 at 1.9%, while for 7 months it's already at 2%. Looks like they expect the prices to go down for the rest of the year?

UK inflation rate for July announced yesterday was lower than June's despite fuel increases

Our central bank expected them to rise fairly sharply, up until the latest lockdown. Too soon to tell what they think will happen next.

So we are now in a third wave and everyone seems to be wondering what to do. Now, Come September the fancy benefits run out. Now we will see who goes back to work. There is also going to be a rush of lawsuits for non-paid rent. This is going to get fun.

Papaphilly wrote: "So we are now in a third wave and everyone seems to be wondering what to do. Now, Come September the fancy benefits run out. Now we will see who goes back to work. There is also going to be a rush ..."

Judging by UK numbers our third wave peak has passed in terms of infections although it had risen back up in the last week, but then again virtually all restrictions have gone. economy is recovering, but a long way to go. Huge shortages of workers in some industries but no workers to be found... Support for furlough and other schemes also being reduced...

Our governor in Georgia cut the extra $300 a week unemployment benefit at the end of June, and people here are back at work.

If I was younger with children, seeing the cost of daycare and gasoline, I couldn't afford to work in an office at the current rate of pay locally in today's market. After taxes and paying the costs of a commute, child care for 2 kids, healthcare, and the costs of appearing professional (especially clothing), along with payroll taxes, I would be short on the basics of food and prescriptions. I can't imagine those in the lesser paying jobs being able to maintain a household.

In our area, housing prices have skyrocketed. It's a seller's market like we have never seen since I moved here in the 80s. Rent, if you can even find a place, is 3 to 4 times more than 2018.

Given all of that, I am putting my house on the market and hoping to cash in on it as I can make 50% or better over what I paid for my house.

In my opinion, the inflation in house prices is meaningless for house owners. Yes, you can sell and make much money, but you have to live somewhere, and if you don't buy quickly you will lose out. You gain if you time it right and prices tank, but you have to be very lucky to get that timing right, given again you have to live somewhere. In NZ at the moment prices are at a record high, but so are rents, if you can find somewhere to rent.

Ian wrote: "In my opinion, the inflation in house prices is meaningless for house owners. Yes, you can sell and make much money, but you have to live somewhere, and if you don't buy quickly you will lose out. ..."

Ian, on another thread regarding love at first sight, I commented on my chef friend being in love with me. Hadn't decided on which thread to state this, but I am moving in with him as soon as I have a contract to sell. His sister raised the rent, but still cheaper than anywhere else.

My expectation is that the bubble here will be gone in 6 months. Then I hope to buy within the required time period in regards to capital gain taxes.

Lizzie,

Congratulations!

Lizzie, I wish you all the best with your chef and I hope all works out extremely well. In that situation, cashing out makes sense because you have somewhere to live. The alternative would be for you to be a landlord and make some cash, but that is not for everyone.

Ian wrote: "Lizzie, I wish you all the best with your chef and I hope all works out extremely well. In that situation, cashing out makes sense because you have somewhere to live. The alternative would be for y..."

Thought about the rent thing too. That would only happen if I don't get a buyer. 3 listed in my neighborhood were listed at the beginning of July and were under contract within 3 days for twice what the houses cost those owners. I am hoping for the cash out over rent.

Thank you for the well wishes. I admit to being scared. I have lived alone for the past 12 years.

Lizzie wrote: "Ian wrote: "In my opinion, the inflation in house prices is meaningless for house owners. Yes, you can sell and make much money, but you have to live somewhere, and if you don't buy quickly you wil..."


good for you. I hope it works out. At least you know he can cook....

Papaphilly wrote: "Lizzie wrote: "Ian wrote: "In my opinion, the inflation in house prices is meaningless for house owners. Yes, you can sell and make much money, but you have to live somewhere, and if you don't buy ..."

And the cobbler's kids don't have shoes ...

It's the really busy season at the B&B, so on top of breakfast and pies, they added box lunches and dinner several times a week for the August group booked for the month. The search for some elusive bird, I think. Between that and trying to get things packed, we eat take out the past 2 weeks.

Have you been to the grocery store lately? Prices have almost doubled on meat and dairy. Other prices are much higher than 3 years ago. Every time I reorder on Amazon, the price has gone up. It's pretty depressing.

More pressure discussed today in UK on global wholesale gas prices (Natural etc not petrol) - Russia has reduced production for no reason anyone can fathom. Demand in far east has increased. No one stockpiled last year and many cancelled due to lockdowns and now want gas but can't buy it at 2020 prices when there was a glut.

Also issue of fertilizer companies and CO2 output used in other manufacturing - two plants closed in UK leading to shortage because they either can't buy gas, didn't hedge it and have no workers (Pick excuse) thus supply chain is impacted and thus warnings of increased prices - feels like companies getting excuses in early when they try to recoup last 18 month profits.

It is possible Russia has lowered delivery because it has scheduled switching over to the new pipeline. Changing to new infrastructure on such large deliveries is not like throwing a switch. Also, if demand was reduced due to lockdowns at this time last year, maybe they assumed the same would happen this year, and being in your summer they closed some facilities for maintenance. In the chemical industries, maintenance usually takes at least a month and is often doe in the holiday season.

Ian wrote: "It is possible Russia has lowered delivery because it has scheduled switching over to the new pipeline. Changing to new infrastructure on such large deliveries is not like throwing a switch. Also, ..."

And/or Putin had a wonderful awful idea.

Which raises the question, which has priority in analysis - the obvious reasonable or the aggressive malignant?

Putin does not help his cause by playing games. All it doe sis remind countries why you cannot depend on Russia. In the long run it gives incentive to search for other alternatives.

Over here, the National Health Service, who was one of the flags of numerous regimes, had not applied at all. In Portugal, it was created by a left-wing policy but not taken in advance by any measure.

Luís wrote: "Over here, the National Health Service, who was one of the flags of numerous regimes, had not applied at all. In Portugal, it was created by a left-wing policy but not taken in advance by any measure."

How is the inflation in Portugal behaving lately, indeed?

Nik wrote: "Luís wrote: "Over here, the National Health Service, who was one of the flags of numerous regimes, had not applied at all. In Portugal, it was created by a left-wing policy but not taken in advance..."

GDP has been declining, but it is not significant enough to have higher-than-expected inflation. Our Government has made enormous progress in this regard. It is a pity that in other areas, such as teaching and science, it does not correspond in full.

I think inflation here is well-established. The government blames shortages for the price increases and argue supply will come right once the virus situation abates (if it does), but prices of items like cheese are going up ridiculously in some supermarkets, and we have no shortage of cheese. The mindset is starting to get established. There are also some serious wage/salary claims in the pipeline.

Biden's govt is passing trillion dollar spending bills. It's sending millions in aid to Afghanistan's Taliban and aid to Central and South American countries to stop immigration (to no avail). You'd think that money grows on trees in this administration. But, no, it grows on the printing presses that churn out dollars. The more dollars churned out, the less our dollars are worth. Joe will say that he's not raising taxes, but your dollar will buy less.

That is not so much a tax as theft of taxed savings.

And Trump wasn't doing exact same thing or did US Gov debt go down under Trump?

https://tradingeconomics.com/united-s...

Note recent increases under Trump and Biden for COVID impact but also note significant increases before that. If you cut taxes but not spending then debt goes up

Every major economic nation has almost identical graph and has since 2008/9 - even China has been increasing spending and debt

The amazing thing has been that inflation (Until this year) did not reflect this

Not entirely surprising. Thanks to China there has been a glut of manufactured supply and there has been significant unemployment in the West. The first has meant that prices have been kept low, and the second that there was no wage pressure. Meanwhile, major wealth was being stored in tax havens to there was not actually a glut of money. But maybe all this is changing. The problem with tax havens is that the money is also not available, and there may be a limit to how much people want to so store. Also, with Covid, supply is tightening significantly so inflation seems most likely.

Philip wrote: "If you cut taxes but not spending then debt goes up..."

Actually no. You cut taxes and revenue goes up because business flourishes.

Observationally, debt went up. Also, some of the most dynamic stages of the US economy was in the 1950s when taxes on the top level were huge, but manufacturing was busy.

Papaphilly wrote: "Philip wrote: "If you cut taxes but not spending then debt goes up..."

Actually no. You cut taxes and revenue goes up because business flourishes."

That is the hope that GDP growth brings more income thus spending can go up whilst tax goes down. In reality, the rich evade and avoid. Spending goes on Chinese goods and governments borrow to meet spending promises.

Saw a graph on oil price inflation

https://www.macrotrends.net/1369/crud...

Like currencies best to show a longer view rather than hysteria of reporting a current trend. i.e. current price is still less than 2018 i.e. oil is cheaper than in 2018 but pump prices are higher - check share prices of oil companies for correlation over last week
"Shares in BP (BP.) gained 2.2% to 327p and Royal Dutch Shell (RDSB) added 2.8% to £15.72."

Of course those of you/us with pensions, life policies, unit trusts have gained from that too as most investment funds hold shares in the company.

Pensions usually do badly in inflationary times as they seldom keep up. If they are investment-based there is also the argument that stock prices are currently overvalued and a correction is due, especially as reserve banks are considering raising interest rates. Inflation seldom benefits the old, who cannot benefit in the long term.