Where will inflation stop?

In reply to frenchyd :

It didn't cost $27,800 in todays money, but again, you know that. 

Steve_Jones said:

Here is a brand new house in your area for the equivalent of $29k 1970 dollars. That's what the 2023 Frenchy buys. I was under the impression it was impossible to find.

https://www.zillow.com/homedetails/33080-Birch-Ln-Motley-MN-56466/115954966_zpid/

Motley Minnesota is more than 100 miles away from my area.   

frenchyd said:

Steve_Jones said:

Here is a brand new house in your area for the equivalent of $29k 1970 dollars. That's what the 2023 Frenchy buys. I was under the impression it was impossible to find.

https://www.zillow.com/homedetails/33080-Birch-Ln-Motley-MN-56466/115954966_zpid/

Motley Minnesota is more than 100 miles away from my area.   

I don't know where you live, you said "Lake Shore" so I assumed Lake Shoe MN. That hose is 20 miles from Lake Shore MN. I went with the info I had. 

Steve_Jones said:

In reply to frenchyd :

It didn't cost $27,800 in todays money, but again, you know that. 

Exactly!!   I'm saying inflation deals with debt.   It's paid off with cheaper dollars. 
    This Nation started out in Debt  ( 75 million) to France for the revolutionary war. 
 And there was no war tax.   
America inflated its way out of debt.  It took until the 1840's?  To eliminate the national debt.  And as recently as WW 2 America owed 100% of its annual GDP in national debt  It was being paid off in fits and starts until it reached a low of 22% debt to GDP in 1980.  The next 12 years it went back up to 78%. 

In reply to Steve_Jones :

I'm sorry Steve.  I've repeated Lake Minnetonka so many times on this site I assumed everyone knows it.  With more than 10,000 lakes ( closer to 15,000)  your guess was a good one.   

Steve_Jones said:

I have never said hand hewn.  The pictures I've shown are not hand hewn.   The exterior Timbers  and trim are all black walnut. The interior Timbers are White oak, except the master bedroom which is also black walnut. 

frenchyd said:

Duke said:

In reply to frenchyd :

Have you ever read anything I've ever written here?

If so, why would you assume I blame it on one particular flavor of politicians?

National debt and heavy inflation are largely - not entirely, but largely - caused by the same thing: excessive government spending.

Address that fundamental issue and you address both problems at once.  All three problems, if you count high taxes as a problem.

And before the inevitable condescending, uh, person comes in to tell me about roads and libraries and fire trucks, I am NOT a "taxation is theft" Libertarian.

Generating inflation is not the way to successfully reduce national debt.  Unless you think burning it down is a great way to reduce the clutter in your garage.

 

Inflation does come as you say from excessive spending relative to income. 
     Sometimes that is required. Such as wartime.   ( in my life we've been at war an awful lot).  Never-the-less we could pay that off by raising taxes.  Something politicians find difficult or impossible  to do.   Those who can afford the additional taxes are also those who typically pay the big money to politicians  to avoid paying taxes. 
         The alternative is inflation.  Look at any post war period and there is significant inflation.    
      Dealing with inflation for most of us means figuring out how to get a pay raise.  Retired people indirectly get a pay raise as the value of our investments inflated along with inflation.  ( sharp investors realize how to capitalize on inflation)  even fixed income retires living on Social security  get raises to reflect inflation.  
    The only losers are those who put money in the mattress or a banks savings account. 

You use the term "excessive spending" but cant quite  keep ahold of that train of thought and immediately go back to raising income (raising taxes). For a more easy example to understand lets pretend the US is a single person. If they where the top earning person in the world (US has the largest national tax revenue in the world) but they were spending more than they made pretty much every single year, would you recommend they earn more money, even though they are already the top earning in the world, or reduce spending?

You pretend like if taxes are raised we will pay off debt, but we have decades of history telling you the exact opposite will happen and we will just continue to inflate the spending. I dont want to hear about rates because actual federal revenues have pretty much been trending upwards since like 1950, which is about as far back as I cared to look.

You talk about the rich avoiding paying taxes, but in reality they pay the majority of taxes. Sure you can find examples of people paying low taxes but in the aggregate the top 1% of earners have 20% of the income share but pay over 40% of all income taxes. In fact most people making under 75K pay no federal income tax and about half of Americans pay no federal income tax. The reason there is no political capital for actually raising taxes (unless you specifically go after a group and demonize them or just outright lie "we wont raise taxes on anyone earning under 400K") is because most serious people realize there is a point where taxes hurt  the economy  and the American people are already taxed into oblivion. Even though half of Americans dont pay federal income taxes, think about all the money that is double or triple taxed and all the other taxes besides income taxes, Sales tax, gas tax, vehicle registration, property tax, estate tax, gift tax, corporate tax, payroll taxes, capital gains tax, gross receipts tax, excise tax, TPP taxes, etc. Most people only think about income tax, thats why so many of the proposed tax increases now are hidden taxes, "we only tax one cent on these specific trades" or people are buying EVs to save on gas but we get a cut on gas sales so we want a tax on miles you drive (in that case think about the people driving ICE, they get to pay for the same thing twice, which isnt exactly unprecedented in the tax code) Next time you go out try and do ANYTHING and not be taxed in some way.

Take a think about your inflation solution for retirees. They have to sell the assets they acquired during their life to continue to survive. In reality was this means many times is an older person unable to work, cant make enough money to survive and has to sell the home they raised their kids in to continue to survive, so we invented dumb E36 M3 like reverse mortgages, for literally this exact reason. You know who benefits? The banks. You know what it stops? The normal persons way to transfer generational wealth, which is largely done through real estate in this country. Keep in mind im not talking about the ultra wealthy im talking about the normal people.

You know what everyone getting a pay raise to deal with inflation causes? More inflation.

Frenchy you should really take a long hard think about some of the things you believe. I get policy disagreements, but many of the things you use to justify policy are factually wrong or completely outdated and some of the things you advocate lead to pretty obvious human suffering. (Retirees can just sell their home to deal with inflation because we need it to pay off war debt)

While I do think it's funny that Frenchyd works his house into every other thread, I don't blame him. It's a beautiful house. 

In reply to Opti :

...of the Frenchylorian.

Inflation even if it stops the prices won't come down. The current prices will remain. There isn't enough attention by government to continually drive prices down. That needs to be governments priority.

udidwht said:

Inflation even if it stops the prices won't come down. The current prices will remain. There isn't enough attention by government to continually drive prices down. That needs to be governments priority.

Opti said:

frenchyd said:

Duke said:

In reply to frenchyd :

Have you ever read anything I've ever written here?

If so, why would you assume I blame it on one particular flavor of politicians?

National debt and heavy inflation are largely - not entirely, but largely - caused by the same thing: excessive government spending.

Address that fundamental issue and you address both problems at once.  All three problems, if you count high taxes as a problem.

And before the inevitable condescending, uh, person comes in to tell me about roads and libraries and fire trucks, I am NOT a "taxation is theft" Libertarian.

Generating inflation is not the way to successfully reduce national debt.  Unless you think burning it down is a great way to reduce the clutter in your garage.

 

Inflation does come as you say from excessive spending relative to income. 
     Sometimes that is required. Such as wartime.   ( in my life we've been at war an awful lot).  Never-the-less we could pay that off by raising taxes.  Something politicians find difficult or impossible  to do.   Those who can afford the additional taxes are also those who typically pay the big money to politicians  to avoid paying taxes. 
         The alternative is inflation.  Look at any post war period and there is significant inflation.    
      Dealing with inflation for most of us means figuring out how to get a pay raise.  Retired people indirectly get a pay raise as the value of our investments inflated along with inflation.  ( sharp investors realize how to capitalize on inflation)  even fixed income retires living on Social security  get raises to reflect inflation.  
    The only losers are those who put money in the mattress or a banks savings account. 

You use the term "excessive spending" but cant quite  keep ahold of that train of thought and immediately go back to raising income (raising taxes). For a more easy example to understand lets pretend the US is a single person. If they where the top earning person in the world (US has the largest national tax revenue in the world) but they were spending more than they made pretty much every single year, would you recommend they earn more money, even though they are already the top earning in the world, or reduce spending?

You pretend like if taxes are raised we will pay off debt, but we have decades of history telling you the exact opposite will happen and we will just continue to inflate the spending. I dont want to hear about rates because actual federal revenues have pretty much been trending upwards since like 1950, which is about as far back as I cared to look.

You talk about the rich avoiding paying taxes, but in reality they pay the majority of taxes. Sure you can find examples of people paying low taxes but in the aggregate the top 1% of earners have 20% of the income share but pay over 40% of all income taxes. In fact most people making under 75K pay no federal income tax and about half of Americans pay no federal income tax. The reason there is no political capital for actually raising taxes (unless you specifically go after a group and demonize them or just outright lie "we wont raise taxes on anyone earning under 400K") is because most serious people realize there is a point where taxes hurt  the economy  and the American people are already taxed into oblivion. Even though half of Americans dont pay federal income taxes, think about all the money that is double or triple taxed and all the other taxes besides income taxes, Sales tax, gas tax, vehicle registration, property tax, estate tax, gift tax, corporate tax, payroll taxes, capital gains tax, gross receipts tax, excise tax, TPP taxes, etc. Most people only think about income tax, thats why so many of the proposed tax increases now are hidden taxes, "we only tax one cent on these specific trades" or people are buying EVs to save on gas but we get a cut on gas sales so we want a tax on miles you drive (in that case think about the people driving ICE, they get to pay for the same thing twice, which isnt exactly unprecedented in the tax code) Next time you go out try and do ANYTHING and not be taxed in some way.

Take a think about your inflation solution for retirees. They have to sell the assets they acquired during their life to continue to survive. In reality was this means many times is an older person unable to work, cant make enough money to survive and has to sell the home they raised their kids in to continue to survive, so we invented dumb E36 M3 like reverse mortgages, for literally this exact reason. You know who benefits? The banks. You know what it stops? The normal persons way to transfer generational wealth, which is largely done through real estate in this country. Keep in mind im not talking about the ultra wealthy im talking about the normal people.

You know what everyone getting a pay raise to deal with inflation causes? More inflation.

Frenchy you should really take a long hard think about some of the things you believe. I get policy disagreements, but many of the things you use to justify policy are factually wrong or completely outdated and some of the things you advocate lead to pretty obvious human suffering. (Retirees can just sell their home to deal with inflation because we need it to pay off war debt)

I 'm not the politician that  voted  to  spend the money.  I'm telling how I can deal with the effect of spending money.  
       Eisenhower  warned us about the military industrial complex.  Yet no one has figured out how to bring their spending under control.  
  In My lifetime    America has been involved in 8 wars. Not counting the  war on drugs which is also a massive expense.  
       Since that is America's #1 discretionary spending item.  I agree.  Let's cut spending there.   
     
    It is true but not completely true. That rich people pay more of the taxes  than poor or middle class.  
     Last I checked there were 77,000 + pages in the tax code.  If I wanted to hide tax breaks I'd make it a document that only people with extremely specialized training can understand. 
    Then I'd hide the biggest tax breaks in something called legal precedence. Where you have to hire $1000 an hour lawyers to figure it out.  
  So Yes the richest of the rich don't pay as much taxes as you or I do.  
     But if you and I could could just assign taxes according to how much they have. It would be very simple wouldn't it?   Pick a percentage.  That covers the budget. And make  everyone pay it.   You'd be shocked at how little that number would be.   
  
Take the GDP   And compare it to tax burden,  divide that by the number of adults.  And we'd be less  than 3% 

   Do everything you are paying above 3%  you are making up for those who pay less or nothing.  
      
     

In reply to frenchyd :

I agree with you about cutting spending on wars, but even if we eliminated our total defense budget we's still be running a deficit, so its going to take a lot more than just cutting spending on one thing. But thats the way political discourse goes today, we argue about the fringes and pretends like it does something, one party cuts here and adds there, the other parts cuts there and adds here, they both pretend like its a massive triumph and things are changing and getting better, but really we just carry on business as usual and continue to massively spend, and inflate the American people into poverty. Any politicians talking about real reform or change are labeled as crazy and cast out.

Yes the tax code is overly complex, and is lobbied to maintain that complexity. Most of the tax benefits are available to average Americans but they dont need to use them, because they arent paying any income tax, and thats all people think about. Hiring a good accountant isnt that expensive. I went to school for accounting and Im someone that does all my own work on my house and cars because Im cheap, but I still pay an accountant to do my taxes and help with business/tax advice. Its not that expensive.

Your wrong the richest of the rich pay more taxes than you or I do, again you can find examples of people that literally pay very little taxes, but in reality the rich pay WAY more taxes than normal Americans.  You can cry about their rates all you want, but look at the actual numbers.

Comparing GDP to tax burden is ridiculous we dont tax GDP, we tax consumption and income (and a bunch of other things). Its a way to frame it and pretend like the tax burden isnt a big deal for average Americans. Ive seen stats showing the average American will spend over a third of their lifetime earnings on all the various taxes.

I can promise you I pay more than 10x the rate, that you think the average American pays.

Lots of jokes about you bringing up your house in every thread, I actually enjoy the pictures of it, because as has already been mentioned its a beautiful house and I love real estate. Here is where me and you differ though, I dont want to advocate for things that create runaway inflation that even prudent normal Americans cant plan for in their retirement and have to sell the beautiful home they worked so hard for to continue to survive after a lifetime of service. I dont want your hard work to enrich the government, I want it to enrich your family or whoever you willing choose to pass it on to.

PS: Im sick of the talk like inflation goes away. The rate comes down, but that doesnt mean its gone, It just means our baseline is now the inflated prices that we complained about. We also dont want deflation. So it cant be really be "fixed" so you just kinda have to get used to it, and the best you can hope for is going forward it will be relatively low and stable.

In reply to Opti :

I'm simply trying to find easy ways to explain the problem.   What I like about the GDP is it eliminates inflation. We don't have to look up what a dollar was worth under Washington,  Lincoln, and every President.  And takes into account everything that produces money for that year.   It's like hitting the total on a cash register. 
    I'm a veteran, I completely understand the need for a healthy defense budget.   

  I also understand the need for a healthy infrastructure, 

Plus  a need for a healthy  social budget.  

 Most important I understand the need for time.  America borrowed 75 million from France to fight the British.  We also made the Louisiana Purchase.  But it took decades to pay it off.   ( sometime around 1820-40?) 

    We owe 31 trillion dollars.  70% of which we owe to ourselves.    Chinese have roughly 20% Japan has roughly 10%.  And there is a little more scattered around the globe.  
      I do know that between 2016-2020  another 7 trillion was added.    It's very hard  to reduce that number when  the budget isn't balanced. 
    Only Twice in my lifetime Has America balanced the budget.   Once during Eisenhower and during Clinton.   In fact that was the only time I remember a surplus.  
   
   Ever wonder what caused the hot button to pay off the debt?   I didn't hear a word about it between 2016 & 2020.  But suddenly it's a priority?!?!   
 Pure speculation on my part?   Since we owe most of that money to ourselves.  We must want it back.   Could it have anything to do with the low interest rates much of that was borrowed at?   Maybe the American  people holding the debt would like to get a higher interest rate??  
 Just speculating.   
   
PS. I agree with you regarding the tax code.   That's why for the last 40+ years I've had retired IRS agents do my taxes every year.  
       I also listen to them regarding spending and investments. 

Here we talk about cars but they are far too diverse to have any real baseline.   
   I use my house numbers because it's the one big purchase we all get, Shelter.   
     I'm a strong advocate for home ownership.  Given the gains I've realized maybe I should bow out?  
     However there are 3 reasons not to.  
 First stocks which are given as an alternative. Are volatile.  While it can be said that the market as a whole appreciates at a greater rate than inflation.   That is totally dependent  on the stock selected, the time it is purchased,  and the time it is sold.   Get any one of those 3 things wrong and it can be a loser.  
     Real estate does fluctuate, typically at about the rate of inflation. But it's less volatile than stocks which change value by the seconds or fractions of seconds.  
     Real estate is a necessity ( shelter ).  So if the market is down you can simply wait for it to recover.  Long term a home appreciates at about the rate of inflation.  Unless it's in a highly desirable location.  Water frontage, prestige location, view location or good schools location.  
   While stocks are far more liquid. That liquidity is also the. Cause of volatility. 
  Tax advantage.  Mortgage payments are tax deductible.  ( interest) 

There is no such tax break buying stocks.  
     Finally, leverage.   For a smallish ( as low as 3 % ) down payment you control an asset  many,  many,  times the actual cash outlay.  
        So if your $200,000 home appreciates 10% or $10,000 on a $6000 investment.  You win!!  
          

Opti said:

You talk about the rich avoiding paying taxes, but in reality they pay the majority of taxes. Sure you can find examples of people paying low taxes but in the aggregate the top 1% of earners have 20% of the income share but pay over 40% of all income taxes. In fact most people making under 75K pay no federal income tax and about half of Americans pay no federal income tax. The reason there is no political capital for actually raising taxes (unless you specifically go after a group and demonize them or just outright lie "we wont raise taxes on anyone earning under 400K") is because most serious people realize there is a point where taxes hurt  the economy  and the American people are already taxed into oblivion. Even though half of Americans dont pay federal income taxes, think about all the money that is double or triple taxed and all the other taxes besides income taxes, Sales tax, gas tax, vehicle registration, property tax, estate tax, gift tax, corporate tax, payroll taxes, capital gains tax, gross receipts tax, excise tax, TPP taxes, etc. Most people only think about income tax, thats why so many of the proposed tax increases now are hidden taxes, "we only tax one cent on these specific trades" or people are buying EVs to save on gas but we get a cut on gas sales so we want a tax on miles you drive (in that case think about the people driving ICE, they get to pay for the same thing twice, which isnt exactly unprecedented in the tax code) Next time you go out try and do ANYTHING and not be taxed in some way.

Yeah it's a big joke of a system, but what you get with no accountability. Turbotax et. al. have lobbied to keep the tax code complex, same with... well, every other totally not a monopoly corporation nowadays. I mostly made this comment to point out that the bolded comment is likely only "true" because of COVID Relief, becuase you can easily see your bracket on the IRS's site apropos whatever breaks you get.

You know what everyone getting a pay raise to deal with inflation causes? More inflation.

And yet corpos have no choice but to keep up with rising costs of living, or to just get workers in the door. Pay for labor is still rising. How is that different?

In reply to GIRTHQUAKE :

I'm not sure that $75k number is correct. My salary last year was $87k, after my federal refund last year I still paid just under $12k in federal income taxes. 

And that doesn't include Medicare or Social Security. SS was another $9200 and Medicare was another $5700. 

And for fun another $4k in state income tax.

I edited the first number, I pulled up my W2 to ensure I was sharing correct info.

GIRTHQUAKE said:

Opti said:

You talk about the rich avoiding paying taxes, but in reality they pay the majority of taxes. Sure you can find examples of people paying low taxes but in the aggregate the top 1% of earners have 20% of the income share but pay over 40% of all income taxes. In fact most people making under 75K pay no federal income tax and about half of Americans pay no federal income tax. The reason there is no political capital for actually raising taxes (unless you specifically go after a group and demonize them or just outright lie "we wont raise taxes on anyone earning under 400K") is because most serious people realize there is a point where taxes hurt  the economy  and the American people are already taxed into oblivion. Even though half of Americans dont pay federal income taxes, think about all the money that is double or triple taxed and all the other taxes besides income taxes, Sales tax, gas tax, vehicle registration, property tax, estate tax, gift tax, corporate tax, payroll taxes, capital gains tax, gross receipts tax, excise tax, TPP taxes, etc. Most people only think about income tax, thats why so many of the proposed tax increases now are hidden taxes, "we only tax one cent on these specific trades" or people are buying EVs to save on gas but we get a cut on gas sales so we want a tax on miles you drive (in that case think about the people driving ICE, they get to pay for the same thing twice, which isnt exactly unprecedented in the tax code) Next time you go out try and do ANYTHING and not be taxed in some way.

Yeah it's a big joke of a system, but what you get with no accountability. Turbotax et. al. have lobbied to keep the tax code complex, same with... well, every other totally not a monopoly corporation nowadays. I mostly made this comment to point out that the bolded comment is likely only "true" because of COVID Relief, becuase you can easily see your bracket on the IRS's site apropos whatever breaks you get.

You know what everyone getting a pay raise to deal with inflation causes? More inflation.

And yet corpos have no choice but to keep up with rising costs of living, or to just get workers in the door. Pay for labor is still rising. How is that different?

Some of the rich pay a lot of taxes.  For example the guy who won 2 Billion dollar lottery probably paid 50% of his winnings in state and federal taxes.   Hollywood movie stars and major sports figures who's pay is in the millions pay a lot of taxes.

    Yet " investors" CEO's of major corporations,  and other 1% ers. Are fully aware of legal ways to avoid tax liability's.
      Warren Buffet  explained a few years back how to legally evade Capitol gains taxes.    
   Shifting your tax base to Ireland or other tax friendly countries is relatively simple to do as well. ( just pay the expensive lawyers to do it for you). 
   So if the 1% ers mostly evade taxes and people as low as the 10%. Are also busy evading those same taxes.  That means most of the taxes really aren't being paid by Elon Musk etc.  In fact didn't we recently have a president who bragged about not paying any taxes?  
  So it sounds good. The richest tax filers pay most of the taxes. But that doesn't mean what it sounds like.   
       Billionaires may be able to avoid paying taxes.

  But millionaires, well off farmers with a good crop, or successful medium sized businessman. Etc wind up paying the most. 
     

In reply to Toyman! :

Are you implying that government do nothing? It will never happen unless they take the lead. Unfortunate, but true.

In reply to GIRTHQUAKE :

You'd be only partly correct in your statement. Covid relief did make it worse but essentially half of Americans paying no federal income tax has been a thing long before COVID. Thats why I think its dumb that people get so caught up in rates, because they really dont tell you anything.

Here is a Reuters fact check going back to 2011 with as much spin as possible

https://www.reuters.com/article/us-factbox-americans-income/factbox-half-of-americans-pay-no-u-s-income-tax-well-sort-of-idINBRE88H0ZN20120918

You understand the rising cost of living is largely inflation, right? So you are just saying the same thing I am. You know why its bad? Because as labor costs increases it becomes economically viable to replace labor with automation, plus its rare that wages acually keep up with inflation. Its also quite common as labor costs rise for businesses to shrink their staff and expect the people that remain to just pick up the slack and do the work of multiple people.

z31maniac said:

In reply to GIRTHQUAKE :

I'm not sure that $75k number is correct. My salary last year was $87k, after my federal refund last year I still paid just under $12k in federal income taxes. 

And that doesn't include Medicare or Social Security. SS was another $9200 and Medicare was another $5700. 

And for fun another $4k in state income tax.

I edited the first number, I pulled up my W2 to ensure I was sharing correct info.

I didnt say everyone under 75K paid nothing

https://www.cnbc.com/2021/05/26/earn-under-75000-you-may-pay-zero-in-federal-income-taxes-for-2021.html