Inflation sucks
inflation not slowing down
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Last: 3 mo ago by Sea Speed
that's insane. 89 test is $4.29 minimum in Maryland.Mas89 said:
Gas was 1.78 at my Heb station in November 2020 when Trump was still the president.
Gas is 2.89 today at the same store.
That's a 62.36 percent increase.
Is there a budget summary that addresses our nation's debt vs. funds or revenue available? I will easily admit that I don't fully grasp the magnitude of the current debt value, and I am trying to understand it from the aspect that we all carry some kind of debt in our lives. I know what my comfortable number is for debt carry, and I dont know the math behind what our nations debt percentage looks like vs. what money is coming in.LMCane said:
now add in $34 Trillion in debt with another trillion dollars being added every 6 months.
Is the number 25%, 50%, or some insane percentage that is going to make me want to bunker down and hide?
Am i even asking the question the right way? Is there a metric that makes more sense to reference and review?
Read the Daniel Amerman article I posted on the last page.PuryearAg98 said:Is there a budget summary that addresses our nation's debt vs. funds or revenue available? I will easily admit that I don't fully grasp the magnitude of the current debt value, and I am trying to understand it from the aspect that we all carry some kind of debt in our lives. I know what my comfortable number is for debt carry, and I dont know the math behind what our nations debt percentage looks like vs. what money is coming in.LMCane said:
now add in $34 Trillion in debt with another trillion dollars being added every 6 months.
Is the number 25%, 50%, or some insane percentage that is going to make me want to bunker down and hide?
Am i even asking the question the right way? Is there a metric that makes more sense to reference and review?
"H-A: In return for the flattery, can you reduce the size of your signature? It's the only part of your posts that don't add value. In its' place, just put "I'm an investing savant, and make no apologies for it", as oldarmy1 would do."
- I Bleed Maroon (distracted easily by signatures)
- I Bleed Maroon (distracted easily by signatures)
We are living in a real life game of Monopoly.
I am pretty confused on why it's considered raiding deposits (linked article)? Saying money is created from debt completely ignores the equity capitalization and asset risk profile of the entity. If the Fed was buying garbage it's time to worry, but it's not (in theory).
This is banking. I have $500k to start a bank, and I take $5MM in deposits. I'm going to make my first business loan of $50k to a company that puts the $50k in the lending bank's deposits. Fed is doing the same thing except to the UST / USGov.
This is banking. I have $500k to start a bank, and I take $5MM in deposits. I'm going to make my first business loan of $50k to a company that puts the $50k in the lending bank's deposits. Fed is doing the same thing except to the UST / USGov.
So i just went down a rabbit hole (using Chat GPT to help), and here is what it gave me..
Current National Debt and Revenue:
As of the latest data (mid-2024), the U.S. national debt is around $32 trillion. The federal government's revenue for the fiscal year is approximately $5 trillion.
Debt-to-GDP Ratio:
Current National Debt and Revenue:
As of the latest data (mid-2024), the U.S. national debt is around $32 trillion. The federal government's revenue for the fiscal year is approximately $5 trillion.
Debt-to-GDP Ratio:
- The U.S. GDP is roughly $26 trillion.
Then I asked...
Is the US currently running a basic deficit or surplus?
The U.S. is currently running a basic deficit. This means that the government's expenditures exceed its revenues, excluding interest payments on the national debt.
For fiscal year 2024:
The primary deficit is calculated as the difference between revenues and expenditures, excluding interest payments on the debt. Given the current figures:
Primary Deficit = Federal Expenditures - Federal Revenue
Primary Deficit $6 trillion - $5 trillion = $1 trillion
This primary deficit indicates that even without considering interest payments on the existing debt, the government is spending more than it is taking in. This contributes to the overall national debt.
Is the US currently running a basic deficit or surplus?
The U.S. is currently running a basic deficit. This means that the government's expenditures exceed its revenues, excluding interest payments on the national debt.
For fiscal year 2024:
- Federal Revenue: Approximately $5 trillion
- Federal Expenditures: Estimated at around $6 trillion
The primary deficit is calculated as the difference between revenues and expenditures, excluding interest payments on the debt. Given the current figures:
Primary Deficit = Federal Expenditures - Federal Revenue
Primary Deficit $6 trillion - $5 trillion = $1 trillion
This primary deficit indicates that even without considering interest payments on the existing debt, the government is spending more than it is taking in. This contributes to the overall national debt.
And then I asked about Debt Service to Revenue Ratio costs..
what is the US's current Debt Service to Revenue Ratio
Calculation:
Debt Service to Revenue Ratio:
DSRR=(Interest PaymentsFederal Revenue)100\text{DSRR} = \left( \frac{\text{Interest Payments}}{\text{Federal Revenue}} \right) \times 100DSRR=(Federal RevenueInterest Payments)100
DSRR=($600 billion$5 trillion)100\text{DSRR} = \left( \frac{\$600 \text{ billion}}{\$5 \text{ trillion}} \right) \times 100DSRR=($5 trillion$600 billion)100
DSRR=(6005000)100\text{DSRR} = \left( \frac{600}{5000} \right) \times 100DSRR=(5000600)100
DSRR=12%\text{DSRR} = 12\%DSRR=12%
Interpretation:
The U.S. is currently spending approximately 12% of its federal revenue on interest payments for the national debt. This means that for every dollar the government collects in revenue, about 12 cents go towards servicing the debt. This ratio provides insight into how much of the government's budget is being allocated to interest payments rather than other public services or investments.
what is the US's current Debt Service to Revenue Ratio
Calculation:
- Federal Revenue: Approximately $5 trillion (for fiscal year 2024)
- Interest Payments on Debt: Estimated at around $600 billion for the fiscal year 2024
Debt Service to Revenue Ratio:
DSRR=(Interest PaymentsFederal Revenue)100\text{DSRR} = \left( \frac{\text{Interest Payments}}{\text{Federal Revenue}} \right) \times 100DSRR=(Federal RevenueInterest Payments)100
DSRR=($600 billion$5 trillion)100\text{DSRR} = \left( \frac{\$600 \text{ billion}}{\$5 \text{ trillion}} \right) \times 100DSRR=($5 trillion$600 billion)100
DSRR=(6005000)100\text{DSRR} = \left( \frac{600}{5000} \right) \times 100DSRR=(5000600)100
DSRR=12%\text{DSRR} = 12\%DSRR=12%
Interpretation:
The U.S. is currently spending approximately 12% of its federal revenue on interest payments for the national debt. This means that for every dollar the government collects in revenue, about 12 cents go towards servicing the debt. This ratio provides insight into how much of the government's budget is being allocated to interest payments rather than other public services or investments.
So then finally I asked...
When is the last time the US was run with a yearly basic surplus?
Specifically, the federal government recorded budget surpluses in the following fiscal years:
Since then, the U.S. has generally run budget deficits each year
When is the last time the US was run with a yearly basic surplus?
Specifically, the federal government recorded budget surpluses in the following fiscal years:
- 1998
- 1999
- 2000
- 2001
Since then, the U.S. has generally run budget deficits each year
Oh, the final thing i asked was this...
When is the last time the US had a Debt Service to Revenue Ratio of less than 10%?
The last time the U.S. had a Debt Service to Revenue Ratio (DSRR) of less than 10% was in the early 2000s. During this period, relatively lower levels of national debt combined with robust federal revenue growth contributed to a lower burden of interest payments relative to revenue.
Specific Context:
The DSRR was below 10% during the late 1990s and early 2000s, coinciding with the budget surpluses mentioned previously. For example:
When is the last time the US had a Debt Service to Revenue Ratio of less than 10%?
The last time the U.S. had a Debt Service to Revenue Ratio (DSRR) of less than 10% was in the early 2000s. During this period, relatively lower levels of national debt combined with robust federal revenue growth contributed to a lower burden of interest payments relative to revenue.
Specific Context:
- Early 2000s: The U.S. experienced budget surpluses and strong economic growth, leading to higher revenues.
- Interest Rates: Interest rates were relatively low, which helped keep interest payments on the national debt manageable.
- Federal Debt Levels: The national debt was lower compared to more recent years.
The DSRR was below 10% during the late 1990s and early 2000s, coinciding with the budget surpluses mentioned previously. For example:
- Fiscal Year 2001: During this time, the Debt Service to Revenue Ratio was approximately 9-10%, as interest payments were around $206 billion, and federal revenues were about $2 trillion.
So....with that all being said (and assuming the math and values are correct), should the concern really be with the rising percentage of DSRR, and not on the dollar values that I keep reading about?
$34 Trillion is a massive amount of money, but if we have been running at a 10-12% DSRR ratio for the last 20 years, doesn't that show its a manageable value (with responsible corrections needed to at least get the US back to a neutral or basic surplus)?
$34 Trillion is a massive amount of money, but if we have been running at a 10-12% DSRR ratio for the last 20 years, doesn't that show its a manageable value (with responsible corrections needed to at least get the US back to a neutral or basic surplus)?
I think the key risks there are:
1. Is the same level of borrowing available in the future at the required scale?
2. Is it at the same price?
If rates stay up for a long time then there is duration risk where that 12% could flex up bigly.
1. Is the same level of borrowing available in the future at the required scale?
2. Is it at the same price?
If rates stay up for a long time then there is duration risk where that 12% could flex up bigly.
When should the US be concerned with rising DSRR values? Is there a specific percentage that starts possible default conditions for the US?
Rising Debt Service to Revenue Ratio (DSRR) values can indicate growing fiscal pressure, but there's no specific threshold that universally signals imminent default for the U.S. However, there are key factors and thresholds to consider:
When to Be Concerned:
[ol]
Rising Interest Rates: If interest rates increase significantly, the cost of servicing the debt will rise, increasing the DSRR even if the debt level remains the same. High and Growing Debt Levels: A continuously rising national debt without corresponding revenue growth can push the DSRR higher. Crowding Out Effect: High DSRR can crowd out other essential government spending (e.g., infrastructure, healthcare, defense), as more revenue is diverted to interest payments. Investor Confidence: If investors lose confidence in the U.S.'s ability to manage its debt, it can lead to higher interest rates and borrowing costs, exacerbating the problem. [/ol]
Specific Thresholds:
[ol]
10-15% Range: Historically, a DSRR in this range has been manageable for the U.S., but it starts to indicate growing fiscal pressure. Above 15%: Sustained DSRR above 15% could signal significant fiscal challenges, making it harder to allocate funds to essential services and investments. Default Risk: The U.S. is unique due to its status as the issuer of the world's primary reserve currency (the U.S. dollar). This status provides more leeway compared to other countries. Default risk is less about a specific DSRR threshold and more about overall economic conditions, fiscal policy, and investor confidence. [/ol]
Mitigating Risks:
[ol]
Economic Growth: Policies that stimulate economic growth can increase revenues, helping to manage the DSRR. Fiscal Policy: Prudent fiscal policies, such as reducing budget deficits and controlling debt levels, can help keep the DSRR manageable. Interest Rate Management: The Federal Reserve's monetary policy can influence interest rates, impacting the cost of debt service. [/ol]
Conclusion:
While there's no hard and fast rule, a DSRR consistently above 15% should raise concerns and prompt policy measures to manage debt levels and interest costs. The key is to maintain a balance where debt servicing does not overly constrain the government's ability to fund essential services and investments.
To reach a DSRR of 15%, the U.S. interest payments on the national debt would need to increase to approximately $750 billion annually, given the current federal revenue of $5 trillion. This would represent a significant increase from the current estimated interest payments of $600 billion.
Rising Debt Service to Revenue Ratio (DSRR) values can indicate growing fiscal pressure, but there's no specific threshold that universally signals imminent default for the U.S. However, there are key factors and thresholds to consider:
When to Be Concerned:
[ol]
Specific Thresholds:
[ol]
Mitigating Risks:
[ol]
Conclusion:
While there's no hard and fast rule, a DSRR consistently above 15% should raise concerns and prompt policy measures to manage debt levels and interest costs. The key is to maintain a balance where debt servicing does not overly constrain the government's ability to fund essential services and investments.
To reach a DSRR of 15%, the U.S. interest payments on the national debt would need to increase to approximately $750 billion annually, given the current federal revenue of $5 trillion. This would represent a significant increase from the current estimated interest payments of $600 billion.
You're misunderstanding.500,000ags said:
I am pretty confused on why it's considered raiding deposits (linked article)? Saying money is created from debt completely ignores the equity capitalization and asset risk profile of the entity. If the Fed was buying garbage it's time to worry, but it's not (in theory).
This is banking. I have $500k to start a bank, and I take $5MM in deposits. I'm going to make my first business loan of $50k to a company that puts the $50k in the lending bank's deposits. Fed is doing the same thing except to the UST / USGov.
The FED creates (prints) money when the treasury issues new securities and the FED buys them, uses them as 10% reserve and lends them 10x to banks.
The FED creates (steals) money when it takes money from bank deposits, keeps 10% reserve, and then loans it BACK to the banks at 10x.
In both cases the money supply expands. In the latter case, the money supply only expands because the taxpayer has just loaned the FED their money. The banks get 10x the money that was originally deposited in them from their customers. Let me know if you can find a time when the taxpayer depositer has gotten their original money back. And even if they do, the money is devalued and the taxpayer depositer got no return on it. This was not allowed until 2006 and then conveniently used to "rescue" the economy in 2008, and then again 100fold in 2020. We are not creating money organically. We are borrowing from our ourselves, devaluing our future, just to keep a mirage of status quo.
"H-A: In return for the flattery, can you reduce the size of your signature? It's the only part of your posts that don't add value. In its' place, just put "I'm an investing savant, and make no apologies for it", as oldarmy1 would do."
- I Bleed Maroon (distracted easily by signatures)
- I Bleed Maroon (distracted easily by signatures)
Can you make a T account with debit/credits (not even kidding) for the latter? Your steals example.
I disagree with your "prints" example. The Fed buys bonds from large banks freeing up their (the bank's) balance sheet. This buying directly from the UST and lending to banks notion would be news to me.
I disagree with your "prints" example. The Fed buys bonds from large banks freeing up their (the bank's) balance sheet. This buying directly from the UST and lending to banks notion would be news to me.
Great explanation. Thanks.Heineken-Ashi said:You're misunderstanding.500,000ags said:
I am pretty confused on why it's considered raiding deposits (linked article)? Saying money is created from debt completely ignores the equity capitalization and asset risk profile of the entity. If the Fed was buying garbage it's time to worry, but it's not (in theory).
This is banking. I have $500k to start a bank, and I take $5MM in deposits. I'm going to make my first business loan of $50k to a company that puts the $50k in the lending bank's deposits. Fed is doing the same thing except to the UST / USGov.
The FED creates (prints) money when the treasury issues new securities and the FED buys them, uses them as 10% reserve and lends them 10x to banks.
The FED creates (steals) money when it takes money from bank deposits, keeps 10% reserve, and then loans it BACK to the banks at 10x.
In both cases the money supply expands. In the latter case, the money supply only expands because the taxpayer has just loaned the FED their money. The banks get 10x the money that was originally deposited in them from their customers. Let me know if you can find a time when the taxpayer depositer has gotten their original money back. And even if they do, the money is devalued and the taxpayer depositer got no return on it. This was not allowed until 2006 and then conveniently used to "rescue" the economy in 2008, and then again 100fold in 2020. We are not creating money organically. We are borrowing from our ourselves, devaluing our future, just to keep a mirage of status quo.
I'm being hit on both ends of this thing. We're now a gallon a day family. Here's this week's supply...
Those are really weird looking gallon jugs with those ribs molded in. What brand is that?
I shop almost exclusively at Smith's [Kroger] and the stores often have milk marked down 30-50% once it has less than 10 days before the best by date. So $1.80-$2.20/gal. You do have to go fairly early in the morning 0700-0830ish.
Milk freezes really well for short time frames. [1-2 weeks].
I shop almost exclusively at Smith's [Kroger] and the stores often have milk marked down 30-50% once it has less than 10 days before the best by date. So $1.80-$2.20/gal. You do have to go fairly early in the morning 0700-0830ish.
Milk freezes really well for short time frames. [1-2 weeks].
Hard to see oil reaching $95 anytime soon.
Here we are in peak travel season and lost the $80 handle.
Here we are in peak travel season and lost the $80 handle.
It's Sam's club (Member's Mark). That's where we shop for most of our groceries. In our smaller market, that's probably as cheap as it gets for us (no Kroger's). 10 days wouldn't be a problem No need to freeze.
Inflation is a part of the only way out of this federal fiscal mess . It's not going away. It's going to be a part of the plan. Plan accordingly.
I'm not even saying there is a way out of this but if there is inflation is a necessary part of it.
I'm not even saying there is a way out of this but if there is inflation is a necessary part of it.
There's better chart analyzers out there than me but it looks very rare to have a price slump in the summer that's supposed to be peak demand for the year… last July slump looks to be 2022 but that brought prices from upper $90's and $100's to about where they are today and we've been in that trading range ever since. Lots of calls for mid $80's oil… anyone have thoughts on what would cause oil to go the other direction? Below $70? Hard to imagine OPEC would allow that even with demand erosion… you'd think they'd prop it up with supply cuts.
We'll reach a point where denominations below $1 are done away with.
EnronAg said:
agree, dude...I would say the floor to even begin discussions of grocery inflation for a total bill would be 50%...so the 25% number is just laughable...but I bet the arguments could be made for close to 75% total difference on an entire grocery bill...
I use to buy steaks, frozen foods, and extra stuff that would be fun to try and cook. On a big weekend trip we might spend $170-200.
Now I buy only what I know we will eat without any extras. We rarely get anything that isn't raw ingredients to make a meal. Lots of deli meat and bread. I'm luck to get out of there $240. $300 on trips where we need to stock up on medicine or tooth paste.
It's absurd, and the same usual suspects still tell us all is well. Inflation is higher in other countries, and the economy is great! Be happy and like your grocery prices.
I'm Surprised we even bother with pennies, nickels, and dimes anymore.
Stat Monitor Repairman said:
We'll reach a point where physical moneydenominations below $1 areis done away with.
except that in monopoly, the total amount of cash is $20,580 and additional money can't be printedclobby said:
We are living in a real life game of Monopoly.
Sure it can, you just steal the money from another game of monopoly. Boom! Double the money.Ag92NGranbury said:except that in monopoly, the total amount of cash is $20,580 and additional money can't be printedclobby said:
We are living in a real life game of Monopoly.
"H-A: In return for the flattery, can you reduce the size of your signature? It's the only part of your posts that don't add value. In its' place, just put "I'm an investing savant, and make no apologies for it", as oldarmy1 would do."
- I Bleed Maroon (distracted easily by signatures)
- I Bleed Maroon (distracted easily by signatures)
Heineken-Ashi said:Sure it can, you just steal the money from another game of monopoly. Boom! Double the money.Ag92NGranbury said:except that in monopoly, the total amount of cash is $20,580 and additional money can't be printedclobby said:
We are living in a real life game of Monopoly.
SFW.
We are all the 6 year old.
We seeing the beginning of the end, no?Quote:
(Reuters) - The U.S. Federal Trade Commission will probe why grocery prices remain high even as costs for retailers fall. A key theme for the Biden-Harris administration as it heads towards the presidential election.
Major grocery chains would be ordered to provide information on their costs and prices on common products.
Stat Monitor Repairman said:We seeing the beginning of the end, no?Quote:
(Reuters) - The U.S. Federal Trade Commission will probe why grocery prices remain high even as costs for retailers fall. A key theme for the Biden-Harris administration as it heads towards the presidential election.
Major grocery chains would be ordered to provide information on their costs and prices on common products.
Price controls are a very, very bad idea. There is no shortage of bad ideas coming from the Dem party.
When you're worried about making mistakes keep this deal in mind...
— Sieva Kozinsky (@SievaKozinsky) August 1, 2024
135 West 50th Street in Manhattan, NY
Bought for $332 million in 2006
Sold for $8.5 million yesterday
Even when you make great decisions, a deal like this can blow up.
As an investor, you must constantly… pic.twitter.com/j3Fy6hHWL7
ouch...CRE is in bad shape.
As the belt tightens the markets will correct any grocer prices that are inflated.
We've already started buying costco for anything that lasts a while. Kroger probably never gets that business back from us. Screw it, go to costco every few weeks, get a cheap meal with a hot dog and a coke, save at least a hundred a month on various items.
We've already started buying costco for anything that lasts a while. Kroger probably never gets that business back from us. Screw it, go to costco every few weeks, get a cheap meal with a hot dog and a coke, save at least a hundred a month on various items.
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