Buying power, inflation and others

104 posts in this topic

13 minutes ago, tor said:

I have not eaten it, but it is real. 

Looks good.  Spinach and someting creamy as base?  So, a robust green salad.  And chilli, somewhre.

 

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34 minutes ago, snowingagain said:

Looks good.  Spinach and someting creamy as base?  So, a robust green salad.  And chilli, somewhre.

I’m glad that I missed this limited edition. 

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3 minutes ago, LukeSkywalker said:

I’m glad that I missed this limited edition. 

Ha.   If you change your mind I think their spinach one, with a few fish fingers put on top would be the same.  If you are hungry, it would not be the worst combination.

 

My favourite is still the plainist margerita

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I am sure it goes through Easter for those darn Catholics... 

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We never bought frozen pizzas until we recently discovered the brand Gustavo Gusto. Comes in a white box and pretty good with an excellent crust.

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3 hours ago, Chelski said:

 

Nonsense.

 

Beer and Döner is the best diet. Döner (mit allem) gives you "your five a day” and you don't have having to worry about anything.

 

Except gastroenteritis and food posioning.

Alem hat heute frei

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Any thoughts on why the ECB is so far behind the curve on inflation. Central banks around the world are aggressively raising rates. Read the the Bank of Canada is (which I follow as Canada is home*) has signalled a 75 basis point hike, Insane!!!!!! Yet the ECB is still talking like, yeah at some point we gotta raise rates but yeah what ever.

 

Oddly read online that mortgage rates have jumped (from under 1% to almost 3%) this despite the ECB rate being bus zero.

 

Germany is at serious risk of a wage price spiral if the ECB doesn't get it's act together

 

Holger Zschaepitz had this to say. Good morning from #Germany where risk of a wage-price spiral is rising. Now the union Verdi has demanded S&W hike of up to 14% for dock workers in container shipping, amongst others hourly compensation plus €1.20, extra payment of €1,200 as well as compensation for #inflation.
 

 

Other unions are pushing for pay hikes in the 8-10% range. 

 

*a friend commented that, despite living here and never planning on returning home I still refer to Canada as home

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1 hour ago, Rushrush said:

Any thoughts on why the ECB is so far behind the curve on inflation. Central banks around the world are aggressively raising rates. Read the the Bank of Canada is (which I follow as Canada is home*) has signalled a 75 basis point hike, Insane!!!!!! Yet the ECB is still talking like, yeah at some point we gotta raise rates but yeah what ever.

 

Oddly read online that mortgage rates have jumped (from under 1% to almost 3%) this despite the ECB rate being bus zero.

 

Germany is at serious risk of a wage price spiral if the ECB doesn't get it's act together

 

Holger Zschaepitz had this to say. Good morning from #Germany where risk of a wage-price spiral is rising. Now the union Verdi has demanded S&W hike of up to 14% for dock workers in container shipping, amongst others hourly compensation plus €1.20, extra payment of €1,200 as well as compensation for #inflation.
 

 

Other unions are pushing for pay hikes in the 8-10% range. 

 

*a friend commented that, despite living here and never planning on returning home I still refer to Canada as home

 

I would say Italy, Spain, Greece, maybe France are the reason why the ECB won`t act.

 

The ECB wants to narrow the gap between Italian and German bond yields.

 

If the ECB is no longer buying Italian Bonds (known as QE), who will?

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23 hours ago, RenegadeFurther said:

 

I would say Italy, Spain, Greece, maybe France are the reason why the ECB won`t act.

 

The ECB wants to narrow the gap between Italian and German bond yields.

 

If the ECB is no longer buying Italian Bonds (known as QE), who will?

 

 Yeah that makes sense. Noah Smith makes and interesting point about inflation

 

Quote

 

The other day, I was writing about  inflation and the national debt , and a commenter asked me whether inflation had caused the debt to go down in real terms. I checked, and to my surprise, I found it had! From the first quarter of 2021 to the third quarter, despite two huge Covid relief bills — the $0.9 trillion bill in December 2020 and Biden’s $1.9 trillion bill in March — the national debt actually fell in inflation-adjusted terms:

 

 

and this 

 

Quote

 

How inflation erodes government debt — and what that means

 

How was a little bit of inflation — less than an 8% annual rate — able to drive down the real value of government debt in just two quarters, despite the fact that we spent almost $3 trillion on Covid relief during that time? 

 

And finally to this

 

Quote

First, poorer people tend to be net debtors and richer people tend to be net creditors, so inflation redistributes from richer people to poorer people. For a nation whose wealth inequality  has skyrocketed in recent decades , inflation will act as a partial countermeasure. People whose wealth is mostly in stock — e.g. entrepreneurs — will not see nearly as much of a hit to their real wealth, since stocks are an OK long-term hedge against inflation — as prices rise, so do the profits that give stocks their value. Indeed, the wealthiest people, who are mostly founders, have seen their total wealth increase much faster than inflation over the last year. The wealthy people who are hit most are those who have more of their wealth in bonds. Statistically, this means older people, so inflation will also act as redistribution from the Boomers to Millennial and Gen Z borrowers.

 

Interesting points, seems counter intuitive as you normally think of inflation as a tax on the poor.  

 

Paywalled link

 

https://noahpinion.substack.com/p/inflation-is-forgetting?r=8ahwm&s=r&utm_campaign=post&utm_medium=web

 

Edit: not sure why the formatting is so weird

 

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On 4/10/2022, 8:23:00, fraufruit said:

We never bought frozen pizzas until we recently discovered the brand Gustavo Gusto. 

I'm a hard core pizza obsessed Italian and on Gustavo Gusto I actually agree.

Never I would have expected frozen supermarket pizza can be this good.

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I'm amazed someone is surprised to learnt inflation makes debt smaller (in relative size).

I thought this was one of the most basic and firstest things one learns in economics.

 

 

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22 hours ago, Gambatte said:

I'm amazed someone is surprised to learnt inflation makes debt smaller (in relative size).

I thought this was one of the most basic and firstest things one learns in economics.

 

 

Yes in the form of the average persons spending , houses where much cheaper 30 years ago but the business financial press constantly fear monger over deficits - Euro zone fears of a default etc etc. 

 

Others have commented that governments are using inflation as a cover to reduce the value of debt, much like the US government did after WW2

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On 10.6.2022, 11:03:28, LukeSkywalker said:

Yesterday, the ECB had a meeting in Amsterdam and Lagarde explains the reasoning and the difference with US and UK:

https://nos.nl/nieuwsuur/video/2432106-ecb-president-lagarde-over-renteverhoging-en-inflatie

 

Better start at 02:45 since before it’s Dutch :)

What did she mean when she was asked why they didn´t act sooner, as the US and the UK had done, and answered that the labour market in the UK was different from that in the EU?

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9 hours ago, jeba said:

What did she mean when she was asked why they didn´t act sooner, as the US and the UK had done, and answered that the labour market in the UK was different from that in the EU?

 

I suspect, all she cares about now is saving Italy.

 

Italys 10 Year government bond now is at almost 4% (up 350% over 1 year)

 

Soon as it reaches 6%, Italy will be forced to leave the Eurozone or become a Greece 2.

 

 

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Is anyone else watching the Bond market

 

Italy 10 year Bond Now at 4.146%.

 

Spain 10 Year bond 3.006%

 

Greece 10 Year Bond 4.652%

 

Portugal 10 year bond 3.001%

 

In comparison to Germany

 

Germany 10 year bond 1.6385%

Netherlands 10 year bond 2.009%

Austria 10 year bond 2.248%

 

The ECB must now be bricking themselves.

 

The only thing they could do to protect (Italy, Spain, Portuagal etc) was QE and negative interest rates. 

With inflation rampant what do they do now?

 

Brexit may have happened but the EU has huge problems (it will be so much worse than Brexit)

 

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On 4/10/2022, 5:44:56, Chelski said:

 

Nonsense.

 

Beer and Döner is the best diet. Döner (mit allem) gives you "your five a day” and you don't have having to worry about anything.

 

Except gastroenteritis and food posioning.

So, it helps with losing weight too.

 

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Italian 10 year bond at 4.266%.

 

This is far more devastating for the EU than Brexit.

 

Question for @murphaph, who do you think should pay Italy's debt? 

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3 hours ago, RenegadeFurther said:

Italian 10 year bond at 4.266%.

 

This is far more devastating for the EU than Brexit.

 

Question for @murphaph, who do you think should pay Italy's debt? 


I’d wager that bond rates of 4% when inflation is at 8% is absolutely not a problem for governments - specially considering that older bonds are at 0% or something. Inflation is after all a time tested tool to pass wealth from bond creditors to bond debtors. 

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