Investing Thread

[The Sultan]

How much of this is just pent up demand that's been ginned up by stimulus payments though?  As demand is met, and as the economy moves away from stimulus support, won't prices stabilize?  I don't think there is much structural that will keep prices rising over time.

[Goose]

Fluff

The stimulus checks definitely helped cause on an uptick, but I believe the wealth effect factor has played a bigger role. An awful lot of money has been made in the market, crypto and housing over the past year and that is real money. Many of our clients cater to mid to upper class consumer and they are not be bumped up by $1400 stimulus checks.

That said, the US government has spent/printed an awful lot of money over the past decade and that has yet to be felt in regards to inflation. To me, a perfect storm is brewing. I am not sure when, but I think we are going to be in for a tough road ahead some time in the next year or two, could be sooner.

[The Sultan]

Gotcha.  Thanks. 

[StillAWarrior]

This boomer has zero idea what the price of gas, nor do I care. I have a friend that lives in NYC and whenever he asks me how much gas is in MKE, I tell him $10 a gallon.

Same 😂, except the boomer part

Me three.  Every now and then one of my parents will ask me what gas prices are here and I generally don't really know. Maybe I can guess within $0.25...maybe not. When my tank is nearing empty I have to fill it; it doesn't really matter what the price is. I realize that I'm very fortunate and that for many people the price increases cause real financial harship.

[ATL MU Warrior]

How much of this is just pent up demand that's been ginned up by stimulus payments though?  As demand is met, and as the economy moves away from stimulus support, won't prices stabilize?  I don't think there is much structural that will keep prices rising over time.

It is primarily pent up demand and is being fueled by 1) high savings rates for the last 12-15 months for those who didn't lose their jobs due to pandemic and 2) govt. stimulus.  People are flush with cash and tired of staying home...they are ready to get out and live life and have fun again...and they will spend to do so. 

In my business (automotive) we are seeing sales skyrocket starting in March & continuing through April.  May is currently pacing well over 100% higher than last year.  The only thing that might slow it down is lack of supply due to ongoing shortage of computer chips which is beginning to impact production.  It is a very real possibility that our dealers will run out of cars before production catches back up.  Our brand is fortunate as we are facing less of an impact than many others. 

[TSmith34, Inc.]

That said, the US government has spent/printed an awful lot of money over the past decade and that has yet to be felt in regards to inflation. To me, a perfect storm is brewing. I am not sure when, but I think we are going to be in for a tough road ahead some time in the next year or two, could be sooner.

Here is a counter point from Krugman:

"In particular, I'm hearing a lot of buzz around how the Fed's wanton abuse of its power to create money will soon lead to runaway inflation — or maybe that we're already experiencing high inflation, but it's being hidden by dishonest government statistics.

There was a lot of talk along those lines a decade ago, but it faded out as it became obvious to everyone that hyperinflation just wasn't happening. Now it's back, I think for a couple of reasons.

For one thing, we are seeing some actual inflation as a recovering economy runs into bottlenecks — shortages of lumber, shipping containers, used cars, etc. I believe, and the Fed believes, that these shortages are temporary, that this is only a blip and that inflation will subside; but we could be wrong, and at least there's some substance to this concern.

<snip>

Anyone claiming that big increases in M2 presage surging inflation was wrong again and again since the 1980s. I mean really, really wrong:

There are actually two big fallacies in the "printing press goes brrr -> inflation" story.

One of them is what I think of as the doctrine of immaculate inflation: the notion that an increase in the money supply somehow translates directly into inflation without causing economic overheating along the way. Many people have fallen for that fallacy over the years. Among them was no less a figure than Milton Friedman."

[jficke13]

TBF, there has never been a printing of money Krugman didn't simultaneously like and think didn't go far enough.

[The Sultan]

TBF, there has never been a printing of money Krugman didn't simultaneously like and think didn't go far enough.

He's not really wrong though.  We have been printing money pretty much continuously for nearly 40 years and haven't seen much core inflation to show for it.

[Goose]

TSmith

I do not disagree with most of the article. There are a lot of moving pieces in the world today and excessive printing of money is only piece of the puzzle. My point earlier is that coupled with the additional pieces of the puzzle, the printing press might create the tipping point. I believe the can has been kicked down the road since 2001 and sooner or later we were/are going to pay the price for the spending.

[MU82]

Some folks say Bitcoin can't be used to buy stuff, but it came in handy for paying off the hackers who brought a major pipeline to its knees. Totally untraceable, just the way the criminals like it!

[TSmith34, Inc.]

TSmith

I do not disagree with most of the article. There are a lot of moving pieces in the world today and excessive printing of money is only piece of the puzzle. My point earlier is that coupled with the additional pieces of the puzzle, the printing press might create the tipping point. I believe the can has been kicked down the road since 2001 and sooner or later we were/are going to pay the price for the spending.

Yes, that's fair, I was merely sharing a different viewpoint and not throwing shade on your observations or opinion. I honestly don't know how it will play out but am smart enough to recognize that I have no expertise in this [monetary policy] area.

[lawdog77]

Some folks say Bitcoin can't be used to buy stuff, but it came in handy for paying off the hackers who brought a major pipeline to its knees. Totally untraceable, just the way the criminals like it!

Speaking of bitcoins, why does it take so much energy to do 1 transaction? I read this:
A single bitcoin transaction uses roughly 707.6 kilowatt-hours of electrical energy–equivalent to the power consumed by an average U.S. household over 24 days,

[MU82]

Speaking of bitcoins, why does it take so much energy to do 1 transaction? I read this:
A single bitcoin transaction uses roughly 707.6 kilowatt-hours of electrical energy–equivalent to the power consumed by an average U.S. household over 24 days,

Why indeed.

[JWags85]

Speaking of bitcoins, why does it take so much energy to do 1 transaction? I read this:
A single bitcoin transaction uses roughly 707.6 kilowatt-hours of electrical energy–equivalent to the power consumed by an average U.S. household over 24 days,

So basically each Bitcoin transaction is computer algorithms solving numerical puzzles or equations to produce the batches of transactions. And one computer is only doing fractions of the data processing for the full transaction.  So think of when your computer is straining and using up all of its computer power, it gets hot, the fan is loud, etc...computer rigs set up for Bitcoing mining/processing are super high powered versions that are working like that constantly.  And hundreds are working per transaction.  So your average server room for a company uses much more electricity than a normal home.  Well Bitcoin mining and processing is like a bunch of de facto server farms

[lawdog77]

So basically each Bitcoin transaction is computer algorithms solving numerical puzzles or equations to produce the batches of transactions. And one computer is only doing fractions of the data processing for the full transaction.  So think of when your computer is straining and using up all of its computer power, it gets hot, the fan is loud, etc...computer rigs set up for Bitcoing mining/processing are super high powered versions that are working like that constantly.  And hundreds are working per transaction.  So your average server room for a company uses much more electricity than a normal home.  Well Bitcoin mining and processing is like a bunch of de facto server farms

Thanks. So will the power supply needed always be this high? How can this ever be a mainstream way of conducting business?

[Heisenberg]

The power argument is what a bunch of haters are pushing.

Why don't we ever ask the same of the current financial system?



Also ... idles devices (phones, iPads, laptops, computers) consume 4x more power than bitcoin in a year.
https://cointelegraph.com/news/energy-used-by-idle-device-in-the-us-can-power-bitcoin-for-4-years

[Heisenberg]

Thanks. So will the power supply needed always be this high? How can this ever be a mainstream way of conducting business?

Proof of stake and green energy usage is the solution.  It is coming within a year for Ethereum.

And don't worry about bitcoin, once the "flipping" happens, bitcoin will collapse and become a bit player.

[Frenns Liquor Depot]

The power argument is what a bunch of haters are pushing.

Why don't we ever ask the same of the current financial system?



Also ... idles devices (phones, iPads, laptops, computers) consume 4x more power than bitcoin in a year.
https://cointelegraph.com/news/energy-used-by-idle-device-in-the-us-can-power-bitcoin-for-4-years

That's misleading.  The market value of gold mined in a year is like 9x the value of Bitcoin (2500 tons vs 324k coins).

I would also assume the same costs to maintain the Bitcoin financial system aren't in the mining costs. 

So yeah other things can get more efficient, but it doesn't mean crypto is an incredibly energy intensive way to create value. 

[Skatastrophy]

That's misleading.  The market value of gold mined in a year is like 9x the value of Bitcoin (2500 tons vs 324k coins).

I would also assume the same costs to maintain the Bitcoin financial system aren't in the mining costs. 

So yeah other things can get more efficient, but it doesn't mean crypto is an incredibly energy intensive way to create value. 

This is so close to talking about PER stats. Basketball reference needs to get on this.

[Heisenberg]

That's misleading.  The market value of gold mined in a year is like 9x the value of Bitcoin (2500 tons vs 324k coins).

I would also assume the same costs to maintain the Bitcoin financial system aren't in the mining costs. 

So yeah other things can get more efficient, but it doesn't mean crypto is an incredibly energy intensive way to create value.

Not sure that is a good measure.

[Hards Alumni]

That's misleading.  The market value of gold mined in a year is like 9x the value of Bitcoin (2500 tons vs 324k coins).

I would also assume the same costs to maintain the Bitcoin financial system aren't in the mining costs. 

So yeah other things can get more efficient, but it doesn't mean crypto is an incredibly energy intensive way to create value.

Okay now add in the environmental, and human costs of mining gold.

[Skatastrophy]

Okay now add in the environmental, and human costs of mining gold.

Consider that gold has intrinsic value

[Hards Alumni]

Consider that gold has intrinsic value

Right, but that isn't what we use it for, generally.  We use less than 8% of what we mine every year in electronics.

Also, should we discover a lode of gold that would drive prices down and increase human and environmental harm.

I'm not suggesting that Bitcoin's power usage is acceptable, but I think a lot of people don't quite understand why it uses POW instead of POS protocols.  BTC will never work for everyday transactions.

[JWags85]

Right, but that isn't what we use it for, generally.  We use less than 8% of what we mine every year in electronics.

Also, should we discover a lode of gold that would drive prices down and increase human and environmental harm.

I'm not suggesting that Bitcoin's power usage is acceptable, but I think a lot of people don't quite understand why it uses POW instead of POS protocols.  BTC will never work for everyday transactions.

I think far less even know what POW vs POS  means

[Hards Alumni]

I think far less even know what POW vs POS  means

One was a block you could hit in the original Mario Bros. arcade game while the other was what I'd call the car I drove when I was sixteen, aina?