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2021 - Is inflation finally back in the conversation?


Reagan1k

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1 hour ago, FirstTimeCaller said:

Oil trading in the $80s. Lumber down sharply:
 

Great things if you're worried about inflation. A little worrying if you're worried about recession.
 

Been watching the lumber for a while. Also a great thing if you have 6000 sqft to frame out doing a gut and rehab plus an RV deck and cover. 

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2 hours ago, gmr548 said:


The name is political pandering. Its not a tax increase for the vast majority of people and isn’t going to be inflationary. Both can be true.

I’ll be interested to see how increasing the size of the IRS doesn’t lead to increased taxes being paid by people. You think they’ll be sticking to large businesses and entities? That’s a big lol there. 
 

I can’t really make a call on anything inflation wise in the bill other than that increasing the proportion of intermittent green energy In favor of other reliable sources seems to run the risk of increasing energy prices. We’ve seen that play out a few places now. 

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On 7/29/2022 at 7:03 AM, Captainant said:

I think gravy train is right on the money, most of what's making homes expensive is corporate and non-resident buyers buying homes as investments. Whole generations have had adorable housing stolen from them, and then told it's their fault for incurring student debt and eating avocado toast and continuing to rent

 

On 7/29/2022 at 7:12 AM, Cheeseweasel said:

Statistics say "not so fast"

 

https://www.longtermtrends.net/home-price-median-annual-income-ratio/

 

Minus the bubble and the last 2 years of "Covid economy", we are below the 50's ratio with much better interest rates.

 

I love this interaction. Captainant makes a statement about housing affordability due to what's transpired over the last couple of years and Cheeseweasel's response is "everything is fine as long as you ignore what's happened the last 2 years".

 

bob-ross-very-good.gif

 

Minus the GFC and the last 2 years of "Covid economy", inflation has been running at a normal pace for the last 3 decades. No need to worry!

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20 minutes ago, Humble Beast said:

I’ll be interested to see how increasing the size of the IRS doesn’t lead to increased taxes being paid by people. You think they’ll be sticking to large businesses and entities? That’s a big lol there. 
 

Are you infering that the IRS is going to change the tax code so people will be paying more?

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3 minutes ago, Hmbre97 said:

Are you infering that the IRS is going to change the tax code so people will be paying more?

No. There will be more government employees harassing people and small businesses looking for mistakes or willful errors. I have an admitted anti IRS bias, but to act like no small time people will be hurt by this bill for minor things is BS. 
 

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1 minute ago, Humble Beast said:

No. There will be more government employees harassing people and small businesses looking for mistakes or willful errors. I have an admitted anti IRS bias, but to act like no small time people will be hurt by this bill for minor things is BS. 
 

They'll be hurt by being asked to pay what they're legally obligated to?

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35 minutes ago, Hmbre97 said:

They'll be hurt by being asked to pay what they're legally obligated to?

Maybe. Maybe not. Maybe go fuck yourself gif. 

Are little guys hurt if they have to spend a ton of time and energy dealing with an IRS audit if they did nothing wrong?  I’d say they are. I’ve paid probably 103% if what I owe over the years, never getting aggressive with anything in the code, but that doesn’t mean I want anything to do with an IRS audit. It’s a bewildering confusing mess out there in a lot of ways. It’s not just bad faith (but there’s plenty of that, obviously) actors that will be concerned if the IRS starts auditing everyone and their brother. 

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1 minute ago, Wulaw Horn said:

Maybe. Maybe not. Maybe go fuck yourself gif. 

Are little guys hurt if they have to spend a ton of time and energy dealing with an IRS audit if they did nothing wrong?  I’d say they are. I’ve paid probably 103% if what I owe over the years, never getting aggressive with anything in the code, but that doesn’t mean I want anything to do with an IRS audit. It’s a bewildering confusing mess out there in a lot of ways. It’s not just bad faith (but there’s plenty of that, obviously) actors that will be concerned if the IRS starts auditing everyone and their brother. 

I mean, imagine applauding the taxman getting more money to harass people. The real way to make more money is to change the code like the carried interest loophole, but that miraculously got saved. Wouldnt need an $80B expansion of the IRS to benefit from that, but gosh I guess it didn’t work out. 
 

GGWP
 

C9-E81-F25-4603-4-C4-C-9145-1-E413-BC3-E

 

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28 minutes ago, Wulaw Horn said:

Maybe. Maybe not. Maybe go fuck yourself gif. 

Are little guys hurt if they have to spend a ton of time and energy dealing with an IRS audit if they did nothing wrong?  I’d say they are. I’ve paid probably 103% if what I owe over the years, never getting aggressive with anything in the code, but that doesn’t mean I want anything to do with an IRS audit. It’s a bewildering confusing mess out there in a lot of ways. It’s not just bad faith (but there’s plenty of that, obviously) actors that will be concerned if the IRS starts auditing everyone and their brother. 

Audit rates from prior to the IRS being intentionally defunded don't bare that out though. Sure, there will probably be an increase in the number of "little guys" getting audited but at a MUCH smaller clip to the biggest offenders. I don't buy it. It would be like someone living in a town where the police budget has been slashed over the last 10 years and crime has risen over that time. A new mayor is elected and says we want to increase the police budget to help fight crime and the argument against it is let's not do it because some normally law abiding citizens might get a small increase in the amount of traffic tickets issued. 

 

audit rates.JPG

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35 minutes ago, Humble Beast said:

I mean, imagine applauding the taxman getting more money to harass people. The real way to make more money is to change the code like the carried interest loophole, but that miraculously got saved. Wouldnt need an $80B expansion of the IRS to benefit from that, but gosh I guess it didn’t work out. 
 

GGWP
 

C9-E81-F25-4603-4-C4-C-9145-1-E413-BC3-E

 

Considering a large majority of the people they will be harrassing are large earners not paying what they should be, causing a large tax gap.... yeah, go IRS. 

And yeah, there is lots of shit in the code that should go away that would increase revenue but can't let perfect be the enemy of good. 

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17 minutes ago, Hmbre97 said:

Audit rates from prior to the IRS being intentionally defunded don't bare that out though. Sure, there will probably be an increase in the number of "little guys" getting audited but at a MUCH smaller clip to the biggest offenders. I don't buy it. It would be like someone living in a town where the police budget has been slashed over the last 10 years and crime has risen over that time. A new mayor is elected and says we want to increase the police budget to help fight crime and the argument against it is let's not do it because some normally law abiding citizens might get a small increase in the amount of traffic tickets issued. 

 

audit rates.JPG

Star Wars Statistics GIF

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I don’t think the IRA will have a significant impact on inflation one way or the other.  But I think the Fed (and the passage of time away from the shocks that caused it) will fix inflation relatively soon.

I actually like what I’ve read about the bill. 

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9 hours ago, Hmbre97 said:

I love this interaction. Captainant makes a statement about housing affordability due to what's transpired over the last couple of years and Cheeseweasel's response is "everything is fine as long as you ignore what's happened the last 2 years".

Try reading all the words.

 

9 hours ago, Hmbre97 said:

Whole generations have had adorable housing stolen from them, and then told it's their fault for incurring student debt

So "whole generations" of 2 years? Post your bullshit elsewhere.

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Sweet, we'll get an army of 80k new IRS agents looking to make our lives miserable. 

Meanwhile, the IRS still won't be capable of picking up a fucking phone call. 

But hey, at least inflation will go away. Just look at the name of the bill!

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10 minutes ago, Neonmoon said:

In my experience, if you’re W2, you’re paying the right amount of taxes. If you’re self self employed, you’re not paying shit. 

Rate on self employment up to the social security cut off is over 7% higher than for W-2 employees. Not sure what your talking about.  If you mean SE folks get more deductions well gross receipts from self employment are like gross revenue for a company, we don’t pay tax in this county on gross receipts we pay it on net income. Ordinary and necessary business expenses are not a tax loop hole. 

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1 minute ago, troph said:

Rate on self employment up to the social security cut off is over 7% higher than for W-2 employees. Not sure what your talking about.  If you mean SE folks get more deductions well gross receipts from self employment are like gross revenue for a company, we don’t pay tax in this county on gross receipts we pay it on net income. Ordinary and necessary business expenses are not a tax loop hole. 

I'm not speaking about the rate. I look at tax returns every day. SE people make off like bandits compared to W2. I'm completely aware that ordinary and necessary business expenses are not a tax loophole. Just because it is legal, doesn't mean it's fair. If you are SE employed, you are capable of using all the legal machinations to reduce your taxable income to absurdly low levels. Maybe you don't abuse the system, but believe me, many people do. 

Anyway, jobs report just came out. Beat expectations by a lot. 

https://www.usatoday.com/story/money/2022/08/05/july-jobs-report-unemployment-rate-3-5-528-000-jobs-added/10243309002/

Quote

U.S. employers added a booming 528,000 jobs in July as the labor market now has recovered all 22 million jobs lost in the pandemic and continued to defy soaring inflation, rising interest rates and a slowing economy.

The unemployment rate fell from 3.6% to 3.5%, matching a 50-year low, the Labor Department said Friday.

Economists had estimated that 250,000 jobs were added last month, according to a Bloomberg survey.

 

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3 minutes ago, Neonmoon said:

I'm not speaking about the rate. I look at tax returns every day. SE people make off like bandits compared to W2. I'm completely aware that ordinary and necessary business expenses are not a tax loophole. Just because it is legal, doesn't mean it's fair. If you are SE employed, you are capable of using all the legal machinations to reduce your taxable income to absurdly low levels. Maybe you don't abuse the system, but believe me, many people do. 

Anyway, jobs report just came out. Beat expectations by a lot. 

https://www.usatoday.com/story/money/2022/08/05/july-jobs-report-unemployment-rate-3-5-528-000-jobs-added/10243309002/

 

Driveby accusations aren’t compelling, those who are truly self employed (as opposed to running a company with payroll to meet etc.) get hit the hardest in my experience. They often make $100-200k and have limited deductions and carry the weight of the extra taxes an employer would otherwise be required to carry. 
 

on your jobs news …

Gives cover for another rate hike not sure how I feel about that.

Edited by troph
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27 minutes ago, Neonmoon said:

In my experience, if you’re W2, you’re paying the right amount of taxes. If you’re self self employed, you’re not paying shit. 

Sounds like something a w2 worker bee would say. 

I'm self employed and pay a metric fuckton in taxes. I'd assume the ones "not paying shit" are also not making shit. Or they are cheating on their taxes, in which case, fuck them. 

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1 minute ago, StruggleBus said:

Sounds like something a w2 worker bee would say. 

I'm self employed and pay a metric fuckton in taxes. I'd assume the ones "not paying shit" are also not making shit. Or they are cheating on their taxes, in which case, fuck them. 

Ding Ding Ding. This is the point I'm trying to make. 

 

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1 hour ago, Cheeseweasel said:

Try reading all the words.

 

So "whole generations" of 2 years? Post your bullshit elsewhere.

My infant was about to buy his affordable starter home last month before those capitalist pigs Blackstone callously ripped the housing stock from under his feet, which is doubly cruel since he literally cant walk yet

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528k jobs added in July. The term recession (sweater god, anything can be politicized in this stupid fucking country) has become almost arbitrary with squabbling over the definition, but regardless, this is a very oddly behaving slowdown if you don’t want to use the r-word, or oddly behaving recession if you do.

Fed gonna go hard later this month unless inflation data is way below expectations.

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25 minutes ago, Neonmoon said:

Ding Ding Ding. This is the point I'm trying to make. 

 

then you could have said, some SE folks don't pay shit because they cheat.  you said SE folks don't pay shit.  and meaningfully cheating on your taxes is a lot harder than you'd think.  most of the reductions in tax liability come from basic planning.  the rank and file SE taxpayers don't have much opportunity to "cheat" beyond being hyper aggressive on deductions which will only get you so far. The next line of cheating is making numbers up, and the data doesn't bear that out as a real world trend. now, at certain levels, $750,000+ in net income, you can get into heavy, heavy tax planning with tax lawyers as opposed to CPAs, but that isn't cheating. That's often being proactive and planning transactions in advance to be most efficient, using prior losses to reduce tax liability, finding tax deferral strategies that are legit, etc., etc.  bottomline, to incorporate your comment about cheaters, honest SE taxpayers carry the highest burden, far and above anyone else under the tax code in my experience.

Edited by troph
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So "whole generations" of 2 years? Post your bullshit elsewhere.
Do you think everyone buys a house at the exact same age that only people in a 2 year window are affected? Whole generations means Gen Z and younger millennials getting priced out due to what has happened during those 2 years.

This is also assuming that the housing market deflates to prepandemic pricing. The reality is the "2 years" of data you want to exclude could just turn into the new normal, leaving those people priced out for good.
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6 minutes ago, troph said:

then you could have said, some SE folks don't pay shit because they cheat.  you said SE folks don't pay shit.  and meaningfully cheating on your taxes is a lot harder than you'd think.  most of the reductions in tax liability come from basic planning.  the rank and file SE taxpayers don't have much opportunity to "cheat" beyond being hyper aggressive on deductions which will only get you so far. The next line of cheating is making numbers up, and the data doesn't bear that out as a real world trend. now, at certain levels, $750,000+ in net income, you can get into heavy, heavy tax planning with tax lawyers as opposed to CPAs, but that isn't cheating. That's often being proactive and planning transactions in advance to be most efficient, using prior losses to reduce tax liability, finding tax deferral strategies that are legit, etc., etc.  bottomline, to incorporate your comment about cheaters, honest SE taxpayers carry the highest burden, far and above anyone else under the tax code in my experience.

I agree. 

We just disagree on the level of honesty in the SE employed tax filing population. 

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11 minutes ago, gmr548 said:

this is a very oddly behaving slowdown if you don’t want to use the r-word, or oddly behaving recession if you do.

There’s the rub. And why good news is bad news. The Fed sees an economy running too hot and in need of a cooldown. How to do that? Raise those rates to make borrowing more expensive and therefore slowing the economy. The Fed prefers a soft landing but is willing to trigger a recession to combat inflation. 

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4 hours ago, Cheeseweasel said:

Yes indeed. However, labor participation rate is still below Pre-Covid levels. Until we sort that out, inflation will be a concern. 

Are we sure that isn’t just demographic trends playing out?  Pandemic induced early retirement of boomers would drag that rate down, and that will iron itself out as they reach full retirement age.

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17 minutes ago, Snake Diggity said:

Are we sure that isn’t just demographic trends playing out?  Pandemic induced early retirement of boomers would drag that rate down, and that will iron itself out as they reach full retirement age.

We hashed this out a few pages back.

 

the worst demo for labor participation vs. historical is young workers under 25.

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On 8/5/2022 at 7:45 AM, Neonmoon said:

In my experience, if you’re W2, you’re paying the right amount of taxes. If you’re self self employed, you’re not paying shit. 

We still incentivicing fuck trophies, or nah?  I'm W2, single, and paying for a shitload of 'free' lunches.

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On 8/5/2022 at 8:53 AM, Hmbre97 said:

Do you think everyone buys a house at the exact same age that only people in a 2 year window are affected? Whole generations means Gen Z and younger millennials getting priced out due to what has happened during those 2 years.

This is also assuming that the housing market deflates to prepandemic pricing. The reality is the "2 years" of data you want to exclude could just turn into the new normal, leaving those people priced out for good.

All of this.  Millennials who were renting pre-pandemic (and couldn't get ahead to afford the downpayment) sure as shit aren't finding a single-family 'starter home' in any metro outside of Hillfuck, Missouri.  Access to dirt-cheap capital and loose-enough underwriting regulations allowed Mom & Pop as well as the Institutional Investor load into housing as a new investment asset.  These 'investors' are also leveraging rent price escalations (and at one point, AirBnB bookings) to pay said mortgage with legislators keeping thumbs up their collective asses over the potential to tax them more aggressively.

The 2018-era 'starter home' of $400K (in metro suburbia) became $600K in most markets.  That Gen-Z family needed to cough up another $10K to cover their downpayment, but wait.. they just got beat out by some faceless cash buyer who's hidden behind an iBuyer agent or has an Internet-based management company renting this one out, among four other SFHs in the same development.

It is the new norm, at least until those holding multiple properties get rekt by other means and the glut of their inventory is unloaded on the market at once, taking home values with them.  The rate hikes have barely made a dent so far, everyone is clutching to their listing price with slimy realtors convincing sellers to just pay down the buyer's rate. 

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On 8/6/2022 at 6:30 AM, Cheeseweasel said:

Yes indeed. However, labor participation rate is still below Pre-Covid levels. Until we sort that out, inflation will be a concern. 

 

22 hours ago, Incredulity said:

We hashed this out a few pages back.

 

the worst demo for labor participation vs. historical is young workers under 25.

LOL, "worst?" What does "worst" mean? What LPR is "bad" or "good," and in what way do "we" "sort out" the LPR, and how does that, in turn, tamp down the key drivers of CPI inflation in this particular moment in time?
yes-sit.gif

Edited by Bozo_Casanova
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Just now, Bozo_Casanova said:

 

LOL, "worst?" What does "worst" mean? What LPR is "bad" or "good," and in what way do "we" "sort out" the LPR, and how does that, in turn, tamp down the key drivers of CPI inflation in this particular moment in time?

 

Lowest current vs historical.

TIL low LPR is “good”

the ultimate supply side gambit.

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9 hours ago, Gravy Train said:

All of this.  Millennials who were renting pre-pandemic (and couldn't get ahead to afford the downpayment) sure as shit aren't finding a single-family 'starter home' in any metro outside of Hillfuck, Missouri.  Access to dirt-cheap capital and loose-enough underwriting regulations allowed Mom & Pop as well as the Institutional Investor load into housing as a new investment asset.  These 'investors' are also leveraging rent price escalations (and at one point, AirBnB bookings) to pay said mortgage with legislators keeping thumbs up their collective asses over the potential to tax them more aggressively.

The 2018-era 'starter home' of $400K (in metro suburbia) became $600K in most markets.  That Gen-Z family needed to cough up another $10K to cover their downpayment, but wait.. they just got beat out by some faceless cash buyer who's hidden behind an iBuyer agent or has an Internet-based management company renting this one out, among four other SFHs in the same development.

It is the new norm, at least until those holding multiple properties get rekt by other means and the glut of their inventory is unloaded on the market at once, taking home values with them.  The rate hikes have barely made a dent so far, everyone is clutching to their listing price with slimy realtors convincing sellers to just pay down the buyer's rate. 

This comes up a lot when I speak at banking and financial conferences. Broadly speaking, fiscal and monetary policy since 2001 is widely  and intuitively if not explicitly interpreted by millenials as a wealth transfer from themselves to their parents generation. In other words, that their futures were sacrificed to prevent the generations ahead of theirs from experiencing shared sacrifice or discomfort during war or moments of economic crisis, or even discipline during periods of peace and expansion. 

Housing is the best example, I think. I was talking about this to Elliott Eisenberg at a conference we both spoke at a few months ago. In my opinion (not his necessarily, I'm not an economist) inflation or something like it has been pretty high for half a decade, it was just hiding in the cost of housing.  Since 2009 we've been openly using monetary and fiscal policy to prop up real estate values, and I think that's a big part of why inflation wasn't reflected in CPI for the last 12 years - since housing has such low elasticity of demand and supply elasticity in high opportunity areas has been artificially constricted by local zoning, all the debt funded surplus liquidity from tax cuts and other stimulus during periods of expansion was absorbed into the wealth of incumbent property owners and parked, thus removed from productivity. And there are many other examples as well. Essentially the ladders of opportunity have been pulled up and away from the not-so-young-anymore middle class.  They feel like they got shafted because they did. In this and countless other ways. 

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2 hours ago, Bozo_Casanova said:

This comes up a lot when I speak at banking and financial conferences. Broadly speaking, fiscal and monetary policy since 2001 is widely  and intuitively if not explicitly interpreted by millenials as a wealth transfer from themselves to their parents generation. In other words, that their futures were sacrificed to prevent the generations ahead of theirs from experiencing shared sacrifice or discomfort during war or moments of economic crisis, or even discipline during periods of peace and expansion. 

Housing is the best example, I think. I was talking about this to Elliott Eisenberg at a conference we both spoke at a few months ago. In my opinion (not his necessarily, I'm not an economist) inflation or something like it has been pretty high for half a decade, it was just hiding in the cost of housing.  Since 2009 we've been openly using monetary and fiscal policy to prop up real estate values, and I think that's a big part of why inflation wasn't reflected in CPI for the last 12 years - since housing has such low elasticity of demand and supply elasticity in high opportunity areas has been artificially constricted by local zoning, all the debt funded surplus liquidity from tax cuts and other stimulus during periods of expansion was absorbed into the wealth of incumbent property owners and parked, thus removed from productivity. And there are many other examples as well. Essentially the ladders of opportunity have been pulled up and away from the not-so-young-anymore middle class.  They feel like they got shafted because they did. In this and countless other ways. 

 

I suppose anyone spending time in western Europe over the last decade could have seen this coming, with their central banks leading the charge in monetary policy and velocity of money parked in real estate.  I just never thought it would catch up here over such a short period of time, while consumers are blinded by the fallacy that the unnatural hike in all-things-residential real estate was due to an inevitable supply shortage, but no mention of the demand side from speculation and asset class to park liquidity.  Of course, at the same time, the Fed also injected $5.8T in Treasury Securities and $2.7T in Mortgage-backed Securities.

For those shafted Millenials, Policy makers' have said the quiet part out loud, by only addressing inflationary pressures from culling demand, while at the same time, discouraged wage appreciation over the myth of the "wage-price spiral" theory.

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