Venezuelan inflation rate nearing 100%.

[OverVolt]

How's that 'clear inflection' point coming?

Maybe you just don't 'get' markets. lol.

Meh

http://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

That is all that matters. They pushed the rate all the way down to 1.68% in Feb 2015. Impressive. It takes time for all the cash to slosh around the market. Its kind of like a dead cat bounce in rates. Interesting. Markets are dreadfully slow to react, but the equilibrium was massively disturbed with the buying in 2013-2014.

I always re-analyze at planned intervals. I'm going with a dead cat bounce in rates and that we are still on for an increase. I never realized that rates could bounce like that but it makes sense because of the strong dollar.

You are right I guess in that rates tend to increase after QE ends. But it would seem to be driven by investors drawn to treasures because of the strong dollar. Long term though, the rate is going up unless the fed resumes buying.

If you explained it like that, then I would have believed you.

If I were in a hypothetical scenario where I had bet on rising rates I'd feel comfortable holding, but had the timing wrong.

 

[sm625]

This is what the liberal wants to do to murica

Wants to do? They ARE doing it. Just wait till every single illegal is collecting $15,000 a year in welfare and racking up another $25000 a year in "free" medical care. That's $40,000 a year. Multiply that by 30 million. That's $1.2 trillion, just in handouts to illegals. That's the ten year plan in a nutshell. Once enough of them have illegitimate voting rights, they will be able to vote themselves welfare increases and then the government will start running $3 trillion deficits each year and the currency will be debased by that amount every year. The amount of debasement will grow every year until it reaches a hyperinflationary threshold. And all the while, I am sure the official statistics will say that inflation is 1.8%. That $12 a pound for beef that you'll be paying doesnt count towards inflation. Nor will that $18000 a year insurance premium, or that $47000 a year college tuition. It will all be just a normal part of the low inflation liberal utopia.

 

[dank69]

Wants to do? They ARE doing it. Just wait till every single illegal is collecting $15,000 a year in welfare and racking up another $25000 a year in "free" medical care. That's $40,000 a year. Multiply that by 30 million. That's $1.2 trillion, just in handouts to illegals. That's the ten year plan in a nutshell. Once enough of them have illegitimate voting rights, they will be able to vote themselves welfare increases and then the government will start running $3 trillion deficits each year and the currency will be debased by that amount every year. The amount of debasement will grow every year until it reaches a hyperinflationary threshold. And all the while, I am sure the official statistics will say that inflation is 1.8%. That $12 a pound for beef that you'll be paying doesnt count towards inflation. Nor will that $18000 a year insurance premium, or that $47000 a year college tuition. It will all be just a normal part of the low inflation liberal utopia.

Okay, I'll wait.

 

[pauldun170]

Didn't read any of the posts in this thread (yet)
Just came into check if this was a necro thread from 1996 until I remembered that intenets...never mind.
I used to work with a few folks from Venezuela back in the early to mid 90's who came to the US fleeing that crap back then.

Venezuela and inflation go back like me and Mariah, like babies and pacifi-ahs.

 

[woolfe9998]

Are we now. Venezuela has routinely had yearly inflation of 30%+ while the U.S. has had inflation well below our target for years:
http://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG

You would think that people being wrong about inflation in the U.S. for closing in on a decade now would either admit they were wrong or at least stop making the same wrong predictions out of embarrassment.

I mean how many more years of being wrong will it take?

Correction, predictions of hyper-inflation by libertarians and other "fiscal conservative" types goes back way more than a decade. I can recall such predictions as far back as the 1980's. It probably goes back even further than that.

 

[fskimospy]

Correction, predictions of hyper-inflation by libertarians and other "fiscal conservative" types goes back way more than a decade. I can recall such predictions as far back as the 1980's. It probably goes back even further than that.

I think there's a qualitative difference here though. There have been predictions of hyperinflation by monetary cranks like Ron Paul for decades, but recent predictions were by a considerably larger and more respectable crowd. I mean everyone knows Ron Paul is a nut, but these guys were individuals that people did (and still do!) take seriously.

 

[brycejones]

Wants to do? They ARE doing it. Just wait till every single illegal is collecting $15,000 a year in welfare and racking up another $25000 a year in "free" medical care. That's $40,000 a year. Multiply that by 30 million. That's $1.2 trillion, just in handouts to illegals. That's the ten year plan in a nutshell. Once enough of them have illegitimate voting rights, they will be able to vote themselves welfare increases and then the government will start running $3 trillion deficits each year and the currency will be debased by that amount every year. The amount of debasement will grow every year until it reaches a hyperinflationary threshold. And all the while, I am sure the official statistics will say that inflation is 1.8%. That $12 a pound for beef that you'll be paying doesnt count towards inflation. Nor will that $18000 a year insurance premium, or that $47000 a year college tuition. It will all be just a normal part of the low inflation liberal utopia.

Get help, you're drinking too early in the morning.

 

[LegendKiller]

I'm not an expert on rates, I'm just applying some fairly basic knowledge of economics and recent history to the issue. Inflation expectations remain low, so rates remain low.

I hope you didn't take too many positions based on the idea that rates were going to rise significantly in the near future.

The problem with that is the assumption that inflation is tied to rates 100% without consideration to risk premium and, if risk premium compresses from a lack of supply, that relative value assumptions shift.

For example, we had a conversation internally about what looks "cheap" for IG purchases. 3yr BBB corporates at benchmark + 100, aaa student loans at swaps + 100, or CMBS at +90.

You can find better value in structured products. Why? Smaller space and not everybody who is flush with cash (IG corps) can go in to structured.

But you'll get some creep through various sectors because risk premiums are compressed.

Some areas are compressed enough that treasuries or similar are more competitive since they have better risk adjusted relative value.

As I have maintained, you cannot just look at high level metrics when considering rates. Inflation or rates may help, but supply matters more. There has been a lot of supply, but even more demand due to a lot of cash, and a lack of supply in other spaces, including a huge derth of supply in mortgages, both in agency and non agency.


The former is due to qe3 and continued purchase by the Fed and the latter due to a lack of supply.

 

[woolfe9998]

I think there's a qualitative difference here though. There have been predictions of hyperinflation by monetary cranks like Ron Paul for decades, but recent predictions were by a considerably larger and more respectable crowd. I mean everyone knows Ron Paul is a nut, but these guys were individuals that people did (and still do!) take seriously.

Could be. I think I'm older than you so I've been hearing this crap seemingly for a long while. I recall reading the book "Bankruptcy 1995" which I think was published around '91. It was a popular book if memory serves. The whole "buy gold" thing was popular in the late 80's when people worried over the Reagan/GHWB deficits.

Everything about the right these days seems exactly like it was 20 years ago, just more extreme. It's like their amplifier has gone to "11."

 

[fskimospy]

I figured it would be interesting to check in on this one more time as interest rates have SURELY had enough time to go up by this point, right? I mean QE was the reason for 'artificially low' rates and it's been effectively over for a long time now.

Oops.

I wonder if anyone will actually admit they got it wrong. My guess is no.

 

[realibrad]

I figured it would be interesting to check in on this one more time as interest rates have SURELY had enough time to go up by this point, right? I mean QE was the reason for 'artificially low' rates and it's been effectively over for a long time now.

Oops.

I wonder if anyone will actually admit they got it wrong. My guess is no.

I did.

 

[fskimospy]

I did.

Hey, fair enough!

 

[realibrad]

Hey, fair enough!

To be fair though, I disagree with the reason you believe it did not go up though. QE was supposed to take bank debt away and allow them to lend. We know that they did not lend more. That effectively means that QE did not really increase the money supply. Velocity did not really change and so inflation did not happen. If the Fed can pull back fast enough when things start to get going then this may have been the most painless way to deal with what happened.

But, inflation did not go up because the predictions by people like me assumed things that did not happen. That makes me wrong either way.

 

[hal2kilo]

There is something else the rich did, that I have seen first had. When the leaders were shoving their heads up their asses to come up with bad ideas, the rich started to funnel money outside of the country. The company I work for sells timeshare. We saw a huge influx of Venezuelan people buying our timeshare. Even today, many people use our timeshare as a way to invest money, as it can be deeded and sold. It does not hold as much value as currency, but its more protected and safe.

The rich did this with many things. You buy assets that are maintained outside of the use to transfer your wealth from Venezuelan money to assets to keep your wealth safe. Then, if you can you GTFO.

Timeshares an investment... funny.

 

[fskimospy]

To be fair though, I disagree with the reason you believe it did not go up though. QE was supposed to take bank debt away and allow them to lend. We know that they did not lend more. That effectively means that QE did not really increase the money supply. Velocity did not really change and so inflation did not happen. If the Fed can pull back fast enough when things start to get going then this may have been the most painless way to deal with what happened.

But, inflation did not go up because the predictions by people like me assumed things that did not happen. That makes me wrong either way.

I've pretty consistently said that QE had a relatively poor effect, just that it was better than doing nothing. This actually ties into my larger point though, since QE didn't do that much to begin with, ending it didn't do that much either. It simply isn't the reason for low interest rates, then or now. This is all unfortunate news as we would all be better off had it done more.

 

[realibrad]

Timeshares an investment... funny.

You would not believe the amount of money that my company made off of it. The fact that things are so bad that timeshare is an investment...scary.

 

[hal2kilo]

Could be. I think I'm older than you so I've been hearing this crap seemingly for a long while. I recall reading the book "Bankruptcy 1995" which I think was published around '91. It was a popular book if memory serves. The whole "buy gold" thing was popular in the late 80's when people worried over the Reagan/GHWB deficits.

Everything about the right these days seems exactly like it was 20 years ago, just more extreme. It's like their amplifier has gone to "11."

The CEO of the corporation that use to own us, Figgie International, Mr. Figgie himself was railing about it in the late 80's. Actually, wrote a book.

Still waiting.

 

[alien42]

spewing of ignorance.

you don't actually believe illegals are collecting welfare do you?

the vast majority of illegals in this country work their asses off at full time jobs and pay taxes just like all of us legals. i don't want to attribute your ignorance to hate, but it sure does appear that way.