Inflation

rob316

https://www.boards.ie/discussion/comment/119056366#Comment_119056366

The last recession though didn't have record inflation to go with it. It'll be absolutely ugly for these businesses if it does come to pass.

Wanderer78

https://www.boards.ie/discussion/comment/119055229#Comment_119055229

increasing public debt is the only way out of this, but that probably wont happen, so role on the recession!

Amadan Dubh

The crypto and US equity bubble finally starting to pop (shocking that the COVID explosions in valuations was not sustainable after all!) is going to put a lot of younger people back into the jobs market over the next few months, perhaps alleviating to some extent the labour crisis and its impact on inflation.

Why? A lot of younger people with their crypto and other invetstment portfolios that they built up during covid won't get a recovery in valuation, perhaps ever, and they'll need the cash so will have to get jobs again.

Wanderer78

https://www.boards.ie/discussion/comment/119056620#Comment_119056620

maybe, or maybe many were already simply working, and were using their savings to purchase

Amadan Dubh

https://www.boards.ie/discussion/comment/119056626#Comment_119056626

In alot of cases they were getting PUP to sit at home and not work, then withdrawing from their wallets to top up as PUP was wound down. Now there's nothing left.

Immeasurable in reality how many people would be in this position but just based on my own experience there would be at least a few.

Indestructable

https://www.boards.ie/discussion/comment/119056620#Comment_119056620

Yeah there was a collapse of a supposed stable coin and it's backing yesterday. Terra/Luna. Luna went from a high $116 a few weeks ago to 0.00003 today. Lots of people lost substantial amounts of money and their subreddit was closed with suicide helplines pinned. Not pretty.

Pussyhands

I don't think people grasp yet what is coming.

Listen to US Fed chairman Jerome Powell the other day. They are going to bring inflation down. That is a fact. What happens in the middle of that? Well, it means the amount of money floating around will be reduced. For the every man, it means you won't have as much discretionary spending. But tech companies are doing great, everyones getting 10% rises a year right? The Fed don't want this.

All the people on lower wages not seeing rises in 8% inflation? Well the banks don't want this either. We already see what damage it's doing to the economy with people refusing to work those jobs.

Powell: Some places worse, some places better. We’re facing different challenges, but then again our economy’s more fully recovered, they may be just behind us in time. But what would I say to that person? So I would say that we fully understand and appreciate how painful inflation is, and that we have the tools and the resolve to get it down to 2%, and that we’re going to do that. I will also say that the process of getting inflation down to 2% will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels, and we know what that’s like. And that’s just people losing the value of their paycheck to high inflation and, ultimately, we’d have to go through a much deeper downturn. And so we really need to avoid that.

Then he poured cold water on the idea of a 'soft landing' that so many asset-gatherers and commission-rakers are constant telling investors is likely:

“There are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so,” Mr. Powell said on Thursday.

“So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”

And just a reminder that the ECB, have done NOTHING regarding interest rates yet or signified their path to rates rises. These two central banks are very far apart on their thinking....one of them is very very wrong and I believe it's definitely the ECB.

Danzy

https://www.boards.ie/discussion/comment/119045954#Comment_119045954

The ECB have been off duty for at least 15 years.

Wanderer78

https://www.boards.ie/discussion/comment/119057351#Comment_119057351

both central banks are wrong, both in fact need to rapidly increase the money supply, but to make sure its put to use, and not the usual asset price inflation sh1te, increasing rates will only make matters far worse, as inflation is largely due to supply and energy market shocks, i.e. nothing to be doing with the money supply, raising rates is just further inducing recessions....

Danzy

https://www.boards.ie/discussion/comment/119042236#Comment_119042236

I have been told I'm special and sometimes it was lovingly said.

You were on about people in bars etc. People can be out loads, have a lot saved but still be ground down by inflation.

That was my point. I should not have asked you if you understand economics, that was snarky.

Pussyhands

https://www.boards.ie/discussion/comment/119057366#Comment_119057366

What do you think throwing 350 to people for nothing during the pandemic was????

Freddiestar

https://www.boards.ie/discussion/comment/119035937#Comment_119035937

They're closed, as in closed down

road_high

https://www.boards.ie/discussion/comment/119057065#Comment_119057065

Who’d have ever imagined that this crypto mania would end in tears? Can’t beat nice hard dollar currency and never will.

Kermit.de.frog

https://www.boards.ie/discussion/comment/119057365#Comment_119057365

This is the fundamental problem of the eurozone for countries like Ireland. No control of monetary policy.

The ECB is essentially the Bundesbank. They won't be doing anything to suit our interests.

It's what suits Germany.

No exaggeration to say we are locked in to a prison and we already suffered the consequences of not having our own monetary policy in the previous boom and bust.

This is no different. ECB policies will never suit where we are in our economic cycle.

The next phase of the eurozone crisis is on the way. They got away without one of the periphery falling out last time by throwing German taxpayers money at bailouts. That's not going to happen again.

Subzero3

The EU is limping along and doing its very best to stab itself in the other foot. How they got hoodwinked into bankrolling Ukrianie and turning off the gas/oil is crazy. Its going to get messy for a long time, there's no way out of this inflation trap unless cheaper energy comes and its not going to happen.

riclad

Maybe they are waiting to see does the Ukraine war go on or will there be some kind of treaty from Ukraine giving some land to Russia. There's no magic solution to inflation, rising energy costs cause inflation plus supply chain shortages Putting up interest rates will cause a recession . America is in a much better position it does not directly rely on Russian oil and gas. Some factory's in China are still closed due to covid lockdowns the chip shortage is causing a shortage of some goods that need cpus the cost of transporting basic goods has gone up so company's have no choice but to increase prices central bank experts can learn from history we had boom bust inflation in the 70s 80s , of course if you are a 20 year old zoomer you may not know this and you maybe just take zero inflation for granted so this will be a shock for people under the age of 30

like 20 year old kids don't know a time when Irish people had to emigrate to get a job that's understandable.

zell12

Milk in the multiples shot up overnight

1l €0.95 (+10c), 2l €1.89 (+20c), 3l €2.59 (+30c)

Mooooo

Its likely only the start of it for food. Fertiliser alone has gone up 270% here, and has increased in all major producers, this autumn/ winter things could get serious as due to cost increases supply hasn't increased on farm so food will have the increased cost as well as less supply

road_high

https://www.boards.ie/discussion/comment/119059448#Comment_119059448

The so called “Green deal” is a perfect example of the EU shooting itself in the foot, overburdening citizens and making itself much less competitive. Again

road_high

https://www.boards.ie/discussion/comment/119059713#Comment_119059713

I’m in the agricultural industry and think that’s true- only a fraction of the massive cost increases have actually fed through yet to the consumer- the wheat used for milling for example is all from last harvest stores when prices were relatively stable. They’ll be €400 plus off farm next autumn meaning huge increases to feed through into next winter and beyond. I predict massive political instability

Wanderer78

https://www.boards.ie/discussion/comment/119057626#Comment_119057626

....speaking of which, pandemic supports such as ewss and pup should have never been removed, the economy is far too fragile to do so, and our near future isnt looking terrible good either, more state supports are urgently needed, or we re in for a sh1t show!

Viscount Aggro

It's possible to cut back, at a personal level. You can limit the effects of inflation.

I may sound extreme, but that's because I am. You can go without milk. I always compare price of milk to that of fuel per litre. Food - easy to reduce meat consumption. Toilet paper - again you could wipe it out, cut in half your usage. Driving - I still see lots of non essential driving. Monthly bills - cut everything, cancel direct debits. I looked at my monthly expenses, and 3 out of 4 categories, I am not affected.

People look at interest rate rises as a bad thing. It's not. They are needed to curb people's spending.

Wanderer78

https://www.boards.ie/discussion/comment/119059890#Comment_119059890

...once again, this isnt a money supply problem, but a supply and energy supply problem, increasing rates will not solve these problems, its just gonna make matters much worse, by doing so, we re slowly starving the economy of money, slowing economic activities, increasing the likelihood of recession. this is why increasing the public money supply during covid, and simply giving people the money, pup etc, worked, it increased economic activities, maintaining and in fact creating jobs....

Indestructable

https://www.boards.ie/discussion/comment/119059890#Comment_119059890

It is possible to limit the impact I'd agree. The amount of subscriptions here and there that people sign up to is unbeliveable. Drop Spotify, Netflix, Amazon, Disney, Gamespass, PS Plus and the myriad of others. I don't like how everything is now subscription based. It was grand when it was just Netflix.

Danzy

https://www.boards.ie/discussion/comment/119059713#Comment_119059713

Add in global yield dropping, maize in America down 3 to 4 million acres.

Just one crop in one area, one that was least affected.

HBC08

https://www.boards.ie/discussion/comment/119026756#Comment_119026756

The car industry is nearly a separate case in its own right with the perfect storm of the chip shortage and more so Brexit coupled with plenty of money sloshing about after Covid savings = crazy prices.

It was well flagged on here years ago that Brexit on its own would nearly drive prices to what they are now.

I've accepted it and am lucky that I have a car that I love and its reliable and makes me smile every time I see it.I treated it to a set of new alloys this week and will have it fully detailed next month.The Mrs car is 20 years old but again is a nice old jag that she loves. We're having a full respray done on that.

Doing g little things like this and putting a bit of money into your car is the new buying a car for us.

This situation is not going to get any better in the short to medium term.I really feel for anyone who's car has given up the ghost or whatever reason they have to go looking in this messed up market.

combat14

David McWilliams: Ultimately, uncontrolled inflation will be followed by a recession

interesting article as to where we are headed ..

Patsy167

There was a post on a Reddit thread earlier this week that was very helpful in explaining what is happening in the economy at the moment.

https://www.reddit.com/r/irishpersonalfinance/comments/uo1a1n/whats_going_on_at_the_minute/

Here it is in full:

Central banks turning on the money printers -> Wild speculation in the markets.

Central banks lowering interests to zero -> Even more wild speculation in the markets.

Wild speculation in the markets -> Huge asset bubble.

Huge asset bubble -> **** loads of unsustainable 'high growth' tech companies with zero profits and crippling debts.

While in tandom we also have:

A global pandemic -> Mass lockdocks across the world.

Mass lockdowns -> Totally screwed up supply chains.

Screwed up supply chains -> Vastly reduced supply of goods across the world.

Reduced supply of goods -> Higher prices, aka inflation.

Rampant inflation -> Central banks raise interest rates to try reducce demand, hello recession.

And also:

Russia invades Ukraine -> Major geopolitical crisis in Europe leading to sanctions against Russian gas and oil.

Sanctions against Russia -> Massive reduction in supply of gas and oil (and fertiliser) to Europe, aka an energy crisis.

Energy crisis in Europe -> Spiralling prices of gas and oil, resulting in mass inflation of pretty much everything across all industries.

And don't forget other things like:

Potential global food shortages

Rapidly accelerating climate change

The threat of nuclear war

Brexit

The lingering spectre of Covid

Unaffordable housing in many cities

Pussyhands

https://www.boards.ie/discussion/comment/119060632#Comment_119060632

McWilliams is a hack!

He was saying a few weeks ago that raising interest rates into a recession will be a mistake. And now he's saying uncontrolled inflation will cause a recession?

Amadan Dubh

https://www.boards.ie/discussion/comment/119061389#Comment_119061389

It is a mistake. We should be loading up government borrowing in order to invest in a sustainable economy; rather than borrowing to pay businesses not to trade and employees to stay at home as well as propping up the housing market,we should be borrowing at very low or zero rates to head off a recession and minimize its impact.