If most people already own houses, then why are prices increasing so much? Since demand is ostensibly low (after all "most people already own houses"), and supply isn't decreasing, why are prices soaring? My contention is that it's due to the federal reserve printing dollars like there is no tomorrow.
Yes. Now multiply that by the % of income people spend on energy and you get what?
So if energy really isn't that big a deal, why is it usually excluded from the "offical" inflation numbers?
But I'll answer your question. Let's assume $150 a month for your typical household energy bill, and $150 a month for gasoline. That's $3600 a year, and that's not including higher prices on other goods as a result of the increased cost of energy. That's a lot of money.
Yeah, I heard copper was up big. And how much copper does the average consumer use each year?
The AIG commodity index is 6% copper. The other 94% of "stuff" is increasing in price also.
Now if you are correct, why are long term bonds yielding well under your 6% to 10% numbers? Real interest rates would be -1.5% to -6%. Not very likely over the long term.
I don't understand why the bottom hasn't fallen out of the bond market yet. Perhaps because millions of Americans keep blindly buying them via 401ks and other "investment" (LOL!) plans. Personally, I would not want to be holding any bonds right now.
Home ownership is about 75%. If 1,000,000 new units are built but 2,000,000 families want to buy, prices will rise. A big boost was the cap gains exclusion passed in 1997.
So if energy really isn't that big a deal, why is it usually excluded from the "offical" inflation numbers?
Energy is included in official CPI.
But I'll answer your question. Let's assume $150 a month for your typical household energy bill, and $150 a month for gasoline. That's $3600 a year, and that's not including higher prices on other goods as a result of the increased cost of energy. That's a lot of money.
Fine. If prices rise 10% that's $360 a year. Doesn't add up to 10% inflation.
The other 94% of "stuff" is increasing in price also.
I heard plutonium is up big. I haven't use much of that lately either.
Personally, I would not want to be holding any bonds right now.
Me neither, but people who make a living trading this stuff have a lot more information than you and if inflation was "really" 10% they'd be selling the shit out of bonds.