Bob Brinker Free Discussion Site 59,820+
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» bbaddict - Re: Re:
In response to Re: posted by jamesj24:I don't understand why higher oil prices is not inflationary. Bob has said that many times on the program, and he has been right. There has been no evidence of inflation caused by the higher prices.
The only explanation I can think of is that consumers are at the brink of insolvency. That they have little discretionary income left. They MUST buy the gasoline to get to work. So if their gas cost goes up $50 per month, then they must take $50 out of their discretionary spending. So, it slows down the economy.
If they had plenty of discretionary income, they would buy the more expensive gas, and still buy the new barbeque from China. So, overall, their costs would rise.
Currently, the higher fuel costs are coming out of spending elsewhere.
So, could the same be said about the goods from China? If the cost of the Chinese products go up 25%, will consumers just buy 25% less?
This leads me back to trying to figure out the real estate market, and if the bubble will burst. If consumers are really at their spending limit (and all counts say they are...A median income earner cannot buy a house in many places. They resort to interest-only, adjustable rate, etc. to make ends meet), then a rise in housing costs must come out of other spending. If there is nowhere left to cut spending, then they must sell the house, or walk away from the mortgage.
If this is the case, rising rates (from the Chinese not buying as many bonds, and the weaker dollar) and rising costs of Chinese goods will slow the economy, or burst the bubble. This will lead to lowering the rates again.
Where is the equilibrium?
-- posted by bbaddict
» bbaddict - Critical Mass
I am not at critical mass, but I think several of you are. I wonder if you can share any of your experiences?For one, were there any surprises? Did you get bored, and go back to work? Were any of your expenses (travel, entertainment, etc.) more or less than planned?
Let's say a person has no mortgage (or rent), no car payments, etc. They of course still have property taxes, insurance, medical costs, food, utilities, travel, entertainment, and windsurfing. Any insights into how you budgeted for these? Obviously, a simple budget is rather easy, but any surprises?
-- posted by bbaddict
» bbaddict - Re: Oil
In response to Oil posted by Jeremy77:Brinker has stated that the price of oil, risk- adjusted for inflation, is the same as in 1990.
Yes, but in he recent past, oil has risen dramatically faster than the inflation rate. In the past 2 years, this spike in oil costs did not show up as any spike in inflation.
If oil prices go up, AND cost of discretionary (Chinese) purchases, AND rates, something's gotta give. I think it spells slowdown.
-- posted by bbaddict
» Normxxx - Re: Critical Mass
In response to Critical Mass posted by bbaddict:My biggest reaction was one of relief and well-being. I really began to enjoy life and nothing at work (or even in my private life) much bothered me anymore. I slowed down my lifestyle, and stopped to smell the roses. In fact, I began to enjoy my work so much that I postponed 'retirement' for several years. I can't say 'retirement' has changed my lifestyle much, except that I spend much too much time on Kirk's site!
Obviously, CM must allow for property taxes, insurance, medical costs, food, utilities, travel, entertainment, and windsurfing. But the only (potential) killer is medical costs. The best thing to do here is to try to spend the last few years of your career with the Federal Government or with a generous State Government. That's my best suggestion. Also, if you want to be considerate of your heirs, get some LT Care insurance.
My backup plan was always to comit some Federal crime and be sent to a minimum security Federal pen. Conditions there are not so bad; you get your three squares and medical for life, or as long as you remain there. It's probably better than most nursing homes.
-- posted by Normxxx
» Jeremy77 - Re: Critical Mass
I haven't been bored, but then again, I never had a job I loved. So it was easy retiring. I never traveled much while working, mainly short trips. I'd like to travel throughout the U.S. I'm not really adventerous but I'd really like to go tornado chasing. (Without anyone getting hurt). There are "Tornado chasing vacations," sounds a little strange. Even though I have plenty of $, I still look for bargains. Don't use heater, except maybe a little in winter. Gas and electric never more than $50. This month,$17. Of course, it helps being in S.F. Shop at Costco, etc. Eat out occasionally. Some people don't realize how expensive it is to eat out.( $ goes a long way at Costco, Trader Joes etc), healthy food also. Luckily not into expensive clothes, cars, etc. Just bought first new car, Toyota Corolla. Own a home outright in S.F., prop. 13, low prop. tax. Presently have 60% in Fidel. Total St. Mkt. Index, 10% in Internat. Index, 30% bonds. Will probably move 10-20% more to bonds in near future. Medical keeps going up, I'm in early 50's. I have Kaiser, min. 10% increase ea. yr. Really jumps at age 65. ( then Medicare, S.S., medicaid also, hopefully). Have always paid off credit card ea. mo. Have never lived beyond my means. Now I could, still don't. Not materialistic, I guess. Still can have a good life without too many frills. Would rather have $ to leave wife and son when pass., hopefully not from 1st tornado chas. trip. I don't use more than approx. 4% of savings ea. year. $ should cont. to grow this way. Exercise everyday, more energy. Luckily started dollar cost ave. into market at early age. Also started same for my son when he was 2 yrs. old. Haven't told him what it's worth yet, he's 17.-- posted by Jeremy77
» Normxxx - Re: Re: Critical Mass
In response to Re: Critical Mass posted by Jeremy77:Haven't told him what it's worth yet, he's 17.
Very astute. If at all possible, keep it from him (or under constraints) for at least another 13 years or so, depending on his maturity.
But, medicaid? How do you qualify for medicaid if you are at CM?
-- posted by Normxxx
» Moe_Berg - Re: why higher oil prices is not inflationary
In response to Re: Re: posted by bbaddict:Many economists suggest that inflation is a monetary phenominum where the growth in money, including outstanding credit, exceeds the growth in the supply of goods and services. In theory, if the growth in the supply of money, including credit, remains constant in relation to the growth in goods and services, then an increase in price of a singled out item such as oil would be offset by a price decrease in one or more other items. Thus the supply of money, including credit, is ultimately spread over all goods and services on a market basis.
Cappish?
-- posted by Moe_Berg
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