Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

[goadam1]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

100% wage inflation.This is awesome news. It suggest an Inflationary boom. I hope so. I wonder how many businesses will see sufficient demand without the undercutting effects of tech and globalization. Maybe an engineer Google wants or Geriatric Oncology will see it. I doubt my business won't . I've had seen lower gross and net for 3 years running. And just think i'll surely be paying at least 7% to 10% more in taxes and fees.

The high inflation modeled here over the years is 100% over six years, with inflation reaching 20% to 30% in the peak year (see Inflation is Dead! Long Live Inflation!, Dec. 2005). The model is informed by periods such as the Mexican inflation you mention, as well as the Russian and U.S. inflation eras. A 100% wage inflation over six years will be sufficient to, for example, wipe out all mortgage debt, and allow for a reset of household balance sheets as did The Great Inflation of 1975 to 1980.

None of our models have every forecast inflation exceeding 30% in a single year.



The article The Face of Inflation that explores the Mexican inflation era you refer to is worth an occasional revisit.

[flintlock]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Fred,

Just wondering how you see wage inflation developing?

Even with a weakened dollar, manufacturers continue to outsource jobs overseas to escape an increasingly onerous regulatory and tax environment. And with what jobs are left, unions seem too weakened to strong arm big raises.

Except for finance and government employees what employees have the power to get 100% COLA raises?

I can't see wage inflation developing. Of course they'll continue the outsourcing trend. Maybe some at the top will see wage inflation, but unless they re-start FIRE, not a chance for the rest . Too many people. Too little need for people vs rapid technology growth combined with outsourcing. We can't grow our way out of this mess anymore. At least not on a global scale. All the US could hope to do is stave off disaster for a while by becoming protectionist about its dwindling blue collar job base( highly unlikely). So I expect a full blown Socialist state by 2012. I Expect higher taxes to more than eat up any wage inflation anyway.

Glad you brought up the outsourcing along with increasing taxes and regulations. That is a vicious cycle. Lowering taxes on business and easing regulations would indeed help save jobs here. But now we see why deficit spending is bad. We can't AFFORD to lower the taxes now. The credit is maxed out. Ross Perot was right way back when he ran for President. The deficit would catch us one day with our pants down.

[BiscayneSunrise]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Fred,

Just wondering how you see wage inflation developing?

Even with a weakened dollar, manufacturers continue to outsource jobs overseas to escape an increasingly onerous regulatory and tax environment. And with what jobs are left, unions seem too weakened to strong arm big raises.

Except for finance and government employees what employees have the power to get 100% COLA raises?

[FRED]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

It all depends on definitions. Most of the people that have called hyperinflation are thinking of Zimbabwe or Argentina or Weimar Republic. I've posted here the term "rampant inflation", that is the one we had here in Mexico from Dec. 1973 to Jul. 1997. My personal definition about it marks a 20% sustained yearly inflation as a minimum, and a maximum of about 200%.

The high inflation modeled here over the years is 100% over six years, with inflation reaching 20% to 30% in the peak year (see Inflation is Dead! Long Live Inflation!, Dec. 2005). The model is informed by periods such as the Mexican inflation you mention, as well as the Russian and U.S. inflation eras. A 100% wage inflation over six years will be sufficient to, for example, wipe out all mortgage debt, and allow for a reset of household balance sheets as did The Great Inflation of 1975 to 1980.

None of our models have every forecast inflation exceeding 30% in a single year.

And, for people thinking right now in getting to Mexican Pesos due to recent strength, the only ones I recommend are the ones defined in the 1905 monetary law, and shown by EJ at the beginning of this thread, and yes, my gold stash is in that form.

The article The Face of Inflation that explores the Mexican inflation era you refer to is worth an occasional revisit.

[ocelotl]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

We have never, ever, even once forecast hyperinflation. High inflation, yes. Hyperinflation, never. Collapsing dollar? Never. Falling dollar, repeatedly since 1998.



There is an entire thread documenting instances of this type of inflation here: Inflation snapshots: December 2009

It all depends on definitions. Most of the people that have called hyperinflation are thinking of Zimbabwe or Argentina or Weimar Republic. I've posted here the term "rampant inflation", that is the one we had here in Mexico from Dec. 1973 to Jul. 1997. My personal definition about it marks a 20% sustained yearly inflation as a minimum, and a maximum of about 200%.

And, for people thinking right now in getting to Mexican Pesos due to recent strength, the only ones I recommend are the ones defined in the 1905 monetary law, and shown by EJ at the beginning of this thread, and yes, my gold stash is in that form.

[Jaminon]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Long time listener first time caller... I am UK based and now finally able to take some modest positions and have a couple of questions; Gold: Is this a level ($1134) still worth getting in at? If yes, what is the best ETF to use? What’s a good percentage for gold in a portfolio?
RMBY exposure/Chinese bonds, seem like a good idea? Any other happy thoughts towards building a portfolio today? Many thanks

[ThePythonicCow]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Anyone want to clue me in?

Sorry, mate. There seems to be a world-wide clue shortage. I'm suffering from it here as well.

[Chris Coles]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Please stop with the "inflation is showing up in the quality of food and restaurant meals". This is the most bizarre assertion I have ever heard regarding inflation and it is also the opposite of what is occurring. Do you ever shop? Every store in the country is having the equivalent of a going out of business sale. The prices on literally every item I can think of is savagely discounted and I have yet to see ONE credible story of reduced quality from yourself or an Itulip member.

Well I call: My experience here in the UK is that reduced quality is exactly what is happening. Sainsbury's are an excellent example. Their "Greens" now come in the same package but with about 20% less cabbage in the pack. (for example). I could list many examples. I live alone for the time being and have to do all my own shopping. Reduction in quality, or quantity is happening all through the food industry. My first instance was Turkey burgers, that I used to like with 56% turkey, but when they reduced the turkey to 42% and removed the fresh herbs and replaced them with chemical taste effects I went right off them and have not returned again. Moreover, the manufacturer has moved the entire production facility to Poland and foisted their new product on them as something new to be enjoyed. Poor sods, they too will have a shock when the burgers end up with 30% turkey....

I can only speak for myself, but where I am, today, there are many signs of lower quality or quantity throughout the food industry.

[jiimbergin]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Me. I've been caught with my pants down on this mess. I built a big cash position from 2006 until now. Waiting. I have about 5% in pm, 20% in some combo of blue chips and multi-nationals (mostly my small business retirement account that has to be passively managed), 5% energy/agriculture and the rest cash (cds, short term tax free munis). Not a great spread. What should I have done? In the Ka I should have bought more metals and dare I say corporate bonds. So the result is those who came of this mind early and sit 30% pms feel pretty okay. I was so caught up in crash mode I missed the boat. I did buy paper gold, some energy and some more blue chips.

I also came in late (I did have a small amount of gold and junk silver left from the late 70s that I never sold), but I have managed to get up to about 40% of my net worth (not counting my real estate) in pm. Only about 12% in physical, the rest in GTU and CEF. I have an additional 10% in GLD and SLV for trading purposes. I keep buying physical often, in fact some just arrived today from APMEX. I am sure I will be buying more physical in the next few days.

[Spartacus]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

You couldn't make this up.

Looks like I've unwittingly made a joke. Or was my attempt at not naming names too convoluted & twisted? (and everyone thinks they know the names anyway). I can be dense sometimes, especially when sleep deprived.

I hope I'm not its butt.

Anyone want to clue me in?

[cjppjc]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

I'm trying to stay out of it, but it sucks me in! I just deleted a smarmy reply to this thread about 30 minutes ago but you tempt me cjppjc! ;)

You certainly show more restraint than I do. The best is earlier predictions are turning out well. And Nero3 with his sugar and railroad calls is no longer heard from.

[Jay]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

You couldn't make this up.

I'm trying to stay out of it, but it sucks me in! I just deleted a smarmy reply to this thread about 30 minutes ago but you tempt me cjppjc! ;)

[cjppjc]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Spartacus - Just my two cents, but if you were any more arch in your (uncannily infallible!) identification of all the knee jerk time-wasters among us, you'd be bending over into a pretzel.

heh ... I wasn't trying to be cute ... names not needed as I feel no need to explicitly insult anyone

Besides, no one that I plonked for that particular reason is still posting here (they may be reading of course)

You couldn't make this up.

[Spartacus]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

Spartacus - Just my two cents, but if you were any more arch in your (uncannily infallible!) identification of all the knee jerk time-wasters among us, you'd be bending over into a pretzel.

heh ... I wasn't trying to be cute ... names not needed as I feel no need to explicitly insult anyone

Besides, no one that I plonked for that particular reason is still posting here (they may be reading of course)

[Jay]

Re: Asylum Markets of the post FIRE Economy – Part I: Locked Up - Eric Janszen

The best "investment" you can currently make is to obtain citizenship in a civilized country and have an escape plan.

I always wonder about those with this sentiment. It strikes me as escapist and depressing. Do you have no family, no friends, no community? I am here in the US for the long haul. I'm going to play it as well as I can financially, while living amongst my friends and family. I hope wherever you run to the grass is greener.