Investing General Discussion

Flobee · 2025-07-01T19:02:44-0400

Inflation rate matters, but it's not really useful to compare today to the 70's in this way because there is one massive difference. In the 70's we were able to find buyers for our debt via the petrodollar agreement. A similar agreement is unlikely today. If there is someone willing to buy the negative yielding debt you can absorb inflation. If no one buys the debt you're in real trouble.

That's the stablecoin play via the Genius Act. They're going to try to destroy the off shore dollar market and replace it with stablecoins which are backed directly with US Treasuries. In other words offloading the negative yielding debt on poor in hyperinflation states.

Stablecoin companies are happy to buy the debt because they can plow the yield into Bitcoin and come out ahead massively. Go take a look at Tethers balance sheet sometimes... They only have like 20 employees and their profit is in the billions. I don't think this saves the US debt as a reserve asset, but it may extend the runway for currency status

Fucker · 2025-07-01T19:42:57-0400

Cad said:
Whatever level it is or has been, it's a fraction of what happened in the 70's and 80's, and we came through that?

Inflation surged in 2021 and 2022, reaching a high of 9.1% in June 2022, the highest since 1981, as measured by the Consumer Price Index (CPI). By December 2022, it was 6.5%, and it declined to 3.4% by December 2023 and 2.9% by December 2024. As of May 2025, the CPI inflation rate was 2.4%, with core inflation (excluding food and energy) at 2.8%.

The 1970s saw sustained high inflation, with peaks of 11.0% in 1974 and 13.5% in 1980 (CPI-based). The early 1980s also saw elevated rates, with inflation hitting 10.3% in 1981 before declining sharply to 3.2% by 1983 under aggressive monetary tightening. Inflation was higher (up to 13.5% in 1980) and more persistent, with elevated rates throughout much of the 1970s and early 1980s.

Wages for middle class and lower also flatlined after that. Inflation becomes a serious problem when the average household can't pay for anything, which is happening now. Fed adding 50% more money to the supply since 2019 has greatly outpaced wage increases which people are trying to counter with debt. What's next? Bolstering family income by sending Little Jimmy to the coal mines? Families were able to counter inflation in the 60's-70's by sending Mom to work, but that won't work now.

Gonna have a big problem when 67% of the working population needs cash infusion from Uncle Sam just to put ramen on the table.

Cad · 2025-07-01T20:12:39-0400

Lightning Lord Rule said:
I don't know why it's valuable to compare the 2 eras, other than the accuracy of the numbers involved, since the 2 eras are totally different. The debt's different, the demographics are different, geopolitics is different, monetary policy goals are different, etc etc.

If you're asking me if I think that the fact we got through worse inflation 40 years ago means we'll get through equal or slightly better inflation (by rate) this time, I don't see how you can say that with confidence.

I think to know the results of a thing happening you can look at previous instances of that thing happening.

Haus · 2025-07-01T20:43:18-0400

Cad said:
Okay, so lets just narrow it down a little bit. Are you saying the post-COVID inflation is worse than the 70's/80's inflation or no? Or are you saying it's impossible to know?

Some of it is that they have done the same thing to CPI that they have done to unemployment numbers. They keep making changes to what is counted and what isn't. Right now, IIRC , CPI is calculated off a "basket of goods" and they won't really tell people what's in the basket, but we do know some large swaths of what people spend money on aren't counted. With unemployment they have several different ways to measure it (I think it's something like the u-1, u-2, u-4, u-6 numbers).

For instance they made some major changes in 1980 to how they calculated things (which did wonders for how well Reagan ended up looking). And you can see charts of "if they still calculated it like 1980" here...

Alternate Inflation Charts

www.shadowstats.com

For unemployment the big changes were made in 1994 : Alternate Unemployment Charts

Haus · 2025-07-01T20:45:10-0400

Flobee said:
Inflation rate matters, but it's not really useful to compare today to the 70's in this way because there is one massive difference. In the 70's we were able to find buyers for our debt via the petrodollar agreement. A similar agreement is unlikely today. If there is someone willing to buy the negative yielding debt you can absorb inflation. If no one buys the debt you're in real trouble.

That's the stablecoin play via the Genius Act. They're going to try to destroy the off shore dollar market and replace it with stablecoins which are backed directly with US Treasuries. In other words offloading the negative yielding debt on poor in hyperinflation states.

Stablecoin companies are happy to buy the debt because they can plow the yield into Bitcoin and come out ahead massively. Go take a look at Tethers balance sheet sometimes... They only have like 20 employees and their profit is in the billions. I don't think this saves the US debt as a reserve asset, but it may extend the runway for currency status

*coughcough*There's something ELSE that also happened in 1971...*coughcough*

WTF Happened In 1971?

https://inflationdata.com/articles/2022/08/10/u-s-cumulative-inflation-since-1913/ "I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly...

wtfhappenedin1971.com

Lightning Lord Rule · 2025-07-01T21:59:27-0400

Cad said:
I think to know the results of a thing happening you can look at previous instances of that thing happening.

If all other things are equal, sure. But that isn't the case.

But I'm all ears for all the other reasons you might find to dismiss Blazin's assessment of sustained 5% inflation going forward as untenable.

Rangoth · 2025-07-01T22:03:25-0400

Lightning Lord Rule said:
At what point do you think the level of inflation breaks things beyond repair?

As in, say we've had X amount of inflation in the last 15 years. If we get 2X, 3X, or 4X (or more) that inflation over the next 15 years, would that be enough to break things? Where do you think the threshold might be?

I'm just thinking of the 'hyperinflation' case that some of the prognosticators out there think might be on the horizon within the next 10 years.

Spitballing but I think nothing short of a cataclysmic world wide event could tip it. We'll see inflation, we'll see numbers go up, but it will never collapse so long as the US is the world power and the dollar is the holy gospel.

Things that could break it?

A true US collapse. I don't mean recession, I mean collapse
Not sure of the number but the dollar no longer being the world reserve and something like 25%+ countries trading in something else, especially major countries
WW3? A real one not missiles from isreal

Stuff like that would trigger a true, "cant come back" scenario. But as others have said if that happens your SPY portfolio is probably the least of your worries. Anything else and we just bully our way into the right angle honestly. That is where things like bitcoin or stocks matter most. Because even if the dollar turns to total shit you don't have dollars, you have units of a thing. If you can(assuming you could) sell those units of a thing for 1 million <insert other currency/option and pretend a million is big> then it really doesn't matter, does it? You have a million "shitbucks" which buy the things you buy today.

All that matters is buying power, not dollars. We think in dollars because well...the world does, its obvious, clear, easy to understand, and for the most part...true. But really its buying power. I want to order shit off amazon and I dont really fucking care if its dollars. I care that its x of <a coin> and I have a million of <a coin> so it's not a big deal.

Furry · 2025-07-01T22:08:47-0400

I think the chance of hyperinflation in the next 20 years is close to zero, but not impossible. Long term sustained inflation higher than everyone would like? That sounds fairly likely.

I just don't thing systemic problems will bear their head quickly in an economy the size of the US's. We got plenty of hole we can keep digging ourselves into before we're truly fucked.

tugofpeace · 2025-07-01T22:27:41-0400

Furry said:
I think the chance of hyperinflation in the next 20 years is close to zero, but not impossible. Long term sustained inflation higher than everyone would like? That sounds fairly likely.

I just don't thing systemic problems will bear their head quickly in an economy the size of the US's. We got plenty of hole we can keep digging ourselves into before we're truly fucked.

People throw around the H word too easily, not realizing it means 50% inflation month over month

Furry · 2025-07-01T22:40:26-0400

tugofpeace said:
People throw around the H word too easily, not realizing it means 50% inflation month over month

Yea, its incredibly unlikely. The only reason I can't say is zero is because I trust our political elite to be stupid enough to achieve such an unlikely outcome.

Arden · 2025-07-01T22:49:16-0400

Furry said:
I think the chance of hyperinflation in the next 20 years is close to zero, but not impossible. Long term sustained inflation higher than everyone would like? That sounds fairly likely.

I just don't thing systemic problems will bear their head quickly in an economy the size of the US's. We got plenty of hole we can keep digging ourselves into before we're truly fucked.

I.e. plenty of time to transition away from the dollar. Agree that we aren't facing imminent collapse, but we are going to get a snowball effect as more people realize this and we drift into an autocatalytic cycle. This is especially true as it becomes more obvious that there is an easy, already established life raft to flee to.

Haus · 2025-07-01T23:55:12-0400

Rangoth said:
Spitballing but I think nothing short of a cataclysmic world wide event could tip it. We'll see inflation, we'll see numbers go up, but it will never collapse so long as the US is the world power and the dollar is the holy gospel.

Things that could break it?

A true US collapse. I don't mean recession, I mean collapse

Not sure of the number but the dollar no longer being the world reserve and something like 25%+ countries trading in something else, especially major countries

WW3? A real one not missiles from isreal

Stuff like that would trigger a true, "cant come back" scenario. But as others have said if that happens your SPY portfolio is probably the least of your worries. Anything else and we just bully our way into the right angle honestly. That is where things like bitcoin or stocks matter most. Because even if the dollar turns to total shit you don't have dollars, you have units of a thing. If you can(assuming you could) sell those units of a thing for 1 million <insert other currency/option and pretend a million is big> then it really doesn't matter, does it? You have a million "shitbucks" which buy the things you buy today.

All that matters is buying power, not dollars. We think in dollars because well...the world does, its obvious, clear, easy to understand, and for the most part...true. But really its buying power. I want to order shit off amazon and I dont really fucking care if its dollars. I care that its x of <a coin> and I have a million of <a coin> so it's not a big deal.

Of those three options I think the most probable would be the emergence of a solid alternative for reserve currency and trade usage. BRICS is feigning at it. China and Russia are both stockpiling non USD assets, more and more countries are settling business without translating things into dollars. To some degree that train is coming. And if it arrives full force then the US suddenly has to really start thinking about debt reduction and control as the days of super cheap borrowing on the open market will dry up if other countries are buying US Treasuries.

From a "What can we do to win this?" standpoint, I think the biggest advice is to have some exposure in non-depreciating assets that aren't dollars. (Real-estate, crypto, gold, possibly other hard assets) And use those as a hedge against dollar devaluation. This year is apparently the worst year (so far) for the US dollar in terms of depreciation since the end of the gold standard in the early 70's.

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Investing General Discussion

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Alternate Inflation Charts

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