Is inflation really hiding?

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redfan11
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Is inflation really hiding?

Post by redfan11 » Mon Mar 16, 2020 7:45 pm

Many so called experts FWIW are predicting the COVID-19 related downturn will last 1-2 quarters and rebound by Q3/4. My question is, if there were to be this big boom and catch-up growth, given the easy liquidity/low interest rates, could inflation rear its head again?Am I making a mistake by tying up money in CDs?

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fredflinstone
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Re: Is inflation really hiding?

Post by fredflinstone » Mon Mar 16, 2020 8:12 pm

The bond market seems to think that deflation is more likely than inflation, but anything is possible.
Stocks 28 / Gold 23 / Long-term US treasuries 19 / Cash 22 / TIPS 8

Thesaints
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Re: Is inflation really hiding?

Post by Thesaints » Mon Mar 16, 2020 8:15 pm

redfan11 wrote:
Mon Mar 16, 2020 7:45 pm
Many so called experts FWIW are predicting the COVID-19 related downturn will last 1-2 quarters and rebound by Q3/4. My question is, if there were to be this big boom and catch-up growth, given the easy liquidity/low interest rates, could inflation rear its head again?Am I making a mistake by tying up money in CDs?
The liquidity is easy for the banks; not for you. That doesn't tend to drive the CPI-U index.

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Portfolio7
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Re: Is inflation really hiding?

Post by Portfolio7 » Tue Mar 17, 2020 12:11 am

I wouldn't give Ed Yardeni too much credit (I'm guessing he's one of the pundits you're reading). He's a smart guy, and I'd love for him to be right, but he's talking perceived odds regarding something that none of the pandemic experts can predict with certainty right now.

If you're worried about inflation, I understand there's a nice sale on ebonds right now. Not a recommendation, just an observation.

If you want some advice, move slowly. Understand what you're doing before you do it. Asking other people for AA advice is dangerous because if you don't understand and believe in your AA, it will be harder to hold on to in times like these. Best of luck.
"An investment in knowledge pays the best interest" - Benjamin Franklin

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willthrill81
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Re: Is inflation really hiding?

Post by willthrill81 » Tue Mar 17, 2020 12:44 am

fredflinstone wrote:
Mon Mar 16, 2020 8:12 pm
The bond market seems to think that deflation is more likely than inflation, but anything is possible.
And deflation is what makes the Fed really quake in their boots. The main reason that the Fed has targeted 2% inflation is in order to stay away from deflation. It leads to downward spirals that are extremely difficult to stop.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Thesaints
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Re: Is inflation really hiding?

Post by Thesaints » Tue Mar 17, 2020 1:02 am

It also reduces the national debt by a quarter in 15 years...

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