Inflation is hurting many!

Inflation is hurting many.

 

Yes it is. I think it's a temporary phenomenon. Once the Ukrainian war is over and Russia starts trading in oil and gas again the situation may stabilize. Prices probably won't go down to where they were though. We have had nearly zero inflation since at least 2008. That scares Central Bankers because deflation is a realistic threat. Now we're getting inflation in sizeable chunks but not really as serious as people seem to think. I remember the inflation of the Seventies. This is nothing like that. Nearly 14%!

 

Keep in mind that official core inflation doesn't include food or energy. Those prices are said to be too volatile.

 

They called it "Stagflation." A stagnant economy with high interest rates and high inflation. For now, anyway, this ain't that. Wages are rising, supply chains are repairing, the nation is at practical full employment. Yes, the situation in Ukraine is destabilizing, and increases in oil prices do bleed into increases in goods and services across the board.

 

It looks to me that a lot of the current inflation is driven by corporate greed. There's always been some of that, but this round of inflation appears to be umm- special. Worst by far are corporate landlords, but every outfit with two or more stores has taken to charging whatever they can get away with. That's not new of course, but in recent times, the amount they can get away with seems to have increased. Particularly ANY kind of food. And when you ask -- you get the strangest tales.

(1) I remember asking a supermarket manager why apple prices were so high. "Transportation surcharges," he moaned. "They're killing us." So I had a look. The cheapest apples came from NEW ZEALAND. The most expensive? From just outside Grimsby - nine miles from the store!

(2) A long time ago, I asked a grocery manager why the price of a can of baked beans had gone up 30% in one go. He said "Uh, well -- beans have a lot of protein, y'know -and protein is expensive right now --- So I asked another manager and he had the right answer. The price of beans from the farm had gone up a great deal, and it was set by the Ontario Bean Producers' Marketing Board. OK - at least I knew why.

I think the prime qualification test of a retailer is telling the BS stories they do -- and passing a lie detector test while telling them. They can do that -- they're Corporate Management material.

 

That.

The way for that to end is for people to change their buying patterns and habits.

 

While interest % is going up the banks are not raising the interest on savings and CD's.
Some IRA's and 401Ks are down in 2022.

 

Yes - but that's nowhere near the whole answer - and I don't quite know what is. Any change in buying etc. has to be the decision of a lot of people - and a meaningful, significant change, to accomplish anything. There also comes a point of irreducibility. You quit buying meals out, you cut down your grocery bill, cable is gone, younbuy less clothes and everything else, you hold onto your car forever etc. - it's been working to some extent... and then your rent goes out of sight. God forbid someone gets sick or loses their job - you're homeless. Not fun.

The thing that bugs me the most is - there are many, many people who could have bought a house, if this were the old days. Back then, anyone with a reasonable income could buy a house. Maybe you sacrificed a wee bit - didn't go out so much for a year or so and zap - you had a down payment of sorts and that got you in. That's no longer possible. There are many people who will work all their lives and the only way they'll ever get a house is to inherit one.

It's wrong. And it's not just the US or Canada. It's all over. A fundamental family purchase -- that many families will never make.

 

PS - I'm not talking, in my previous post about wasters - those who, though they have little money still smoke, drink significant amounts of alcohol, spend frivolously on things they can't really afford, max out their cards etc. I care as little about what happens to them as they apparently do. I'm talking about people who've already tightened their belts as far as it's practical to do, without injury. And there are millions -everywhere.

My parents and millions of others from UK and numerous other countries came here in the 50s and 60s from places where they could not afford to buy a home. They came here because that was possible for ordinary people. There was even a popular song in Italy - the title translated as "A Little House in Canada."

That dream has disappeared. It's no good to me at almost 80, and I've owned two houses in the past. Selling the last one was my decision - a bad one, it turns out - but I'll take the rap for that. But I STILL WANT the dream back - for others. This is a far poorer country without that dream.

I think corporate greed played a large part in the disappearance of that dream.

 

They're raising rates here -- but not enough to make a difference. Still way behind inflation. What they're offering isn't investment -- it's parking. I've come to like the Islamic approach - I don't pay interest (pay what I owe in full every 30 days) and I don't collect it. There are plenty of ways to do that and plenty of Islamic compliant companies, here and abroad to invest in. All a company really has to do to be suitable for Islamic investment is NOT to be in a prohibited industry, pork, alcohol, gambling, porn, arms / armaments or a few others, keep its debts to within 30% of capital and not make any significant income from interest. That's basically it. Lots of variety - plenty of halal (ritually clean) mutual funds etc. A very few based in Canada, lots more in US.

Religiously (or not) I'm an atheist -and I sleep well.. Financially - I go the Islamic route. I sleep even better.

 

Good point - and good simile, Steve. I'm better informed - and even unhappier now. Thanks. Some more useful sayings:

(1) If you can keep your head while all others are losing theirs - then you've totally failed to grasp the seriousness of the situation. (Apologies to Rudyard Kipling)
(2) It's always darkest before it goes totally black. (Apologies to Lovejoy - played by Ian McShane)

 

Right. Brit TV is usually good. Plays to a different (higher) mental age than North American TV.. Not because North Americans are dumb - it's just our Networks' policy because they think we are.

 

@SteveFoerster Do you remember "Beth Taylor," (Diane Parish), Lovejoy's apprentice / co-op student in 1993-1994? Here's an old pic from those times. She's done very well and has now spent 15 years as "Denise Fox" in the long-running night-time soap - "East Enders." That show runs over here, too.
http://yertiz.co.uk/girl-90s-tv-show-lovejoy-now-eastenders/

Amazing amount of things she's done since Lovejoy. The Wiki has a list.
https://en.wikipedia.org/wiki/Diane_Parish

And just because I've liked her since 1993 (the year I retired) here's another page with pics.
https://www.heart.co.uk/showbiz/tv-movies/eastenders/denise-fox-how-old-diane-parish-married/

And now, back to our regular programming. ..... INFLATION!!!

 

"Abu Bakr ibn Abi Maryam reported that he heard the Messenger of Allah say: “A time is certainly coming over mankind in which there will be nothing (left) that will be of use (or benefit) save a Dinar (i.e., a gold coin) and a Dirham (i.e., a silver coin).”

You heard it here, folks... and you'll note neither Abu Bakr nor the Messenger of Allah said "there will be nothing of use save a Bitcoin or a Dogecoin." I think that stuff is crazy.

 

How does an "e-coin" have any actual weight - or were you assigning a value equal to the prescribed weights of gold (dinar) and silver (dirham). The gram weights are easy, but those mithqals and grains of barley --- hard to work with, these days. Can you find a scale that weighs in mithqals any more?

Steve, was that when you were working with the people who brought out the Kelantan dinars and dirhams in Malaysia? I looked for them a few years ago - couldn't find ANY to buy. I'm guessing the project stalled after a while. There seemed to be dealers carrying them for a little bit, as far afield as London - and then --- not.

Yes - I know that Muslim finance people and religious authorities have been working on crypto - and fatawa (plural of fatwa) have been declared for some. There's yet another gold-backed one. The trouble with those has always started when somebody moseys off into the sunset (or in this case, maybe the desert) with the gold, or it's found not to exist in the first place. Gold-backed crypto doesn't have a very pretty history. I've read some of it.

I don't trust in crypto - Islamic or otherwise - any more than I trust in tulips. To me, it appears to have a strong element of gharar - gambling / speculation, which is forbidden to Muslims. It appears in this case they are developing ways to get around that. It's not forbidden to atheists like me, but I forbid it for myself anyway. I try to avoid gambling for exactly the same reason I've avoided drinking for a lot of years now. I know me - and I know I could get carried away by either. I have weaknesses and I know them. So I stay strong by avoidance. It's easy. No trouble at all. At first I thought it might be - but it wasn't. I have no idea why.

And a dhow or felucca (boats) full of fatawa won't make any difference to me. I think what is being done MAY have an element of rationalization. There's a need to "get with the program;" nobody wants to "miss out." Sometimes, extremely complex structures are created to facilitate new Islamic financial instruments. As I see it, that's the case with 'sukuk' (sing. 'sak') - "Islamic Bonds." The premise is that payments made to the holder are not interest. They are a "share of the profits made by the underlying assets." OK. If they say so. But if it walks like a duck, quacks etc. .... I hold a smallish amount of halal investments, but not sukuk. I have fund shares that represent equity in companies that meet shari'a provisions for investment. They're not interest-bearing, period. Sukuk are really complex. Here's an overview. https://www.lw.com/thoughtLeadership/guide-to-structurings-sukuk

There are trillions of dollars' worth of sukuk. I hope that the holders will be rewarded - but I don't think they're for the little guy - like me, yet. I'm happy with my old-fashioned halal fund that holds securities that are primarily headquartered outside the Arab world - but comply with shari'a provisions. They're stuff I understand. YMMV.

 

PS - Confession here. I said no gambling. Right - I've never even been inside a casino - or in a back-room card game. That is easy - because I've never liked card games. Reason: I suck at them. But there's something I overlooked. I'll 'fess up to the fact that I spend something less than $10 on lottery tickets, most weeks, which is stupid. I quit even those for years and years and I don't know why I started again. So there you have it - my one dumb exception to the no gambling rule.

And back around 1970 I went to a racetrack once. I took $10 I decided I could afford to lose - and promptly lost it. That cured me. End of confessions.

 

Depends on what you're buying. If it's the thrill of playing, that's your call. If it is to win, then yeah. The EV (expected value) of a $1 lottery ticket is only about $.65. (The currency doesn't matter.) But, you'll lose your money a lot faster than that since that $.65 is paying a few winners against a ton of losers. (Unless you're the rare winner, of course.) But it can go a whole lot lower.

In Nevada, the legal limit on the "house vig" (house advantage) is .25 (25%). And you only see that hit by a few games (like Keno). In contrast, blackjack--properly played with perfect basic strategy--is between .5% and 4%. This depends on how favorable (or not) the rules are. The vig on sports betting is 10% (you bet $11 to win $10). That's why in all such games, the key isn't the game, but getting people to play. The more players, the more profits (to the casino or to the government in the case of the lottery). The best measure for the success of a casino is how many people walk through the door.

Nevada does not have a state lottery.

I read a synopsis of some research done on gambling addicts. The subjects had their dopamine levels measured while gambling, with the dopamine being considered the addictive substance. At what point did dopamine levels spike? Believe it or not, it wasn't when they won. And it obviously wasn't when they lost. It was when they placed their bets! It was the action, not the payouts, that mattered. I found that insightful.