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Inflation, Travel Costs, and MFs

Superchief

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Our mortgage on this house in 1979 was 10.5% FHA, we refinanced several years later for 8.5% and thought we were seeing an amazing interest rate. Now our daughter and her husband refinanced their house with VA for 1.99% for 20 years. She is ecstatic. I would be too!

It's their forever house, so they won't cringe too much when the house goes down in value by $250,000, when the economy tanks, which I believe is within a couple of years.

People walk away from mortgages, even with record low interest rates, when they realize the value of their house is less than what they owe. It's really kind of crazy. Interest rates will rise and property values will decline. It's happened before and will happen again.
The other problem with home ownership is the rapid increase of property taxes in many areas. My taxes are double what they were five years ago due to absurd increases in assessments as well as rate increase by local government and school systems. My taxes are more than my current mortgage.
 

isisdave

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I don't know if or how measures of inflation compensate for big one-time events that disrupt production and supply chains, like a worldwide pandemic. Clearly, this one has resulted in big perturbations in just about every market, due to labor shortage and demand interruption. We have a pretty good understanding of why car rentals cost so much, and expect a big correction once car supply improves.

At the same time, economic policies like increasing the minimum wage will cause higher prices to consumers, but ought to reduce the costs of unemployment and homelessness, which are borne by governments and businesses. Yet at the end of the day, consumers pay all the costs -- retail, business, government -- because we're all the "last guy" on the food chain. So there'll be changes in what sectors pay what part of the total price, and this will affect current measurements of inflation until the system is recalibrated.

If California suffers a big, long, or big and long drought, farmers there will abandon cheap crops like wheat and corn an concentrate on more profitable ones. So you can expect wheat and corn prices to increase, to the extent that the country still exports a lot of those. Almonds take a heap of water, so they may be reduced. It's all a balancing act, and it's all big averages. There's no inflation in car rentals if you don't rent one; there's no inflation in health care costs if you don't consume it; etc.

The other day I bought two gyro pita sandwiches at Arby's for $6, and you can still get two breakfast sandwiches at McD's for under $5. There is still some amazingly cheap food in this country.

Note: Marriott Waiohai kept the 2021 MF the same as last year's.
 

MrockStar

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You summed it up best when you stated we are the "last guy" in the food chain, and I will add crap rolls down hill. unfortunately most Americans are at the bottom of the hill. :-\
 

Ty1on

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At the same time, economic policies like increasing the minimum wage will cause higher prices to consumers, but ought to reduce the costs of unemployment and homelessness, which are borne by governments and businesses. Yet at the end of the day, consumers pay all the costs -- retail, business, government -- because we're all the "last guy" on the food chain. So there'll be changes in what sectors pay what part of the total price, and this will affect current measurements of inflation until the system is recalibrated.
I believe increased min wage will increase the costs of unemployment and homelessness, and increase the prevalence of both as well, as employers opt to invest in automation to reduce a higher costing workforce, and things like unemployment compensation and homeless care costs increase in response to the overall higher prices caused by inflation and increased labor costs.
 

MrockStar

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Increased automaton is happing right now where I work.
 

Superchief

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I think gas prices will impact things a lot more than a most people anticipate. I find it interesting that the 'experts' all blame it on increased demand but fail to mention the dramatic cuts to the US oil production and ability to be self sufficient. Demand was much higher two years ago when the economy was thriving, but gas was often less than $2 per gallon. The shift to the 'summer blends' is currently compounding this problem. I never understood why there are so many different summer blend formulas even though many major metro areas have similar conditions. The result is that there are only a few refineries that produce the blend needed for a specific metro area, so there is no competition. It also seems like there are always 'maintenance' issues this time of year that drive prices up even higher. A scientist on NPR said that these summer blends often cause more pollution than the regular gas, so this is just a money grab for the big refineries.

I share isisdave's concerns about the CA drought's potential impact on food supply and hope the farmers in the rest of the US enjoy good weather so crops are good. Another corn shortage similar to a few years ago will really drive up food prices, especially if the government requires a large portion of the crop to go towards ethanol production again.
 

MULTIZ321

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BLUEWATER BY SPINNAKER HHI
ROYAL HOLIDAY CLUB RHC (POINTS)
The perfect storm making everything you need more
expensive.




Richard
 

arcsinx

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May's update came out today, and inflation now has risen to 5.0%. Here are some of the biggest changes:

Bacon and related products+13.0%
Fuel Oil+50.8%
Gasoline+56.2%
Piped Natural Gas Service+13.5%
Furniture and Bedding+8.6%
Major Appliances+12.3%
Used Cars and Trucks+29.7%
Sports Vehicles including Bicycles+10.1%
Lodging away from home including hotels and motels+10.0%
Moving, Storage and Freight Expense+16.2%
Transportation Services+11.2%
Car & Truck Rental+109.8%
Motor Vehicle Insurance+16.9%
Public Transportation+15.9%
Airline Fare+24.1%
Other Intercity Transportation+11.1%
Delivery services+7.4%
 

MrockStar

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to sum it up, almost everything. Thanks Congress. :-\
 
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