Thoughts on inflation?

Watching costs go up and up…and now rates are climbing fast…what are your thoughts on inflation?

Good if:

  • You own assets or companies that are driving inflation (e.g. petroleum) or are monopolies or oligopolies who can raise prices at will, or are in shortage due to supply-chain issues affecting your competitors.
  • You are in a labor sector that has gone into shortage and therefore can demand higher pay, better benefits, and better working conditions.
  • You owe fixed-rate debt that you are capable of paying.

Bad if:

  • You own assets in general other than those which are the drivers and benefactors of inflation.
  • You are in a labor sector with falling demand, or in an industry which is not among the drivers or benefactors of inflation.
  • You are a creditor of fixed-rate debt.

The concern I have is that we have 10x the amount of money on the fed balance sheet than we did in 2008. That’s never a good sign. Also, the other big debate is whether the rate increases will actually deflate prices, or put us into an extended period of stagflation. I’m thinking, the latter since much of Russia’s oil is off the market. It’s nice to have a 30 fixed mortgage and nowhere to move to.


99% bad. Inflation is bad for so many. The young paying higher rates on student loan debt, mortgages, cars and all the rest. The middle paying more for their family in every respect. The older close to retirement ( falling retirement savings) and the retired ( fixed incomes get hit hard).

Unless you own a real estate company that is focused mainly on rentals or Airbnb, you have less than you did 2 years ago. Even the truly frugal are feeling it.

I raised my hourly rate today by 20% more per hour and my first client with the new rate didn’t even blink. I haven’t had to raise it in a long while. I barely even drive, work from home and go out only to clients (not everyday) and I cannot believe how much things cost. We have almost no debt at all. Yet, It’s still insane. I haven’t heard a single person point out they are doing better with higher inflation.

Every employer is looking for help, no one can find staff, prices are rising weekly and it’s crazy. I’m not normally someone who complains about prices but when a quick trip to the local market is $120, I take notice. I really feel for people who are on a budget or who are low income and cannot cut out essentials.

Oh and I have zero faith in the Feds direction.


20% is greater than the rate of general inflation. Seems like if you can raise your rate by that much in general, and your spending is not concentrated in sectors driving the inflation (e.g. petroleum, hired labor that has gone into shortage), you may actually be benefiting, at least on the labor side.

Of course, if you also own assets that are not benefiting or the drivers of inflation, you could be losing on the capital side while winning on the labor side.


Can you explain? Are new loans higher than the 7% we paid? All student loans are currently in forbearance and if you would like to pay on your loans, the interest rate is exactly 0. We paid the last of my kids federal loans and took advantage of the 0%. My daughter started and ended her masters during the time loans were in forbearance. Paid them off when she was done, so took out loans, made the money work for her and paid the original amount off.

But I’m feeling things in gas and food. Some other goods but gas and food are necessary so I feel those. I know at my local fruit market, they are paying $1000 more this year to fill their delivery truck. Those costs have to be passed on, it’s not like my local fruit market is operating on a huge profit.


Filled my gas tank this week. I was trying to get the picture to work, but I can’t. I paid just over $100 bucks for my small to mid-sized SUV.


Our electric bill is also our gas bill, so no direct hit yet. The utility co will be hiking the electric rates 12% next year. Our solar project looks less and less crazy. No mortgage and no imminent moving means no worries about interest rates, but our property taxes will go up significantly because the country just valued our house 35% higher than last year’s valuation. :confounded: Food bill is definitely going up… We will likely cut down on travel and entertainment to keep our expenses down. We both work so no dipping into our retirement funds yet… and no RMDs on the horizon for a while. If I start commuting, we will need to shop for a second vehicle. Not looking forward to that exercise!

We are going to be stuck with high inflation and higher interest rates for at least 2-3 years minimum (probably longer) because there’s nothing being proposed that will address our situation in any meaningful way. The Fed acted too late and the current policy and regulatory climate is hostile to those industries and economic vectors that could possibly help reduce it, especially energy.

Prices are insane and I feel especially badly for those at the retirement end of the spectrum. Their IRA, SS and pension payments are buying less and less on daily basis.

For those in the younger generations who support the policies driving our current malaise, I don’t feel sorry for them…they made their bed (too bad we all have to sleep in it). But those who don’t support it are definitely getting the crappy end of the deal and unfortunately there’s very little they can do to remedy their situation in the short term (and probably the long term too).


I retired fairly young, and I don’t get any pension increases for another 3 years. I know I’m lucky to get a pension at all, but between the stock market falling and no increase, I’m a little worried.


The undergrad direct loan rate for 2022-23 (begins july 1) is 4.99%. Grad rate is 6.54% for grad unsubsidized, and 7.54% for PLUS loans. Right now, the rate is 0% because of the ‘pause’ but the rate on the note is as listed and will kick in when the pause ends. The Plus loans also have a hefty origination fee of 5%.


You should separate gasoline prices when talking about inflation, because the dynamics in that market are quite a bit different.

For most of the market (equities, debt, large assets such as home, consumables, labor), prices increased rapidly in a large part because of irresponsible Fed behavior. The Fed should have started raising rates in early 2021, not in early 2022. Now the Fed is playing catchup. Rates are at historical lows, and were kept at 0-0.25% long past the point when the economy was growing rapidly. Leaving Quantitative Easing going as long as it did compounded the problem, effectively flooding the economy with cash. Our Central Bank was not alone in using these tools to super-charge the economy long after the point when these tools were doing more harm than good.

The result was a spike in the prices for everything. The stock and housing markets went crazy, as did exotic markets like crypto. Now, long past when it should have addressed this problem, the Fed is returning rates to historical norms.

I don’t know how anyone can throw around predictions of stagflation until we see what happens when Fed Funds rates are 2.5%. That is an historically more normalized Fed Funds rate that will balance out the markets and dry up liquidity. If the Fed has to go much past that, then maybe we have a problem. I think inflation is going to come down quite a bit in the next few months as rates increase and QE is unwound.

I am only a fan of Quantitative Easing in short bursts, and only in extreme circumstances. I think the benefit of QE wears off after a few months and it effectively becomes a subsidy for big banks.


Gas prices are a different story. People can argue the exact ratio, but Gasoline prices should be roughly 1/35th that of a barrel of oil. There are 42 gallons to a barrel, but the price of refining plus a profit margin gets the ratio to about 35:1 between the two. A barrel closed at $105 today, but gas prices are not $3.00 a gallon.

That is a problem, and may indicate price fixing or other market manipulation.


Question. Are those rates higher or lower than they’ve been? My kids both graduated 10 years ago when I know mortgage interest rates were higher. I’m not sure what rate the school loans were originally.

But student loans have been in forbearance since March of 2020. My only point is that at 0%, you could have been making a dent in those loans. That’s what we did. It’s been 2 plus years.


Here are government student loan interest rates (current ones near the top of the page, historical ones toward the bottom):

Note that these are fixed rates for the life of the loan, so inflation actually helps those who had borrowed those loans. New physicians with mountains of medical school debt may be among the larger beneficiaries of inflation.

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The rate last year was 3.75%.

As compared to a ‘regular’ unsecured loan the rate is still very low. Credit card rates are often 18-29% and credit cards are the most common type of unsecured loans. Usually the student loan amount borrowed is much higher than what you’d borrow on your credit card, and the term is longer so you may end up paying much more for the same $10k loan, especially because you don’t have to make payments until you graduate.

It’s not so much the rate as the fact it went up more than a percent in one year.


Honestly, I have zero idea what student loans are but rates go up when fed rates go up (inflation=high interest rates) . Maybe just take out the word student and say young people borrowing loans. As I said, i have zero faith in the Fed. Too much tampering, like too little intervention is problematic. Tough balancing act, but this Fed is not on target.

Yep, local fruit market is likely having a hard time finding, paying and keeping employees. Let’s hope we don’t hit a recession and all that brings.


The employees that are in high demand here are lifeguards. Pools have either not been able to open or have limited hours. The governor is now suspending the rule that teens can’t work overtime so that lifeguards can work more hours, and get time and a half. Many of these teens will now be making $25/hr.


The rate is now 4.99% for undergraduate direct loans. This is still lower than the May 2022 CPI inflation rate estimate of 8.6% ( CPI Home : U.S. Bureau of Labor Statistics ). So it is like the government is paying students to borrow student loans, at least for the time being.

Note the various CPI components are not having uniform inflation rates. As of May 2022, energy is at 34.6%, food is at 10.1%, and everything else combined is at 6.0%.


I’m now buying ahead of most thing whenever I get a chance. For example, I just bought 2 luxury sheet sets at 75% off, I normally would only buy one set. Immediately after I did the buying(less than a month), the price of that exact sheet set jumped 300%. I really feel bad for people who can’t afford to stock up on things.

The part that I experience inflation the most is insurance, insurance premiums went through the roof, and there’s not much I can do to hold it back.

Other than that I’m ok, my personal inflation rate is less than the current rate of inflation, my grocery bill is down by half, why, in the past I don’t care, I just shop at Costco, now I don’t shop at Costco, but I do worry about the younger generation( like my kids). Will they be able to keep up with inflation. They are too young and don’t have time to shop like us retirees on fixed income.