Reminder: inflation is the devil. Youse are all so screwed now!

ABS says spending is up 28% for the year.

28%. LOL.

Not even kidding.

https://www.abs.gov.au/statistics/economy/finance/monthly-household-spending-indicator/latest-release

20% even if the lockdown-lull is ignored.

At this clip, EZFKA unit surpluses should be drained very quickly indeed. This rocket in non-interest might have a more immediate bite on land prices than what the RBA has been doing.

indeed, on one view this hit to household finances is what the RBA could be hoping might do some of the heavy (and politically unpleasant) lifting.

That is, to some extent, the solution for high inflation may be high inflation…..As long as wages can be ground into the dust with mass slave imports, of course, as is being attempted. If wages break out, this strategy fails.

5 1 vote
Article Rating
guest

31 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Coming

what do you think this means though?

Without more credit/money creation, it isn’t strictly speaking inflation (everywhere and always a monetary phenomenon)

Isn’t more spending just recycling the same stock of money through more hands

Increased velocity

more spending = more income = more spending and so on

and how is increasing interest rates going to change that when only 30% of the population has a mortgage (and 80% must have bank shares at least via super so will get the profits)

if wages haven’t increased by 28%, then where is all the extra money going? Presumably to qantas shareholders etc

having said that I was speaking to someone who was getting quotes for a small deck around their very small swimming pool (like 6 x 4m)

$48,000 (no, I didn’t add an extra zero by mistake)

A couple of friends confirmed that is a standard price nowadays and had the same outrageous stories to tell

Who is paying those prices?
Maybe other tradies if they’re also making bloated profits, but wage-cucks can’t afford it

Coming

but what on earth is persuading the units to burn through their very limited money?

They aren’t getting pay rises
Their homes aren’t going up in value

their mortgage repayments are increasing
their costs of necessities (power, food, rent) is increasing

Yet they are willing to drop $48k on a deck
or $400/night on a hotel
or $500 for flights to adelaide

I myself have chosen to simply not spend anything, go anywhere or consume anything because it isn’t worth it

This is quite bizarre, and everyone I speak to agrees – don’t know who the people are who are spending all the money

Is it a covid thing?
Like the media managed to convince them that they were all about to die, so they better spend while they still can?
Or the media convinced them that their cash is going to be worthless because of inflation, and so they may as well spend it?

Last edited 24 days ago by Coming
Coming

guess you have to live somewhere

but you don’t have to have a deck or a holiday

but i guess maybe they aren’t used to house-sharing or whatever

i think that this is what they mean when they say inflation is habit forming

Aussie Soy Boy

The typical unit sees how their favourite character lives on one of their intolerably long Netflix serials and seeks to emulate to emulate these lifestyles.

Peer pressure is another element, you don’t want some smart Alec joke made about you at the next BBQ for looking at the price tag.

A lot of it is conspicuous consumption what better than at to display wealth than spend $48k on a pool deck (and kid yourself it will add value to the property).

bjw678

but what on earth is persuading the units to burn through their very limited money?

Hunger? Need to get to work? Roof over head and power?
Internet to keep them entertained since they can’t afford to go anywhere?

Where does your income place you on this graph coming?
https://povertyandinequality.acoss.org.au/income-calculator/
I suspect most people don’t have your lived experience.

Reus's Large MEMBER

Whuflu was a wake up for a lot of people in the sense of let’s just live it up and not care about the future cause either the rona or the vax is going to kill us.

DictatorDavid

I myself have chosen to simply not spend anything, go anywhere or consume anything because it isn’t worth it”

+1 to this and I’d say my household income is pretty well off. I was talking to a female colleague last night who was telling me she’s doing 11 weeks in America. Literally going to a bunch of states in this epic family holiday. I was thinking who the fuck can afford such a trip atm? She said she used up all her savings to pay for it…

Freddy

I used the WFH opportunity to figure out how little I could spend and how soon I could retire. The short answer is without a mortgage my essentials costs are less than $25k pa. Around another $10k-$15k if I want to maintain my current lifestyle of own boat, yearly holidays, etc.

I have seen no reason to change my spending as I am actually eating healthier. Still use the hair clippers. I am saving a fortune. Fuck them all.

DictatorDavid

Yep I go the clippers too. Haircuts are fucking expensive. I see some people getting fancy fades and beard trims once every 4 weeks and think they are paying a fortune!

Ramjet

Same. My two boys and I use the clippers too. Decent amount saved. My working class upbringing also means that I am not pretentious about coffee or food for that matter (other than the health aspect). Hence could nearly live like Freddy.

brenten is a phag

Covid home building grants would have something to do with it. All those new houses need furniture, tvs fridges etc to go with them. Cant have a shiny new house filled with milk crate furniture now can we?

Freddy

I would say a combination of high savings during covid, and wealth effect due to crazy property prices. Those who ran out of savings are happy to keep spending via withdrawing equity.

JimsCentralBank

48k is criminal.

An older bloke up the street from me just got a quote for 20 meters of fence to be replaced and it was $10,000. I just laughed. I’ll help him build it and we’ll get it done for under a quarter of that.

Azrael

So how does the tradies on big wages square with your ‘wages are flat’ theory?

bjw678

if wages haven’t increased by 28%, then where is all the extra money going? 

It’s simples,
Overseas…

stagmal

ya i feel this, shopping malls are PACKED, people are spending like absolute mad, i cant get a park in the main street and that’s my barometer (the stagmal parking difficulty index) for how much the ezfka units are pissing away their dough

Gouda

Just spoke to someone who manages a chain retail store that mainly sells pop culture collectibles and other gimmicky made in China crap – basically non essentials. This time last year they had their best sales period ever (due to the end of lockdown), and weren’t expecting it to reach the same heights this year. But it seems people have just gone nuts and are just buying everything up for Christmas as soon as the shipments arrives.

Ramjet

Covid and its response benefitted people (the wealthy) and hardly benefitted others (the working class). All the high end restaurants are booked out for months, well so a senior at work was telling me.
I was chatting to a couple of people on Sunday who volunteer at a local church outreach program and they said they have never been busier as they cooking more than double the meals compared to three years ago.
I agree inflation is the devil as it benefits asset holders at the expense of non asset holders.

Azrael

Huh, wages are going up, just like Whitlam put Pub Serv coin up 25% back in the day to tame inflation (he failed).
It’s happening now, aged care workers wage rise at 15%.
There is no wage crash.

Freddy

It is not the 70s where unions held employers to ransom. The immigration floodgates are opening with the blessing of the unions.

Coming

15% is only 12% after tax

long way short of 28% in any case

LostSocialist

15% is probably what the real inflation rate is, in which case wages are flat. Anything less than that is a wage cut.

A fly in your ointment

how does gov.au “spending” affect the inflation?

JimsCentralBank

It really does demonstrate how fragile housing is; a sector so reliant on credit that even during an inflation breakout, it can suffer (lol) double digit declines when credit is restricted.

Does anyone want to take a guess on what the percentage falls will be in real terms? We could be down close to 20% real by the end of the year.

JimsCentralBank

Yeah, I just think it’s an interesting thought as so many think housing is an asset that protects against inflation. But here we are with inflation potentially hitting 8% and housing already down 10% nominal. It seems significant. But yes you’re point about wages is a good one.

Freddy

I nearly choked on my breakfast when checking overnight stock markets. So US CPI (less food and energy) was 0.3% MOM which is half of previous months.

What I find fascinating is markets reacting as though rates are going back to zero. Yet US 10 year bonds only dropped slightly to 3.81%. Something needs to give.

31
0
Would love your thoughts, please comment.x
()
x