Discussion in 'Casual Photo Conversations' started by invisibleflash, Aug 3, 2021.
Yes. I don’t trust Fox News disinformation campaigns and projections.
That's a gross oversimplification. If you chart the growth of U.S. money supply in recent decades and compare it with the inflation rates for that period, you won't see the strong correlation that you assert.
I already cited a few contrary examples, which you haven't addressed. Here's another: new money doesn't spread evenly throughout the economy. It tends to accumulate among the wealthy, who in aggregate spend less money than lower-income people do. Velocity of spending is a vital factor in the inflation equation. The less velocity, the less inflation.
In 2017, U.S. corporations received a huge tax cut funded by higher government borrowing. As many economists predicted, public companies spent much of this windfall on stock buybacks. In fact, they set a new record for that (unfortunately legal) form of stock-market manipulation. The buybacks inflated the company's share prices and executive bonuses without a corresponding increase in the company's productivity. But consumer prices didn't inflate nearly as much as stock prices did. Indeed, the Federal Reserve usually failed to reach its 2% inflation target in subsequent years. The reason is that very little of that corporate tax windfall trickled down to workers as pay raises.
If money supply is the primary driver of price inflation, it should be easy to reverse. The Federal Reserve can do it by shrinking the money supply, probably by reducing or ending its monthly purchases of Treasury bonds, mortgage-backed bonds, and corporate bonds. The federal government can do it by raising taxes and burning the revenue. In reality, however, it's not so easy, because many other factors besides money supply contribute to inflation (and deflation). For instance, in our global economy, we can't control what other nations do.
Yes, that's why the first rule of investing is diversification. If the retired guy invested all his money in bonds tied to interest rates, he's definitely hurting. Had he invested an age-appropriate percentage of his assets in stocks, the market inflation of recent years would have compensated.
Even within a bond-heavy portfolio, some diversification is possible. Some U.S. savings bonds purchased years ago are returning upward of 7.5% interest -- and it's exempt from state and local taxes. There are also inflation-adjusted bonds that pay higher interest in step with higher inflation. Those bonds additionally provide some protection against deflation, because their interest rates don't fall below the base rate at the time they were purchased.
It's sad how many people who are nearing retirement or who have already retired know so little about investing. Some are poor by circumstance and never had enough spare money to invest. But I have known well-paid middle-class people in their 50s who don't know what a mutual fund is and who have never contributed money to an IRA or 401(k) retirement account, even when their employer offers to match their contributions.
Not that I'm perfect. I still kick myself for not investing more heavily in Leica lenses. I have one "King of Bokeh" 35mm f/2 Summicron lens that has appreciated about 600% since I bought it in the 1980s. Dang, I should have bought a boatload of those.
If printing solved the problems of people, why not print $100K for each person? The problem is that printing does not work effectively. All it does is diminish the value of each dollar. So if you're poor, food, housing, all the basics all cost more. So you wind up hurting the very people you think you're helping.
What helps the poor and people, in general, the most, is to allow investments by having fewer taxes and less deficit spending so printing isn't required. Investments create new businesses and expand existing businesses. That creates jobs that help everyone. Earnings in your paycheck stay valuable instead of diminishing because of printing. Politicians always advocate spending more so you'll vote for them. Unfortunately, people are fooled by their promises. It sounds good when they declare all those jobs. But that's fleeting as inflation diminishes the value of your paycheck. It sounds good but backfires.
There's nothing wrong with increasing the money supply. However, productivity has to increase as well. There has to be a relationship between the two. Let's say a country doubled its population over three decades. Well, all other things remaining equal, you can double the money supply because productivity has doubled as well because you have twice the number of workers. Product costs would remain the same even though there's twice the amount of dollars in circulation.
The problem occurs when they increase the money supply and productivity doesn't increase. Or worse, production due to Covid has decreased. So you have more money chasing fewer goods. That bids up the price of the goods. That's what we're seeing now.
As you said, if the money doesn't wind up in circulation, then it may not have much of an effect. But even 2% isn't chump change. Over a ten-year period, that's 20%. So if you had $100,000 in a savings account, it would only have $80,000 in purchasing power at the end of the ten years. That's an additional tax of $20,000 being paid secretly in the middle of the night that you don't see on your tax returns but is paid never-the-less. I don't know about you. But I'd rather have that $20K. 2% adds up fast.
Of course, currently, the extra money is winding up in the economy accounting for around 5 or 6% and growing. That's 2-3x the Fed's goal of 2%. It's going to get worse before it gets better.
I diversified in Nikon and Mamiya. My Nikon is worth $25 and my Mamiya system is worth maybe 15% of what I paid for it.
That’s what helps the rich and keeps the poor poor and lowers the standard of the middle class, and it’s been proven over and over again.
But enough. This goes nowhere and has nothing to do with photography.
As for photography and inflation, I’ve always bought what I could afford and didn’t think about what I couldn’t. That goes for cars and many other purchases that, for some, border on hormonal.
I do not worry much about stuff I cannot afford and most of the stuff that I can. However my Leica M6 was free and it just works perfectly year after year. Just shot a roll of Arista 100 yesterday. I went over to what used to be Fort Ord and they are tearing down the old wooden Army barracks so I shot a roll of film of the beat up old buildings that are left. Photos look great and I printed out one in my darkroom. I did not stay in those buildings but I was stationed at Ft Benning in the late 60's and lived in barracks of the same design. They had coal fired heaters.
Actually, 2% inflation over 10 years is more than 20%. Inflation is cumulative. If you plug your numbers into a spreadsheet, you'll find that after 10 years of 2% inflation, your $100,000 would be worth only $78,100.56, not $80,000. So, ha! It's even worse than you think!
But seriously, I won the inflation argument against the fear-mongers in 2009 and I'll win this one as well. Too many factors weigh against sustained high inflation at this time.
If you're really so worried about it, sell some of your assets to buy inflation-adjusted bonds and maybe Leica lenses. Your $100,000 example assumes it isn't invested in anything. Even in 1980-81 when U.S. inflation reached double digits, I was earning upwards of 18% in money-market funds. My wealth didn't shrink; it grew. In fact, that's when I splurged on my first home computer -- an investment that has paid bigger dividends than anything else I've ever done, except for college.
You’re talking way too much sense!
The problem today, unlike the 70s, is that you can't find double-digit interest rates. In fact, you can't find any CD over 1%!.
Find current CD rates and recent interest rate trends from Bankrate below. Here are the current average rates for the week of Aug. 11:
1-year CD rates: 0.17%
5-year CD rates: 0.31%
1-year jumbo CD rates: 0.19%
5-year jumbo CD rates: 0.32%
Money market account rates: 0.07%
Bonds are providing higher interest rates than CD's, but currently less than prices going up. So bottom line interest is negative.
I hope you're right that inflation won't cause everything to escalate like the 70's. But a lot the printing today is going into the regular economy unlike what happened after 2008. Plus, with all the deficit spending supported by printing, that's mainly going into regular consumers and commercial spending unlike how they hid the printing to a degree after 2008. We'll know pretty quickly over the next few months.
The thing is prices have already gone up a lot. Housing is out of sight. Producers price increase were up 1% last month double the .5% consumer CPI. These increases eventually get passed along to the final consumer. I suspect that my film will continue to rise since there's a lot of chemical commodities required to make it.
As I said before, the first rule of investing is diversification. Had you bought ordinary U.S. savings bonds when they were unpopular, you could be making 4% to 7.5% interest now. And most of mine are I-series bonds, so their interest rates will rise even further in step with any future inflation.
Interest rates are at historic lows now, so it's a good time to borrow money -- good for individuals, good for businesses, and good for governments. Borrowing costs will probably never be lower. In the early 1980s when I was earning up to 18% interest in money-market funds, one of my coworkers signed a 30-year mortgage to buy a house. My recollection is that his interest rate was 21%. Most Americans are heavier borrowers than savers, so low interest rates are more favorable than high rates. Retired people with diversified investments are doing okay, too.
I don't think film prices were ever based entirely on material costs. From what I've read about Kodak's glory days, the markups on film, paper, and chemicals were high. Now that film is a niche product, I suspect the cost/price difference is even greater.
So... returning to the original question: no.
What do we need? What are our 'staples' in this digital age?
For me, it's storage, mainly. That has become cheaper.
Batteries. Well, 'regular' AA and such batteries have not gone up in price either. Have gone down in price. Proprietary batteries always were expensive. But there are cheap alternatives.
Printing? Maybe more expensive, yes. But less needed nowadays.
Computers? Not more, but less expensive (even more so if you consider what you get for your money).
As Yogi Berra said, "Predictions are hard. Especially about the future."
Regarding borrowing, that's great except prices for houses are in a bubble and higher than reality, I believe, and will drop substantially. It also makes it harder for young couples to come up with the 20% down payment, even if interest rates are low. Borrowing may be OK for investments and expanding business as capital, but it's a bad idea for governments because they don't invest, only spend. Howe much really goes for bridges rather than expensive social programs? Taxing takes money out of the private economy and is misallocated by governments. Printing is worse as it also devalues the currency, eventually. There is no such thing as a free lunch.
Look at what we spend on the infomation age. How often do you replace your photo taking cell phone? Cloud backup? Rental closts fpor Adobe software? New digital cameras? Printers? I just spent $1100 on aa V850 scanner for my new 4x5 camera. Spent thousands on the camera equipment. Film is out of sight. Processing. How about shipping charges when I send my film to the processors and back? What about property taxes on that part of your house if you have a darkroom? Replacement computers, laptops, electricity costs, cables, chargers, it doesn't end. Storage is cheaper, you say. Well I use to store my negatives in a shoe box. Now I've got hundred dollar hard drives for backup. Sure they're cheaper then they were. But shoe boxes didn't cost anything.
Add in internet ISP services, modems, calibratable monitors, pucks, keyboards, and mouses. How about 75" HDR 4K TV's for digital slide shows? Geek Squad to fix everything.
Price of Canon 5D Mark III when introduced in March 2012: US $3499 in 2012 dollars, $US 4164 in current (July 2021) dollars (CPI Inflation Calculator)
Current price of Canon R5, which is a far more capable camera: US $3899
It’s an absolute riot (more of a nightmare) to hear a guy who affords all that equipment complaining about what his “fixed income” is experiencing. Sounds like it’s fixed at a high enough rate to afford quite a bit. I suggest you stop complaining.
Life’s full of all kinds of choices. We all spend what we can (some spend more than they can and get in trouble) on what’s important to us. I worry about those who can’t afford potatoes. One of your precious pieces of equipment will buy you plenty of potatoes should you ever have to sell it in order to afford food. Until then, enjoy life and the hobby you’ve made more expensive than it has to be but reasonably expensive for what you want it to be and stop burdening the rest of us with your crocodile tears about your “fixed income.”
I do take pictures with my cell phones. But not in earnest. My cell phones are hand-me-downs, from my younger family members who do care about latest and greatest.
So virtually no cost. And not a photo staple.
I have my own cloud back up. NAS with spinning disks. Prices of that have been going down.
The subject is how inflation impacts costs? Then storage is getting cheaper, yes. No matter that a NAS and back up drives are more expensive than cardboard boxes (the archival type, by the way, was not cheap either).
I do no rent software.
I use an old bought PS (still capable) and free Capture One (for Phase One) and Phocus software.
New digital cameras i do not buy often. And whenever possible i buy used. The old stuff still delivers.
I too have spent a lot of money on cameras and lenses. Except for the relatively cheap 35 mm film stuff, it is all still in use in these digital days.
I do not own a printer, except an age old monochrome laser printer for correspondence. It's cheaper, i find, to outsource the occasional print.
I do have Nikon film scanners. They do the job. No replacement costs. No other costs.
The rare 4x5 scan is outsourced. I switched to roll film backs on 4x5 long ago. And use BetterLight scanning backs. No costs.
Film. Gets used less and less. No processing and shipping costs, because i do that myself.
No wet darkroom (though i could set up a temporary one if needed). Film is scanned.
Less film means a huge saving on the cost of photo staples. It used to be the best part of running costs. So though the price of film has gone up, the expenditure has gone down enormously.
Computers and such have become less, not more, expensive.
The cost of running your house, insurance, food, in short: life, has gone up, yes. But our photo staples? Not really.
I cut my own hair with an electric clipper. Made a complete mess of it.
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