I pulled a Rip Van Winkle--interest rates

PWMDMD said:
Maybe it's because I'm in business school taking courses on finance but yeah...the Fed and rising interest rates have been all over the news for months and months. If it makes you feel better I often feel that way about pop culture things, especially related to current music. People say names of songs and artists' names and not only have I never heard the song but I've never heard the name.
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(y) = business / finance schools. Great things to learn now.
Pop culture!:rolleyes:
We all used to laugh at my dad's attitude about current entertainment. He refused to watch 99% of new movies or Tv shows. He would have us lol in stiches fussing saying things similar to your comments.
"I 'm not watching that stuff ! I don't know who those people are!" One time years back the wife and I caught ourselves fussing about , "nothing we want to watch on tv" and then my dad's same "we don't know who these people are!" When it comes to newer music - forget it!
 
PWMDMD said:
Depends on the ETF. VTI and ITOT are both Total US Market funds but both hold a different total number and proportion of stocks. Either choice, you are far more diversified than individual stock pickers. Super easy to pick a total market, foreign market, bond market, and REIT ETF and be pretty darn diversified.

Plus QQQ for the win!
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yes, I think the article was referring specifically to S&P 500 ETFs - ie SPY, VOO, IVV that try to mimick the S&P. There by far the most popular. Holding other ETF's is likely a good idea.

The one thing I don't like about ETF's is they weight by market cap, so you might think you own a diversified tech ETF, but 50% of the value is held in AMZN, META, and MSFT or whatever. I have in the past "built my own ETF" by buying several stocks in the same industry, but rather than weighting by market cap I buy equal portions. Then I have my own fund of some number of stocks, each starting at the same value. If my premise on the industry is correct, I can make money even if some ancillary thing happens to one of them - like their CEO is caught on Epstein's airplane or something.
 
mrsilv04 said:
Yes, it has been happening. I deposited a chunk of money with Discover late last year, due to their interest rates that none of the local banks can touch, and a cash bonus for depositing money with them. Now I need to get it out of there and move it somewhere else, because of recent news about Discover.
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I did the same with Discover for a $500 bonus. Then after I collected the $500 I transferred to a higher rate savings account. Cit Bank (not Citibank) CitBank pays 4.05% interest on everyday savings account. They also offer free checking accounts.

CitBank is an online division of First Citizens. Saving account I chose https://www.cit.com/cit-bank/bank/savings/savings-connect-account

Main Website page:

Been banking online for over a decade, just opened the CitBank account a couple months ago. It's been good, the app is a little rudimentary but it works good enough. Now that First Citizens owns them I am sure the app will be updated over time. Still it does everything you need it to do, just the speed can seem a bit "clunky by todays standards. Still not bad at all.
 
Snagglefoot said:
Inflation is still putting you under water. A 5 % return when inflation is 6% is a -1% real return.
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Yes and no, depends on what you buy. Its EASY for Americans to cut their food bill by 20%
Fuel is also way down in cost. I haven't paid over $3 a gallon in months now.

IM not saying everything is great but ... hmmm ... not the everyday media fiasco either. Food inflation is stupid for sure and downsizing of the packages. My answer to that is = Dont buy it and I dont.
I dont know about you, but here in the states, even in Walmart Super Centers the snack isles still get sold out of products on a daily basis, the frozen foods and ice cream still get sold out on a daily basis and OMG the soda and drink isles are sold out all the time, all completely unnecessary to support life. In fact they shorten your life and quality of life. Water is the most healthy drink, everything else kills you.

The FAST FOOD restaurants are still packed EVERY day and night of the week. Also the chain restaurants still have up to two hour wait times on weekends.
The one place I feel "trapped" is my wife and I Saturday night out. Dinner is getting pricey, my answer to that is to stay with the good best restaurants but still the prices have gone up quite a bit. (we only eat healthy real food, not junk)

Other than that, if Americans completely skip the snack isles, the soda and frozen section they will more than make up for food inflation and lose some weight in this overweight country = bonus is you will also live longer and have a better quality of life. Plus they will help out their fellow Americans cost of health insurance as another bonus! :)
 
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alarmguy said:
Yes and no, depends on what you buy. Its EASY for Americans to cut their food bill by 20%
Fuel is also way down in cost. I haven't paid over $3 a gallon in months now.

IM not saying everything is great but ... hmmm ... not the everyday media fiasco either. Food inflation is stupid for sure and downsizing of the packages. My answer to that is = Dont buy it and I dont.
I dont know about you, but here in the states, even in Walmart Super Centers the snack isles still get sold out of products on a daily basis, the frozen foods and ice cream still get sold out on a daily basis and OMG the soda and drink isles are sold out all the time, all completely unnecessary to support life. In fact they shorten your life and quality of life. Water is the most healthy drink, everything else kills you.

The FAST FOOD restaurants are still packed EVERY day and night of the week. Also the chain restaurants still have up to two hour wait times on weekends.
The one place I feel "trapped" is my wife and I Saturday night out. Dinner is getting pricey, my answer to that is to stay with the good best restaurants but still the prices have gone up quite a bit. (we only eat healthy real food, not junk)

Other than that, if Americans completely skip the snack isles, the soda and frozen section they will more than make up for food inflation and lose some weight in this overweight country = bonus is you will also live longer and have a better quality of life. Plus they will help out their fellow Americans cost of health insurance as another bonus! :)
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A good example is the price of Coca Cola. Here it is now $6.00 ($4.20 USD) for a 12 pack. I no longer buy 12 packs, just a two liter bottle once in a while when it’s on sale. If every one did that the price of Coke would come down. As far as giving up my Coke Zero, not going to happen. :D
 
If you bought your home a while ago and are locked in, don’t need to buy a car, don’t need to buy a college education, and your employer pays your health insurance, then in reality inflation to you is something to complain about and not much more.

However if you do need any of those things, it’s a very different reality. We’ve only been in a high inflation scenario for about a year. If it continues for several more years it’s gonna start to hurt most everybody.
 
Snagglefoot said:
A good example is the price of Coca Cola. Here it is now $6.00 ($4.20 USD) for a 12 pack. I no longer buy 12 packs, just a two liter bottle once in a while when it’s on sale. If every one did that the price of Coke would come down.
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I have to wonder if price would go up instead. Less demand, less ability to get the ingredients cheaply, since it's bought in bulk.

I get it, it's just sugar and water, how expensive could it be? but they aren't the only vendor of soda, so, unless if there is a conspiracy to keep prices high amongst the soda vendors, I have to wonder if the price doesn't follow the cost to make, to some degree.

What is the price of Sam's Club soda, or any other store brand? That might reflect actual cost to make and distribute, minus the overhead cost of advertising. [And bonuses to the C-suite? I'm guessing those still exist, but I'm not sure if they are on the same level--they could well be, for all I know.]
 
atikovi said:
Let me see if I understand this. Here is that JEPI on Etrade,


Each share is $54.11 plus an 8 cent fee.

The monthly dividend is 0.4112 cents a share.

The yield is 11.80%

This doesn't add up or I'm looking at it wrong. The monthly dividend x 12 = $4.93 for a year. That's only like 9.11% of $54.11.
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Yeah, you need to watch that.

I touched on it in post #95. It will change based on the price you actually pay, and of course what the dividend is that month.
 
alarmguy said:
Yes and no, depends on what you buy. Its EASY for Americans to cut their food bill by 20%
Fuel is also way down in cost. I haven't paid over $3 a gallon in months now.

IM not saying everything is great but ... hmmm ... not the everyday media fiasco either. Food inflation is stupid for sure and downsizing of the packages. My answer to that is = Dont buy it and I dont.
I dont know about you, but here in the states, even in Walmart Super Centers the snack isles still get sold out of products on a daily basis, the frozen foods and ice cream still get sold out on a daily basis and OMG the soda and drink isles are sold out all the time, all completely unnecessary to support life. In fact they shorten your life and quality of life. Water is the most healthy drink, everything else kills you.

The FAST FOOD restaurants are still packed EVERY day and night of the week. Also the chain restaurants still have up to two hour wait times on weekends.
The one place I feel "trapped" is my wife and I Saturday night out. Dinner is getting pricey, my answer to that is to stay with the good best restaurants but still the prices have gone up quite a bit. (we only eat healthy real food, not junk)

Other than that, if Americans completely skip the snack isles, the soda and frozen section they will more than make up for food inflation and lose some weight in this overweight country = bonus is you will also live longer and have a better quality of life. Plus they will help out their fellow Americans cost of health insurance as another bonus! :)
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That’s how it’s here in central Florida, restaurants packed on the weekends.
 
M2 money supply went up 50% during the pandemic. Its still pretty much there, it hasn't come down much at all. I have followed one analyst who mostly works at a global macro level who says inflation in the US will stay at 8 to 15% for the foreseeable future. Not sure if I agree but he has been mostly correct on a bunch of things for the last 6 years. Expect to see full restaurants with crappy food and lousy service for some time to come. I have decided to avoid them as much as possible.

I believe the fed slowed raising rates not because they though inflation was conquered, but because those developing countries who's currency was pegged to the US dollar are getting slaughtered, and that along with the supply chain issues and the ukraine war has caused a lot of turmoil in those countries. Turmoil is bad for the US dollar as the reserve currency, not to mention inflation is good for the US debt - it makes it smaller in relative terms over time.
 
SC Maintenance said:
M2 money supply went up 50% during the pandemic. Its still pretty much there, it hasn't come down much at all. I have followed one analyst who mostly works at a global macro level who says inflation in the US will stay at 8 to 15% for the foreseeable future. Not sure if I agree but he has been mostly correct on a bunch of things for the last 6 years. Expect to see full restaurants with crappy food and lousy service for some time to come. I have decided to avoid them as much as possible.

I believe the fed slowed raising rates not because they though inflation was conquered, but because those developing countries who's currency was pegged to the US dollar are getting slaughtered, and that along with the supply chain issues and the ukraine war has caused a lot of turmoil in those countries. Turmoil is bad for the US dollar as the reserve currency, not to mention inflation is good for the US debt - it makes it smaller in relative terms over time.
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As the Fed reduces its balance sheet of treasuries the net effect is essentially removing money from the money supply.

Yeah…the few economists I have access to don’t have a real clue where this boat is going. Don’t get me wrong, they have their opinions, but freely admit it’s a unique time.
 
PWMDMD said:
As the Fed reduces its balance sheet of treasuries the net effect is essentially removing money from the money supply.

Yeah…the few economists I have access to don’t have a real clue where this boat is going. Don’t get me wrong, they have their opinions, but freely admit it’s a unique time.
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it will take years to remove enough to matter at their current rate. Its just starting to decrease - very slowly. The only way it doesn't take years is to crash something - biggly.

1678237595969.jpg
 
SC Maintenance said:
it will take years to remove enough to matter at their current rate. Its just starting to decrease - very slowly. The only way it doesn't take years is to crash something - biggly.

View attachment 143782
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It’s reducing its balance sheet by $100B per month but they also let $420B in bonds mature without reinvestment.

And I stand corrected in an earlier post where I said the Fed Balance sheet was $4.5B. That’s where it started before the most recent increase and it’s now $9B.
 
alarmguy said:
Sad part is people come to expect easy money built on government debt which is the public debt.
One can do their own comparison of the public (national) debt to the low interest rates of the last 15 years. It's all borrowed money and the free ride is over. (please NO politics) In fifteen years of low rates the national debt is up 300%.

View attachment 143364
Then look at this = http://usdebtclock.org
Top right is "Debt Clock Time Machine" go back 15 years and match up with the chart above.

NO politics.
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I find most people misunderstand the national debt because they equate it to personal debt, which it is not. What's the difference? A person has a finite time to accumulate money and at some point, this accumulation stops and it becomes almost 100% consumption. In this scenario, yes, you must pay back your debt in most cases to make your money last.

Now imagine you were going to live and work for 10000 years and every year you were going to make 5% more while the payments on your debt increased at 3%. Why would you need to pay it all back? So long as you can make your payments and because you will always be making money than increasing debt, total debt repayment is unnecessary. You are actually making out even though your debt is increasing every year (your debt is becoming a smaller % of your income). Here GDP is rising faster than the national debt and all is well even though the debt is increasing.

The problem comes when incomes increase by 3% and debt payments increase by 5%. Here debt is rising faster than GDP and that's bad. I'm not arguing our debt accumulation is not out of control...it is...but we don't have to ever pay back the $31T in a one-shot or even in a short period of time and 100 years from now in a healthy economy $31T will look like chump change compared to GDP. The only way we pay back $31T is when it is the interest payment on the much larger total debt that's hopfully part of an even larger GDP.
 
PWMDMD said:
I find most people misunderstand the national debt because they equate it to personal debt, which it is not. What's the difference? A person has a finite time to accumulate money and at some point, this accumulation stops and it becomes almost 100% consumption. In this scenario, yes, you must pay back your debt in most cases to make your money last.

Now imagine you were going to live and work for 10000 years and every year you were going to make 5% more while the payments on your debt increased at 3%. Why would you need to pay it all back? So long as you can make your payments and because you will always be making money than increasing debt, total debt repayment is unnecessary. You are actually making out even though your debt is increasing every year (your debt is becoming a smaller % of your income). Here GDP is rising faster than the national debt and all is well even though the debt is increasing.

The problem comes when incomes increase by 3% and debt payments increase by 5%. Here debt is rising faster than GDP and that's bad. I'm not arguing our debt accumulation is not out of control...it is...but we don't have to ever pay back the $31T in a one-shot or even in a short period of time and 100 years from now in a healthy economy $31T will look like chump change compared to GDP. The only way we pay back $31T is when it is the interest payment on the much larger total debt that's hopfully part of an even larger GDP.
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I understand this but, for example. Isnt paying six hundred billion dollars in interest payments this year a bad thing?
By the end of this decade our projected interest payments will be around one trillion dollars a year.
It seems to me to be like a fake economy. Are we not making life more difficult down the road for the future by spending now and then later we can not? Are the debt payments which will get to around 1 trillion a year irrelevant?

What about the next global crisis in the near future, do we then run the debt up another 15 trillion?
We never "paid" back the money from the 2008 crisis and kept increasing the debt ever since.

What about the next war around the corner? IN WWII our debt ratio was 119% right now in peace time and a thriving economy its 123% what happens if and when we need the money for war and go to 225%
I dont know but to me, we seem to be making life easy for us now and stealing from future prosperity. There has to come a point where debt matters.
Yes, yes, debt is rising faster than GDP and that is bad. But why do we assume that things will get good? If something else happens, war, health crisis ect in the coming year, then what? We assume only good but the world to me is a bit of a powder keg right now, not just military but economic issues in the EU.
I only follow this stuff loosely and can tell by your post you are informed and I understand your post 100%. I just feel we are being left "exposed" as a nation because we keep borrowing ourselves out of trouble. Sure, we are in better shape then most countries but my concern is, in the last 15 years, Washington constantly going to the piggy bank to put more IOUs in it has now become an operating standard with NEVER a plan to "pay" anything back. Meaning, we just keep adding and adding. We need let the debt of 2008 become meaning less when the debt ratio was 68% and now its above 120%
Isnt there something negative about paying out One Trillion Dollars a year in interest?

Just conversing here, hope I typed it ok sounding.
This is what I am talking about though, look at the last 15 years, when does it stop and what happens with the crisis that may happen this year?
www.thebalancemoney.com

US National Debt by Year

The U.S. national debt was over $31 trillion in 2022. In 1930, it was just $16 billion. The biggest impacts have been defense spending, recessions, and recently, the pandemic.
www.thebalancemoney.com www.thebalancemoney.com
 
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