Thursday, February 01, 2018

Testing 1...2...3.

I guess we get to see if we are strong enough again to survive higher interest rates. Every time interest rates cross 4.25%, they've pulled back in the past.

Last night on the news they predicted that gas would rise to 4 bucks a gallon by summer. And the dollar has fallen enough now that I believe them.

Gas prices going up like that is infinitely more scary than interest rates to me right now. That is going to hit people harder than it did during recession because people are commuting from even farther  and farther afield these days to try to find cheap housing. So while you can try to insulate yourself from higher interest rates, you can't do that with gas prices. That hits you right away. And when people are spending hours on the freeway.... it's not going to be pretty.

Likely the tax cut everyone is getting will go directly into gas. These two things are fairly deflationary - so we will see if inflation wins out this time.  I personally think the flood of money that was printed and is now free, will prevail. But it's going to be messy and everyone is going to be mad. I believe there is a ridiculous amount of pent up demand in lots of areas. And that is very inflationary.

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