25% Inflation! (the hidden tax)

General Real Estate Investing
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Well, I now know that the country is headed into runaway inflation. As a saavy investor, I have my pulse on the heartbeat of the economy. Today, I went into McDonalds for my usual lunch (a 10 piece chicken nuggets with ranch dressing for dipping) and was shocked to find out that the price had increased 25% since last week. Last week, the nuggets were $2.00 and today they were $2.50. I think that marks the end of civilization as we know it!!!

When I’m very hungry or feeling particularly wealthy, I sometimes order dessert (McDonaldland Cookies). They are usually 75 cents, but today I was afraid to even ask the price! I’m praying for courage, so if the sun is shining and everyone pays their rent, I might order cookies tomorrow. If so, I’ll report back, if I can afford the gas to get back from town.

Mike

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Our favorite restaurant has raised its prices about 40%.

My fence guy just told me that all metal is going up and the price of fence nails has tripled in the last six months.

But I am not raising any rents, don’t think people can afford to pay more.

Furnishedowner

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But I am not raising any rents, don't think people can afford to pay more.

I would love to raise rents, but the market won’t support it here. The good news is that I’m almost completely full.

Mike

4

Good for you. We are going into our typical summer slump here, 13% vacant. It happens every June-July and then again in December. Medical people go on vacation. Now I don’t panic as much when there’s vacancies.

Furnishedowner

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In the last year, my vacancies have dropped sharply. I have tenants who came in riding high economic winds, but have since stagnated in my properties as renters. I think their problems are primarily attributed to the increase in jumbo loan interest rates, and the idea that they are waiting….they see the fall in housing prices and they are not ready to enter the market because they don’t want to buy when values are falling. I have tenants from the Midwest who are looking (and have found) greener pastures in California. Typical young families having kids and waiting for the opportunity to finally stake claim and build a home.
I would like to point out a particularly interesting point:
Many people have predicted recession in the recent times. Many people have called our economic condition a recession. The problem is that the definition of recession often implies two quarters of declining gross domestic product. If you use that definition, we are not in a recession, nor have we seen a recession since 2001.
Many economists take issue with this definition because it disregards unemployment and consumer confidence.
The unemployment rate went from essentially 4% in 2001 to over 6% in 2003. We currently sit at 5%.
Consumer confidence is at it’s lowest in ten years. This does not come as a surprise, when taking into account the abrupt stop of the rising home value ATM phenomena.
Besides the real estate crisis and credit crunch, there is really no reason to perceive recession-like conditions.
Just a passing consideration by anyone on this board will breathe life into the idea that we are actually on the heels of inflation. How much does gas cost versus 10 years ago? How much does food cost versus 10 years ago? How much does shelter cost versus 10 years ago? What else do you spend your money on?
What is your income versus 10 years ago?
I am sure that the negative tone, which we see all around us, occurs for a reason.
I simply think that our economy is a lot stronger than people are willing to admit right now, and with the right conditions (tax cuts, corporate profits) we could see an amazingly resilient economy in the next several years.

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I simply think that our economy is a lot stronger than people are willing to admit right now, and with the right conditions (tax cuts, corporate profits) we could see an amazingly resilient economy in the next several years.

Good luck with that. You’ve got two socialists and a liberal running for President. Which one is going to cut taxes? Corporations are considered evil by the socialists and the socialists want to TAKE their profits (Billary and Barack Hussein have been campaigning on stealing the profits from big oil, big pharma, etc). Add to that the Cap and Trade system that is on the way to combat the fictional global warming. Even the government itself says this system will raise gas prices $1.50 per gallon (we know the government is accurate with it’s estimates :bs).

More importantly than any of this, the baby boomers are starting to retire and there will be a decreasing number of workers supporting an increasing number of retirees and an increasing number of deadbeats who live on government handouts (like Section 8, SSDI, welfare, etc). Deadbeats are breeding at a phenomenol rate and their numbers will overwhelm our economy in the near future.

Finally, every time that a society has gone to fiat money, their has been a collapse. Of course, somehow “it’s different this time” because man is so much smarter; has better technology; fill in your favority nonsense here. However, the truth is that history repeats itself and we’re set up for a big fall.

Mike

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I noticed the same thing at Subway. I get the same thing every time I go there ( a veggie footlong w/ chips and a drink) and it was always $5.43. About three weeks ago I went in an ordered lunch and it had jumped to $7.12 which equates to a 31% increase. Scary stuff.

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I notice that Dominos has cut prices if you buy the specials. On “Two Fer Tuesday” day, buy one get one free. On Wednesday a large one-topping is just 4.99 carryout.

My favorite deli has not raised prices for my favorite sandwiches in three years.

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Burger King went up last week on my large “BK Joe” from $1.19 to $1.50 in one jump - 26%…luckily, I’m not addicted!

Keith

10

In the paper last night: the restaurants are all going to be raising prices.

The price of the flour they use has almost cuadrupled and the price of honey has increased over 4-fold.

They are rationing rice, here. Grain at the feed store has gone up almost 50%.

I noticed at the check-out line last night that the price of styrofoam ice chests has doubled.

The value of the dollar has fallen, and that’s the same effect as inflation. Prices go a lot higher.

Food’s going to get a lot higher: it’s grown with oil, fertilized with oil, processed with oil, and shipped with oil.

Too bad, I don’t seem to be able to get rents up any. It’s getting so the tenant’s biggest bill is their car payment, which is more than their rent.

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I’m proud to report the chow hall food over here on deployment is still free. Hope they don’t start charging for it. I do have to say they have remarkably fresh salad here for being in BFE.

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If you’re bad, do they bend your dog tags and stamp your meal card “NO DESSERTS”?

LOL

Keith

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Tater,

You would be shocked at how many people I have to decline these days because of high ratios. And where do you think those high ratios come from… their $550 car payment. If you make 50K a year you are bringing home $4166 per month pre-tax. So when your rent or house payment is 37% of your pre-tax income and your car payment is another 13% you are totally screwed. 50% of your pre-tax income is already spent before you even get out of bed. Debt is really really scary.

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What’s scary is that 50% ratio that the mortgage companies and credit companies look at is PRE TAX, and doesn’t include big time expenses like FOOD, GAS, UTILITIES, etc; and they still lend to 50%!

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My political statement…

http://i158.photobucket.com/albums/t96/IrisPen/FuelProxy.jpg

John $Cash$ Locke

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Good News! I scraped together all my pennies and ordered dessert for lunch yesterday and am happy to report that the price of McDonaldland cookies are still 75 cents! Maybe the inflation isn’t so bad after all. Of course, I had to WALK 10 miles to McDonalds in the rain because I couldn’t afford the gas!!! :bobble

Mike

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Uphill both ways???

Keith

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Plus two neighbors on his back and the rain turned to snow.

John $Cash$ Locke

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Sounds like Wyoming! In its defense, it hasn’t showed in almost a week now…

Keith

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AAAHHHH YES!!!

Beautiful isn’t it??? All this NEGATIVITY!!

Here’s a prediction for you…

OIL is going to get HAMMERED in the very near future!!!

WHAT??? Have I lost my marbles???

No…It’s a simple economic reality.

Anyone see what’s happening to MASS TRANSIT ridership in this country??? It’s going THROUGH THE ROOF!!! Up 100% this year alone.

Anyone notice the TRUCKS & SUV’s being traded in for Ford Focus’s and Honda Civic’s??? Both Honda and Ford CAN NOT meet demand for these cars. (they both get high 30 mpg)

Travel for Memorial Day weekend 2008… was the LOWEST in 20 YEARS!!!

Demand for Gas in this country is going to fall off the charts. Watch what happens when George W. leaves the White House. I don’t care, or think it matters which dope takes his place. The PARTY “W” threw for BIG OIL is OVER!!

This oil BS is all speculation. How do I know this??? Because they tell us every night that it ISN’T!! Once we get a sharp move down IT’S OVER for this trade. Buying oil futures has been a NO BRAINER for the last year. TOO many people who have NO IDEA what their doing are in it. When it breaks WATCH OUT!!! It’ll look like a 2005 Florida Condo pre-construction sale.

Anyone notice how “OUR” non recession seems to being spreading unchecked through out the world???

Deutsch Bank (the current LARGEST HOME OWNER in the USA) is predicting 6.5 MILLION FORECLOSURES Globally over the next 5 years.

Watch…As the rest of the world falls into their NO RECESSION, the US Dollar is going to RALLY HARD!! When that happens and with lower demand for Gas, OIL IS going through the FLOOR!!

Almost NO ONE is predicting this. Do you think China is going to need all that oil once the spending in the US and (later) the rest of the world slows to a trickle??? It’s ALREADY happening here, just wait… this MESS is just picking up speed.

As the old saying goes…“There is no better cure for high prices, than high prices.”