INFLATION ABOUT TO EXPLODE HIGHER

“Those who are capable of tyranny are capable of perjury to sustain it.” ― Lysander Spooner

http://www.gloucestercitynews.net/.a/6a00d8341bf7d953ef014e8ae500da970d-320wi

We all know the BLS artificially suppresses the CPI through bullshit substitution adjustments, quality adjustments, and various other incomprehensible hedonic adjustments made by government apparatchiks at the behest of their politician bosses. Some obscure theoretical academic  calculation called owners equivalent rent accounts for almost a quarter of the CPI weighting.

It has no relation to reality as it has increased by only 12% since 2012, while the Case Shiller Housing Price Index is up 52% over the same time frame. The median price of existing home sales is up 30% over the same time frame. It also has no relation to rent increases, as they have gone up 22% nationally since 2012. It’s essentially a made up number by goal seeking bureaucrats doing the bidding of their establishment masters.

Prior to Greenspan and his cronies getting their grubby little non-callused academic hands on it in the 1980s, CPI reflected measuring the cost of maintaining a constant standard of living, as measured by a fixed-basket of goods. The purpose of all these adjustments and calculations has been to systematically repress the reported level of inflation as a way to keep the Social Security system solvent, allow the Federal Reserve to keep interest rates falsely lower for their banking cartel owners and the biggest debtor on the planet – the U.S. government, and to conceal from the average American how far their standard of living has fallen. It ain’t working.

The average household might not know real median household income is at the same level it was in 1989, but they know they are treading water on a daily basis – using credit cards to sustain themselves while paying 15% interest to the Wall Street banking cartel.

They know their wages are stagnant and their every day costs relentlessly rise. Real hourly wages, using the fake CPI, are up just 1.4% in the past year. In reality, using an accurate measure of inflation, real wages are falling. The government can tell them inflation is only up 1.5% in the last year, but they know better. Their real everyday inflation is north of 4%, as measured before the 1990 coverup began. Now, even the BLS is starting to lose control of the narrative of no inflation.

Even the suppressed, manipulated, massaged and adjusted CPI has gone up at an annualized 3% rate over the last two months. Core inflation, which the Fed supposedly basis their interest rate decisions upon, has run at 2.2% over the last year, and has exceeded the Fed’s 2% mandate for 11 straight months. As you can see in the chart above, medical care costs are skyrocketing due to the disastrous Obamacare train wreck. Medical-care prices are up 4.9% in the past year, including a 7% jump in prescription-drug prices (a 24-year high). Medical care commodities are up 5.2% and poised to go higher.

Obama declared to the American people his Obamacare plan would cut the annual average household insurance premiums by $2,500. This bald faced lie by the slimy snake is revealed in the chart below showing health insurance CPI is up 29% since Obamacare was rammed down our throats. Of course these fake BLS figures drastically underestimate the true increases, as most hard working families have seen their premiums rise in excess of 100%, with deductibles increasing by 500%. Close enough for government drones. But, at least they got to keep their doctor. Right?

But the fun has just begun. As Obama takes his victory lap, his prized piece of legislation is collapsing under the weight of government incompetence, outrageously high costs, lack of choice, and not enough young fools willing to pay through the nose for the benefit of lazy, obese, free shit army members. If you thought the 5% medical cost inflation was bad, how about 25%? That will be the average increase for Obamacare plans come November, with 9 states having rates growing by 40% or more.

The BLS not only under-reports actual medical cost inflation but under-weights it in their CPI calculation. It’s almost laughable they give it only an 8.5% weighting, when it accounts for at least 15% of the average household’s expenses. Nothing reported by the government or bloviated by a corrupt politician can be believed. I was reminded of an Obama whopper during the debate this week when Hillary declared her ridiculous economic plan wouldn’t add a cent to the national debt.

As he was doing his best snake oil salesman routine in 2009, Obama promised Americans his government controlled health insurance plan wouldn’t add one dime to the national debt. He was right. According to the CBO, it will add 14 trillion dimes ($1.4 trillion) to the national debt over the next ten years. How naive and mathematically inept does one have to be to believe these sleazy power hungry control freaks? Evidently more than half the willfully ignorant populace will believe anything they are told to believe. Dumber Together.

This brings us to rent, which has taken off like an Elon Musk government subsidized rocket ship, due to the Fed and Wall Street’s collusion in turning foreclosures into a windfall of rental income for connected Wall Street hedge funds. The purposeful limiting of foreclosure housing supply has driven prices to such astronomical heights, first time home buyers have been completely priced out of the market. Wall Street scam artists gleefully rent out the vacant houses to the people they kicked out of those houses. This has driven up the demand for rental units, resulting in rents jumping by 4% to 8% annually across the land and especially in major metropolitan centers.

What is again laughable is how the BLS weights rental housing versus owned housing. The U.S. home ownership rate of 62.9% is the lowest rate in over 50 years. So much for Bush’s ownership society. If the percentage of people renting is the highest in 50 years and owning lowest in 50 years, why would the BLS only weight rent at 7.7% of CPI and owners equivalent rent at 24.2%? Again they are purposely under-weighting an expense that is rising at a far greater rate than their beloved 2% goal.

Lastly, we get to the expense which is about to go vertical and give the old CPI calculation a drastic boost upwards. Yellen and her cronies have been riding the low oil price gravy train for the last 18 months, giving them cover to not raise rates because inflation was below their fake propaganda goal of 2%. The plunge in oil prices from $100 a barrel in August 2014 to below $30 a barrel in February of this year gave the Fed another excuse to delay increasing rates so their Wall Street owners could continue to feed at the trough of national wealth like never satisfied bloated hogs.

The year over year oil and gasoline decreases of 6% to 10% which have been suppressing the CPI calculation are about to turn into 10% to 60% year over year increases for the next six months, unless oil prices plunge again. Gasoline prices are already up 30% from the February lows. Transportation costs account for over 15% of the CPI calculation. Household fuel and utilities account for 5% of the calculation. In case you have forgotten, a major cost of food is transporting it to grocery stores. These year over year increases in energy costs will reverberate throughout the economy.

The official manipulated, massaged, seasonally adjusted and suppressed CPI is going to rocket above 2% into the 3% to 4% range. Janet and her cronies are already working on a dozen new excuses about these increases being transitory and not a reason to increase rates. I’m sure some new global crisis will arise, forcing Janet to delay again as instructed by her establishment masters. But they assure us the economy is growing, employment is booming and all is well.

In the real world where the deplorables live, senior citizens are going to get a $4 annual increase in their Social Security payments in 2017 (somehow the government gets away with a 0.3% increase when their own numbers show a 1.5% increase), while Janet allows them to earn .15% in their money market accounts. In addition, their medical cost inflation is exceeding 10%. Two of the largest expenses for a senior citizen are rent and medical costs. Maybe this is the equivalent of the Obamacare death panels. I guess granny will have to decide between her heart medicine and Ramen noodles with a side of Friskies for dinner.

With real wages stagnant below 1.5%, rising energy costs, soaring medical costs due to Obamacare, record high home prices and rent expense due to the Fed, the average new car price at a record $34,000, and food prices rising steadily, the standard of living of the irredeemables continues to plunge. But at least our taxes will be going up if Hillary and the establishment have sufficiently rigged the election to insure her victory. Sit back and enjoy our journey to third world status.


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Hollow man
Hollow man

How can millions of Americans continue to support the current crop of politicians is beyond me. Especially any democract let alone entrenched bought off republican

wip
wip

What is the other choice?

MMinLamesa
MMinLamesa

Trump

Dana King
Dana King

“What is the other choice?”

Rope. Lots of rope.

MetaCynic
MetaCynic

Voting from rooftops?

harry p
harry p

Piano wire is a superior choice i think…

Alan
Alan

The guillotine.

Anonymous
Anonymous

Gary Johnson

starfcker the deplorable
starfcker the deplorable

Gary Johnson is a choice? You’re an idiot

Dutchman
Dutchman

Correction: Gary’s Johnson.

cranerigger
cranerigger

We are asked to believe that Americans voted twice for Obama/Biden. Enough said.

Suzanna
Suzanna

Hollow,
You rock!

Edit: Admin,
Ken Schortgen (rogue money/top stories) mentioned Jim Quinn,
on TBP, regards this inflation article on his podcast today.

https://youtu.be/9hQJMNB3h7U
(at 28 minute mark)

starfcker the deplorable
starfcker the deplorable

The good news is Friskies price has stabilized for the last few years at .46 for a 5.5 oz can. And they have lots of great new flavors. Thanks janet.

Lysander The Deplorable
Lysander The Deplorable

The hell with Friskies, I’m going to eat the cat!

Johnny
Johnny

Hold the front door! I’m paying 48 cents a can at Walmart and 55 cents at Family Dollar

Kevin Desmond
Kevin Desmond

I think Obamacare actually added 14 trillion dimes to the Federal debt which is 1.4 trillion dollars. Government does almost nothing well as we see in healthcare. They do know how to create and spend money and they know how to start wars. They can’t even protect their own turf or borders. I sense the people have had enough finally. A non-violent political revolution is ongoing. If it fails then we will likely get the next phase, a social revolution. Those are almost never non-violent.

Marshall Banana
Marshall Banana

Government does not create money. They buy it from the Federal Reserve, which is nothing more than a private corporation. It’s no more “Federal” than Federal Express.

susanna

Yes and yes and it is quite the racket the “money changer”
boys have with their monopoly on money. Begin term limits,
end the Fed, prosecute the most obvious criminals and banish
the rest. The gov is needing an overhaul.

DaBirds (Living and dying in 3/4 time)
DaBirds (Living and dying in 3/4 time)

Wish in one hand, poop in the other….

MetaCynic
MetaCynic

Federal Express wasn’t created by an act of Congress. The Fed was. Federal Express isn’t protected from competition. Federal Reserve notes are. The President doesn’t appoint the board of Federal Express. He does for the Fed.

James Stamulis
James Stamulis

“Those who are capable of tyranny are capable of perjury to sustain it.” ― Lysander Spooner
The Obama administration in spades!

RiNS

Wow

A great compendium that outlines the trainwreck that is the economy. Enjoyed reading and will add that side-order of Friskies was a nice touch.

Local radio station is playing in background coming from another room. Hits from the 70’s back when this crisis of debt caught it’s steam and train got underway. I do wonder what I will be listening to on radio 20 years from now. Seeing as the bridge ahead has been washed away by incompetence, sloth and greed I fear it will be a drone of the emergency test pattern..

comment image

Simon and Garfunkel’s Sounds of Silence just finished playing.
Synchronicity strikes again. Time for another cup of Tea. Might as well enjoy a morning while I can still afford it.

nkit
nkit

Twenty years from now just think. You’ll be old and living in a nursing home. They’ll play golden oldies for you. Problem is, golden oldies will be rap then. Enjoy!

RiNS

You are likely right nkit. Me getting wheeled to TV to watch another failed season of baseball. Cub’s fans will likely still be cursing a goat as well.

https://g.co/kgs/HNeUaK

Homer
Homer

What radio??? I seem to remember a thing called radio in the distant past. Hmmm! And the ‘bridge ahead’ will be the one you’re living under.

I’m just being facetious.

RiNS

Homer no worries

Friskies, a cup of Tea and a bridge for a roof over my head. All a fella needs to live out his days..

Benign
Benign

Judgment upon America is coming.

Miles Long
Miles Long

Judgement? Speak for yourself. I’m not in charge of or responsible for any of this shit. If, or when, the SHTF it wont be splattering on those responsible… at least not at first. Payback’s a bitch though.

Homer
Homer

There are no fence sitters. Considering what America has become, you are either for it or against it. There is no middle ground. Being against it involves sacrifice, being for it gets you Social Security, Medicare and Medicaid, EBT and Snap cards, and all matter of Government perks. Doesn’t seem so bad. But you also get all the destabilizing social forces, fear, war, a two tier justice system, just to name a few!

Tell me do you feel more secure with Homeland Security? I didn’t think so!

susanna

Homeland Security is a jobs program, people conditioning,
and soul crushing Police State faction.

Homer
Homer

That one can act without any regard for the consequences of one’s actions except for apparent short term gains is the greatest misunderstanding by mankind of how the Universe works. Judgement is nothing more than facing the consequences of our badly conceived actions.

Weighing America on the Egyptian scale of justice as depicted on the walls of the temples and tombs of ancient Egypt, in the last 40 years America, I think, is found wanting and God’s blessing will be withdrawn.

That can’t be good! That’s why I pray every damn day!

Trapped in Portlandia
Trapped in Portlandia

You don’t understand, BLS will not let the inflation number get above 2% annually. They will just keep making adjustments to their algorithms to insure inflation stays low.

They did it with food prices by assuming that a person who at steak would switch to hamburger and then to cat food. They will do the same housing. In other words, a family who owned a home would switch to a rental and then switch to a homeless camp. Presto their housing costs are zero.

The problem isn’t the government and BLS, it is the dumb-ass citizens who actually believe the government.

Homer
Homer

Yes, the problem is the Government and BLS as they chose to lie to the American people. Anyone who shops in a supermarket, buy a Obama Care policy, rents housing, or is out of work and can’t get a job doesn’t believe the statistics coming from the BLS. It’s that they don’t know what to do about it. State pronouncements of the falsified stats get a lot of media attention and are herald as true and accurate. It’s nice to own the MSM. The propaganda arm of the government.

People like John Williams of Shadowstats.com, who accurately correct and portray the government and BLS metrics get very little media attention, if any at all. The People aren’t entirely the blame and not all are dumb-assed. They have been hoodwinked by a very powerful propaganda machine.

But, the People are waking up to the manipulations. We can thank Trump, Julian Assange, and other brave souls for pointing this out.

Do you think that you will get a more open government with HiLIARy or less open government?

Remember Obama’s promise of a more open and accountable government when he was running for POTUS the first time? How’d that work out for you?

Lord Koos
Lord Koos

I don’t know who they think they are fooling — investors maybe? The average citizen can certainly notice that they are now paying more for a 12 oz box of cereal than they were paying for 16 oz box a year or two ago.

Lulu
Lulu

who down votes this?

Pekka
Pekka

Finland thanks for the perspective. I’ll be out with this in FB as soon as one of my “friends” is enlightning repeatedly how great the present administration is and what a wonderful continuation, and then some, Hillary would be and most likely will be. Consider this: I stumbled to a poll that claimed 53% would vote for Hillary in France. We had a poll this week in Finland stating 70% is for Hillary. And I promise you that the numbers in the rest of Scandinavia (Sweden, Norway, Denmark, Iceland) is at least equal to the Finnish numbers. Isn’t that wow, and how sad it is that the MSM is not giving you any other perspective!

bb

Bingo , judgment is already upon America.Witness the continuous non Christian,non white third world bottom feeders invaders.Witness the astronomical debt levels.Witness the moral collapse of our republic.All judgements from God for our idolatry.

Homer
Homer

bb–God doesn’t judge you! Get over it! God is LOVE! God LOVES his creation. You judge yourself as to whether you lived up to God’s standard for his creation and if found wanting, you experience what you created. The Good you create is experienced as Good and Bad that you create is experienced as Bad.

Quit looking for a punisher to right the evil in the world. God’s not the Guy! Remember the two great commandments? They’re based upon LOVE, get it.

Look, bb! When you see God as a punisher, you separate yourself from God. You place a barrier between your Spirit and the Spirit of God. There is only one sin and that is the denial of God. God want you to be united with Him. That’s the great promise of the Parable of the Prodigal Son. Its whole meaning is that God Loves you and wants you back with Him.

Toby
Toby

Wow! Are you Swedenborgian? Sounds like their philosophy. Well put.

General
General

Inflation is not an increase in prices. It is an increase in the money supply. An increase in the money supply, usually, but not always, leads to an increase in prices.

That being said, the real inflation rate is very high and likely going to get much worse until the fake dollar dies.

Homer
Homer

General, close but no cigar! Yes, inflation is an increase in the money supply, idiomatically speaking, and ALWAYS and I mean, ALWAYS leads to higher prices.

Today, we don’t have money. We have a Credit and Debt substitute for a money system. There ain’t no money except for clad coinage. The FED extends credit, but it’s meaningless unless someone else, the other side of the coin so to speak, takes on debt. The two go together, can’t have one without the other, as the song goes. So, what is credit “money”? Nothing more than Demand. Your ability to demand products and services from another.

Well, there is a way that inflation doesn’t lead to higher prices. That’s when government puts on price controls. Like the old Soviet Union, potatoes, by government edict, are only 5 rubles a pound. Of course, growing potatoes costs 10 rubles a pound. So nobody grows potatoes and there are none in the market for sale. Hence, no price increase because of inflation, no potatoes either.

Price increases brought about by inflation can be delayed but never negated. Also, prices are always a result of ‘high bidder wins’. You bid with credit “money”. But, not all products and services receive the same demand and therefore, are ‘bid at a lower price’. Look at Beannie Babies as an example, before and now. Items in high demand are ‘bid’ up, like food and energy. Items in low demand are ‘bid’ for less. So there is ‘price inflation’ and ‘price deflation’ occurring at the same time across the marketplace because demand for products and services vary.

In the Weimar Republic (Germany between 1919 and 1933) inflation increased. In the early stage, although inflation was high, the people were fearful of the economy and the state of their economic security. They saved their currency and cut their purchases. Money velocity fell. The inflation created by the bank wasn’t having an effect on prices because the demand fell.

Later, when the economy seemed to improve, all this stored up currency came out of the mattresses and people, becoming more secure economically, began spending. All the inflation create up to that point began having an effect on prices and prices began to skyrocket. Price inflation was delayed but not negated. The same thing happened after WWII in the USA. Rationing during the war curbed demand and when the war was over all that stored demand came out and people spent and prices climbed. There was a hellva increase in inflation by the US to pay for the war.

General, there are two ways to handle debt. One, default on it. This includes inflation of the currency to the point where it is worthless and won’t buy anything (Hyper-inflation). Deflation is also a default. It is removing demand from the monetary system. Price deflation occurs because demand has fallen. People don’t have the currency make purchases. Two, pay off the debt. Retire it. There are several problems with this approach. First, in our ‘credit-debt’ system, debt is never retired but merely transferred to another. So, debt only grows larger. Secondly, the means that the US had used to pay down the debt of WWII was inflation, after the war and into the sixties. But, there was a spurt of productivity that ameliorated the price increases that would have happened as the result of war inflation and people had stored demand that the government could take thru inflation and taxes.

Today, people don’t have stored demand. Most don’t have much more than $1,000 to their name and debt has grown to gargantuan levels. People are only taking on debt that they need to survive. You can see this in the Money Velocity charts. People aren’t spending. There is war, the rumors of war, and political uncertainty and they are fearful and storing up like the Germans did.

When people realize that their currency is losing purchasing power rapidly, they will spend, wildly, for anything that is real and this will ‘bid’ up prices astronomically and the government and FED will print endlessly and it is called HYPER-INFLATION.

This is the way I see it!

General
General

Lol. I agree with most of what you are saying, but you just contradicted yourself. Inflation in the money supply doesn’t always lead to higher prices. In certain circumstances, prices can fall short term, but yes long term, prices rise with an increase in the money supply.

The Federal Reserve is the source of debt money and must be destroyed.

Homer
Homer

No contradiction. Inflation always leads to higher Price Inflation. It can be delayed for a number of reasons, but it is as inevitable as taxes and death. Figure out a way that it doesn’t and a Nobel Prize awaits you. I’ll give you an example.

A cashless society where all your money and transactions go thru the banking system, the government can tell you that you can only withdraw, thru purchases, $100 a week. This is rationing of your purchasing ability. It is cutting your Demand for ‘goods’ and ‘services’. This has the effect of balancing Supply of ‘goods’ to Demand– money in the economy. If you can’t spend your money it is the same as not having any. This affects Price Inflation because of your inability to ‘bid’ for ‘goods’ and ‘services’. It essentially reduces the money supply.

P.S. Guess why the government wants to go cashless. If it took you more than a second to answer, reread the previous paragraph until you understand what I said.

The FED is a creation of the government and is sustained by the government for obvious reasons. The government isn’t an innocent party in this economic matter.

Look, prices are a reflection , more so, of Supply and Demand as well as Inflation and Deflation which affects Supply and Demand.

General
General

Not really. Imagine if the increase in the money supply was fixed at 1% per year, and productivity improvements were 2% per year. You could have mild inflation in the money supply (1%) and a decrease in prices (1%).

Homer
Homer

That’s called ‘grow the economy’. Theoretically a nice thought, but hardly realistic.
Inflation always creates distortions in the economy. Subtle Inflation is probably worse than massive leaps in terms of percent. When you have a whole lot of inflation, things go to pot in a hurry and the economy readjust quickly. What we have is subtle inflation and already we are talking ‘bail-ins’, cashless economy, negative interest rates, meddling in the stock market and bond market, massive deficits, high unemployment, 50% on food stamps, high taxation among other ills. Any Inflation is letting the horses out the barn door. There’s never is any good Inflation despite Keynes suggestion that there is. Also, since when does government ever keep their promises? Ask the American Indian. 1% a year? Fat Chance!

How is it you think that productivity will increase when the Inflation that we have been living with have proved just the opposite. Our productivity has declined.

General, you neglect looking at the effects (contraindications) of subtle Inflation. Who benefits from Inflation? Those who create it. Taxation is the legitimate method of paying for government, not Inflation which is stealing.

General
General

I never said inflation was good. I would prefer that we follow sound money as per the Coinage Act of 1792, which was passed by George Washington btw.

You seem to get ahead of yourself.

Johnny McTonny
Johnny McTonny

Too much printed dollars coming back as inflation. What else would you expect?

Homer
Homer

Johnny McTonny–Too many printed dollars IS Inflation. Price Inflation is the result. Of course, you could grow the economy (which means increasing ‘goods’ to balance out the increase in printed dollars) . hahahaha! Like not!

You know, Inflation really ain’t that bad if it weren’t for that damn Price Inflation thing rearing its ugly head. I know, we’ll just ban higher prices like Nixon did. That was easy.

IndenturedServant

Just end the fed and end the inflation.

Make an amendment to the constitution that requires the President, Sec. of Treasury, the majority and minority leaders of the house and senate to appear in public and fully explain/balance the budget every six months with an extensive Q&A period to follow. If the budget fails to balance every six months, the Treasury Sec. loses their job on the spot and the others are no longer allowed to run for any office once their term expires. As it is now, their only incentive is to enrich themselves and grow their power. Apply the proper incentives and make these people answerable to the citizens.

Homer
Homer

IndenturedServant–I think that I just stumbled into Wonderland. Nice thoughts, tho! Keep up the good work!

Things are not going to change until the ‘Fat Lady’ sings. All I hear now is the “Sounds of Silence”.

IndenturedServant

That’s probably because everyone is still sitting around waiting for the plantation owners, out of the pure kindness of their hearts, to restore our rights, freedoms and liberty. Here’s a little pro tip: They never will, not even after a full blown collapse. If we don’t look out for ourselves no one will. Till then, enjoy your servitude. Your owners depend on it.

Peggy
Peggy

You guys! I swear…it’s simple. We have collectively lived far beyond our means for 50 years now and have borrowed ourselves into oblivion. The debt which the taxpayer now owes to the bondholders is going to be paid back and not be defaulted upon. And as the Whitehouse told Kyle Bass, payment is going to come out of the value of the dollar. That is to say inflation. The scramble that is currently ongoing is simply a dogfight to position yourself, whether big or small, so that when the payback begins in earnest your standard of living falls less than the next guys. In 2008 I was screaming at the top of my lungs, nationalize all of the money center banks and put our currency back on a sound footing because this will be our last chance. It won’t happen now without the pitchforks. And in the final analysis the pitchforks are the ONLY thing that the money center bankers REALLY fear. Ask Hank Paulson.

Homer
Homer

Simple, Peggy? I usually find when people think things are simple that they don’t really understand the situation. In my old age, I have come to realize that everything is more complicated, more expensive, takes longer, and is harder to do. Simple and easy ain’t in my vocabulary.

Peggy, what is the value of the dollar? There are comparisons between the 1913 dollar and todays dollar and the dollar has lost 98% of its value. All thru Inflation. Hank Paulson says that the dollar’s value is what it can buy, in other words, what someone is willing to give you something for it.

The dollar is valueless as a unit of account. It’s elastic. It’s value changes based upon the whims of those printing it and using it.

What the Whitehouse told Kyle Bass is meaningless. I like Kyle and read everything he writes that I can get for free. Ya! I’m cheap and I realize that information is worth what you pay for it. He was extremely right on demographics, but I not so sure on the Deflation issue.

Peggy, I think and I have thought so for over 30 yrs. that the debt is going to be paid with worthless dollars. In other words, paid for with hyper-inflation. I don’t think that the government is going to be selling the Brooklyn Bridge to foreigners. The US is going to keep their assets and stiff the holders of debt. That’s bond holders, dollar holders, pension holders, etc.

Stiffing people is just the logical extension of the philosophy of giving people depreciating pieces of green paper for valuable resources with no intention of redeeming those pieces of paper with the same value as when they were issued. That’s CRIMINAL. Hell, that’s our Modus Operandi. That’s what we have become. Scam artists!

Peggy, the reason that the currency can’t be put on a sound footing is that it would have been too painful and the CONgress always avoids pain and pushes anything that might be painful into the future. Kicking the Can down the road! The truth is that anything we do is going to involve pain. Von Mises was right. You can’t avoid the consequences of credit expansion.

Ya! People try to position themselves. When the Titanic is sinking, you want to be the first person in the lifeboat.

EL Coyote
EL Coyote

Homer, I don’t know much about economics but I agree that a dollar’s value is whatever you can get for it. If they want a stronger dollar, they would have to issue new dollars and collect the old ones. Or they can stop issuing onesies and let the 20 spot be the new unit. This is effectively what has happened with coins, you need a quarter to get a candy from the candy machines, pennies, nickles and dimes are useless there.

When I was a kid in Juarez, a 20 centavo copper coin about the size of a quarter was the smallest unit. The lesser coins were mostly relics that you saw once in a while like buffalo nickles and barber dimes.

Eventually, the debt would be inflated away. It would be a drastic measure to reissue currency at 1:1000, brutal for the boomers who have wealth stored in old dollars but efficient for the millenials who have debt piled up in the same old dollars.

Getting tangled up in 1913 vs 2013 dollars is just getting tangled up, were you alive in 1913?

Bea Lever
Bea Lever

EC- if I may horn in…..

I was not alive in 1913 but I was a real live grocery shopper in the early 60’s when you could buy quite a bit with a dollar.

5 loaves of bread- 1 dollah
2 pounds of bacon- 1 dollah
4 dozen eggs- 1 dollah
10 Coca Colas in bottles out of the Coke machine- 1 dollah

Today you can get some items for a dollah but you better stop at the Dollar Store to do it.

EL Coyote
EL Coyote
Homer
Homer

EL Coyote–A stronger dollar. Stronger in relation to what? The dollar is stronger today because other currencies are weaker in comparison and others people want to hold dollars which makes them in demand which raises their purchasing power, value. Maybe, maybe not! Maybe it’s a comparison of yesterday’s dollar to today’s dollar.

All currencies in relation to gold are weaker. Stronger is a measurement. a comparison, and you have to know what the yard stick is that you are using to make that judgement. Otherwise you’re lost in understanding the reality of what you are talking about. In order not to feel lost we make assumptions that makes the statement understandable to us. Those assumptions can be wrong.

It’s brutal whether debt is inflated away or the dollar is devalued. Inflation is a subtle process in its early stages where devaluation is a stark shock. Devaluation can be blamed directly on the government whereas inflation with its price inflation can be blamed on foreigners, greedy corporations, and other ne’er-do-wells, not those who caused it.

No I wasn’t around in 1913. I was relating a comparison of purchasing power others have made. It reveals the subtle process of destruction of money as a result of Inflation.

EL Coyote
EL Coyote

Homes, I’m not an economist. I do not understand dollars. If I made the smart-ass remark about you being around in 1913 it was to say that I prefer to deal with problems of the here and now. I don’t know how much a drachma bought back then and I don’t care.

I mean, if you want a strong dollar that buys as much as it did in 1913, you will have to accept deflation, folks will have to work for less. That would work if it wasn’t for debt. Debt is the engine of inflation.

At some point it will be more efficient to stiff the boomers instead of poisoning them to get out of debt.

Jubilee might have worked back when the lifespan was 50 years. Now that boomers are living longer, the debt doesn’t disappear. Therefore, inflation services the debt. It’s better than a bullet servicing the debt.

RiNS

Homer

You seem to know a bit when it comes to finance. I work in construction and will always be a novice. So I have a question. I deal in practicalities. Likely because my job requires concrete and rebar. Anyways as I understand it right now if rates normalized to historical average the interest will subsume the budget leaving no money for the normal functions of government. That is what the math says. We are essentially bankrupt.

Why do smart money people keep giving cash to a beggar that can’t pay it’s bills. The best they can hope for is another IOU when the bond comes due. It makes no sense to me.

Homer
Homer

RiNS–I’ve done my share of concrete and rebar, too. Spreading concrete is hard work.

If Interest Rates normalize to historic averages of 4 1/2% to 6%, it will become too burdensome? Well, that’s a problem with interest and compounding, so I expect that Interest Rates will stay low because we can’t afford higher rates. But, the FED really doesn’t set interest. The lender (buyer) sets the interest. It’s his money and he wants the ‘time value’ and the risk that he is taking compensated. Who will lend his money at a loss when he could have it to spend himself, now.

The question is who is buying the bonds? We know that the Saudis have been a big buyer thru the Petrodollar and the Chinese and others have accepted our bonds in trade. Other Central Banks have our bond as part of their reserves.

The Chinese have been a seller of bonds lately and I suspect that the buyer of last resort is the FED.

There are trade incentive to hold our bond and maybe military threats by us (unsubstantiated) to hold them and not sell them. I expect that many of these bonds will be repatriated and then we will be in a fix. Then again getting dollars for the bonds doesn’t help if you can’t buy real things with the money you get for them. I’ve read where the Chinese have been using their US bonds in trade for real resources. Trading paper for real wealth.

There are institutional buyers that front run the FED and buy bonds at par or even negative rates (Europe) hoping that the rates will go more negative. When Interest Rates drop, the value of existing bonds become more profitable. These are trading accounts not holding accounts because holding bonds is a loosing proposition. Bonds today, at their low rate doesn’t compensate the buyer for inflation or risk.

When our bonds come home to roost, I don’t think that the FED will buy them. I think that the government will move your IRA, 401k, pensions into government bonds for your own protection of course. This will sop up the money that would need to be printed to buy all those returning bonds. You won’t have the money to spend as your pensions, etc will be locked up in 30 yr government bonds and the money only rationed out to you.

Of course, we could just default on them when the only course of action is default or hyper-inflation. Presently, at this point in time any course of action has dire consequences.

We’re not bankrupt. Of course, we can’t pay off our debt in a million yrs. , well maybe in a million yrs. Your not bankrupt until someone asks for payment and you can’t pay them and are legally disposed of your assets (disposition). That hasn’t happened. The threat of war by our military will probably keep that from happening.

Hey, you’re in economic Wonderland. When does anything make any sense?

Boat Guy
Boat Guy

Well done and a great deal of information to digest and sadly too few people actually will ! I have attempted to explain to my own family how bad things are and just how much worse they will inevitably become . So I offer some possible protective measures and am immediately cast out as the bearer of bad news with nothing good to share . This tells me all I need to know the left elite have brainwashed Americans and it will end badly . There will be catastrophic failures from energy , food and security nationwide , war or riots ? maybe either way the lights may go out and people will be hungry and desperate ! Storm Clouds are coming and everybody will get wet ! Don’t think it won’t happen just because it hasn’t happened yet !

Homer
Homer

Sad, very sad, but true!

KaD
KaD

Website keeps track of online retailers whose sites have been hacked with the goal of compromising your credit card details: https://gitlab.com/gwillem/public-snippets/snippets/28813

Skinny
Skinny

Sayeth Quinny – “Good catch. maff is hard. I changed it.” Its math like this that ended up with IKEA buying STOR. The B no L S has a plan for rising energy prices as well. Instead of gasoline they will assume we will run our cars on cooking oil. Food prices dropped but have since bottomed out. For the foreseeable future, the BS will concentrate on the drop, and ignore the bottoming out part.

Homer
Homer

Skinny, I had to read your comment 4 times, but I got it.

Ya! We are truly hopelessly lost in Economic Wonderland and the compass that I carry is spinning wildly.

General
General

Everyone complains about the bullshit.

When I sit down and think about possible solutions, HSF seems to have a reasonable solution. Although granted, a lot of people don’t want to or can’t for different reasons.

Homer
Homer

General, self reliance is highly overrated. I’ve ask HSF to adopt me. I told him that I don’t eat much and I work hard. Still waiting tho.

The reason that we are successful as a species is that we depend and cooperate with each other. It was a good strategy. I don’t know of any other animal on this planet that has sent someone to the moon.

HSF will eventually run out of resources. His store will sooner or later be exhausted without outside help. I just turned on my oven. Someone else thought it up, someone else made it, someone else created the electricity to run it. Boy, am I grateful to be able to use it.

The things we take for granted like my oven are built on a hierarchy of a thousand minds creating every step in making my oven possible. I didn’t have anything to do with it and here I am, blessed by it. We need each other.

I just think that James Howard Kunstler has it right. It will be small communities working with each other. The large mega governments will be a thing of the past. An anachronism. Like today, cooperation will be the future. also.

Que Sera, Sera (Whatever Will Be, Will Be)

General
General

I need to be more specific. I wasn’t referring to living forever on a farm. I meant to imply that living on a farm with family and a steady supply of food and water is the best way to get through the coming financial storm.

Llpoh
Llpoh

Gee, I was right again. Amazing.

The govt/PTB will try to inflate the debt away. They will try to do it via controlled inflation if say 10% a year, devaluing the $20 trillion by $2 trillion annually.

But, fuck-ups that they are, they will likely screw up that plan, and inflation may scream ahead at unimaginable levels.

The other small issue they gave not come to grips with is that their little plan relies on wages screaming ahead at the same time. Oops. Not happening, is it.

It is going to be a clusterfuck.

EL Coyote
EL Coyote

LLPOH, I tried to cover that scenario but then went all conspiracist and surmised that, using quantitative easing, bankers have co-opted the muppet’s savings. Bankers can now sit back and laugh as the muppets discover that their savings and home equity are worthless.

I suggested that they could kill the muppets but inflating their wealth away while pocketing the proceeds of QE is a plan Lex Luthor could only dream of.

You said the middle class that was born after WWII was an anomaly. Well, the bankers and their government cronies are going to claw the money back with a vengeance.

Homer
Homer

It’s not 20 trillion. It’s all these unfunded liabilities. All these ole farts wanting their Social Security, Medicare, and pensions. The nerve of them!

RiNS

Yup they are going to screw it up because it is one giant Ponzi scheme. Once the confidence game is exposed the smart will try to quietly leave the dance. Sooner or later somebody will trip over a chair in the dim light. Then the lights get turned on and those who are left will panic. The stampede will then ensue.

Llpoh
Llpoh

Homer – I disagree with you. In my experience most everything is in fact simple. People try to make things seem complex so as to hide their incompetence. If someone ever says “but it is not as simple as that”, you can be damned sure it is in fact as simple as that. Or that they do not have the will to do what is required.

For instance, people say stopping crime is complex. I say it is not. I say I could stop all crime immediately. For instance, if you simply killed off thieves, robbers, addicts, rapists, etc., crime would cease virtually overnight. Simple. Easy. Cheap. But people do not have the will to implement it.

Almost everything is simple. If the will exists. And if incompetence is not tolerated.

Homer
Homer

I was watching a NatGeo show on the first emperor of China. He was ruthless, murderous cutthroat, demanding and intolerant. Generally, a rather unlikable fellow. He dealt with incompetence by not giving you another chance. But he had to deal with all these bodies stinking up the place. See, it is complicated.

JdL
JdL

Would it kill you to expand “BLS” one time, or are you making a point that anyone who doesn’t have every government acronym memorized is an idiot to be sneered at?

Stucky

BLS stands for BlackLivesSuck

DaveP
DaveP

According to Zillow, my house has increased by 66% in value since I bought it in 2012. Now that doesn’t mean shit to me since I’m not selling it. In the same time frame, a 21.3 ounce box of Kashi Go Lean Crunch has gone from $3.12 to $4.20 at Walmart. A 35% increase, while my income hasn’t increased at all.

Dutchman
Dutchman

Was cleaning the range / oven the other day. There were ‘new’ and ‘old’ cans of EasyOff on the grocer’s shelf.

Old can 14.5 oz. New can 12 oz. – That’s an 18% reduction in product – for the same price. Yet the FED tells us inflation is less than 1%.

PoorStevie

Here is the real enchilada folks.
Basically a McDonald’s Big Mac could be bought for a little more than a $1.00 in 1996 and today in 2016 a Big Mac is almost $5.00. In conclusion, prices of Big Mac’s have risen 5X. One issue is that it seems that the size of the Big Mac has been made a little smaller also. One can conclude that the burger business being competitive as it is and the many ingredients that make up a burger we conclude that prices of almost everything has risen by 5X in 20 years. Mostly necessities have risen by more and things that are not necessities have risen less. Net though is the same overall as prices have risen about 5X over 20 years. Basically the observation is true inflation averaged over 20 years has been running about 8% per year and these are compounded increases.
Inflation is baked in to our western economic system, until it breaks.
So unless you made 12% on your savings yoy …after taxes you would have had made no forward progress.
Imagine folks all the inflation money went into the military for purposes of pillaging the world.

ambrose bierce
ambrose bierce

suppose the government actually wanted inflation, and in the goal of implementing that inflation they over-reported CPI, in order to give fixed income and wages tied to the measure more money in their pockets as part of a fiscal stimulus plan?

Ananomous
Ananomous

When will we all have enough of the B.S.?? Isn’t it time to stand up and revolt!! March to Washington and throw the bums out!! If force be necessary then so be it!! If we don’t do something soon it will be just too late( we won’t be able to afford gas for our vehicles or a vehicle to put gas in). Someone needs to organize a gigantic protest with ad many different kind of Americans as possible in Washington on the steps of Congress!!

TAKE ACTION NOW!

Lgr
Lgr

Anono, not sure how you came to read an old post by Admin from Octubre 2016, but the totle caught my eye “Inflation”, so I had to sniff it out, as it was before my time.
Two takeaways.
1. Quinny at his best, and
2. The usual big Dawgs chiming in on the comment thread, too numerous to list, or pay homage.
Left me wondering…
Whatever happened to Homer?

Still like the old blasts from the past.
Kinda like looking at someone’s shoebox full of pictures from a party, back in the day…funny, reveals, familiarity, and an occasional new nugget of insight.
What’s not to like?

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