ARE YOU WORRIED ABOUT DEFLATION?

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Posted on 27th October 2014 by Administrator in Economy |Politics |Social Issues

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Grandma Yellen, Federal Reserve Presidents, Wall Street bankers, CNBC talking heads and Ivy League economists are terribly worried about falling prices. Are you?

Via The New York Post

Meat, fruit, milk and butter prices skyrocket

New Yorkers are bringing home the bacon — but can’t afford the beef.

The prices of supermarket staples such as meat, milk and butter are skyrocketing.

US Labor Department data show the bill for butter surged 23.7 percent over the last 12 months. Meat rose 13 percent in the last year, with beef jumping 17.8 percent — the biggest boost since January 2004.

Meanwhile, fresh fruits other than apples, bananas and oranges increased 9.5 percent and whole milk rose 8.7 percent.

“Our paychecks stay the same, but the food prices keep going up,” fumed Jody O’Toole as she shopped at the Associated Supermarket at Eighth Avenue and 14th Street. “You still gotta feed your family, but meat and milk are too much.”

Colleen Vincent, who lives with her mother in Brooklyn, said she’s avoiding meat and sticking to canned goods and cabbage, which she turned into three meals last week.

“I don’t do big grocery shopping trips anymore,” said Vincent, 37. “I have to buy something that gives me more bang for my buck.

“We used to buy beef — now it’s a special treat,” she added. “There are other things I want out of life. I don’t want to spend everything on food.”

Steve Gould, 68, was picking up seltzer water, bananas and yogurt and said he refuses to buy anything unless it’s on sale.

“I want people to stick their heads out the windows like they did in the movie ‘Network,’ and say, ‘I’m mad as hell and not going it take it anymore,’ ” Gould said.

At Associated, a gallon of whole milk was going for $3.99, an eight-ounce package of Breakstone butter was $3.39 and ground beef was $4.19 a pound.

In Chelsea, the Gristedes on 26th Street and Eighth Avenue sold milk for $4.99 a gallon, eight ounces of Breakstone butter went for $3.49 and ground beef was $8.49 a pound.

The Inflation/Deflation Train – Always on the same track!

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Posted on 13th August 2014 by MuckAbout in Economy |Politics |Social Issues

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Mucks’ Note:  The   Woodpilereport can be found at:      http://www.woodpilereport.com/.

‘Ol Remus is spastic with his post filings and you never know when one will show up and what it’s going to be about (kind a’like TBP)  Since he allows unrestricted reposting of his newsletter with credit, I will be taking advantage of that and bring his “reports” over to TBP whenever a fresh one shows up.  You might check the website directly now and again because ‘Ol Remus tends to stuff in baskets of interesting blurbs, quotes and such along with the main posts.

How you all enjoy.. Please let me know if it’s worth the trouble..          

Old MuckAbout

 

Curtesy of The Woodpile Report 8/12/14

This train wreck isn’t simply going to hit a wall out of the blue. Actually, it has been forming and accumulating and expanding for many years now, and yet it has simply been ignored, particularly by the financial markets which have ridden this bubble to these extreme and historic heights. The only issue is, when does it hit the wall? The answer to that question is it’s not very far down the road, and I can promise you that is when all hell is going to break loose.

David Stockman at davidstockmanscontracorner.com

                    There’s good evidence our current inflation is artificially induced to stave off an underlying deflation. Deflation is a slowing of the “velocity of money”—a measure of how often a dollar passes from one hand to another. Deflation theorists say the velocity of money became near-catatonic in 2007-2008. The ongoing “money printing” is intended to compensate for the lack of real circulation. It’s this “money printing” that accounts for such inflation as exists, and even at that it’s not been effective. More technically, in the last twenty five years the M2 money stock has gone up 700% while prices have gone up 200%. It’s the dormant 500% we should worry about.

                      In a classic deflation like the Great Depression of the 1930s, currency becomes all but unobtainable, everyone sits on it, in part because they believed “everything will be cheaper tomorrow.” They weren’t wrong. Faith in the currency was justified by real events so it became more valuable over time. The question is, if we revisit real deflation, what happens to the price of gold and silver? The only honest answer is, nobody knows. History says the price for precious metals—including coins—will drop just like prices for everything else. And that’s the key, just like everything else. At minimum their relative value will be maintained and they’ll probably do better in terms of purchasing power.

                  Paper traders and promise holders will take inescapable losses because debt doesn’t fall with everything else, it becomes unpayable. Deflation incurs a relentless repudiation of debt—touchingly called “restructured debt” in its final phase—and the stair-step crumbling of everything connected to debt, including prices. Yes, gold and silver prices too.

                    1930s-style deflation is an economy’s rigor mortis, proof it’s well and truly dead and good evidence the regime may be next. Government will do anything to counteract deflation—or even talk of deflation. Which is about where we are now. The policy has been aggressive inflation—they call it stimulus or bailouts or quantitative easing—and it’s done in the sorriest strongman’s pest-hole and name brand empires. Political flavorings aside, there comes a time when inflation devolves into a frantic torrent of nearly worthless paper. It’s here the purchasing power of gold and silver go to escape velocity while that of currency soars twenty feet into the ground and disappears. Long before that, gold and silver won’t be on offer for any amount of currency.

                     By the time the handwriting is on the teleprompter it’s already too late. Holders of precious metals are ahead of this curve. They know it can take mere weeks for ordinary inflation to metamorphosize into an outright repudiation of the currency, meaning hyper inflation.

Hyperinflation arises as a result of money printing leading to a currency collapse and not from demand pull. The slight deflation that we are experiencing currently is a prerequisite for hyperinflation. The fear of a deflationary implosion forces governments to print money, leading to a collapsing currency which historically has always been the cause of hyperinflation.
Egon Greyerz, Matterhorn Asset Managament AG

                    In passing, there are other dimensions to all this. Given our lawless police state, our institutional corruption and the collapse of official ethics and personal values art-link-symbol-tiny-grey-arrow-only-rev01.gif, we’re closing fast on third world status. Already the lives of much of the population are indistinguishable art-link-symbol-tiny-grey-arrow-only-rev01.gif from the bottom reaches of the Third World. This protected subset of society, these professional voters, are paid to consume, know only consuming and despise all else. The coming debacle will be much less orderly than the one of the 1930s.

             Don’t imagine DC‘s ‘public servants’ would perform acts of selfless heroism in a currency collapse. They’ll lack motivation, credibility and legitimacy, perceived or otherwise. One last note. It was rebellions and secessions that finally dissolved the Soviet Union, long in the making, short in the doing. They succeeded because police and armed forces are fractional like bank reserves—not enough by orders of magnitude. It’s said the United States is nearly ungovernable even in times of stability and prosperity. Some states may save themselves in whole or in part. It’s the least happy of unhappy endings for our former republic, but the most likely.

                    Deflation is historically more relentless than it is swift, typically it takes a year or two for the last holdouts to topple into the abyss. Inflation is historically as patient as rust, festering as a low-grade infection for decades. But hyper inflation goes from hint to full stride like a drag racer, typically blindsiding layman and professional alike. If deflation is a return to honest bookkeeping, hyper inflation is a book burning. And when the confetti blows away and takes its imaginary wealth with it, what remains are those things of enduring value: land, food, houses, clothing, tools, medicine—and gold and silver. History tells us this is so. All of history. In all places.

                There’s no predicting these things, but be aware socialist regimes consider any asset subject to eminent domain, including life itself. Government doesn’t give, it takes. It’s foolhardy to rely on government, ever, especially when things get sketchy. Whatever dire events lie ahead and however they unfold, precious metals will have their place, and bullion in the form of recognized coins is likely to have the widest acceptance. It may be wise to make them a part of your discreet holdings before government makes itself a party to every transaction.

                  Only a complete and irredeemable fool will store coins in a bank or any other off-premise location not under his direct control and personal access. Even the minimally prudent will keep them in a location unknown to anybody whose interest is not identical to his own. Nor will he generate avoidable documentation. We are deeper into the storm than most admit and many can imagine. While our well being is not assured by taking such measures, it’s imperiled if we do not.

 

Mucks’ Note: You might try a visit the website directly every now and then.  ‘Ol Remus tends to throw in bushel baskets of nifty thoughts, comments, quotes and other verbiage (all good) along the edges of his main post.  It’s a fun site to just browse.

Please let me know if you enjoy it enough for me to take the time to pick up new posts and bring them over to TBP

MA

SMOKING GUN FROM THE FEDERAL RESERVE MURDER OF THE MIDDLE CLASS

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Posted on 18th May 2014 by Administrator in Economy |Politics |Social Issues

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“Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling.” - Ben Bernanke

“The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.”Alan Greenspan

There you have it – the wisdom of two Ivy League educated economists who are primarily liable for the death of the American middle class. They now receive $250,000 per speaking engagement from the crooked financial parties their monetary policies benefited; write books to try and whitewash their legacies of failure, fraud, and hubris; and bask in the glow of the corporate mainstream media propaganda storyline of them saving the world from financial Armageddon. Never have two men done so much damage to so many people, so quickly, and are not in a prison cell or swinging from a lamppost. Their crimes make Madoff look like a two bit marijuana dealer.

The self-proclaimed Great Depression “expert” Ben Bernanke peddles pabulum about inflation being too low and posing dire risk to the economy, but is blasé that swelling the Federal Reserve balance sheet debt from $900 billion in 2008 to $4.4 trillion today with his digital printing press poses any systematic risk to the country and its citizens. Either his years in academia have blinded him to the reality of his actions upon the lives of real people living in the real world, or his real constituents have not been the American people, but the Wall Street bankers that pulled his puppet strings over the last eight years.

Now that he has passed the Control-P button to Yellen, he is reaping the rewards of bailing out Wall Street and further enriching them with QEfinity. Ben earned a whopping $200,000 per year as Federal Reserve chairman. He now rakes in $250,000 per speech from the very financial interests who benefited from his traitorous monetary machinations. I don’t think he will be invited to speak at any little league banquets by formerly middle class parents whose standard of living has been declining since the 1980s. Is it a requirement that every Federal Reserve chairperson lie, obfuscate, misinform, hide the truth, and do the exact opposite of what they say they will do?

“It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.” - Ben Bernanke – October 2007

Greenspan, Bernanke and Yellen have always been worried about deflation, while even the government suppressed CPI calculation reveals that inflation has risen by 108% since the day Greenspan assumed office in August 1987. The dollar has lost 52% of its purchasing power in the last 27 years of Fed induced bubbles and busts. And these scholarly academic bozos have been worried about deflation the entire time. Since Nixon closed the gold window in 1971 and unleashed the two headed inflation loving gargoyle of debt issuing bankers and feckless self-serving politicians upon the American people, the dollar has lost 83% of its purchasing power (even using the bastardized BLS figures).

Any critical thinking person with their eyes open knows the official inflation figures have been systematically understated since the 1980’s by at least 3% per year. Should the average American be more worried about deflation or inflation, based upon what has occurred during the 100 years of the Federal Reserve controlling our currency?

I’m sure Greenspan is content and proud, as he succeeded through his own endeavors in rewarding, encouraging and propagating excessive risk taking by the Wall Street cabal during his 19 year reign of error. He exited stage left as the biggest bubble in history, created by his excessively low interest rate policy, blew up and destroyed the 401ks and home values of the middle class. This was the second bubble under his monetary guidance to burst. The third bubble created by these Keynesian acolytes of easy money will burst in the near future, further impoverishing what remains of the middle class and hopefully igniting a long overdue revolution.

Greenspan’s pathetic excuse for a career has benefitted those who owned him, while leaving a trail of casualties that circles the globe. His inflationary dogma, Wall Street enriching doctrine and Keynesian motivated schemes have drained the savings and confiscated the wealth of the middle class through persistent and devastating inflation. And it was done by a man who knew exactly what he was doing.

“Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth… The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation” – Alan Greenspan – 1966

The abandonment of the gold standard in 1971 set in motion four decades of consumer debt accumulation on an epic scale, currency debauchment, and real wage stagnation. The consumer debt accumulation was a consequence of the American middle class being lured into debt by the Too Big To Trust Wall Street banks and their corporate media propaganda machine, as a fallacious response to stagnating real wages when their jobs were shipped to China by mega-corporations using wage arbitrage to boost quarterly profits, their stock prices, and executive bonuses.

The bottom four quintiles have made no progress over the last four decades on an inflation adjusted basis. The middle quintile, representing the middle class, has seen their real household income grow by less than 20% over the last 43 years. And this is using the understated CPI. In reality, even with two spouses working today versus one in 1971, real household income is lower today than it was in 1971.

Click to View

The more recent data, during the Greenspan/Bernanke inflationary era, is even more disconcerting and destructive. Real median household income has grown at an annualized rate of less than 0.5% over the last thirty years. During the bubblicious years from 2000 through 2014, while Wall Street used control fraud and virtually free money provided by the Fed to siphon off hundreds of billions of ill-gotten profits from the economy, the average middle class family saw their income drop and their debt load soar. This is crony capitalism success at its finest.

The oligarchs count on the fact math challenged, iGadget distracted, Facebook focused, public school educated morons will never understand the impact of inflation on their daily lives. The pliant co-conspirators in the dying legacy media regurgitate nominal government reported income figures which show median household income growing by 30% over the last fourteen years. In reality, the real median household income has FALLEN by 7% since 2000 and 7.5% since its 2008 peak. Again, using a true inflation figure would yield declines exceeding 15%.

Greenspan and Bernanke’s monetary policies loaded the gun; Wall Street bankers cocked the trigger with their no doc negative amortization mortgages, $0 down – 0% interest – 7 year subprime auto loans, introducing the home equity line ATM, and $20,000 lines on dozens of credit cards; the media mouthpieces parroted the stocks for the long run and home prices never fall bullshit storyline, encouraging Americans to pull the trigger; government apparatchiks and bought off politicians and their deficit expanding fiscal policies, pointed the gun; and the American people pulled the trigger by believing this nonsense, blowing their brains all over the fine Corinthian leather interior of their leased BMWs sitting in the driveway in front of their underwater McMansions.

Median household income in the United States peaked in 1999. The internet boom, housing boom and now QE boom have done nothing beneficial for middle class Americans. They have been left with lower real income, less home equity, no savings, and no hope for a better tomorrow. Most states saw their median household income peak over a decade ago, with more than half the states experiencing double digit declines and ten states experiencing declines of 19% or higher. It’s clear who has benefitted from the fiscal policies of spendthrift politicians and the spineless inhabitants of the Mariner Eccles Building in the squalid swamplands of Washington D.C. – the pond scum inhabiting that town. The median household income in D.C. stands at an all-time high. Winning!!!!

A former inhabitant of Washington D.C. spoke the truth about inflation and the men who benefit from it in the 1870’s. He was later assassinated.

“Who so ever controls the volume of money in any country is absolute master of all industry and commerce and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” James Garfield

The Federal Reserve, a private bank representing the interests of its Wall Street owners, has been in existence for 100 years. It has managed to diminish the purchasing power of the dollar by 95%, while causing depressions, enabling never ending warfare, allowing politicians to expand the welfare state to immense unsustainable proportions, and enriched its true constituents on Wall Street beyond the comprehension of average Americans. In 2002 Ben Bernanke made his famous helicopter speech where he promised to drop dollars from helicopters to fight off the ever dangerous deflation. After the Fed created 2008 worldwide financial collapse he fired up his helicopters, but dropped trillions of dollars on only one street in America – Wall Street. He dropped turkeys on Main Street, and we all know from Les Nesman what happens when you drop turkeys from helicopters.

Les Nesman: Oh, they’re crashing to the earth right in front of our eyes! One just went through the windshield of a parked car! This is terrible! Everyone’s running around pushing each other. Oh my goodness! Oh, the humanity! People are running about. The turkeys are hitting the ground like sacks of wet cement! Folks, I don’t know how much longer… The crowd is running for their lives.

Arthur Carlson: As God is my witness, I thought turkeys could fly.

The intellectual turkeys running this treacherous institution create a new and larger crisis with each successively desperate gambit to keep their Ponzi scheme alive. Even though Greenspan, Bernanke and Yellen are highly educated, they are incapable or unwilling to focus on the practical long-term implications of their short-term measures to keep this perverted financial scheme from imploding. Denigrating savings and capital investment, while urging debt financed spending on foreign produced trinkets and gadgets passes for economic wisdom in the waning days of our empire. Courageous and truthful leaders are nowhere to be found as the country circles the drain. Farewell middle class. It was nice knowing you.

“There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.” – Henry Hazlitt – Economics in One Lesson

 

GASOLINE AT A NINE MONTH HIGH

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Posted on 26th April 2014 by Administrator in Economy |Politics |Social Issues

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Have you noticed the mainstream media propaganda machine has been silent regarding gasoline prices? When they are dropping they gush about the huge benefits for the consumer and the economy. When they are soaring, the sound of crickets. They must keep the charade alive.

It seems gas prices have been accelerating at a rapid pace over the last two months, with a 12% increase since February 10. They are up 13% from the November low and up 5% versus last year. But don’t you worry. The BLS assures us that gasoline prices have been dropping for the last two months. Ignore the extra $10 showing on the pump screen when you fill up. It’s an illusion. 

Now for the kicker. Gasoline prices usually fall from February through until May. Prices ratchet up around Memorial Day as the summer driving season kicks in and demand goes up. Last year prices fell from February 20 through May 1. This year they’ve risen in a straight line. Guess what happens in May? They rise some more. Last year we didn’t have a war in the Ukraine. Last year we had exactly zero damaging hurricanes in the Gulf Of Mexico.

Do you have gas pains? If you don’t now, you will in the near future. But at least the High Frequency Traders on Wall Street get richer by the day as they front run you in the stock market. We’ve got that going for us. And as a Federal Reserve governor once said, “Let them eat iPads.”

I understand Janet Yellen is dreadfully worried about deflation. She doesn’t see any bubbles and the housing market is in full recovery mode. Now do your duty and charge that gasoline on your credit card and pay the Wall Street banks 21% interest on the rolling balance. Be a good American.

 

AND YELLEN IS WORRIED ABOUT DEFLATION

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Posted on 14th March 2014 by Administrator in Economy |Politics |Social Issues

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Don’t you just love the bullshit spin title to this MSM article. You’re not getting a fucking raise because the temperature is going up. The idiot writing this story can’t even pick up a calculator and realize the weighted average increase in heating the average home in the country was 9.8% higher than last year. The last time I checked you still need natural gas to power air conditioners in 49% of homes in the country. The price is currently 14% HIGHER than last year at this time. Where is the cost savings?

The MSM is nothing but a mouthpiece for the  assholes running this country. Next week Yellen will get up in front of a bunch of  paid off MSM faux journalists who will lob softball question at her. She will blather on about her fear of deflation. Meanwhile we are getting fucked up the ass with energy, food, health insurance, tax, and education inflation. But, at least our real wages are going down. We got that going for us.

You’re getting a raise in May — sort of

With spring’s arrival, Americans can shed layers — and spending

By Quentin Fottrell


Bloomberg

Nick Dykstra, a liquid fuels technician with Michlig Energy Ltd., delivers propane to a rural residence near Princeton, Illinois,

When spring arrives, many Americans might feel like they got a pay raise. That’s because the cold weather and a storm of other factors jacked up heating bills for many households, according to the U.S. Energy Information Administration.

Average prices for U.S. households heating primarily with propane are expected to end up 54% higher this winter than last year, while expenditures for homes using heating oil will be 7% higher, natural gas 10% higher, and electricity 5% higher, according to “ March Short-Term Energy Outlook ” by the U.S. Energy Information Administration. Persistently cold weather east of the Rocky Mountains and along the northeast drove up demand for all heating fuels, depleted inventories, and helped raise prices, the report found, but household propane prices experienced an especially high spike.

The reason for the propane spike? Damp corn in the Midwest. “Propane is used to dry corn crops and, last year, the Midwest had a particularly large and wet corn harvest,” says Sean Hillen, economist at the U.S. Energy Information Administration. “It got cold and stayed cold. People couldn’t get enough propane into the region fast enough and prices went through the roof.” Propane prices more than doubled from $2.08 per gallon in September 2013 to $4.20 by the end of January. He estimates that Midwestern homes using propane had winter heating costs of around $2,212, which were $759 higher than October estimates.

The good news: Just 4.5% of the 116 million homes in the U.S. use propane and 7% of homes use propane in the Midwest, according to the U.S. Census Bureau, while 49% of homes use natural gas and 39% use electricity. But this winter has also been much longer for most households. Between October and the end of February, the number of heating days was 13% higher than last winter — and 10% above the 10-year average.

This winter has been the coldest in four years, according to data released Thursday by the government’s National Oceanic and Atmospheric Administration. In fact, the average temperature in the U.S. during the 2013/2014 winter season was 31.3 degrees, one degree below the 20th-century average, the NOAA found.

“Natural gas is almost always the cheapest form of heating,” says Jeff Rogers, president of the Energy Audit Institute, an energy-audit training and certification company in Springfield, N.J. That, he says, has a lot to do with its relatively small carbon footprint. Around 10% of natural gas is used up during the generation and transmission process before it reaches consumers versus a loss of 60% to 65% for electricity, according to the Alliance to Save Energy, a non-profit coalition of industrial, technological and energy corporations. “Consumers are effectively paying for all that wasted energy,” Rogers says. “Whenever you’re buying a piece of meat, you’re paying for the whole cow. The same is true for electricity and natural gas.”

I WONDER IF YELLEN & DIMON HAVE TO HEAT THEIR MILLION DOLLAR HOMES

4 comments

Posted on 27th January 2014 by Administrator in Economy |Politics |Social Issues

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We already know the national propane shortage has driven propane prices up by close to 100% in the last month. Now we’ve seen natural gas prices spike by 16% in the last month and 55% above the level of last year. Oil prices of $97 per barrel have kept gas prices near all-time highs for this time of year. Another round of global warming has hit the Midwest and will hit the East Coast tomorrow. Temperatures will be 30 degrees below normal. Wind chills well below zero will result in massive demand for natural gas and propane. But be thankful to Janet Yellen and her banker owners. They are worried about deflation. The BLS will conclude that natural gas and propane prices didn’t really go up by 55% to 100% because you froze to death and no longer needed heat. They call this deathonomic adjustments. Obama will be using a similar adjustment to healthcare premiums as people die waiting for Obamacare to cure them.

I know you are desperately worried about deflation, so be happy when you get your next heating bill.

 

Oh What a Tangled Web We Weave

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Posted on 16th December 2012 by MuckAbout in Economy

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If this doesn’t piss you off, nothing will.  Let’s just solve all our problems by making the BIG LIE official policy of the Government (as if it isn’t already!).  Now the FED is going to set it QE4EVA policy based on unemployment – which figures are just as big lies as the “official” CPI rate which understates inflation by a minimum of 7%  (Official CPI year over year: 2%, true year over year is 9%).  So what do we do?  Modify the way the CPI is figured, yet once again, so any adjustments to payments made based on the “official” CPI will be lower – saving the Goobermint money and putting the greased pole to anyone receiving benefits.

Now benefits from Medicare, Medicaid, welfare, Obamaphones, SNAP and Social Security are going to have to be reformed and probably cut.  But WHY IN HELL CAN’T THE GOVERNMENT BE HONEST AND SAY, “Hey guys and girls, we’re going broke and can’t afford these entitlements.” instead of LYING about it, not reducing Gooberment spending, fraud and abuse, cut Federal salaries (especially the automatic pay raises CONgress awarded themselves) and everyone share the pain?  

This “suggestion” sucks and John Rubino calls them on it..

 

Hat tip to  John Rubino

 

By the age of 12 or so, most people have learned through bitter experience that dishonesty is hard to pull off, because one lie tends to require more lies, until the complexity of the situation exceeds the liar’s ability keep everything straight.

This is just as true for governments as for individuals, especially when it comes to money. A currency that holds its value over long periods of time is nice but restrictive, because it limits a government’s ability to fight multiple wars and buy votes with generous social programs. So every government eventually resorts to monetary inflation, which is a combination of theft and deceit – or fraud, as it’s known in legal circles. By creating large amounts of new currency, a country lowers the value of each piece of currency in the hands of citizens, thus secretly taxing them to run the government. Then, to mask the effects of this stealth tax, governments distort their reported economic statistics to portray a world that’s healthier than the one most people experience. The goal is to siphon off as much wealth as possible while keeping the victims docile for as long as possible. The longer the con runs, the richer the people at the top become.

Eventually the gap between government reports and individual experience grows so wide that the lie is revealed and the scam ends, either through some sort of revolution or a financial collapse or both. A sign that we’re approaching that point is the following article, in which Time Magazine advocates making a heretofore-unspoken part of the con explicit government policy:

Fixing Inflation Adjustments Is the Smart Way to Shrink the Deficit

Let’s face it: There’s no way to reduce America’s budget deficit that won’t hurt someone, and that pain can’t be limited only to the rich. A payroll tax, passed in 2010, is scheduled to expire at the end of this year, for example, and that will cost middle-class households anywhere from $600 to $1,200. In addition, more than 20 million taxpayers could become subject to the alternative minimum tax (AMT), adding several hundred dollars to their annual tax bills on average. On the spending side, budget cuts would not only reduce government services but could also eventually cost tens of thousands of Americans their jobs.

But there are other ways to make progress on the deficit over the long term that would be a lot less painful and would also be politically viable. In my last column, I wrote about the estimated $30 billion a year that the Federal government could save by getting really tough on fraud. Even more could be done, though, by changing the inflation adjustments for government spending.

Cost-of-living adjustments (COLAs) are used throughout the U.S. economy – for union contracts and income tax brackets, as well as for government entitlements. It may seem only fair to adjust contracts and government programs for inflation – otherwise recipients would see their standard of living steadily erode over time. But there are a lot of ways to adjust for inflation. Moreover, the most commonly used gauge, the Consumer Price Index (CPI), may overstate the adjustment needed. Switching to a more conservative measure could save as much as $200 billion over the coming decade.

The most commonly proposed change is to replace the CPI with another index called the “chained CPI.” Basically, inflation is calculated based on putting together a basket of commonly bought goods and services and then tracking the price increases for them. In reality, though, people don’t consistently buy the same things. If one particular item – steak, for example – gets very expensive, people will typically buy something cheaper instead, such as chicken. The chained CPI takes into account the substitution of cheaper items for things that get too expensive, and is therefore arguably more accurate than the regular CPI. It also rises a little bit more slowly.

The result of replacing the regular CPI with the chained CPI would be slightly slower increases in monthly Social Security payments and some other government benefits. The new measure would also modestly boost tax revenues. The reason: tax brackets are indexed to inflation and would ratchet up more slowly if the chained CPI were used to adjust them. For many taxpayers, that would mean that some of their income would fall in a higher bracket.

Further savings could come from changing the formula used to calculate initial Social Security benefits. Because Social Security was originally designed to mimic a pension plan rather than look like a welfare entitlement, initial benefits are pegged to retirees’ earnings over their working lives. Because the general standard of living improves over time, wages and salaries normally outpace inflation – and so do initial Social Security benefits. (After benefits have begun, further increases are based on a more usual cost-of-living adjustment.) Some economists have long argued for altering the formula for initial benefits. Keeping the current more generous earnings-based calculation for lower-income retirees but switching to an inflation-based calculation for the more-affluent half of the population could eliminate half of the Social Security deficit over the next 75 years.

Such fixes to benefit plans are not uncontroversial. When a recent Republican budget proposal included changes to the way the Federal government calculates inflation, the idea was swiftly rejected by some Democrats. Opponents of the idea objected that retirees face higher inflation than the average American because of health-care costs and that some of the tax increases would fall on the middle class. It’s true, of course, that altering inflation adjustments will limit future benefit increases and cause an upward creep in income taxes. But the idea that the Federal deficit can be brought down to sustainable levels without anyone giving up anything is simply unrealistic. Hiking tax rates on the rich alone will raise enough revenue to cut the deficit only by about 8%. In the end, simple arithmetic ensures that the bulk of deficit reduction will come from the middle class – the challenge is to minimize the pain.

Unfortunately, tinkering with inflation adjustments will be little help with other runaway costs – most significantly health care, which presents even greater long-term budget problems than Social Security does. Advances in medicine often make treatment more expensive. In addition, health care is labor intensive, and in all service sectors it’s hard to offset rising labor costs with the sort of productivity gains that can be achieved in manufacturing. Doctors can only see so many patients an hour, teachers can only correct so many papers, and there’s a limit to how fast a pianist can play the minute waltz.

But where rising costs are chiefly the result of inflation adjustments, fine-tuning those mechanisms may be the least painful way to start bringing down the long-term deficit. The spending cuts that are currently scheduled to go into effect next year in the absence of a budget deal look horrific and could result in 7% to 9% reductions in a broad range of Federal programs. Surely it seems more rational to minimize the need for such sudden, deep, and indiscriminate cuts in the near term by accepting smaller increases in government spending over the coming decades.

Some thoughts:
This is a perfect example of how lying sometimes corrupts both liar and victim. The honest approach to a situation where there’s not enough wealth would be to explain that everything from the military empire to the welfare state will henceforth have to live smaller. But that’s both hard to say and hard to hear, which makes the lie relatively painless for both sides. Just keep telling citizens that they’ll get everything they expect, while actually giving them a little less each year. Government gets the inflation-generated resources it wants, and the recipients of government spending get to pretend for a while longer that they’re taken care of. The problem is pushed into the future for tomorrow’s leaders and the children of today’s recipients to deal with.

Put more clearly, US voters are enabling the liars because – despite the mounting evidence that the lies are coming at our expense – we prefer the comfort of those lies to the harsh reality of no more free money for the lifestyles we thought were our birthright.

The result of dishonest public policy being enabled by voters in denial is a corrupt society, where lying – as in the article reprinted above – becomes acceptable public policy. We’re not far from the old Soviet joke, “we pretend to work and they pretend to pay us.”

Frostbite Falls Daily Rant- 4/29/2011

97 comments

Posted on 30th April 2011 by Reverse Engineer in Economy |Politics

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Doom Lite vs. Full Doom: The TBP Table of Core Arguments

 

Daily Rant Archive

 3/2/11, 3/3/11, 3/5/11, 3/7/11, 3/8/2011, 3/10/11, 3/12/11, 3/15/11, 3/17/11, 3/18/11,3/19/11, 3/20/2011, 3/24/11, 3/25/11, 3/27/11, 3/30/11, 4/9/11, 4/11/11, 4/14/11, 4/25/11, 4/27/2011

 

Top  Links

  

Reverse Engineering 

Automatic Earth 

Zero Hedge 

Economic Undertow 

Of Two Minds 

 

Rant Lite

Today’s rant frames up the major topics pursued on TBP and presents 2 opposing viewpoints on each of these topics.

 

Quote of the Day

Luk 21:10Then He said to them, “Nation will rise against nation, and kingdom against kingdom.

Luk 21:11“And there will be great earthquakes in various places, and famines and pestilences; and there will be fearful sights and great signs from heaven.

 

 

 

 

 A Tale of Two Depressions

As the Great Depression progressed onward, the early collapse in RE prices made many Banks insolvent, which then precipitated the Stock Market Crash of 1929. 

 

 
 
 
 

  

Geological and Cosmological Event Watch Thread

Not sure if there is really a significant increase in geologic events right now, but at least reading the MSM over the last year it appears to me that there has been an increase in frequency and in amplitude.

 

 

Other Shoes and the Uselessness Premium

“Creating fuel production in a failed- state Libya is beyond the grasp of the EU’s and United States’ unconventional ‘assets’. Blatant military intervention would be opposed by Russia, China and no doubt the other oil- producing autocracies.”

 

 

   

 

One of the greatest difficulties you have once you go “Full Doom” as a writer on the Econoblogs is that your concerns become less worth considering by people who are concerned with more “Doom Lite” issues, and their concerns aren’t that important to you.  Let me present a couple of examples to demonstrate how this works.

From my side as a Full Doomer, I’m not really concerned with Obama-care or Ron Paul’s Presidential bid.  I know Obama-care cannot work, but more than that I know there is NO solution to the health care problem that people would consider “acceptable”and would work.  I’m not really concerned with whether Ron Paul becomes POTUS or not, because as a Full Doomer I don’t think anything Ron Paul could do would stop or even much slow down the collapse.  If anything, if Ron Paul follows through with some of the things he has bloviated on over the years, I would expect the collapse to accelerate.  That IMHO would be a GOOD thing, so I support Ron Paul over any other dickhead out there running for POTUS, but I sure do not believe Ron Paul will solve our problems.

Not to say I don’t chip in sometimes on these threads, but when I do you will find many of my remarks to be quite sarcastic, and of course I engage in my predilection for digging up Pics to make fun of the threads.  This because I do not take those threads seriously; because I don’t think they are addressing the real problems.

On the opposite side of the spectrum, when a “Doom Lite” writer like Admin drops in on my threads, he mainly makes fun of my Doomsday ideas.  To him, considering a complete Civilization Collapse is not worthwhile, he wants to tweak and fix the current system to make it WORK again.  Kick the CONgress Critters out, do the Perp Walks with the Banksters, stop the Spending, stop exporting the Jobs, eliminate Entitlements and the FSA, let’s get Amerika PRODUCTIVE again!  The Doom Lite writer sees the short term problems and wants to find a FIX for them; the Full Doom writer sees all these things as transient and unfixable problems that are precursors to other problems.

Who are Doom Lite writers here on the net?  Examples would be Jim Quinn, Karl Denninger, Mike Shedlock, Yves Smith et al.  Full Doomers are Dmitri Orlov, Jim Kunstler,  Mike Ruppert, Chris Martenson et al.  Also myself of course, and I tend to out-Doom most of them, except Dmitri my Ruskie Twin. LOL.  Doom Lite writers tend to be most concerned with the mechanics of the Monetary System Collapse; Full Doomers focus down more on the long term issues of Peak Oil and Energy.

Neither group of writers is WRONG insofar as what they are concerned with, but the timelines are different and there are differences in the types of Solutions they try to consider.  However, if you put a Doom Lite writer and a Full Doom writer on the same website at the same time, each of them will consider the other one to be somewhat ridiculous.  That is for the most part why Jim and I argue, we both see the same things insofar as the collapse is concerned, but Jim hopes for solution to the economic and political issues which I already consider impossible to manage, and the solutions I consider are far past the timeline Jim is concerned with here.  He is most worried about the world his Sons are about to inherit; I am most worried about the world a couple of generations down the line will inherit. (call them Gen Apocalypse and Gen Mad Max)

MOST people prefer Doom Lite, because it tends to offer a little more in the way of HOPIUM.  Since this website is Jim’s Bully Pulpit, MOST of the people here are Doom Lite people.  There are a few Full Doomers here though, HZK is a Full Doomer, ER is a Full Doomer.  Not sure who else  though among the regular contributors is Full Doom.  Even Flash and Plubius are not Full Doomers, because both believe the Illuminati will be able to maintain control in perpetuity.  If you accept the idea that the Illuminati will be able to maintain control over society in perpetuity, you DEFINITELY are not a Full Doomer. (You can substitute and call the Illuminati an Oligarchy or Plutocracy or Krony Kapitalists, I just happen to like Illuminati as my term because it drives anti-Conspiracy Theorists NUTS. LOL)

Now that we have a better Definition of the Full Doomer and Doomer Lite philosophies we can take a look at a few of the Recurring Topics we have on TBP and briefly analyze the differing perspective of Full Doom and Doom Lite Pundits.

Topic

Doom Lite

Full Doom

 Dollar & Monetary System  We can fix the monetary system and rehabilitate the Dollar if we STOP PRINTING, feed Helicopter Ben to the Lions, Slash Spending, allow TBTF Banks to FAIL, Incarcerate the Criminal Banksters and use Precious Metals to underpin the currency.  The monetary system cannot be rehabilitated by any means, there will be a complete collapse of ALL Fiat money and financial instruments and commerce will for quite some time be mainly Barter.  PMs will only retain value in areas where there is a surplus of basic commodities.
Inflation, Hyper-Inflation, Deflation, Stagflation, DICK UP YOUR ASSFLATION WTF CARES ANYMORE?  WE ARE TOAST NO MATTER HOW IT COLLAPSES.AGREEMENT WTF CARES ANYMORE?  WE ARE TOAST NO MATTER HOW IT COLLAPSES.AGREEMENT
Energy To resolve our Energy problems, we must IMMEDIATELY begin building more Nukes, Drill Baby Drill for more Local Oil and build more Hydro Plants and Wind Farms, and eventually pick up the slack from lost energy from Imported Oil sources. Lost Energy from depleted Oil is Irreplaceable and it is far too late to stop an extensive Power Down throughout society which will halt most of our Transportation methods and bring down the Electrical Grid.  Our only choice is to prepare for a Low Energy footprint in the future.
 Goobermint  We can fix Da Goobermint if we Vote Out all the scumbag CONgress Critters and replace them with Honest Politicians who cannot be Bought who all demonstrate the Wisdom of the Founding Fathers and abide by the Constitution.  Said new Goobermint will be made much smaller with fewer Regulations and less Taxation, allowing Commerce to revive as the Free Market takes over.  Da Goobermint is inherently unfixable and corrupt and cannot be rehabilitated via the Ballot Box.  Only a Revolution can remove the current power structure, and the results of a Revolution will likely bring a new Goobermint as bad or WORSE than the current one.  The failure of the monetary sytem and energy systems will eventually render all large scale Goobermints unable to function, with the power vacuum filled by local Warlords and Dictators in most places.
Jobs We must stop the offshoring of Productive Jobs and rebuild our Manufacturing Base in order to build an export based Mercantilist economy with a Trade Surplus. The Industrial Model is FINISHED, even if we could rebuild Factories here in the FSofA, we wouldn’t have the Oil to run them anyhow, and there won’t be anyone here or abroad who could afford the products we build with them anyhow, because of the upward spiraling cost of energy measured in EROEI.
 Immigration  We must Seal the Borders and deport all Illegal Aliens and get FSofA Citizens to work at all the scut jobs at below Minimum Wage they currently fill to reduce Unemployment and reduce the liabilities of Aliens who are soaking up free Medical Care in the Emergency Rooms of our Hospitals.  We can TRY to seal the borders and deport the Illegal Aliens, but they will just be replaced by more home grown Citizens who are falling off the economic cliff and will be just as big a drain on the Medical System.  Besides that, at least on the Border with Mejico,  it will likely create an ever growing Shooting War with a Tsunami of Wetbacks seeking to escape an even worse situation in Mejico.
 Imperialism & Foreign Wars  We must STOP trying to be the World’s Policeman, bring all our Boys & Girls HOME and reduce the outrageous COST of maintaining the Big Ass Military.  As soon as we STOP running all our Imperialist adventures, we will basically be CUT OFF from the Foreign Oil still making its way across the Sea Lanes to our Refineries.  We also will crash just about the only type of “productive” thing we build here anymore, which are the Weapons of War and we will bring back a whole new crew of people to put on the Unemployment line.
 Free Shit Army & 30 Blocks of Squalor  We must end all transfer payments, all Welfare, Social Security and Medicaire which are all unfunded Liabilities we cannot afford.  Former Welfare recipients will be FORCED to go back to work and become Productive Citizens rather than Useless Eaters.  Old Folks will rely on their Savings and their Extended Families to take care of them in their dotage.  The minute we knock down all these social support mechanisms is the minute we turn into Egypt or Libya or all the rest of the 3rd World countries where the people with Nothing Left to Lose go BERSERK.  We don’t HAVE jobs these people could do, even if they were qualified to do any job, which they are not for the most part.  Most Old Folks have no savings, and the Extended Family died back in the 1950s for the most part.  The Medical Industry as a whole would COLLAPSE without Goobermint input, putting the Doctors, Nurses and Medical Records folks on the UE lines also.

China

 China will succeed long term because they are net creditors, have most of the Industrial infrastructure and have more Science and Math geniuses studying at Elite Universities.  China is TOAST because of outrageous Population Overshoot, a depleted Water Supply, insufficient arable land and insufficient local supplies of remaining Fossil Fuel energy.

 

FINAL

SOLUTIONS

 Boomers should be EXTERMINATED  Pigmen should be EXTERMINATED

 

For those of you who do not think I can write in Brief, I think this Table destroys that argument. You cannot GET more Concise than this, 1-3 sentences from BOTH sides of every major debate we engage in here.  I challenge ANYONE here to phrase these arguments in shorter terms with less prose.  If you can do it, hats off to you, but I do not think it can be done.  What I have done here is Frame Up in Brief the CORE Arguments made in the various areas of the Collapse we mainly concern ourselves with here on TBP.  You could go to almost any Thread pursued here and drop it into one of these areas, and then further go in to look at all the Posts made in those threads and you would find they fit to one extent or another into either the Doom Lite or Full Doom perspective.  There are of course other areas of discussion and subsidiary topics based on the Newz of the Day, but in general terms these Top Ten areas cover probably 95% of the posting on TBP.  This is a WAG, I did not come up with that number Scientifically. LOL.

Now, as you go down the Table, you may find yourself to be Doom Lite in some areas, and Full Doom in others.  At the same time though, you should see how these areas inter-connect, so if you accept for instance the Energy argument of the Full Doomer, its hard not to also accept the Dollar argument.

The GAME I have here for this Rant is to do another one of my Polls of the membership.  After reading this post, do you put yourself more in the Full Doom Camp, or are you a Doom Lite kind of person?  How do you sit on the Core Issues defined here?  What is your rationale for believing one or the argument to be the better one?  Let us know your thoughts on these Core Issues.  Inquiring Minds want to Know.

RE