From Birch Gold Group
Price inflation (CPI) climbed from 1.8% in October to 2.1%, its highest rate in 2019, according to official sources. CPI is also up 0.5% since June.
As usual, if we look beyond the government’s official numbers, we can see that “real” inflation has risen to almost 6% (blue line on the chart below):
The reason for the difference in inflation measurement boils down to a method adjustment in the 1990s that moved away from the idea of “the cost of maintaining a constant standard of living.”
But whether you use the official method or the older 1990 method, the items being measured still include food, energy, and other selected consumer items.
The symmetric 2% rate that Fed Chair Jerome Powell relies on isn’t exactly “low” as he claims. According to Ryan McMaken, it still means a lot of lost wealth for the average person:
If central banks are able to nail the “low” 2 percent inflation level, we’d still end up with a dollar that loses nearly half its value in 20 years. […] For regular people who can’t count on a 4 percent return on their investments, and who rely on banks which pay around 1 percent, this means a lot of lost wealth…
And there is likely to be more “lost wealth” in the near future, since Chair Powell has stated that the Fed may let inflation run as high as 3% into 2020.
Of course, inflation affects some areas more than others, and there are at least three sectors which have been infected by extreme price inflation.
Healthcare, Housing, and Higher Ed Bursting with Higher Prices
The official CPI rate has risen about 1% net over the last decade. But that modest increase has been dramatically outpaced by price increases in healthcare, housing, and higher education.
You can see this result here:
According to an article on Mises.org, “Higher education increased 30 percent over the past decade. At the same time, health care spending per capita increased 27 percent. Even bigger increases are found in asset prices. According to Case-Shiller, for example, the twenty-city housing index rose 50 percent from 2009 to 2018. During the same period, the Dow Jones rose 108 percent.”
Surprisingly, home inflation has continued even while the official U.S. homeownership rate has dropped 2% since 2010.
Unfortunately, renting won’t help you escape rising home prices. Housing rent has jumped anywhere from 22.5% to 92.6% over the last decade in the top 50 cities across the U.S., according to Washington Business Journal.
Add it all up, and it appears that the “basket of goods” the Fed relies on to report its “low” inflation rate may not include everything it should.
Obviously, there is a limit to how much price inflation the American consumer can bear. Out-of-control prices could drive consumers out of certain overpriced markets. But because the U.S. economy relies on consumer spending, any reduction could quickly become detrimental.
Make Sure Your Retirement Doesn’t Get Turned Upside Down
No matter what the actual inflation rate is, one thing is certain… it’s on the rise. And with inflation rates being allowed to “run hot” again, who knows how much control the Fed actually has over effective monetary policy?
If price inflation in housing, healthcare costs, or higher education trigger the wrong events, things might get out of control fast. When that happens, you’ll want to be prepared with assets that can protect your hard-earned money.
So as inflation keeps rising in whatever sectors (reported or not), it’s a good time to take advantage of the opportunity to diversify some of your savings into gold and silver.
With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.
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No doubt massive inflation is coming. “And I heard of voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny… (Rev. 6:6) The word for penny in the greek is Denarion and in Bible times a Denarion was worth ten asses/donkeys. Now the way I have it figured, there is a bright side to all of this massive inflation that is coming. If I can round em up, I can trade ten democrats for a loaf of bread. Just saying, Thanks.
Regarding food (which the working class people pay for their own and for the FSA’s also) food is being hit high and low: high from the printing of money to support Welfare, Warfare and the profligate Banksters and low from the GSM cooling of the Earth and reducing the grain and hay harvest 20% this year and forecast to be just as bad next year. Old Timer was referring to the Black Horse of scarcity and inflation (Rev 6:5). PS: Ten Democrats aren’t worth a wooden nickel.
Yes, I fear there are more of them hybrids than not. Which makes them more difficult to catch, you can’t sneak up on em.
One prime example of educational inflation is Rutgers University in NJ. Those losers recently gave out an 8 year, $4 million contract for a football coach. Guess who pays for this waste, and for what?
Every time I see a “Big Red R” on vehicles I feel a wave of contempt and disgust. It’s a primary reason we pushed two of our kids to an out-of-state private military college when their time to choose came around. The older one got an acceptance letter from Villanova and was immediately disappointed. That letter was put aside and forgotten when another, better offer arrived two weeks later. The younger one has followed
The Dark Side laughs in me every time I remember this. When I’m an old man they will thank me, but even now, it’s paying dividends. Despite the costs, they’re learning something the snowflakes will never get and it pleases me to no end.
Football programs cost tens of millions per year, but they do pay for themselves in ticket sales, merchandising and broadcasting.
I just wish I could sell tickets to my lab experiments.
Rutgers put themselves in the Big 10 with the likes of Indiana, Michigan, and Ohio.
They will never put in a winning season and the money invested will never come back. I’d call that a depreciating asset.
They are an utter waste of time if education is actually about education. I went to a libtard school and they lavished funding and attention on their bottom-ranked sportsball team. I know it’s pretty much driven by idiot alumni with deep pockets. I just hate the double standard. Higher Ed should be about the Ed, not the sports. They’ve monetized it to such an extent, the sportsball players get an easy ride. My buddy went to App State. There, the sportsball team raped a girl and the school covered it up. At my school, a lacrosse player stole a car and a professor argued to have the school cover his legal defense.
Also, don’t understand the idea of alumni having some undying support for their school. School was a long, expensive ordeal, regardless of how pretty the campus was or how much fun I had outside of class. The commodified nature of the experience, like the over-priced books, the mandates students live on campus, the mandatory entertainment fees, etc make it obvious they’re nickle-and-diming you at every step. The blatant libtard nature of the school and its leaders and professors was also completely antithetical to my beliefs. So why would anyone feel the need to give them more money after the fact?
Inflation has always been the worst and will always be the worst, in sectors of the economy the Federal Government has screwed with the most. So naturally, healthcare, housing, medicine, the stock market, automobiles, and higher “education.”
Right now gold in holding down the inflation of my other investments….
It’s going to be hard to hide more inflation. Anyone remember how after 2008 food manufacturers started doing crazy things to keep the prices the same, but the packaging got smaller or they bulbed up the inside of peanut butter jars, like wine bottles, so they held less? Cereal boxes were huge, but the bags inside were small. They’re going to have to start mixing sawdust into the bread to hide it this time.