The Biggest Mistake of the Inflation Reduction Act

The biggest mistake regarding inflation “reduction” is not ending inflation altogether by ending the Fed.

Warning: Threat hijacking in progress. (I feel like this thread will get my post the most views, since everybody will scroll down to see if “reported inflation” or “actual inflation” is more popular)

SVARGA LOKA´s MUSINGS FROM GERMANY:

1) Masks
It is getting old and boring to write about masks after all these years and months, but I figured that my observations might be interesting. I flew to Germany from Boston a few days ago to visit my family. This is the first time in 1.5 years that I did not have to get a Covid test either direction to fly. Masks were not required from Boston to Ireland, and only about handful of passengers out of 250 or so chose to wear one. Of note: the line for security at Logan was INSANE. It wrapped all around the perimeter of the terminal, which I have never seen before. I am not sure if numbers of travellers are up, or if number of TSA officers are down. There were signs advertising that the TSA is hiring those (something along the lines of “Do a job that makes a difference”). The plane for the transatlantic flight was completely full. Since I was travelling with children, our entire party did not have to go through the side scatter scanner or whatever technology they use nowadays, which is what always happens when you have children with you. On other flights in the past when I was by myself, I always opt out of that.

To my surprise, when I got to the connecting flight from Dublin, Ireland to Germany, there were signs and announcements that masks were mandatory for the entire duration of the flight. In the waiting area, just like on the prior flight, only about 2-5% of the passengers wore masks. When boarding, all of them put their masks on, except me and my children. Our boarding passes were checked and we entered the plane. On the plane, again, multiple announcements that masks are required. I simply pretended to only speak Kroatian or something and I ignored the announcements. Of note, I carry a simply piece of paper with me, written by myself, that states “Mrs. Svarga Loka is not allowed to wear a face covering for health reasons.”, signed and stamped by myself.

I briefly considered to tell the flight attendant that I have an exemption and show her my paperwork, but I decided to just wait and see. None of the flight attendants ever said anything. Clearly, they have been instructed to not confront any non-masked passengers. Meanwhile, of course, I could feel the piercing, angry looks by the other passengers, but I have learned to not care.

Next on the journey: The train ride. Again, I knew that there is a mask mandate in the trains. There were signs that you will have to pay a 150 Euro fine if you are caught maskless and will not be warned and given a chance to put on a mask. We sat down and waited to see what happened. Other passengers giving us the evil eye again. A group of four, about 60 years old talked about how their friend or sister currently has Covid, that they are not as scared as they used to be any more, given that they are now vaccinated, but “no, they will not take the fourth shot any more”.

The conductor shows up and says “If you don´t have an exemption, please put on a mask immediately”. I tell him that, yes, I do have an exemption and give him my ticket along with the 4 pages of mask exemption. Then, he was OVERLY friendly, told me that I can feel free to put my luggage next to the other seats and the kids could lie down to sleep and wishing us a pleasant ride. My suspicion is that he was extremely relieved that I did not give him a hard time, had the right paperwork and therefore did not cause any trouble. The fact that he is asked to be an enforcer of rules he may or may not agree with must be the worst part of his job, and he never knows when someone gets confrontational.

Later, I figured, I should show my unmasked face to as many people as possible, so that other people may feel emboldened in the future. Even though I did not have to pee, I walked the entire length of the train toward the bathroom, so that other people would see me. I was kindof hoping that anybody would confront me, but nobody ever did. Whether it made anybody think, I will never know.

2) Cost
Naturally, I talked to my parents about the energy situation here. On the news, yesterday, they talked about a small business owner of a butcher shop, who needs to cool his sausages and cold cuts 24/7 and his electricity prices have gone up 10fold and he does not know how to pay the bills, but he went wrong by asking the government to fix it.

My parents live in a house that was built in the 1960s, poorly insulated. In the basement, there are two 1500-L oil tanks for a total capacity of 3000 liters. In a typical 12-month period, they go through about 2500 L. Last year, they paid 70 cents per liter, and right now it is 1.60 Euros (US $ and Euro are roughly at parity right now, which makes calculations easy). The high point for oil costs was over 2 Euros per liter in April 2022. So the total annual heating costs for my parents went from well under 2000 Euros per year to about 4000 Euros. I asked them what they will do when oil doubles in price and my Dad said “They can´t do that!” We shall see.

You have to realize that the typical income and cost of living in Germany are very different from the US. Certain items are much cheaper here and some are much more expensive.

I looked up the income for certain professions (per month, before taxes)
Hairdresser 1800
Car mechanic 2800
Nurse 3200
Software developer 5000
Physician 8000

The average governmental retirement benefit is 1600 Euros.

All these monthly salaries are before taxes. You will have to subtract roughly 50% for social security contributions, taxes and health insurance, so that the net pay is about half of what is listed above, although the lower incomes have no or little taxes and social security payments.

So if you know that a nurse might have about 1600 of “spending money” every month, you can easily see that it would be difficult to absorb an increase in heating costs by, say, Euros a month.

For retirees it is even more difficult. I do not want to disclose the income of my parents, but let´s just assume that they are average. Then, my Dad would get 1600 of monthly social security payment. My mother never worked and always stayed home with the children, so she gets nothing (unlike in the US, where someone like her who has never contributed would get 50% of her husband´s social security retirement). They could live on the 1600 Euros per month, but the increase in heating costs as described above from 2000 Euros to 4000 Euros would be a real hit for them.

If my Dad would die, it would leave my Mom seriously poor, because surviving spouse benefits are 60% of the benefits of the deceased, so 60% of 1600 Euros per month, which makes it very difficult to pay rent, food, electricity, water and heat.

As far as food costs are concerned, food has always been much cheaper in Germany than in the US, but I have noticed a marked increase in the last 6 months. A yoghurt went from 40 cents to 60 cents. A pound of apples from 50 cents to 80 cents. A pound of carrots from 30 cents to 50 cents. Meat is always much more expensive than vegetables, a pound of chicken breast now costs 5 Euros.

On the second day of our trip, we went to the local water park/swimming pool. It has a wave pool, lazy river and three slides. Think a smaller version of Great Wolf Lodge, but without the hotel. We always go to that water park when we come here, so I know when it is crowded and when not. Usually, it is really, really empty on school days in the morning, as expected. On weekends, it is crazy crowded, and on school vacation weekday, it is somewhere in between. Note that fall school vacation started this week, so when we went there on a weekday, I expected it to be at least moderately crowded. It was DEAD! Even emptier than I have seen on schooldays. I even said to the lady at the cash register that I was really surprised how empty it was. She answered that she is, too, but that people are probably travelling.

I doubt it. I think people are saving money and foregoing things like this water park, which cost me 21 Euros for the family ticket and 12 Euros for 3 fries. Total fo 33 Euros that many families do not have lying around any more.

Next day, I went to the local ice cream store. It is owned by an Italian couple who come to Germany selling ice cream during the season from May to November and spend the winters in Italy. They serve the most delicious Italian gelato, 45 flavors of it. I ordered our ice cream to go, and then told them that their ice cream is one of our favorite things to do when we are in Germany and that we live in the US. Essentially, I told them, we are flying half way around the world, in part for their ice cream, which made them smile. Then, I asked them how business was this year? Are they feeling it, that people are not flush with money any more? They said that, no, this summer was actually quite good because the weather was very hot, but right now, this month, is when they are noticing a marked downturn. I told them that I also think that it is NOW that people are starting to cut back.

Then, the wife asked me: “So what is it like in the US?”

How do you answer that? What IS it like in the US? In 2-3 sentences? (Please write your answers below)

I decided not to say “We are waiting for the apocalypse. Should be any day now”, but that, well, we are not as worried about our energy supply there, but (I decided to say something they can relate to) that it is strange to see that people appear to be hurting for money, and yet it seems to be impossible to find employees, across all types of businesses. The husband responded that he noticed that, too, that it was always hard to find waitstaff and restaurant help, but that now, every hairdresser, car repair shop and shoe store seems to not be able to find workers. Why is that? He didn´t know.

On Sunday, I am planning to take our kids to the local amusement park. For German income levels, it is expensive, at 30 Euros per adult and 25 Euros per child. If my theory is correct, it should be completely empty there.

My theory is as follows (it is not anything new, and not rocket science either): There was always that segment of the population which has barely enough money to make ends meet and put food on the table. Going to that water park was never an option for those. But NOW, we are experiencing for the first time since the economic boom of the 1950s-60s that those that were solidly middle class (nurses, accountants, small business owners etc) starting to be really worried about not being able to pay their bills, cut back on unnecessary expenses. They will not TELL you about it, even if you know them well, but you can see it by the emptiness of these businesses.

That waterpark had all sorts of Corona restrictions over the last 2 years. First, no mask but you had to leave your name and address for contact tracing. Then, masks but no contact tracing. Then, only vaccinated allowed. All of that time, to my surprise the pool was very crowded. Now, The corona measures are gone, and the pool is empty for economic reasons.

Mission accomplished by those that want nothing but to harm us by any means possible.