Tag Archives: Inflation

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In Biden’s Annual Economic Report, The Word “Gender” Is Used 40 More Times Than The Word “Inflation”, by Michael Snyder

Different genders must pay different prices for stuff. From Michael Snyder at themostimportantnews.com:

I think that the phrase “out of touch with reality” doesn’t even come close to describing what we are witnessing here.  We all knew that the Biden administration was completely out of touch with what is going on in Real America, but it appears that things are even worse than we thought.  Right now, inflation is the number one political issue in the entire country, and the persistent shortages that we have been experiencing are right up there as well.  But the Biden administration apparently has other priorities.

The Biden administration has just released the “Economic Report Of The President” for 2022, and you can find it on the official White House website right here.  But unless you are a glutton for punishment, I would strongly advise against reading the entire thing, because it is dreadfully boring.

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Perception vs. Reality, by Michael Snyder

The mainstream media doggedly pursues its mission to make itself completely irrelevant. From Michael Snyder at theeconomiccollapseblog.com:

If you only get your news from the mainstream media, you would be tempted to believe that global conditions are relatively stable right now. Yes, there is a war between Russia and Ukraine, but the mainstream media is assuring us that Ukraine is winning that war. Other than that, the mainstream media seems to think that everything is just fine. Of course the truth is that our planet is facing a whole host of extremely challenging problems at the moment. The UN has warned that we are entering the worst global food crisis since World War II, inflation has started to spiral out of control all over the world, the war in Ukraine is making our supply chain nightmares even worse and an absolutely horrifying bird flu plague is killing millions upon millions of chickens and turkeys.

But if you flip on one of the corporate news channels tonight, they will be focusing on other things.

And you probably won’t even hear them talk about the food riots that have suddenly begun erupting around the world at all.

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Fast-Food Meal Costs Family $100 After They Idle In Drive-Thru For Ten Minutes

From The Babylon Bee:

FRESNO, CA—A local family ended up spending over a hundred dollars on their fast-food meal Monday when they got stuck idling in the drive-thru for ten minutes. Due to high gas prices, what used to be a convenience has turned into a crippling expense for millions of American families.

“Oh no!” exclaimed Suzy Williams as she steered into the drive-thru lane. There were five cars ahead of her. “This is going to take forever! It’s going to cost me a fortune!!!”

She quickly put the car in reverse and was ready to put the pedal to the metal, but another vehicle came from behind and blocked her in.

“NOOOOOO!!!!!” she cried. “I can’t afford this!”

According to sources, the entire family became upset. Suzy’s husband, who’d passively opted for the passenger seat, was now regretting his decision.

“We’re going to go bankrupt!” he grumbled. “If I was driving this would have never happened!”

“Don’t you think I know that!” she screamed. “MOOOOOOOOVE!”

Witnesses report Suzy Williams then laid on her horn as if it would help matters. Unfortunately, it did not. Now the Williams family may not be able to afford rent this month.

The Williams family filed for government assistance later that day, knowing they would continue to experience hardship related to rising gas prices. Unfortunately, their application was denied because they failed to buy an electric car.

https://babylonbee.com/news/family-spends-100-on-dinner-after-idling-in-drive-thru-for-10-minutes

One Mad Market & Six Cold Reality-Checks, by Matthew Piepenburg

There are some commonly held notions out there that in no way comport with reality. From Matthew Piepenburg at goldswitzerland.com:

Fact checking politicos, headlines and central bankers is one thing. Putting their “facts” into context is another.

Toward that end, it’s critical to place so-called “economic growth,” Treasury market growth, stock market growth, GDP growth and, of course, gold price growth into clearer perspective despite an insane global backdrop that is anything but clearly reported.

Context 1: The Rising Growth Headline

Recently, Biden’s economic advisor, Jared Bernstein, calmed the masses with yet another headline-making boast that the U.S. is “growing considerably faster” than their trading partners.

Fair enough.

But given that the U.S. is running the largest deficits on historical record…

…such “growth” is not surprising.

In other words, bragging about growth on the back of extreme deficit spending is like a spoiled kid bragging about a new Porsche secretly purchased with his father’s credit card: It only looks good until the bill arrives and the car vanishes.

In a financial world gone mad, it’s critical to look under the hood of what passes for growth in particular or basic principles of price discovery, debt levels or supply and demand in general.

In short: “Growth” driven by extreme debt is not growth at all–it’s just the headline surface shine on a sports car one can’t afford.

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“Supply Bottlenecks” as an Excuse for Inflation, by Daniel Lacalle

The real cause of inflation is monetary, not supply bottlenecks. From Daniel Lacalle at mises.org:

One of the arguments most used by central banks regarding the increase in inflation is that it is because of bottlenecks and that the recovery in demand has created tensions in the supply chain. However, the evidence shows us that most commodities have risen in tandem in an environment of a wide level of spare capacity and even overcapacity.

If we analyze the utilization ratio of industrial and manufacturing productive capacity, we see that countries such as Russia (61 percent) or India (66 percent) are at a clear level of structural overcapacity and a utilization of productive capacity that remains still several points lower than that of February 2020. In China it is 77 percent, still far from the 78 percent prepandemic level. In fact, if we analyze the main G20 countries and the largest industrial and commodity suppliers in the world, we see that none of them have levels of utilization of productive capacity higher than 85 percent. There is ample available capacity all over the world.

Inflation is not a transport chain problem either. The excess capacity in the shipping and transport sector is more than documented and in 2020 new capacity was added in both freights and air transport. Ships delivered in 2020 added 1.2 million twenty-foot equivalent units (TEUs) of capacity, with 569,000 TEUs of capacity on ultra large container vessels (ULCV), ships with capacity for more than 18,000 TEUs, according to Drewry, a shipping consulting firm. International Air Transport Association (IATA) chief economist Brian Pearce also warned that the problem of capacity was increasing in calendar year 2020.

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The Sources of Rip-Your-Face-Off Inflation Few Dare Discuss, by Charles Hugh Smith

There are many highly skilled jobs for which AI is completely unrealistic. There is shortage of people who know who do such jobs, and their wages are reflecting the shortage. From Charles Hugh Smith at oftwominds.com:

We’re getting a real-world economics lesson in rip-your-face-off increases in prices, and the tuition is about to go up–way up.

Inflation will be transitory, blah-blah-blah–I beg to differ, for these reasons. There are numerous structural sources of inflation, which I define as prices rise while the quality and quantity of goods and services remain the same or diminish. Since the word inflation is so loaded, let’s use the more neutral (and more accurate) term decline in purchasing power: an hour of your labor buys fewer goods and services of lesser quality than it did a decade ago or a generation ago.

While the conventional discussion focuses on monetary inflation, i.e. expansion of money supply, the real rip-your-face-off sources have nothing to do with money supply. The rip-your-face-off sources are scarcities that cannot be filled by substitution or globalization.

Consider skilled hands-on labor as an example. Let’s say some essential parts in essential infrastructure require welding. There is no substitute for skilled welders. But wait, doesn’t economic dogma hold that whenever costs rise, a cheaper substitute will magically manifest out of a swirl of dust? That dogma is false in cases such as skilled labor.

The only substitute for a skilled welder is another skilled welder, and while theory holds that there will be cheaper welders who can be brought in from elsewhere, this is also not true: due to deficiencies in education and a cultural bias against manual labor, there is a shortage of skilled welders virtually everywhere.

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Is the United States on The Same Calamitous Path as Yugoslavia? by Brandon Smith

Imagine living in a country where prices doubled daily. From Brandon Smith at alt-market.com:

This article was written by Brandon Smith and originally published at Birch Gold Group

Of all the inflationary disasters in modern economic history, Yugoslavia’s is the one most ignored by the mainstream. To be sure, the collapse of the Eastern European nation was a slow burn, but with a big explosion at the end. Most people are familiar with the Serbian/Croatian war and the genocide that followed, but few people are familiar with the economic crisis that led to the conflict.

I am not here to present an in-depth analysis of the eventual breakup of Yugoslavia, only to examine the conditions that triggered it. I believe there are some interesting similarities to burgeoning conditions within the U.S., along with some distinct differences.

The First Stage: Inflation

President Josip Broz Tito led the nation in various capacities from 1953 to 1980. He used two powerful tools to clamp down on unrest in the ethnically-diverse nation: large-scale repression of dissenting voices using both police and military forces, and allowing regional foreign borrowing. The latter might not sound particularly important. According to the CIA’s 1983 national intelligence document Yugoslavia: An Approaching Crisis?:

Although self-management in theory permits workers to own and manage their enterprises, in fact the leaders in the six republics and two provinces… became the dominant economic decision makers. They grew increasingly protectionist and isolated from each other in pursuing local interests. Ignoring national economies of scale and ultimate profitability, they built redundant enterprises, blocked competition on the “unified market,” and granted unrealistic price increases and subsidies to favored industries. Thus, by the early 1980s inflation in the 30- to 40-percent range became chronic…

Yugoslavia’s inflation troubles were ever present, with up to 76% in price increases annually from the early 1970’s to the early 1990’s. In fact, the Cato Institute’s Steve Hanke calls it The World’s Greatest Unreported Hyperinflation.

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Inflation: Your Role as a Milk Cow, by Jeff Thomas

Shut up, ask no questions about the government inflating its money supply, and continue to produce so that the government may tax you. From Jeff Thomas at internationalman.com:

milk cow

Traditionally, inflation has been defined as “an increase in the amount of currency in circulation.” Such an increase almost always causes an increase in the cost of goods and services, since, more plentiful currency units lowers their rarity, as compared to the supply of goods and services, which remains roughly the same. Therefore, it shouldn’t be surprising if a 20% increase in the amount of currency units translates into a 20% increase in the price of goods and services.

Unfortunately, in recent decades, even dictionaries have been offering a revised definition of inflation, as “an increase in the price of goods and services.” This is a pity, as it makes an already confusing subject even more difficult to understand.

This is especially true for the average guy who has a minimal understanding of economics, but does realise that, even if his wages increase (which he regards as a good thing), he never seems to get ahead. In the end, he always seems to be worse off.

Let’s say that you’re paid $4000 per month. You budget for housing, food, clothing, transportation, etc. Let’s say that that adds up to $3800 per month, and you’re hoping to put $200 per month into savings. Often that doesn’t happen, as unplanned expenses “pop up,” and must be paid for. So, in the end, you save little or nothing.

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David Rosenberg: “A Whole Bunch Of People Are Really, Really Wrong” About Inflation, by Tyler Durden

The consensus is for further increases in inflation, and SLL is part of that consensus. However, SLL is always interested in views that challenge the consensus. From Tyler Durden at zerohedge.com:

With so much focus on the macro environment as stocks struggle to return to their all-time highs, MacroVoices invited seasoned Wall Street economist David Rosenberg, the chief economist and chief strategist of Rosenberg Research, on the show this week to discus the market’s topic du jour: inflation, and whether or not it will be “transitory,” like the Federal Reserve says.

What followed was a thorough critique from Rosenberg, who just a couple of months ago was warning that rising Treasury yields would soon push the market to a “breaking point,” of what he sees as flaws in the market’s pricing of lasting inflationary pressures.

Instead, Rosenberg essentially agrees with Fed Chairman Jerome Powell that the recent acceleration in inflation seen in April will be temporary.

What’s going on isn’t a fundamental “regime shift”, but rather a “pendulum” swinging back to the opposite extreme following the sudden deflationary demand shock caused by the pandemic. We had three consecutive months of negative CPI prints last year, Rosenberg pointed out. To offset all that, April saw the biggest MoM jump in consumer prices since 1981.

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