Hommel isn't bright enough to be either a shill or an economist.
Posted on 02/24/2008 7:23:42 AM PST by Christopher Lincoln
On this Valentine's day, let us remember and pay a tribute to all people who love the Government, and while we are at it, let's pay tribute to the Government itself by buying a T-Bill !
Thank goodness most of America and the rest of the world still loves the Federal Government of the United States and the Federal Reserve enough to continue to hold about $30 trillion worth of bonds that are paying, on average, about 5% while inflation is about 17%.
Such Fed-loving bond holders clearly approve of all the spending habits of the United States government, by their actions of holding bonds, and willingness to lose 12% of their capital per year, and must fully approve of the institution known as the Federal Reserve.
(Excerpt) Read more at gold-eagle.com ...
I wonder what world the author lives in that he believes that the inflation rate is seventeen percent in the United States. Maybe he’s having a flashback to the Jimmy Carter years?
His criticism of the war is just the tip of his iceberg of stupidity. Inflation is 17%? LOL. I'd say his only real point in writing this article was to say buy gold! -- preferably his gold.
Hommel isn't bright enough to be either a shill or an economist.
He’s not selling. He’s buying.
BTW be ready for the onslaught - every time I make the same statement the "economy is great" crowd comes out. You could not be more correct about the Government cooking the books on inflation. Go to the Commerce website and look at the categories they use. Where can you find coffee for $3.50 per pound. No where I know of.
Childcare, too, is going up. The insurance the centers pay, plus their utilities and property taxes, mean child care rates are going up 4-6% a year. Much higher than official inflation.
Real inflation is not 9-12% unless food and gas are like 50% of your budget. There are plenty of things cheaper now than 2 years ago like clothing, housing, electronics, computers, etc. The government headline # does NOT exclude food, fuel etc btw. The “core” number does due to the volatility of those 2. That’s why the “headline” number is 4.3% and the core is in the low 2s.
Housing and clothes prices are dropping—and yes I’m talking about real clothes not Walmart cr$p since I never. I just bought 2 nice pairs of dockers, a nice work shirt and a sweater last week for $60 total. 2 years ago that would have cost me at least $90. Clothing merchants are hurting badly (same store sales are way down) and are heavily discounting. Housing prices have been dropping for 2 years straight nationally and probably won’t stop for at least another year. Electronics and computer prices continue to drop as well (drastically). I bought my wife a laptop 2 years ago for $1000. I could get a faster one today at best buy for $400 now (which would save $600 which is enough to buy my wife and groceries for 4 months).
Official inflation is 4.3%. If you say rates are going up 4-6%, I don’t see how you can say much higher than official inflation since that is in your range. Did you include housing, clothing, electronics, and computer prices dropping though in that calculation?
The author of this travesty of an essay would never be a shill for FedGov because he didn’t get the good grades in the right classes in high school or college.
Considering home prices and interest rates are coming down, if anything housing and rents are in a period of deflation.
I don’t know what the inflation rate is but:
4 years ago the cheapest pair of hiking boots at Walmart cost $16.00.
2 years ago the cheapest pair of hiking boots at Walmart cost $20.00.
Last summer the cheapest pair of hiking boots at Walmart cost $24.00.
1 year ago I could buy 5 Jacks frozen pizzas for $10.00.
Six months ago I could buy 4 Jacks frozen pizzas for $10.00.
Yesterday, I could buy 3 Jacks frozen pizzas for $10.00.
What component of M3 are you unable to find to add to M2 and get the number for yourself? Why not just use M2 like everyone else who understands the basics of money and banking?
Does it really even matter? Anyone who thinks the real rate of inflation is 17%, and the entire bond market is oblivious, is an idiot....and a gold bug.
Where does the author get the figures of $30 trillion in bonds and 17% inflation rate? $30T at 5% interest would be $1.5 trillion in interest. The amount paid is no where close to that.”
Where does he get the idea that Feb 24 is Valentine’s Day??????
Official inflation is 4.3%. If you say rates are going up 4-6%, I don’t see how you can say much higher than official inflation since that is in your range. Did you include housing, clothing, electronics, and computer prices dropping though in that calculation?”
If “official inflation” is 4.3%, then why was my Soc Sec increase only 2.3%. Gas has more than doubled since I retired. Food is another entire story. Thanks to the spotted owl mess, a box of computer paper has gone from 2800 sheets (tractor feed) for $9.95 to 2500 sheets for $28.95.
I used to drive about 15,000 miles a year between my 79 Buick and my 76 one Ton Dually. This last year the total mileage for both was 3111 miles. That still cost me more than $1000 in gas.
For starters, the government has set up a private corporation, and given it a monopoly on counterfeiting private wealth. The very act of “borrowing money into circulation”, according to none other than Alan Greenspan in his 1966 essay, Gold and Economic Freedom, is the key aspect of a long term, slow motion, conversion of private wealth to the benefit of government. In fact Greenspan said it was “confiscation through inflation.”
Next, I would be happy to support a government that did not exempt itself from its own rules. When massive pollution is discovered at a government agency, nobody goes to jail, nobody gets fired. If the environmental damage rises to the level where it cannot be swept under the carpet, the GAO will issue a report with a title like “Cleanup Progressing, but Challenges Remain”.
I would be happy to support a government that meticulously respected my right to protect my own privacy, including my financial privacy, as much is it protects its own records, a government that put put its own agents in jail for telling lies to citizens, just as quickly as it put Martha Stewart in jail for telling lies about her stock trades.
I would be happy to support a government that was just as happy to grant me a deduction for my capital losses as it is to tax me on capital gains. There are some people who cannot live long enough to work off their short term capital loss carry-forward at the generous $3,000 per year limit.
Speaking of taxing gains, I would be happy to support a government that stops taxing me on numerical gains in dollars of long-term assets that have risen in price because of how much the government has inflated its currency. Alan Greenspan was right to be worried about confiscation via inflation coupled with the graduated tax on incomes.
In short, sorry government, you’ll have to improve our relationship substantially before I’ll give you a single penny more than I am legally obligated to.
4 years ago the cheapest pants I could buy at Kohls was $25 on a normal sale. Today I can get them for $20. I don’t know what Jack’s frozen pizzas are but I’ve paid on average $3.99 to $4.99 for tombstone/digorno for about 5 years straight unless it was BOGO. Anectdotal evidence doesn’t work really well for inflation.
No idea about whether computers are considered durable goods or not. If you aren’t seeing clothing discounts, you aren’t looking at a lot of clothing merchants. Maybe they are just way down on the east coast, but I doubt it. True, housing is higher than 5 years ago but CPI is calculated based on the last year, not on the last 3, 5 or 10 years.
You cannot escape the fact that M3 is no longer reported. Sure, you can still calculate it, but they stopped reporting it. BTW, you ducked my question. How much has M3 increased, year over year, this past year?
How does this fact prove that inflation is 17%? Do you think the fed is stupid and thought all they had to do was stop publishing M3 and all of a sudden the markets wouldn't notice that inflation was really 17% and not what they were reporting?
BTW, you ducked my question. How much has M3 increased, year over year, this past year?
If you understood how M3 was calculated you'd understand why most people use M2 to measure money supply growth.
For the third time, could you please give the M3 YOY money growth? Thanks in advance.
If you don't factor in those volatile food and energy prices...
Dude: they're taxing us through food and energy. Don't you get it?
For the last time, why would you even want this information in the first place and, more importantly, do you even know the components of M3? If so, perhaps you could explain to all of us why they're relevant. After all, you're the one who originally suggested that it's an important number and that by no longer publishing the number, the government is somehow conspiring against us.
I'll be happy to post a chart of M3 if you'll tell us why it matters that it is no longer reported. You're seeing conspiracies that don't exist.
M3 increase is about 15% with M2 being about 6%. Inflation is not even close to M3 rate although it is near M2. If you factor in productivity gains, 4.5-5% inflation is probably correct, although oil is the latest bubble. When oil drops back down to 50/barrel (or less) which it will at some point most likely, are you going to cry deflation as loud as you do now with inflation?
Food and energy have always been erradic. Look at the huge declines in energy from the mid 80s to around 2000. Food prices usually follow energy and other commodities. Energy prices are in a bubble right now. Food prices are going up for 2 reasons #1 is higher energy costs and #2 is corn/commodity prices in a bubble. It can’t last forever like that at which point will probably cause headline inflation to look very low but core to still remain 2-2.5%
August 2004: K-1 Kerosene for home heating - $1.75/gallon
December 2007: K-1 Kerosene for home heating - $6.00/gallon.
Just about 350% inflation more than 100% inflation per year. But, it's fuel, so it don't count...
It's not "erratic" - the Greens are pushing the cost of energy through the roof, and it ain't coming down. My cost per Kwh for electricity doubled - so I'm paying MORE even though I more than halved my consumption.
Yup and I venture to say during the Winter this year that has been number on or two on many people’s top expenditure list.
It's not "erratic" - the Greens are pushing the cost of energy through the roof, and it ain't coming down. My cost per Kwh for electricity doubled - so I'm paying MORE even though I more than halved my consumption.
Bulls!ht that's it's gone up double per KWH int he last 3 years. Show me some images of it and maybe I'll believe you. Also, the greens are pushing up the cost but so is speculation, commodity bubble in general and heavily increased demand from China & India.
Actually, I was giving you the date when I last could buy K-1 @ $1.75/gallon. After August 2004, I could never get K-1 for less than $1.95/gallon. Ever. Actually, it's kind of funny, because I was able to buy it cheaper than market for about a year and a half because I knew a place where the pump didn't have a "3" in the dollars slot for the higher prices - so it hung at $2.99 till it spiked WAY over that.
If you'd like, I could fish out my natural gas pricing (I supplement with K-1 for comfort) for the last 4 years. It HAS gone down from about 1.07 per unit to .71 per unit (average 10-14 units per day) over the last year, but it was above or close to 1.00 per unit for most of that time period.
Fourth, we're currently in a commodity pricing bubble that will not last. I hope to see you cry deflation when it goes down but I doubt you'll say anything.
Old-time Freepers believe in full disclosure. We've seen too many "omissions" in the MSM over the years, and know it for the hypocrisy that it is.
Still doesn't dispute my point about summer vs winter. Yes, oil and commodity prices in general have been almost straight up since Katrina happened. Commodities are going up but nearly everything else is flat or dropping or just slightly increasing. That's not to say that you can ignore headline inflation but you have to realize it will drop at some point and cause headline inflation to look near 0. If oil doesn't drop back to $50-60 a barrel or less, I'd be shocked. If we really do have a recession, I think oil may drop back down to $35-40/barrel.
I had a dip in costs for a time as I anticipated the surge in prices by instituting conservation measures, but now we're paying more for MUCH less usage.
I can't imagine what the oldsters in our town are doing...
Well if your city got at a discount rate for a very long time that doesn’t really count IMO as indicative of inflation (but of course good for you to have all of those years at a cheaper rate). Avg Kw/h across the country has been right at what your new rate is for quite a while rising about 3-5% a year.
I've been on FR a VERY long time, and I've seen a lot of strange things, and absorbed a lot of strange information.
Some years ago, I came to the conclusion that the governmental authorities had maxed out their ability to overtly tax the ordinary serfs without a revolt. I then reasoned that further taxation would have to come in the form of price increases on things that the ordinary serf couldn't do without - to whit, food and energy.
Now, either we're in a "bubble" as you assert, or the government is enhancing its revenue collection methods, as I assert.
A friend of mine has postulated that gasoline prices will go over $4.00 per gallon before the end of the year. I demurred.
Want to take that bet with him?
Average kw/h went up 4% last year overall. Residential was up 5% or 10.69¢ per kwh.
I think it's quite possible (I'll say 35% chance) that gas hits $4.00 gallon within a year for a short time frame IF we do not have a recession. I also think it's likely gasoline will go back under $2/gallon at some point in the next 5 years for a decent length of time (unless government raises taxes drastically). Keep in mind though that gasoline stocks right now in the US are at an all time high and gasoline usage is dropping.
Here is what I see. In 98-00, Equities were in a huge bubble. That bubble money started to move in 2000 and through 2004/early 2005 into real estate. In 2005, it started into commodities. When will the bubble collapse? Depends on if we go into a recession, China, India, and what our government does with regards to an energy policy.
I'm somewhat more cynical than you about these things, because I was here during the impeachment wars, when the rule of law in the US collapsed, and the prosecution of perjury, obstruction and witness tampering became a "beauty contest". I believe that the markets were manipulated during that time to facilitate the "beauty contest".
My problem now is that my guesses are coming true.
I have no doubt the markets are manipulated. I think the government does want inflation but not at runaway levels. I lurked on FR from about late 99 through middle of ‘00. I think we’ll have 1 more year of inflation, a year of flat and then it depends on the economy whether we drop into deflation (if Obama is elected in a tidal wave, watch out for a major depression/recession which would be extremely deflationary) or begin our inflationary drive again of around 3% annually if McCain or Hillary gets elected.
It's hard for an intelligent person to lurk here without exploding. I imagine it was tough for you.
Re startling deflation or 3% "status quo" inflation - I really dislike the way the Greenies are driving the energy markets.
I believe we may eventually have to directly relieve the waffling politicians of their burden of responsibility for the energy policy of the US.
I was 18 at the time and just taking in the vast amount of knowledge on here. I was also an avid PC Gamer then so I didn't spend nearly as much time on it then as I do now.
Re startling deflation or 3% "status quo" inflation - I really dislike the way the Greenies are driving the energy markets.
Yup--the 'environmentalists' are seriously scary and completely irrational. I have a few people in my family that I just can't talk to about it. I can have a more rational debate on abortion with them than I can about energy and drilling.
I believe we may eventually have to directly relieve the waffling politicians of their burden of responsibility for the energy policy of the US.
I hope the markets take care of it for us, but you may very well be right.
Thanks for answering my question.
Inflation is not even close to M3 rate although it is near M2.
Well, the government's number is near (but below) M2, although the real cost of living increases for real people is well above M2. Maybe it isn't as high as M3, but then again, maybe Jason Hommel considers purchasing gold and silver, as an investment, a "cost of living." I don't know where he gets the 17% figure, but I will observe that he is a resident of California, and so his costs might be rising will above the national average.
If you factor in productivity gains, 4.5-5% inflation is probably correct, although oil is the latest bubble.
I don't think oil is a bubble. More than 2 billion people in China and India are grasping for what we consider a middle-class existence. Including a car (or two). There are bidders under the price of oil - a lot of them.
When oil drops back down to 50/barrel (or less) which it will at some point most likely, are you going to cry deflation as loud as you do now with inflation?
Actually, I think the best measure of inflation is "increase in the money supply". That will never, ever go down so long as the fiat printing press churns out new dollars by the trillions. As a matter of fact, that's why I'm a gold bug (so you're free to dismiss me if you wish). I think gold will go much higher than it is now, and I'm not saying that because I want to sell you mine. I have been a buyer recently, and I plan to buy more. And I am more bullish on silver than gold.
Commodities are in a bubble but you can refuse to believe it if you want. China & India are why oil went from 15 to 50. Oil went from 60 to 100 on mainly speculation (The barrel/oil up almost 50% in just the last 6 months). Gasoline stock buildup in the US is at an all time high and inventory levels have risen dramatically the last 8 weeks in a row. We (the US) are using less gasoline now than a year ago.
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