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The Inflation Predictions Were Just Wrong, And Now They're Hurting People
Business Insider ^ | 06/21/2013 | CULLEN ROCHE, PRAGMATIC CAPITALISM

Posted on 06/21/2013 6:19:51 AM PDT by SeekAndFind

Remember back when QE started and we saw charts of high powered money going vertical all over the place and everyone who didn’t understand modern banking said that the reserves would flood out into the economy causing high inflation or even hyperinflation? And do you also remember how most of those same people also said that the only way you’d be able to protect yourself from this hyperinflation was by owning hard assets like gold or silver? Well, the inflation never came.

The most recent reading of 1.7% pretty much proves that we’re much more Japan than we are Weimar (and yes, even independent gauges confirm the low inflation story). And now the portfolio recommendations are falling apart as well….

It’s one thing to be wrong about the way banking works and the way inflation might spread. But most of these people were explicitly recommending a substantial overweight in gold and silver as well. And they’ve been annihilated in recent years.

Gold is down 33% from its 2011 highs. And silver is down a staggering 60% since the time I started referring to it as a bubble. These are massive moves and if you’ve been substantially overweight these metals in your portfolio then you’ve experienced substantial pain based on sheer misunderstandings by people who are posing as experts.

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; Society
KEYWORDS: inflation; investment
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1 posted on 06/21/2013 6:19:51 AM PDT by SeekAndFind
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To: SeekAndFind
SeekAndFind, I must live on a different planet than this author. I have seen nothing in my neck of the woods but prices for essential rising.
2 posted on 06/21/2013 6:22:01 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: SeekAndFind

If you’re not including fuel and food, then any measure I’d inflation is useless


3 posted on 06/21/2013 6:22:19 AM PDT by Mamzelle
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To: SeekAndFind

They were not wrong. They were early. And that is common.


4 posted on 06/21/2013 6:22:22 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: no-to-illegals

I have seen nothing in my neck of the woods but prices for essential rising.


There is the rub. Taxes are up. Prices for essentials are up, but you can still get a lot of flat screen TV for your money.

And where would we be without the fracking boom. Seriously.


5 posted on 06/21/2013 6:23:32 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: SeekAndFind

When was the last time this writer went to a grocery store, out of touch much!!!
And a Rick Santelli said Wednesday, it’s the velocity of money that is keeping inflation down, it’s socked away in computers and vaults all over america. If that money ever reaches the consumer we are going to be in real trouble!


6 posted on 06/21/2013 6:26:58 AM PDT by qman (The communist usurper must go!)
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To: Mamzelle
One has to suppose the new books for keeping inflation figures do not include essentials, as is figured. Is a pity most reports regarding inflation being nonexistent are blatant lies. I've seen meat prices continue to soar. Well maybe meat isn't essential. Have seen general food prices soar. Well maybe food isn't essential. Have seen fuel prices soar. Well since I don't need food, fuel must not be essential either. What a crock. Why am I expected to believe there is no inflation? My eyes and brain must not be essential either in the obamanation.
7 posted on 06/21/2013 6:29:35 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: SeekAndFind
Not to worry.

Bernanke's triple-digit hyperinflation is just around the corner.

8 posted on 06/21/2013 6:30:01 AM PDT by E. Pluribus Unum (Religious faith in government is far crazier than religious faith in God.)
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To: SeekAndFind

This guy is either an idiot or intentionally a FOS agent of disinformation. Which is it?


9 posted on 06/21/2013 6:31:28 AM PDT by WKUHilltopper (And yet...we continue to tolerate this crap...)
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To: cuban leaf

Maybe there is no inflation in EBT lines for essential. Guess the D.C. folks have those people’s backs.


10 posted on 06/21/2013 6:33:05 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: SeekAndFind
Well, the inflation never came.

When was the last time this author purchased food or gasoline? At the grocery store alone, my purchasing power has decreased by 30% over the last four years.

11 posted on 06/21/2013 6:37:48 AM PDT by Hoodat (BENGHAZI - 4 KILLED, 2 MIA)
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To: SeekAndFind
Inflation is coming.

And the longer it is before it gets here — the worse it will be.

12 posted on 06/21/2013 6:39:07 AM PDT by BenLurkin (This is not a statement of fact. It is either opinion or satire; or both)
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To: no-to-illegals

I’ve seen the word “biflation” recently. We actually are in a deflationary economy in general, but the three things which everybody sees right in front of their faces, food, fuel, and medical costs, have been being manipulated.


13 posted on 06/21/2013 6:40:34 AM PDT by varmintman
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To: varmintman

Its not just food and energy.....its taxes and fees too...all those government fees have gone up..new licenses needed...property taxes up...federal taxes up...state taxes too...Insurance costs going up..


14 posted on 06/21/2013 6:43:45 AM PDT by Youngman542012
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To: SeekAndFind

uh-huh...That’s why a box of doughnuts costs $5.40? Milk is more expensive than a gas? Low cut hamburger meat is a luxury for some right now?


15 posted on 06/21/2013 6:45:39 AM PDT by Ghost of SVR4
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To: SeekAndFind
What hasn't risen much is the Consumer Price Index. That's the government's phony calculation of inflation. What has risen much faster than the CPI is the price of essentially everything.

Read this for some enlightenment on the subject of inflation:

Peter Schiff Exposes Phony Inflation Numbers

16 posted on 06/21/2013 6:48:11 AM PDT by InterceptPoint (If I had a tag line this is where you would find it)
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To: qman
If that money ever reaches the consumer we are going to be in real trouble!

For that money to reach the consumer, wages will have to go up. With real unemployment and underemployment somewhere north of 13% and Obamacare starting to kick in, I don't see wages increasing anytime soon.

17 posted on 06/21/2013 6:49:35 AM PDT by Roccus
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To: no-to-illegals

No problem - they just change the definition of “essentials” and voila! no inflation.


18 posted on 06/21/2013 6:50:09 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: SeekAndFind

Just give it time.

All this QE money is going into the stock market...and what are alot of comapnies doing with this investment money?

Nothing. They’re just holding onto it.

If the economy ever starts to really grow again, commodities from fuel to copper to drywall are going to shoot up in price.

You can’t just throw money into an economy faster than its growth rate, without eventually getting inflation.


19 posted on 06/21/2013 6:50:51 AM PDT by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: Ghost of SVR4
“””””””””And do you also remember how most of those same people also said that the only way you’d be able to protect yourself from this hyperinflation was by owning hard assets like gold or silver? Well, the inflation never came.””””””

Just because gold and silver were in a bubble does not mean that there was no inflation.

Not just foods and gas have gone up. I purchased lumber last year and this year both and the price is up as well for these items.

I believe the statement above about the velocity of money being to low for very high inflation.

20 posted on 06/21/2013 6:52:01 AM PDT by jimpick
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To: SeekAndFind

I honestly didn’t go and read the article, but when this topic arises, I always go back to the most basic definition of inflation - too much money chasing too few goods. And nowhere TODAY is this more impairment then in an area that often gets overlooked when discussing inflation..........the STOCK MARKET.


21 posted on 06/21/2013 6:52:44 AM PDT by safeasthebanks ("The most rewarding part, was when he gave me my money!" - Dr. Nick)
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To: safeasthebanks

apparent, not impairment (sorry)


22 posted on 06/21/2013 6:53:34 AM PDT by safeasthebanks ("The most rewarding part, was when he gave me my money!" - Dr. Nick)
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To: MrB

Guess if I ever buy another TV, I may have to eat it. Does anyone have a good recipe for cooking a TV to make the TV eatable?


23 posted on 06/21/2013 6:58:33 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: jimpick

have noticed that too ... lumber is way up as is the cost of auto and homeowner insurance.


24 posted on 06/21/2013 6:59:48 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: Roccus; All

“With real unemployment and underemployment somewhere north of 13% and Obamacare starting to kick in, I don’t see wages increasing anytime soon.”

Had a Staff Meeting this week. All of the Managers and The Big Boss. We were basically told to cut the fat everywhere and we would NOT be hiring anyone full-time, even those part-time, loyal employees who are reaching the threshold for qualifying: ‘X’ amount of hours per week for an extended period; we managers give the available hours to the hardest workers, of course.

Secondly, we were pretty much told that 0bamacare will ADD $15K to the bottom line of every full-time employee we already have (close to 100 of us, and no splitting us up into smaller mini-companies, ‘cuz Mother Government is on to us...) and that keeping our jobs IS our ‘raise’ this season; we usually get raises in July.

This man provides many, many jobs throughout our state, full and part time. Things are gonna get ug-lee. I am in totally ‘hunker down mode’ at home and at work.


25 posted on 06/21/2013 7:07:13 AM PDT by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set...)
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To: no-to-illegals

First, turn it to the food channel.


26 posted on 06/21/2013 7:07:17 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter admits whom he's working for)
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To: no-to-illegals

Maybe there is no inflation in EBT lines for essential. Guess the D.C. folks have those people’s backs.


I suspect that since they are not paying for it a lot of them don’t follow the price all that much...


27 posted on 06/21/2013 7:19:27 AM PDT by cuban leaf (Were doomed! Details at eleven.)
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To: Diana in Wisconsin

So long as wages remain nominally static, we have NO inflation......just rising prices and a lowered standard of living.


28 posted on 06/21/2013 7:20:18 AM PDT by Roccus
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To: SeekAndFind

Insurance: up
Food: up
Fuel: up
Education: up


29 posted on 06/21/2013 7:23:00 AM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: MrB

What if one cannot afford the food channel?


30 posted on 06/21/2013 7:24:04 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: SeekAndFind
Back during the housing bubble it seemed like the government was doing everything possible to avoid including the run up in housing prices in the CPI. Sure a house costs twice as much as ten years ago, but that really doesn't count. Now on the way down they use the drop in house prices to counteract the effects of rising food and fuel prices.

Also the only way the trillions the Fed has pumped into the economy hasn't driven massive inflation is because the banks either sit on the money or lend it back to the US government. If they start lending it out to consumers and businesses the velocity of money will return to something close to normal and the inflation dam will break.

31 posted on 06/21/2013 7:24:25 AM PDT by KarlInOhio (This message has been recorded but not approved by Obama's StasiNet. Read it at your peril.)
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To: no-to-illegals

This guy says inflation isn’t here, he must not buy his own food and gasoline.

I have another fact for him.

It aint over yet, The fat lady hasn’t sung.

Because it isn’t here does not mean it isn’t coming.


32 posted on 06/21/2013 7:25:05 AM PDT by Venturer
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To: Mamzelle
Food hasn't changed much either. Pretty much right on the 30 year trend:


33 posted on 06/21/2013 7:27:29 AM PDT by Wyatt's Torch (I can explain it to you. I can't understand it for you.)
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To: SeekAndFind

So reading between the lines, this guy basically believes there should only be government-sanctioned news about the economy.


34 posted on 06/21/2013 7:27:59 AM PDT by dfwgator
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To: Wyatt's Torch

Um, and gasoline? I feel the increase in groceries every time I shop. How about tuition and medical care? This is absurd. Economists can be such morons.


35 posted on 06/21/2013 7:30:20 AM PDT by Mamzelle
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To: Venturer
for me and mine ... inflation is here. I keep decent books on what comes in and what goes out. I categorize ... food, fuel, insurance, clothing. Costs for all have been going up dramatically. If my books are wrong, I'll eat them. Some of the percentages are double digit increases, thus for essentials my eyes, brain, and books would have to be lying or this author is lying when stating inflation is 1.7%. I believe the author of the article is lying.
36 posted on 06/21/2013 7:31:59 AM PDT by no-to-illegals (Scrutinize our government and Secure the Blessing of Freedom and Justice)
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To: qman

You font need an economist — just eat out occasionally and look at the serving sizes and prices at your favorite places. I have watched beef tenderloin dusappear from menus Notice that a pound if coffee us eleven ounces and rising in price. Affluent academics probably have their meals provided by their post doc slaves...


37 posted on 06/21/2013 7:34:10 AM PDT by Mamzelle
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To: SeekAndFind

Crapolla.

Another over educated, yet bereft of real world knowledge, pinhead regurgitates the party line.

Politicians and economists running our country into the ground because they believe theory is reality.

Inflation, unemployment, the GDP. Simply omit the variables that hinder getting the result you desire. Then repeat this result ad nauseum until it becomes the mantra that morphs into fact.

The Soviets used to say that everyone could afford bread. In theory that was true. The fact that there wasn’t any bread to be had was always conveniently omitted.


38 posted on 06/21/2013 7:38:19 AM PDT by ChildOfThe60s (If you can remember the 60s.....you weren't really there)
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To: Ghost of SVR4
That’s why a box of doughnuts costs $5.40?

Come on, that's not an essential unless you're you're a cop. Then it's a two or three times a day thing.

39 posted on 06/21/2013 7:38:31 AM PDT by steve86 (Acerbic by Nature, not NurtureĀ™)
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To: no-to-illegals

If inflation were computed rationally, with a genuine desire for the truth, it would be a much higher number.

If that were done, then a properly computed GDP would probably be negative for the last several years or more. In reality, we probably have never come out of the recession.

In truth, without some serious policy changes or some unforeseen major event, we are in an indefinite recession. With the likelihood of turning into a depression being much greater than turning into a recovery.

So Orwellian in so many ways. And getting worse, not better.


40 posted on 06/21/2013 7:46:48 AM PDT by ChildOfThe60s (If you can remember the 60s.....you weren't really there)
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To: ChildOfThe60s
I ask: what is the price of arugula?

That's all we need to know.

Until the price of arugula goes up dramatically, the chattering class will have no idea what the "other half" Joe six-pack is dealing with.

41 posted on 06/21/2013 8:36:01 AM PDT by elk
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To: cuban leaf

It’s not so much that they were early - what happened is the government has been heavily manipulating gold / silver down over the last couple years when all indicators are it should’ve gone up.

The inflation is all there - they’re just hiding it as long as they possibly can.


42 posted on 06/21/2013 8:39:09 AM PDT by Dave346
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To: no-to-illegals

bflr


43 posted on 06/21/2013 8:52:07 AM PDT by ssschev (Pick up the can, throw out the trash.)
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To: ChildOfThe60s

I agree with what you wrote above. I would suggest two other things are relevant to this discussion.

1 - Financial folks - especially investment advisors - are more concerned with investment instruments and the influence of inflation on making money using different vehicles. Most of us are more concerned with making our bills and feeding our families. This has created a disconnect in what most of us see with our own eyes and what we read in the financial media. They say no inflation because they don’t measure the price of groceries and necessities - we see inflation because we measure it by things we know - milk, eggs, our favorite meal at a restaurant, or a bag of chips.

2 - While I agree with your assessment that we seem to be stuck in a long term recession there is an inevitability as long as the government fails to slash it’s spending in half and as long as the Fed continues to pump money into the financial markets - inflation. It will happen eventually because you can’t continue to borrow and print dollars without creating inflation. The dollar has unique status, but ultimately that status is backed by the faith of other nations that a dollar is worth something. That faith is crumbling due to our irresponsible behavior and we will see more nations/markets demanding more dollars for the same products such as oil and coffee. Continuing on this course will result in the dollar losing it’s special status and we will be in a world of hurt. I don’t see any way we can avoid this given our current leadership and direction so the only thing left to argue about is “when” instead of “what” and will it be gradual or sudden. We only control our destiny with the dollar if our leaders can behave responsibly.


44 posted on 06/21/2013 8:57:10 AM PDT by volunbeer (We must embrace austerity or austerity will embrace us)
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To: Dave346
Like I said I bought lumber this year and last.

Last year a 2X4 stud was $1.99-2.25.
This year it is $2.80-3.29.

These numbers added together and divided by 2 give a price rise of $0.92. Or just about a %50 increase in price.

Wages do not have to go up for inflation to happen. Nixon caused inflation in the 70’s when he put wage controls into force. True this was caused by a shortage of supply, but prices went up with out wages going up.

45 posted on 06/21/2013 8:57:39 AM PDT by jimpick
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To: no-to-illegals

I believe the author of the article is lying

Yes : But he is a Democrat and that makes it ok.


46 posted on 06/21/2013 9:15:01 AM PDT by Venturer
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To: E. Pluribus Unum

Even moderate inflation will wreck this economy. A debt payment of 300 million, if inflation doubles becomes 600 million, and if it triples (7%), it becomes a trillion.

I remember being taught that one should count on inflation averaging about 6%.

Hyperinflation will start a depression or something worse, whatever that might be.


47 posted on 06/21/2013 9:19:39 AM PDT by xzins (Retired Army Chaplain and Proud of It! True supporters of our troops pray for their victory!)
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To: SeekAndFind
said that the reserves would flood out into the economy causing high inflation or even hyperinflation?

The goobermint has to lie and keep the official inflation rate low in order to keep the cost of living increases of social security payments low.

48 posted on 06/21/2013 9:20:21 AM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: SeekAndFind

This is all a setup to collapse the economy so that Communism can be offered by Obama and his follow commies as the answer.

The collapse is immanent. Interest rate will skyrocket, housing will collapse, stock market will collapse, yet the bond market will also collapse as it was sold at 0% interest and cannot be refinanced.

That giant sucking sound is the federal government sucking in all the money and power.


49 posted on 06/21/2013 9:23:07 AM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
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To: xzins
Hyperinflation will start a depression or something worse, whatever that might be.

Thinks Brazil in the 'eighties and early 'nineties, or Bosnia in 1992-1993.

50 posted on 06/21/2013 9:23:15 AM PDT by E. Pluribus Unum (Religious faith in government is far crazier than religious faith in God.)
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