Skip to comments.The Inflation Predictions Were Just Wrong, And Now They're Hurting People
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 didnt 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 youd 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 were 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 .
Its 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 theyve 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 youve been substantially overweight these metals in your portfolio then youve experienced substantial pain based on sheer misunderstandings by people who are posing as experts.
(Excerpt) Read more at businessinsider.com ...
If you’re not including fuel and food, then any measure I’d inflation is useless
They were not wrong. They were early. And that is common.
I have seen nothing in my neck of the woods but prices for essential rising.
And where would we be without the fracking boom. Seriously.
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!
Bernanke's triple-digit hyperinflation is just around the corner.
This guy is either an idiot or intentionally a FOS agent of disinformation. Which is it?
Maybe there is no inflation in EBT lines for essential. Guess the D.C. folks have those people’s backs.
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.
And the longer it is before it gets here — the worse it will be.
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.
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..
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?
Read this for some enlightenment on the subject of inflation:
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.
No problem - they just change the definition of “essentials” and voila! no inflation.
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.
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.
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.
apparent, not impairment (sorry)
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?
have noticed that too ... lumber is way up as is the cost of auto and homeowner insurance.
“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.
First, turn it to the food channel.
Maybe there is no inflation in EBT lines for essential. Guess the D.C. folks have those peoples backs.
So long as wages remain nominally static, we have NO inflation......just rising prices and a lowered standard of living.
What if one cannot afford the food channel?
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.
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.
So reading between the lines, this guy basically believes there should only be government-sanctioned news about the economy.
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.
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...
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.
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.
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.
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.
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.
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.
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.
I believe the author of the article is lying
Yes : But he is a Democrat and that makes it ok.
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.
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.
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.
Thinks Brazil in the 'eighties and early 'nineties, or Bosnia in 1992-1993.