Posted on 05/16/2011 10:23:53 AM PDT by Graneros
New inflation figures were released by the government last week, and the news was not good. The headline inflation number was 3.2% in the 12 months that ended in April. That is more than a percent above the Federal Reserve’s “target” rate of 2% and the first time it has been more than 3% in over than 2 ½ years. Of course, the accounting gimmicks used by the Bureau of Labor Statistics (BLS) understate true inflation, so things look better than reality. Nonetheless, in the latest report from economist John Williams of Shadowstats.com, even the government’s own “official” numbers will likely show double digit inflation in the next three months or so. The reason is continued money printing in the form of another round of Quantitative Easing (QE) by the Fed to prop up the struggling economy. Williams said, “The underlying pace of official inflation is accelerating, and could move into double-digits in third-quarter 2011. Preceding or coincident with that likely will have been some move to QE3 by the Fed and intense—if not panicked—selling of the U.S. dollar and dollar-denominated assets. Such a circumstance could be a base from which a hyperinflation might begin to unfold with some rapidity.”
And get this, inflation is already in double digits, according to Williams, if it was calculated the way BLS did it more than 30 years ago. Williams said, “. . . based on reporting of 1980, the April 2011 annual inflation rate would have been about 10.7%.” But, the double digit inflation story is not the one the mainstream media likes to tell. Instead, it usually focuses on what the government calls “core” inflation that excludes food and energy. The “core” inflation rate is .2%. Who lives in a world where the core of existence is not food and energy?
(Excerpt) Read more at usawatchdog.com ...
Its both of two worlds.
Currency debasement (inflation) and deflation in debt backed assets (house, cars, US Treasuries)
In case you missed it, there was a thread over the weekend that talked about food inflation at the grocery store.
http://www.freerepublic.com/focus/f-bloggers/2720302/posts?page=47
Can’t tell these people there is no inflation!
The drop in the value of the dollar has much to do with the over speculation in the commodities market. This drop in the dollar is a direct consequence of the U.S. federal deficit through excessive spending.
“The fact that you don’t see inflation in housing is because housing is still coming down from its bubble. Housing is still vastly overpriced and vastly overstocked - and the Fed are still keeping house prices pumped up with taxpayer money.”
Correct. The age old adage is that a home should cost you double your gross income. The average gross income is about 40K. Ergo, the average house should be about 80K. There is a lot more house now for that price, but eventually it will fall to appropriate levels, or else there will be a LOT of empty houses (Or filled by foreigners, but less likely) and a lot of slums. Housing needs to fall by about another 50% to be in line with what people can afford. Just because we have had decades of Debt slavery, financed by the labor of foreigners, doesn’t mean we will continue to do so.
I expect to see multigenerational households rise significantly, which will further lower the price of housing. There is definitely inflation, but the housing prices people were paying were just plain stupid.
“Double Digit Inflation has Arrived
Anybody who shops on a regular basis already knows this”
And most of us notice it’s almost monthly, for the necessities of life.
A lot of the houses will be snapped up by investors looking to rent out the houses.
A lot of the houses will be snapped up by investors looking to rent out the houses.
Renting out a one family is usually not a moneymaking venture
“Who will pay for those COLAs? Do the COLAs get paid from magical stimulus dollars?”
No, the backs of foreigners, until they stop buying our bonds.
“Perhaps it may be good for these groups in the short run but it will be another blow to the country’s fiscal outlook in the long run.”
They’re all going to wind up in the same boat, most of the country will have nothing. (Until there;s a true Constitutional government anyway).
The total supply of wealth has to be taken into consideration. The inflation of M1 while M3 is deflating doesn’t work out to the normal understanding of inflation. I believe that the falling realestate values have somewhat offset the money printing to some degree and has saved us from a banana republic inflation rate.
that’s not really relevant. Because there won’t be people able to pay rent at the cost that is required to pay off properties at this cost of housing. But I understand what you’re saying, however, housing prices must drop. It’s inevitable.
You’re right. an increase in velocity was in part to blame for the inflation around the early ‘80s.
last year a pint of milk ran me around a dollar at the local Wal-mart. last week the same pint of milk sold for $ 1.33. That's roughly a 30 cent increase in a year. I buy small amounts of milk because when I buy anything larger than a quart most of it spoils before I use it.
I don't have the ability to check other price increases (actual increases or reduced packaging) but my gut feeling is that other staples have gone up, maybe not as much but they all cost more.
BTW - I didn't get a 30% pay raise last year to cover the increase food costs. My track record for the last decade was a 3 % cost of living increase every year.
BLS uses rent for shelter inflation. So when home prices were getting out of control, it never showed up in the inflation rate. Likewise, home deflation doesn't factor into the BLS inflation rate.
Im one of many, Im sure, who really cant afford to buy gold and silver, Im just starting to use my extra cash to stock up on supplies and things for when it really hits the fan.
The Fed also does not use “taxpayer money” and, in reality, pays the taxpayers tens of billions of dollars per year by turning over its net profits on operations. Other quasi-government agencies have aided the speculation in real estate with taxpayer money. The Fed has other weapons.
Only in periods of economic collapse such as we have had does it pay to speculate against the real estate market.
Multi-generation usage of houses also is proportional to the health of the economy. And we are not comparing a house in 1920 to one of today without understanding that the first would be considered tiny compared to today and containing probably twice as many people as one today. The avg. HH size has dropped precipitously.
To be frank, me neither. That is one reason it’s all about junk silver for me. I buy a few coins at a time. I’m mostly saving up to put a 30x60 sheet metal pole barn on my property.
Thank you for the reply. I agree with you on all points.
Ummm, wasn’t it Clinton who started this game with inflation numbers?
Funny. Yeah. Ain't it wonderful. I used to run a very young 3 person household on $4800.00 a year. It is amazing the power of the "education" system to inculcate bankster bullsh!t. The buying power left since 1913 is what, about 2%? But technically, we're told, the currency has not been devalued.
Everybody has their own actual inflation rate.
If your home is paid off, only property taxes will show up in your personal assessment. Should your PT go down more than everything else you buy, then your inflation will be less than zer0.
“It is also worthy of note that he warned in 1920 (In “The Economic Consequences of the Peace”) about imposing the punitive Treaty of Versailles on Germany. He was dead on about that and universally ignored.”
Wow, that’s a radical revision of history. Actually, all the best people listened to him. Aside from the General Theory, it was easily his most famous book. Because everyone believed it at the time, it has warped public opinion to this day, thus explaining your post.
He was also dead wrong. As we all know, Germany never repaid its war debts. So how could said debts have ruined them? They didn’t. Germany ruined itself. It was bankrupted in foolish attempt to avoid doing paying up.
Granted, France played a big role in said bankruptcy by vigorously enforcing the treaty. There are better ways to squeeze money out of an economy. Grow it, for one. Ultimately, though, Germany was only one of many countries sliding into depression in the 20s. It was unique in experiencing the horrors of hyperinflation, but that was nobody’s fault but it’s own.
Had Germany been dealt a true Carthaginian peace, it wouldn’t have been in a position to bankrupt itself so horribly. Unconditional surrender worked after WWII, didn’t it? That’s what was missing. The compromise peace of Versaille allowed them to preserve their pride, and pride is all one needs to ruin oneself.
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