We all know the BS from the Federal Reserve. They seek a 2% inflation level. They will gladly tell you that even though the US economy continues to grow, American consumers have not faced inflationary pressures in over 20 years. We just cannot find inflation anywhere. I guess that is easy when you leave out the three most important necessities. Then, they talk in a swifter mode to show their data. If you leave out food and energy, our economy almost suffers from deflation.
If you question their approach about leaving out food and energy, they give you a condescending answer of volatility. The price swings in those two components are too great to be included. Your question implies that you know little about economics. I say, "My first sentence sums up the Federal Reserve, BS!"
If oil declined in price and food supply was so great that it too declined in price, what then? I'll tell you. Consumers, who are renters, will save for a home, pay down debt or save for a rainy day. Homeowners will do a home project, get a second car or take a vacation. In all instances, the money saved will eventually find its way into the economy and our GDP.
Now, let us look at the higher cost for fuel and food. Keep in mind, fuel covers heating and cooling in the home. We have to eat, everyday. Everyone utilizes a budget except government. If you need more expenditures for gas in the car and your utility bill, you need more income. The problem is wages have been stagnant since the 1970s. This is reflected in the aspect of wage/financial structure. In a fight against unions, US producers began outsourcing labor in the 1970s. Can you see the connection? At the same time our standard of living began to decline, is the same time outsourcing began in earnest. This aspect never changed. When the word became so great against exporting jobs, producers went to non-union states, mostly in the South. This is the present picture for higher paying jobs in America. The majority, 70% of us, reply on service. The word is a joke. It means, no benefits, low pay and no future. There are people in our government who understand the situation. In a dual benefit for these leaders, (opponents say that they are buying votes,) they included in the stimulus, extra federal cash benefits with unemployment. Both the Trump and Biden administrations also saw the wreckage on the housing market due to the pandemic. It is why both presidents signed Executive Orders against evictions and foreclosure. Then, the vaccine's came. State governments are going bust due to low revenues from the pandemic. Workers who received benefits were able to investigate other means of future employment. They no longer wanted a no benefit job with low pay and no future. We see the conflict and results. There are 25 states who are rejecting extra government benefits. They are cutting off 300,000 unemployment claims as of last Saturday. Next month, another 4.2 million will be in the same boat. Unemployment checks will drop by 79% for most and 60% will get nothing. Go hungry or take that low paying job! This is the corruption of our so-called government leaders. These are the same group who okayed outsourcing without putting tariffs on imports to protect US workers. These same people control the media. If you protest their actions, they classify you as "Populist." This is also another use of condescension. By the people and for the people are only empty words. Our nation needs a new political party, the Liberty Party where the wisdom of the crowd is recognized.
That was then, This is now...
Now that you have the employment picture, we are also seeing inflation. The word or concept is manipulated by the Federal Reserve. If one were to look at housing which by the way, is also not included in their matrix formula used by the agency, it has been rising since the recovery from the financial crisis of 2008. Home prices are unaffordable by 70% of the US population according to a study by CBS. The inflation data revealed by the government last week, said prices have increased by 5% year-over-year from last May. When I went to school, 2 goes into 5, two and one-half times. So, inflation in the US for the fifth month of the year, is already over twice the Federal Reserve's target. It gets worse!
10-Year and 30-Year T-Bill
As of last Friday, the 10-year note paid 1.45% and the 30-year note gave you a return of 2.14%. Dear Reader, we have already doubled what the government says is a return on money by purchasing their bond and the year is not even half over, never mind 10 and 30 years from now. So much, BS! This points to what we say, "Manipulation! Corruption! End the Fed!"
Back to inflation:
Some time last year, a report came out declaring that lumber would add $12,000 to the price of a new home. It was glossed over quickly. People were being infected and dying. Folks, inflation, like the virus, was showing its first signs. Earlier this year, a follow-up report on the price increases in lumber would now add $24,000 to the price of a new home. Last week, lumber costs rose to increase the increase. Lumber adds $36,000 to the cost for a new home. You can multiply that by these facts. Copper and iron ore are at all-time highs. The Federal Reserve admits to inflation, but adds a disclosure. They say it is only temporary. We say, "More BS!" We have shown you this through lumber, but it is everywhere. Gasoline costs one dollar more per gallon than last year. Food is up across the board. Supply chains are clogged and backed up. Demand for packaging, chips and truck drivers exceed any response. Then, there is this example put out by a small contractor from Florida.
The cost to lay a foundation is making contracting extremely difficult. The cost for a slab has gone up by 104%. Lumber is up by 202%. Electrical supplies are up by 49%. Drywall is up 20%. Appliances have no date for delivery and costs are up 55%. Paint is rising. It is up 60% and workers are difficult to employ. Plumbers and their supplies want more. Parts are up 15 to 30%. The idea of just in time delivery is out the door. This inflationary picture shows the difficulty in consumers biggest purchase.
In the bigger picture, the price for shipping containers is up 300%. It is so bad that producers in China are even complaining. Now, that is a first! Do you realize what this component means to costs? It will raise the price from coffee to toothbrushes. You put that together with commodities and the picture of inflation begins to look like the 1970s. Funny, how many things go back to that period? Anyway, no new mines were being developed by big mining firms. No new exploration by oil concerns as capital expenses are being cut. Finally, even banking are making less loans with stricter standards. All these components will take at least three years to fix. Inflation is finally being admitted by government. The real question is what BS will they supply months from now as inflation rears its head? Temporary? They try to find some credence in the aspect that copper and lumber have retraced. Dear Reader, the lumber retraction to $1000 is twice the historic average. Temporary? Get out of town! When did you ever hear of cheaper rent, cheaper cars and cheaper utilities? The government's report without the three necessities of life, food, energy and shelter rose by 3.8%. Our estimates has inflation running at 10%. Can't wait to hear when they say a little inflation means the economy is growing. Of course, when they say that they won't extrapolate to show what stagflation means. Let's hope we don't see that form of economics. Peace.
