The Beat Goes On

August 6, 2008 at 9:50 pm (Food, Inflation)

Inflation over the last 200 years in the US

Want to know something interesting? There was, except in brief times of great duress such as a (declared) war, no inflation in the US dollar until the Federal Reserve came along. You could save a dollar and it would have as much purchasing power to your great, great, great grandchildren as it had to you.  Since the Federal Reserve was established, the value of the dollar has fallen between 96% and 98%. In fact, the rampant devaluation is the main reason no one in this country saves, whether they know it or not. This article outlines some of these themes.

How ironic that the institution causing this problem, the Fed, continues to be in charge of how to fix it.  In fact, the catastrophic failure of the monetary policies in the last 90 years is going to result in even more power of the Federal Reserve, because people don’t understand what’s causing things to go awry.  As time goes by, people will clamor for more regulation, more stimulus packages.  “Wall Street” will get blamed.  Greedy investors will get blamed.  The Bush administration will get blamed.  Everyone except the one organization that controls the entire money supply by setting the value of a dollar — the Federal Reserve.  Not only will they not get blamed, they’ll get praised.

I must stop dwelling on the Federal Reserve; the powers that created it are the same powers that raise and level governments — it’s a waste of time to get upset at them.  So, instead, I guess I’ll get upset at people who steadfastly believe the government’s economic numbers, as if they are the last bastion of truth and accuracy.  After all, 2+2=4 no matter what, right?  Even though these same people believe the government lies about Iraq, lies about WMDs, lies about everything under the sun — and these people distrust corporations and religions and global warming and what have you — somehow they believe the official economic numbers.  And they should know enough to realize a fiat currency is based completely on faith.  In fact, there is very little difference between a religion and a fiat money system.

Well, some mainstream publications, such as this article, hint at how common misleading data is published by the government, although it’s just a hint.  For a full dose of reality, try Shadow Stats.  How else can global food prices have increased by 40% in 2007, according to the UN, but food inflation was only 5% here, according to our government’s official figures?  Oh, it’s because we don’t import much food, right?  Wrong.  It’s because our dollar has increased, then, perhaps?  No.  It’s because we live in a magical fairyland whether food pops out of the ether into our plates, I suppose.  Or maybe the government is lying.  Do you have a receipt from August of 2007 from the grocery store to compare?  Betcha it’s 40% lower.  In fact, you don’t even need to check.  You know it’s true.  Along with 5% food price increases, we only have 5.7% unemployment and 2.6% core inflation.  Whew.  That’s a relief.

Today’s article of doom: far larger wave of home defaults building.

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Here We Go: No Stopping it Now

July 14, 2008 at 4:19 pm (Food, Housing, Inflation, National Debt)

Well, this one’s even bigger than Bear Stearns.  We’re going to bail out Fanny Mae and Freddie Mac, both technically insolvent (their liabilities are greater than their assets) and it’ll only be to the tune of TRILLIONS.  “…a complete bailout of these huge mortgage finance players could double the fiscal deficit.”  Double the national debt.  Double.  Words fail me.  Most of the foreign owners of the 6 trillion dollars worth of owned or secured mortgage debt are China, Russia, and Saudi Arabia.  However, from what we hear on the news, buying stock in the worthless companies with taxpayer money so the shareholders on Wall Street and the debt holders in foreign countries get bailed out is somehow good for the American homeowner.  Go figure.  The Federal Reserve says no more bailouts are expected.  Right.  I’m sure they’ll have to bail out a few of the 150 banks that are expected to soon go belly up.

In other news, not only are food prices going up, but I’ll bet few people notice the size of the food products are stealthily shrinking.  Most people don’t know the weight of the food they buy, so it’s a great marketing trick.  Oh, and here’s an ex-government employee in the UK affirming that the official inflation rate there (and here too) is rubbish.  I mostly agree, but I think it’s more like 18%, not 10%, here in the US.  I like this article too.  “This recession could easily tip into a depression.”  Hahaha, really?  Another interesting read was this person’s take on why the bailouts must occur — to prevent lawsuits forcing the banks to buy back their fraudulent mortgages.  I don’t know much about the legal world, but I wouldn’t be the least bit surprised.

You may have heard that the Federal Reserve, over the weekend, took over the second-biggest bankrupt bank since the FDIC came into play, IndyMac.  You may have heard how many billions this would cost.  What you probably didn’t hear about, however — and the lack of coverage was no coincidence — was that there was a run on the bank leading up to and culminating in its doors closing on Friday.  Fear spreads fast, and the talking heads want it contained.

Today’s article of doom: might as well keep harping on the oil price.  Up to $147 now.

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Food Prices So Much More Than Advertised

April 30, 2008 at 10:37 pm (Food)

worthless rubles

Anyone diligently track their grocery expenses?  The Economist magazine did their recurring price comparison between now and April 2007 of, among other things, food.  The percentage increase in food bills they came up with year-over-last was an astounding 69%.

I say again, 69%!  Here is James Turk’s opinion on that

Meanwhile, the Federal Reserve, along with “official” economists and commentators debate whether the inflation number is 2% or 3%.  Some even dare to say 4%.  What a joke.  I guess it’s true that prices of skis and leather chaps haven’t probably climbed much.  And hey, I’ll bet it’s just as cheap to gain admission to theme parks as it was last year.  Good thing that sort of item is included in the overall inflation numbers because that’s what people really need in difficult times.  Oh, and cheaper cell phones.

Not that doctoring the official inflation numbers (that are used as the basis for peoples’ social security checks and pension) is a local phenomenon.  The UK gets in on the fun too.

The government would disagree with The Economist, I’m sure.  The official food price increases are supposedly between 4% and 5% annually.  But as any careful shopper or receipt-saver will tell you, that’s just not true.  The Consumer Price Index is misleading because it doesn’t track the actual increases per good.  It follows a “substitution logic,” meaning the government assumes that if rice is too pricy, people will switch to lentils.  And if avocados are too pricy, people will use… well… mayonnaise.  Or something.  That way they can say the prices aren’t increasing too much (as long as you do the proper food substitution).  I’m not kidding, that’s really the way it’s calculated.  Take out your receipts.  Pick up any old newspaper ads from six months ago.  And be prepared to get upset.

Today’s article of doom: Bushonomics.

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Oil Highest Ever — Ho-Hum

April 15, 2008 at 7:19 pm (Food)

Well, oil passed $113 per barrel but I didn’t see any headlines on it. Rice, wheat, corn, soybeans — all the highest ever. Yawn. $200 million in emergency aid to prevent widespread rioting. Not enough food to go around. Yawn.

All we seem to hear about is the Chinese Olympic guards and the “Polygamist Ranch” and more Presidential candidate quips. There is a global financial crisis unfolding! All commodities are going up, up, up, and the number of people who can securely eat is going down, down, down. Inflation is rampant. The middle class is disappearing figuratively, and the poor might begin to disappear literally.

Today needs no article of doom.

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Food, Precious Food

April 11, 2008 at 12:04 am (Food)

There are some who still deny we’re in a recession.  Technically, since a recession can only be confirmed after it happens, and it’s entirely based upon the government’s interpretation of numbers, there is somewhat of an argument there.

However, back on Planet Earth, most people believe we’re in a recession.  Even the former chairman of the Federal Reserve has finally admitted as such.  Every move by the markets is geared towards managing this fact.  As a nation, we’ve been run off the road and now our challenge is to slowly let our foot off the accelerator and try not to hit a tree.  If the car gets ruined in the process, well, too bad.  It could be worse.  I’ll leave it up to you to decide who or what the car is.

How do we know when we’ve crossed the line from a recession to a depression?  There is some silly technical definition, but the practical one is: are most people having a hard time feeding themselves?  We’re not there yet, thankfully.  But the momentum heading towards that is undeniable.  And it’s not just us in the United States — it’s everywhere

There is plenty of blame to go around as to why there is not enough food to go around.  Some say it’s overzealousness towards ethanol, some say it’s due to hoarding, some say it’s due to bad harvests from global warming, and others say it’s because of the credit disaster pushing investors towards a safe haven.  Maybe it’s all of them together.  The fact is, however, it’s bad.

Here in the United States, we’ve seen grocery prices climb perhaps 15% or 20% in the last year.  It’s enough to worry people, and enough to be annoying, but we don’t spend half our income on food like those in poor nations.  However, higher prices are still on the way.  How much more will they climb?  Rather, what’s to stop them from climbing?  Decreased demand?  Increased productivity?  Deflation?  Not any time soon.  Of course, one can always stockpile a few airtight buckets of emergency food.  That’s never a bad idea.

Today’s article of doom: Former Navy Seals demolition team member and governor of Minnesota says the 9/11 official story is completely false.

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