Treasury Inflation Protected Securities, or "TIPs", as they are popularly called, are U.S. Treasury Bonds that have a built-in mechanism to adjust returns for increases in the Consumer Price Index (CPI). For a more detailed explanation on how they work, click here: http://markostake.blogspot.com/2009/12/tips-on-grabbing-higher-yields.html.
Yesterday, the U.S. Treasury sold $10 billion worth of TIPs which had a NEGATIVE cash yield of 55 basis points, or -.55%, with a 50 year maturity. Huh? How can yields be negative? Does that mean that investors are so stupid that they would pay to lend money? No, the adjustment feature as described in the piece linked above, adds to total return. But, if the CPI were to come in at zero, then yes, investors would actually pay Uncle Sam for the privilege of lending him money.
Historically, cash yields on TIPs have tended to be in the positive 1-2% range. Not today!
So, what does this mean? Investors are so worried about inflation eating away at their cash yields, that they will pay handsomely for inflation protection.
What inflation? Latest figures for the CPI have come in at a scant 1.1%. That means that the total expected return for a TIP would be a positve .55% (the 1.1% inflation rate less the .55% negative cash yield). Before you howl, keep in mind that the adjustment feature means that TIPs have the risk of 6 month Treasury Bills, which yield something on the order of .25%. By comparison, a decent deal.
So, other than the fat half-percent yield, why should anyone buy these? Simple, hyper-inflation is not only likely, it is inevitable. Proof? A falling dollar, an accelerating commodities market and most significant of all, the now snorting bull market in precious metals. Oh, and let's not forget that none other than "Helicopter" Ben Bernanke's belief that inflation is TOO LOW!
The only reason we have NOT yet seen the explosion in inflation is something called monetary velocity. For a fuller explanation of this aspect of money supply, click here: http://markostake.blogspot.com/2010/08/unusual-uncertainty-meets-qe2.html.
For investors, all roads lead to Gold, Silver and precious metals stocks. While it appears that we are in the midst of a sharp correction, this will only be a minor bump on the road to MUCH higher prices. For a review on where we are in the "Mother Of All Bull Markets", click here: http://markostake.blogspot.com/2010/10/correct-me-if-im-wrong.html.
The Federal Reserve, entrusted with controlling inflation, is actually the engine of inflation. For a more thorough explanation of the Fed, as it is known to its friends, check out this video as to how it is supposed to work, versus how it has actually fared: http://www.youtube.com/markostaketv#p/u/5/JiGA8XeZbUo.
With friends like these.....
Marko's Take
Showing posts with label Consumer Price Index. Show all posts
Showing posts with label Consumer Price Index. Show all posts
Tuesday, October 26, 2010
Tuesday, May 18, 2010
Worldwide Inflation Data Reveals Building Pressure
New data for inflation for the U.K. and U.S. was released this morning. As has been the case since the beginning of the financial crunch, reported data for the U.S. continues to suggest that inflation is tame. This, of course, is at odds with real life experience, which suggests the opposite.
The Producer Price Index (PPI) edged lower 0.1% last month, the second decline in the past 3 months, the Labor Department said Tuesday. Core inflation, which excludes energy and food rose 0.2%, slightly faster than expected. But over the past year, core prices are up just 1%. Core prices, an invention of the government, are hardly representative of anecdotal experience since they assume that no one eats or drives.
For April, food costs dipped by 0.2%. It was the first decline in 9 months and came after a 2.4% surge during the previous month - the largest gain in 26 years. The March increase reflected the impact of a winter freeze in Florida that heavily damaged citrus and vegetable crops. Energy prices fell 0.8% in April with gasoline prices down 2.7%.
In the U.K., the reported numbers were far less sanguine.
Inflation leapt to 3.7% in April, significantly higher than expected, prompting a letter of explanation from the governor of the Bank of England to the new Chancellor George Osborne.
The annual inflation rate of the British Consumer Price Index (CPI) was up from 3.4% in March and well above the Bank’s 2% target. Economists had projected inflation to hit 3.5% this month.
The retail price index measure of inflation jumped even higher to 5.3% in April from 4.4% in March and reached its highest since 1991. The retail price index is used as a benchmark for many public sector contracts, benefits payments and wage settlements.
The further rise in inflation will prove sticky for the Bank of England. Interest rates are still at 0.5% and the Bank pumped £200 billion in newly created cash into the economy to fight the recession.
This news comes after many Asian countries are also experiencing various aspects of inflation - especially in the form of what appears to be housing bubbles. The housing price escalation is particularly prevalent in China and Australia. We have written two very recent blogs on the issues which can be reviewed by clicking http://markostake.blogspot.com/2010/05/asian-inflation-contagion.html and http://markostake.blogspot.com/2010/05/rising-chinese-inflation-augurs-well.html.
One has to remain vigilant as to the accuracy of inflation data as reported by the Labor Department. As we've also pointed out in various pieces, the methodology for computing the CPI has been altered several times since the beginning of the Clinton Administration. The effect of these alterations has been to substantially reduce the reported number. According to Shadow Stats (http://www.shadowstats.com/), the CPI would be reported at closer to 6% if the pre-Clinton methodology was still employed today.
The important thing to keep in mind is that the PPI and CPI are not necessarily indicative of what any individual will actually experience. A better measure is to review your outflows and compare them to the past. If your expenses are rising at 10%, then a tame CPI or PPI is completely irrelevant.
It's inevitable that even the reported numbers will start to creep higher and this should occur in the very near future. The most objective measure of inflation expectations is the GOLD market, which continues to surge to new all-time highs. If that market screams INFLATION, why isn't Uncle Sam listening?
Marko's Take
Some websites we like and urge you to check out are the following: LeMetropole Cafe (http://www.lemetropolecafe.com/) and Shadow Stats (http://www.shadowstats.com/). Both of these sites, like us, only deliver the unvarnished truth - a rare commodity these days.
The Producer Price Index (PPI) edged lower 0.1% last month, the second decline in the past 3 months, the Labor Department said Tuesday. Core inflation, which excludes energy and food rose 0.2%, slightly faster than expected. But over the past year, core prices are up just 1%. Core prices, an invention of the government, are hardly representative of anecdotal experience since they assume that no one eats or drives.
For April, food costs dipped by 0.2%. It was the first decline in 9 months and came after a 2.4% surge during the previous month - the largest gain in 26 years. The March increase reflected the impact of a winter freeze in Florida that heavily damaged citrus and vegetable crops. Energy prices fell 0.8% in April with gasoline prices down 2.7%.
In the U.K., the reported numbers were far less sanguine.
Inflation leapt to 3.7% in April, significantly higher than expected, prompting a letter of explanation from the governor of the Bank of England to the new Chancellor George Osborne.
The annual inflation rate of the British Consumer Price Index (CPI) was up from 3.4% in March and well above the Bank’s 2% target. Economists had projected inflation to hit 3.5% this month.
The retail price index measure of inflation jumped even higher to 5.3% in April from 4.4% in March and reached its highest since 1991. The retail price index is used as a benchmark for many public sector contracts, benefits payments and wage settlements.
The further rise in inflation will prove sticky for the Bank of England. Interest rates are still at 0.5% and the Bank pumped £200 billion in newly created cash into the economy to fight the recession.
This news comes after many Asian countries are also experiencing various aspects of inflation - especially in the form of what appears to be housing bubbles. The housing price escalation is particularly prevalent in China and Australia. We have written two very recent blogs on the issues which can be reviewed by clicking http://markostake.blogspot.com/2010/05/asian-inflation-contagion.html and http://markostake.blogspot.com/2010/05/rising-chinese-inflation-augurs-well.html.
One has to remain vigilant as to the accuracy of inflation data as reported by the Labor Department. As we've also pointed out in various pieces, the methodology for computing the CPI has been altered several times since the beginning of the Clinton Administration. The effect of these alterations has been to substantially reduce the reported number. According to Shadow Stats (http://www.shadowstats.com/), the CPI would be reported at closer to 6% if the pre-Clinton methodology was still employed today.
The important thing to keep in mind is that the PPI and CPI are not necessarily indicative of what any individual will actually experience. A better measure is to review your outflows and compare them to the past. If your expenses are rising at 10%, then a tame CPI or PPI is completely irrelevant.
It's inevitable that even the reported numbers will start to creep higher and this should occur in the very near future. The most objective measure of inflation expectations is the GOLD market, which continues to surge to new all-time highs. If that market screams INFLATION, why isn't Uncle Sam listening?
Marko's Take
Some websites we like and urge you to check out are the following: LeMetropole Cafe (http://www.lemetropolecafe.com/) and Shadow Stats (http://www.shadowstats.com/). Both of these sites, like us, only deliver the unvarnished truth - a rare commodity these days.
Sunday, March 21, 2010
Inflation Stays Tepid in February: Or Does It?
The Consumer Price Index (CPI) was basically flat in February - even with volatile food and energy removed from the equation. Prices ticked up a scant 0.1%, the Labor Department said Thursday. Over the past year, prices have increased 2.1%, or 1.3% omitting food and energy, the smallest rise in six years.
Reported inflation statistics continue to remain low as the result of an excess capacity of workers, factory space and homes. Until more of the nation's productive resources come into use and starts pulling workers off the unemployment line, the sellers of everything from sandwiches to machine tools have little ability to raise prices. The problem is exacerbated by continued tightness in credit, which makes it harder to juice economic growth through bank lending to absorb the economy's substantial slack.
Thursday's report showed weakness across a range of categories. Owner's equivalent rent, a measure of home costs that is by far the CPI's largest component, was flat in February. Weak home prices and a glut of homes for sale have held down shelter costs. Apparel fell 0.7% last month and personal computers fell 0.5%.
Some analysts and investors see inflation as inevitable in the longer run as the result of huge government budget deficits and the necessity to monetize those deficits with excessive dollar creation. There also are concerns — both inside and outside the Fed — that the economy may have less surplus capacity than seems apparent, since some unused capacity will never be brought back online. In addition, wages aren't keeping pace even with this tame inflation: real average weekly earnings fell 0.2% in February from January. Over the past six months, average weekly earnings have been essentially unchanged.
According to the brilliant Dr. Williams of ShadowStats (http://www.shadowstats.com/), "anecdotal evidence continues to mount of higher prices across a much broader spectrum of products and services. A short-lived dip in February energy prices has been followed by higher prices in March and accordingly, the CPI and PPI should show fairly strong gains in March’s reporting, following February’s 'contained' inflation. Without other issues, such as dollar weakness, eventually — within six-to-nine months — the broader inflation issues also should surface in official reporting. Upside risks for near-term inflation, however, remain severe, coincident with any heavy or panicked selling of the U.S. dollar and dollar-denominated paper assets."
Dr. Williams ascribes the relatively muted February data to a temporary drop in average gasoline prices. However, a renewed surge in oil and gasoline prices in March 2010, suggests an upward swing in both the monthly and annual inflation rates for March.
If one uses ShadowStats' 1980 methodology for calculating inflation, the result is an annualized rate of nearly 10%, as opposed to the roughly 2% number reported by the Bureau of Labor and Statistics (BLS). This explains why so many items seem to be jumping in price, while the official government numbers meticulously have been massaged to ignore them.
As to inflation-adjusted Gold and Silver Prices, if we use the 1980 highs in GOLD of $850 per ounce and the accompanying Silver high of $50 per troy ounce, the 2010 equivalents, according to Dr. Williams, would be approximately $7,500 per ounce and $435 per ounce respectively!
As we approach the Spring Equinox, here's to hoping the only thing that inflates is your wealth!
Marko's Take
We hope that you keep reading our essays and visit the sites of some of our co-conspirators in revealing the truth. Toward that end, take a minute, if you have one and stop by and visit our friends at Phoenix Film Group (http://www.youtube.com/phoenixfilmgroup) and StockMavrick (http://www.stockmavrick.com/). Or, take a gander at our own YouTube channel (http://www.youtube.com/markostaketv). Five new episodes were filmed yesterday and our next one, on the legality of the personal income tax, will be posted in the next week.
Reported inflation statistics continue to remain low as the result of an excess capacity of workers, factory space and homes. Until more of the nation's productive resources come into use and starts pulling workers off the unemployment line, the sellers of everything from sandwiches to machine tools have little ability to raise prices. The problem is exacerbated by continued tightness in credit, which makes it harder to juice economic growth through bank lending to absorb the economy's substantial slack.
Thursday's report showed weakness across a range of categories. Owner's equivalent rent, a measure of home costs that is by far the CPI's largest component, was flat in February. Weak home prices and a glut of homes for sale have held down shelter costs. Apparel fell 0.7% last month and personal computers fell 0.5%.
Some analysts and investors see inflation as inevitable in the longer run as the result of huge government budget deficits and the necessity to monetize those deficits with excessive dollar creation. There also are concerns — both inside and outside the Fed — that the economy may have less surplus capacity than seems apparent, since some unused capacity will never be brought back online. In addition, wages aren't keeping pace even with this tame inflation: real average weekly earnings fell 0.2% in February from January. Over the past six months, average weekly earnings have been essentially unchanged.
According to the brilliant Dr. Williams of ShadowStats (http://www.shadowstats.com/), "anecdotal evidence continues to mount of higher prices across a much broader spectrum of products and services. A short-lived dip in February energy prices has been followed by higher prices in March and accordingly, the CPI and PPI should show fairly strong gains in March’s reporting, following February’s 'contained' inflation. Without other issues, such as dollar weakness, eventually — within six-to-nine months — the broader inflation issues also should surface in official reporting. Upside risks for near-term inflation, however, remain severe, coincident with any heavy or panicked selling of the U.S. dollar and dollar-denominated paper assets."
Dr. Williams ascribes the relatively muted February data to a temporary drop in average gasoline prices. However, a renewed surge in oil and gasoline prices in March 2010, suggests an upward swing in both the monthly and annual inflation rates for March.
If one uses ShadowStats' 1980 methodology for calculating inflation, the result is an annualized rate of nearly 10%, as opposed to the roughly 2% number reported by the Bureau of Labor and Statistics (BLS). This explains why so many items seem to be jumping in price, while the official government numbers meticulously have been massaged to ignore them.
As to inflation-adjusted Gold and Silver Prices, if we use the 1980 highs in GOLD of $850 per ounce and the accompanying Silver high of $50 per troy ounce, the 2010 equivalents, according to Dr. Williams, would be approximately $7,500 per ounce and $435 per ounce respectively!
As we approach the Spring Equinox, here's to hoping the only thing that inflates is your wealth!
Marko's Take
We hope that you keep reading our essays and visit the sites of some of our co-conspirators in revealing the truth. Toward that end, take a minute, if you have one and stop by and visit our friends at Phoenix Film Group (http://www.youtube.com/phoenixfilmgroup) and StockMavrick (http://www.stockmavrick.com/). Or, take a gander at our own YouTube channel (http://www.youtube.com/markostaketv). Five new episodes were filmed yesterday and our next one, on the legality of the personal income tax, will be posted in the next week.
Saturday, February 27, 2010
Do Politicians Lie? (Sarcasm Intentional!)
People are starting to wake up. Big brother is not only getting bigger, but much less brotherly! 56% of people questioned in a CNN/Opinion Research Corporation survey released Friday say they think the federal government's become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens. 44% of those polled disagree.
The survey indicates a partisan divide on the question: only 37% of Democrats, 63% of Independents and nearly 7 in 10 Republicans say the federal government poses a threat to the rights of Americans.
According to CNN poll numbers released last Sunday, Americans overwhelmingly think that the U.S. government is broken - though the public overwhelmingly holds out hope that what's broken can be fixed. That hope is well-founded. After all, "Marko's Take" has arrived on the scene (shameful immodesty intentional!).
Undoubtedly, the source of mistrust is the fact that our own government has turned lying into science. Somewhere along the line, it became "acceptable" for our President's to lie. Richard Nixon, Bill Clinton, George Bush and now Barrack Obama are phenomenally talented liars. Unabashed liars! And let's not forget Hillary Clinton. Still ducking those bullets in Bosnia, eh, Ms. Madame Secretary of State?
I believe the public has had it with the BS fest out of our political leadership. Yes, sometimes the truth hurts, but lying as standard operating procedure does NO ONE any good.
Perhaps the greatest source of pure fiction from Washington, D.C. are our reported economic statistics which have, over the years, gotten so contorted that they bear virtually no resemblance to the truth! This process began in the Kennedy Administration and has crept to a level of greater and greater distortion ever since.
According to a fascinating article in Harper's magazine (http://www.harpers.org/archive/2008/05/0082023), the story starts after the inauguration of John F. Kennedy in 1961, when high jobless numbers inconveniently interfered with the image of Camelot.
The result, implemented a few years later, was that out-of-work Americans who had stopped looking for jobs — even if this was because none could be found — were labeled “discouraged workers” and excluded from the ranks of the unemployed, where many, if not most, of them had been previously classified.
Lyndon Johnson, for his part, was widely rumored to have personally scrutinized and sometimes tweaked Gross National Product (GNP) numbers before their release. And, by the 1969 fiscal year, Johnson had orchestrated a “unified budget” that combined Social Security with the rest of the federal outlays. This innovation allowed the surplus receipts in the former to mask the emerging deficit in the latter.
Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He proposed — albeit unsuccessfully — that the Labor Department, which prepared both seasonally adjusted and non-adjusted unemployment numbers, should just publish whichever number was lower. In a more consequential move, he asked his second Federal Reserve chairman, Arthur Burns, to develop what became an ultimately famous division between “core” inflation and headline inflation.
If the Consumer Price Index (CPI) was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of “volatility,” categories that happened to be troublesome: at that time, food and energy. Core inflation could be spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. Naturally, core inflation is more important since NO ONE buys Food or Energy (sarcasm intentional!).
In 1983, under the Reagan Administration, inflation was further massaged when the Bureau of Labor Statistics (BLS) decided that housing, too, was overstating the CPI. The BLS substituted an entirely different “Owner Equivalent Rent” measurement, based on what a homeowner might get for renting his or her house. This methodology, simply sidestepped what was happening in the real world of homeowner costs.
Because low inflation encourages low interest rates, which in turn make it much easier to borrow money, the BLS’s decision no doubt encouraged, during the late 1980s, the large and often speculative expansion in private debt — much of which involved real estate and some of which went spectacularly bad between 1989 and 1992 in the savings-and-loan, real estate and junk-bond scandals.
The distortional inclinations of the next president, George H.W. Bush, came into focus in 1990, when Michael Boskin, the chairman of his Council of Economic Advisers, proposed to re-orient U.S. economic statistics principally to reduce the measured rate of inflation.
His stated grand ambition was to move the calculus away from old methodologies toward the new emerging services economy. Skeptics, however, countered that the underlying goal, driven by worry over federal budget deficits, was to reduce the inflation rate in order to reduce federal payments — from interest on the national debt to cost-of-living outlays for government employees, retirees and Social Security recipients. Marko's Take agrees with the "skeptics"!
It was left to the Clinton Administration to implement these convoluted CPI measurements, which were re-iterated in 1996 through a commission headed by Boskin and promoted by Federal Reserve Chairman Alan Greenspan.
In 1994, the BLS further redefined the workforce to include only that small percentage of the discouraged who had been seeking work for less than a year. The longer-term discouraged — some 4 million U.S. adults — fell out of the main monthly tally. Some now call them the “hidden unemployed.”
For its last 4 years, the Clinton Administration also thinned the monthly household economic sampling by one sixth, from 60,000 to 50,000, and a disproportionate number of the dropped households were in the inner cities. The reduced sample is believed to have reduced black unemployment estimates and eased worsening poverty figures.
Are you one of those people that shrugs their shoulders and says "All politicians lie"? I heard that one enough during the Clinton years. If you think this behavior is in any way shape or form acceptable,
TAKE ME ON!
Marko's Take
Want the unvarnished truth for a change? Please visit our new youtube channel at http://www.youtube.com/markostaketv
The survey indicates a partisan divide on the question: only 37% of Democrats, 63% of Independents and nearly 7 in 10 Republicans say the federal government poses a threat to the rights of Americans.
According to CNN poll numbers released last Sunday, Americans overwhelmingly think that the U.S. government is broken - though the public overwhelmingly holds out hope that what's broken can be fixed. That hope is well-founded. After all, "Marko's Take" has arrived on the scene (shameful immodesty intentional!).
Undoubtedly, the source of mistrust is the fact that our own government has turned lying into science. Somewhere along the line, it became "acceptable" for our President's to lie. Richard Nixon, Bill Clinton, George Bush and now Barrack Obama are phenomenally talented liars. Unabashed liars! And let's not forget Hillary Clinton. Still ducking those bullets in Bosnia, eh, Ms. Madame Secretary of State?
I believe the public has had it with the BS fest out of our political leadership. Yes, sometimes the truth hurts, but lying as standard operating procedure does NO ONE any good.
Perhaps the greatest source of pure fiction from Washington, D.C. are our reported economic statistics which have, over the years, gotten so contorted that they bear virtually no resemblance to the truth! This process began in the Kennedy Administration and has crept to a level of greater and greater distortion ever since.
According to a fascinating article in Harper's magazine (http://www.harpers.org/archive/2008/05/0082023), the story starts after the inauguration of John F. Kennedy in 1961, when high jobless numbers inconveniently interfered with the image of Camelot.
The result, implemented a few years later, was that out-of-work Americans who had stopped looking for jobs — even if this was because none could be found — were labeled “discouraged workers” and excluded from the ranks of the unemployed, where many, if not most, of them had been previously classified.
Lyndon Johnson, for his part, was widely rumored to have personally scrutinized and sometimes tweaked Gross National Product (GNP) numbers before their release. And, by the 1969 fiscal year, Johnson had orchestrated a “unified budget” that combined Social Security with the rest of the federal outlays. This innovation allowed the surplus receipts in the former to mask the emerging deficit in the latter.
Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He proposed — albeit unsuccessfully — that the Labor Department, which prepared both seasonally adjusted and non-adjusted unemployment numbers, should just publish whichever number was lower. In a more consequential move, he asked his second Federal Reserve chairman, Arthur Burns, to develop what became an ultimately famous division between “core” inflation and headline inflation.
If the Consumer Price Index (CPI) was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of “volatility,” categories that happened to be troublesome: at that time, food and energy. Core inflation could be spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. Naturally, core inflation is more important since NO ONE buys Food or Energy (sarcasm intentional!).
In 1983, under the Reagan Administration, inflation was further massaged when the Bureau of Labor Statistics (BLS) decided that housing, too, was overstating the CPI. The BLS substituted an entirely different “Owner Equivalent Rent” measurement, based on what a homeowner might get for renting his or her house. This methodology, simply sidestepped what was happening in the real world of homeowner costs.
Because low inflation encourages low interest rates, which in turn make it much easier to borrow money, the BLS’s decision no doubt encouraged, during the late 1980s, the large and often speculative expansion in private debt — much of which involved real estate and some of which went spectacularly bad between 1989 and 1992 in the savings-and-loan, real estate and junk-bond scandals.
The distortional inclinations of the next president, George H.W. Bush, came into focus in 1990, when Michael Boskin, the chairman of his Council of Economic Advisers, proposed to re-orient U.S. economic statistics principally to reduce the measured rate of inflation.
His stated grand ambition was to move the calculus away from old methodologies toward the new emerging services economy. Skeptics, however, countered that the underlying goal, driven by worry over federal budget deficits, was to reduce the inflation rate in order to reduce federal payments — from interest on the national debt to cost-of-living outlays for government employees, retirees and Social Security recipients. Marko's Take agrees with the "skeptics"!
It was left to the Clinton Administration to implement these convoluted CPI measurements, which were re-iterated in 1996 through a commission headed by Boskin and promoted by Federal Reserve Chairman Alan Greenspan.
In 1994, the BLS further redefined the workforce to include only that small percentage of the discouraged who had been seeking work for less than a year. The longer-term discouraged — some 4 million U.S. adults — fell out of the main monthly tally. Some now call them the “hidden unemployed.”
For its last 4 years, the Clinton Administration also thinned the monthly household economic sampling by one sixth, from 60,000 to 50,000, and a disproportionate number of the dropped households were in the inner cities. The reduced sample is believed to have reduced black unemployment estimates and eased worsening poverty figures.
Are you one of those people that shrugs their shoulders and says "All politicians lie"? I heard that one enough during the Clinton years. If you think this behavior is in any way shape or form acceptable,
TAKE ME ON!
Marko's Take
Want the unvarnished truth for a change? Please visit our new youtube channel at http://www.youtube.com/markostaketv
Sunday, January 17, 2010
Why There Will Be Strategic Shortages And Civil Disobedience
In yesterday's blog, the one prediction which generated the most public and private questioning of my already dubious sanity, was my belief that we will see civil disobedience and riots resulting from key shortages of certain necessities. I didn't site a link, as I hadn't written on the topic before, so I will go into detail today.
I don't think that the notion of some sort of coming hyper-inflation is a stretch by any means. The Consumer Price Index (CPI) is not "restrained", as claimed by the adminstration and the Federal Reserve. According to the Bureau of Labor and Statistics (BLS), inflation troughed in mid-2009 at MINUS 2% and has since risen to nearly 3%!
As I've mentioned many times before, an excellent website called "ShadowStats" (http://www.shadowstats.com/), adjusts currently reported numbers to the methodology used prior to revisions in the algorithms employed during the Clinton Administration. According to Dr. Williams, who makes the adjustments, the rate of inflation bottomed at an annual rate of 1%, but has now jumped to 6% in only a few months!
In the 1970's, as inflation began to super-heat, then President Nixon imposed "wage and price" controls. It was a disaster and led to higher unemployment, lower economic growth and shortages of certain items, such as gasoline. It is possible that the experience of "Richard E. Nixon", as Archie Bunker would say, will be repeated by the Obama administration as the result of a clammoring for relief by hard hit Americans.
Shortages could occur for a variety of other reasons, such as a renewed economic slowdown, increasing trade barriers, war or a plethora of other possibilities!
Should the Obama Administration succumb to the desperation of the populace and impose wage and price controls, the shortages will recur. The U.S. is already experiencing some civil disobedience. Riots have occured in Great Britain. Therefore, could my prediction be so far-fetched?
I truly hope this prediction is wrong, but I'm afraid it won't be. Assuming I am indeed correct, are you prepared? If not, why not? Especially now that you've read the blog!
Thanks for reading!
Still don't think my prediction has merit? You know what to do! TAKE ME ON!
Marko's Take
I don't think that the notion of some sort of coming hyper-inflation is a stretch by any means. The Consumer Price Index (CPI) is not "restrained", as claimed by the adminstration and the Federal Reserve. According to the Bureau of Labor and Statistics (BLS), inflation troughed in mid-2009 at MINUS 2% and has since risen to nearly 3%!
As I've mentioned many times before, an excellent website called "ShadowStats" (http://www.shadowstats.com/), adjusts currently reported numbers to the methodology used prior to revisions in the algorithms employed during the Clinton Administration. According to Dr. Williams, who makes the adjustments, the rate of inflation bottomed at an annual rate of 1%, but has now jumped to 6% in only a few months!
In the 1970's, as inflation began to super-heat, then President Nixon imposed "wage and price" controls. It was a disaster and led to higher unemployment, lower economic growth and shortages of certain items, such as gasoline. It is possible that the experience of "Richard E. Nixon", as Archie Bunker would say, will be repeated by the Obama administration as the result of a clammoring for relief by hard hit Americans.
Shortages could occur for a variety of other reasons, such as a renewed economic slowdown, increasing trade barriers, war or a plethora of other possibilities!
Should the Obama Administration succumb to the desperation of the populace and impose wage and price controls, the shortages will recur. The U.S. is already experiencing some civil disobedience. Riots have occured in Great Britain. Therefore, could my prediction be so far-fetched?
I truly hope this prediction is wrong, but I'm afraid it won't be. Assuming I am indeed correct, are you prepared? If not, why not? Especially now that you've read the blog!
Thanks for reading!
Still don't think my prediction has merit? You know what to do! TAKE ME ON!
Marko's Take
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