November 15, 2007

Nah, don't worry sheeple, there's no inflation. Ben Bernanke and your government say so.


Gotta love the "core inflation" number, which don't include soaring food and energy prices, and is dominated by flat to declining rental costs.

Nah, nothing to look at here folks.

Get a raise yet? You're gonna need one.

Funniest thing though is that if the 1983 change hadn't been made (replacing home prices with rental costs), the US would be reporting staggering deflation right now even as the price of goods and services soared. Now that would have been a hoot.

Bottom line - don't trust your government. Trust your own eyes.

41 comments:

Anonymous said...

Of course from 2001-2006 they would have reported massive INFLATION to the tune of 20% per yr! Imagine asking your boss for a 20% raise every yr! haha

Anonymous said...

Wow, GE is paying $0.96 on the dollar for its Money Market Fund. It started already with the MM Funds.

Anonymous said...

(Bloomberg) -- U.K. retail sales unexpectedly fell for the first time in nine months in October as shoppers bought less food and clothing, a sign higher borrowing costs are squeezing consumer spending.

The brits are broke, too.

Anonymous said...

(Bloomberg) -- The United Arab Emirates may consider pegging its dirham to a basket of currencies, consisting mostly of dollars, said central bank Governor Sultan Bin Nasser al- Suwaidi.

The falling dollar will trigger a ``review'' of the U.A.E.'s dollar peg, al-Suwaidi said in an interview in Gwacheon, South Korea today, signaling for the first time that the U.A.E. may drop the dirham's link to the U.S. currency in the near future.


Owweeee...freefall!

Anonymous said...

Yes, I did just get a raise and well earned. All said and done, it will be around $1200 a month. It will be here to help pay for the increase in prices and falling dollar. I'm living the american dream, get a raise and then lose most of it to higher overall cost.

Paul E. Math said...

I'm glad you're regularly returning to this inflation issue since I feel there is more I need to understand about it.

To me, housing was simple. It all boils down to the 2 ratios: 1) average home price v. median income; 2) average home price v. average rent. There's a lot more to know but that's about all you need to know to conclude that home prices are due for a fall. Inflation is a little trickier.

With all the bad loans, credit must contract, as it is doing. Less credit means less economic activity and slower GDP growth (or downright contraction). Hence the pressure on Bernanke to drop rates.

But lower rates means more dollars, which produced inflation on its own, but also lowers exchange rates and increases the price of foreign goods.

At one time I thought the peg of the Chinese dollar to the US would partially slow the dollars decline but I no longer believe that to be the case. For China to peg to the US they need to lower their own interest rates causing inflation of their own. So even if the renminbi is still worth the same number of dollars it will still cost us more to buy those flat-screens since Chinese domestic inflation has caused the price to rise. (http://tinyurl.com/2cufff)

Bernanke just outright lied about the weaker dollar having no impact on domestic prices.

Anonymous said...

The MSM finally gets it!!!! In regard to the P/E for pricing a home relative to rent. They actually state that the best way to properly value a home is to start with what it will rent!!!! DUH, where've they been?

http://tinyurl.com/2d6fky

Michael said...

I'm all for not believing government statistics, but according to the website for the Consumer Price Index, it does cover food and energy:

FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, service meals and snacks)
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)

Edgar said...

I vote for a four day work week and free health benefits for all. Seriously. We can take all the money from the top 1%, problem solved.

Cow_tipping said...

The gasoline costs do count for core cost of living. However rents falling more than offsets the cost of gas and food rising. You know what it will do right in reality ?? It will cause people to move closer to their jobs. So, outlying areas will crash harder, and residential areas closer to work centers will rent out better, still not enough to make it cover the payments but ... better than when gasoline was $3.
BTW I cannot wait for gasoline to hit $10. Why, people will either start demanding to telecommute, or companies will, or states or whoever will just mandate, incentivise and legislate it. Driving in to work is simply a huge waste of time and $$$. Anyway, housing is toast - will deflate, but, all else will go up - little or lot, up, up and away. Double whammy for housing. Add in rising interest and triple whammy.
Cool.
cow_tipping.

turdly said...

as someone in the top 1% let me speak for all of us;


Get a job. If you have a job, get an additional job. Think about your future. Don't have a 'plan b', have plans 'b through j12'.
Aspire out of medocrity.

I hope you were joking. If you weren't; I want you to know that those of us who aspired and succeedede can certainly handle your slacker ass if the time comes to prove ourselves.

The ivory tower is heavily fortified

hurin said...

"I'm all for not believing government statistics, but according to the website for the Consumer Price Index, it does cover food and energy: "

True, CPI does, but the socalled Core CPI does not, and it's the core number the gov uses.

It does however include rent, and if people have to spend more on food, heating and gas but they don't get a raise, they'll have less money to pay rent, potentially forcing landlords to lower rents. So perversely the Core CPI can drop even as people's living expenses are going trough the roof.

Anonymous said...

I know I'm paying 25%or more for food items ,and I know that my medical insurance just went up 8% We all know about gas prices .

The only thing that hasn't gone up so far is clothing prices and TV's and some high tec items .I notice in restaurnats they are actually giving smaller portions or raising the prices.

I expect that next year the retailers will be passing on the greater costs because of oil prices .Maybe this is the time to stock up while the getting is good . I just bought 7 cans of coffee yesterday that was on sale on a good brand of coffee . I am also stocking up on canned goods when the stores put them on sale .

Edgar said...

Hell turdly, I'm not going to lift a finger. I will vote for Hugo Chavez and he will do the dirty work. As to work, I spit on your burrito, why should I slave for worthless dollars?

straw buyer said...

turdly sed:

The ivory tower is heavily fortified

Hell turdly, that doesn't even make sense. The ivory tower represents academia, the enemy of the maggots.

borkafatty said...

Trust my eyes...screw my eyes ..its my wallet that is seeing the true cpi manipulation.

Anonymous said...

it's called STAGFLATION

borkafatty said...

I too received a good raise this year..and well deserved may i say...but in reality it meant squat, with the raise came the increase in my health care benefits...thanks for the 50 cents..you pricks.

Anonymous said...

It's funny how every country that has their currency pegged to the US$ is seeing inflation at 7-9% while our is around 3%. Could our government be fudging the numbers to show lower inflation or is everyone else fudging their number to show higher inflation?

Anonymous said...

The clever thing about Bernanke's announcement yesterday about inflation reporting is to use the deflation going on in housing and spending to offset rising costs in commodities, etc. Seeing as how the rest of the world feels the same things the U.S. does on a 6 month lag, Washington isn't worrying about Sarkozy's threat of a trade war last week because soon the European Central Bank will be cutting too, and then the Euro sells off. So it appears now the name of the game is if everyone is sucking, where do you put your money???

Andrew Hac said...

"Thy Judgement cometh, and that right soon."

Yup, the day of reckoning is near for the Americano people. Gasoline will be $10.00/gallon.

Now tell me FAT-ASS, Obese, beer belly, pizza-stuffing over-the-bell gut, Americano whom drives a big-ass Ford Expedition, an F-350 truck, how does it feel when you have to fill up that gas tank ? Does it hurt on the same level knowing that your wife is cheating on you but there is no a darn thing you can do about it ?

Your pompous ass, hoity-toity face will be so deep in SH*T that it will begin to smell good to you.

What a nation, what a society, what a people !!!

Anonymous said...

1) average home price v. median income;

Gross or net median income? On ALL forms (including Census forms - 2 yrs away) I only put my after-tax take home pay. LOL

Anonymous said...

Next time I fill up my car I'll try to explain to the guy behind the counter that I don't want to pay the actual price I want to pay the 'core inflation' price.

Wish me luck.

Anonymous said...

where is that pic from? SF where they want to give illegals licenses?

Anonymous said...

I live in the Bay Area and I swear that sign looks identical to what is posted at a gas station just down the street. It's a shell, same prices (I think, or at least they are very similar).

I still think there will be deflation, not inflation. The definition of inflation is an increase in the supply of credit and the money supply. Credit is contracting dramatically, and yes I know the Fed is increasing the money supply. But, with the credit contraction we will see I don't think there is anything the government can do to offset it with the printing press. But we will definitely see, one way or the other.

Incidentially, I think the rise in gas prices is due to speculation and an increase in demand. Be careful not to confuse this with inflation.

upper crust said...

Edgar, you're a fool. We could confiscate every dime of income from the top 1% in this country and it wouldn't run the federal government for one year. You Marxists are all the same in that you see no value whatever in the brains behind the wealth. Why don't you move to a shithole country like Venezuela? It's a "worker's paradise" where wealth is outlawed for the common good.

TM said...

The ivory tower is heavily fortified

Not nearly well enough.

If the indebted millions think your money will solve their problems, your money they will have. I'm not saying that it's right, but that's how it would pan out.

Lucky for you most of the one percent isn't poking a stick through the cage like you seem to be doing.

Paul E. Math said...

Anon 8:08pm, I see your point about deflation and you may be right - I'm not absolutely convinced about inflation the way I was about the housing bubble.

I think you're right at least as far as consumer credit goes. With higher qualifying criteria, auto loans and home loans, etc will reduce credit.

But it seems to me that lowering rates would still increase the money supply. It is very possible that I'm missing something here but if the fed lowers rates by buying treasuries then the former holders of those treasuries will have more cash to loan out at lower rates. I feel like for every drop in interest rates there are incrementally more business ventures which become viable so businesses borrow more and spend more.

And then there's Asia. ...gotta catch a flight.

economist said...

"Credit is contracting dramatically, and yes I know the Fed is increasing the money supply. But, with the credit contraction we will see I don't think there is anything the government can do to offset it with the printing press."

Credit is contracting for you, the little people, but for the money center banks and guys like Mozillo, the money is flowing like water. The Fed will make damn sure their credit never dries up, and they will pay for it by using that wonderful, hidden tax called inflation.

Anonymous said...

GOP THE SHEEPLES CHOICE

borkafatty said...

Yup, the day of reckoning is near for the Americano people. Gasoline will be $10.00/gallon.

Now tell me FAT-ASS, Obese, beer belly, pizza-stuffing over-the-bell gut, Americano whom drives a big-ass Ford Expedition, an F-350 truck, how does it feel when you have to fill up that gas tank ? Does it hurt on the same level knowing that your wife is cheating on you but there is no a darn thing you can do about it ?

Your pompous ass, hoity-toity face will be so deep in SH*T that it will begin to smell good to you.

What a nation, what a society, what a people !!!

--------

Well then a least we will fit in with all you Wetback immigrants who smell like shit...One big happy Shit house.

Anonymous said...

I resturant I go to regularly has replaced all of their menus with new ones that are marked up 20%.

The old ones were leatherbound and had been around since 2002. The new ones are laminated color paper.

A sign of the times.

Anonymous said...


We can take all the money from the top 1%, problem solved.


After we finish confiscating all those hundreds of billions, then what? All of the rich and productive people will avoid our country like the plague and we end up like Cuba. You idiots never learn.

Anonymous said...

Gasoline won't hit $10 except through inflation. They are finding tens of billions of barrels in Canada and Central Asia as well as South America. It will be more expensive to mine the oil from the tarsands and 4 miles beneath the ocean, but the oil is there and there will be no shortage for the next 30 years. It will just be more expensive extract.Six dollar gas is more realistic in the next five years unless BB burns up the printing presses with $1000 bills.

Anonymous said...

.



suzanne researched it!



.

turdly said...

TM said... November 15, 2007 9:09 PM



If the indebted millions think your money will solve their problems, your money they will have.


Yes, and they had the McMansion, and the Hummer, and the right of entitlement, and they are failing as we type. You really don't think any outrage wouldn't be quickly quelled by a call out of the NatGuard or even just a couple of hard core jailings?

Mexicans rise in the streets of Mexico city calling for reform, the poor in France rose to arms calling for reform, who's in jail? It ain't the 1%, we have insurance against insurgance. Irish want reform, it ain't the rich in jail.
the 1,000,000 man joke worked out well....

I don't mean to be an Idaho nut, but think about it, if it comes to blows we'll hire you all to fight yourselves. Always have, always will. Redneck cops love bashing redneck protestors and looters.

It will never come to that, but tell me a situation where the lesser financed group won. I know you'll bring up the french revolution but communication devices we have now would of crushed that in a day.

And the American revolution; please. We would have it so bad if we hadn't done that. WE WOULD BE CANADA IF THAT HADN'T HAPPENED. Find a better example. I'm sure there are hundreds. I'm sure there are tens of thousands that show my side.

I'm just sayin', and not excatly proud of it. I say it not because I believe it's true, or that it will happen, or that there is even a remote chance that it would be seen as anything other than a rant. I say it so some of the nuts here who say 'I'll get me a gun and a years worth of food' will just maybe realize that whatever they get, we'll get ten times that much AND hire a militia. I'm so tired of the 'I can fend off any advance' goofs here. I can spend ten years average wages on slash wire alone. So please please don't use the gun rant any longer. You're not Rambo. If you were, I'd hire you.

I hate myself for saying this. It's out of character and I think it's just hatefull and wrong. But dammit, the gun goodfs here have to realize that the first shot they fire will cause them to die. By the governments hand, by their neighbors hand, or if need be by the hired militias hand.

Gun and Rambo talk here is just stupid. I hope this shows as a cartoonish, over the top example of that particular stupid.

turdly said...

Oh, the Ivory tower thing: I love a good mixed metaphor. It conveyed exactly as I hoped it would.


When it comes to correct analogy; I am obiviously not the sharpest fish in the tree.

Princess Mononoke said...

Government data, NAR data, Fed data etc. are simply manipulated numbers. Like you said Keith, all I have to do is look around me to see the real numbers.

For instance, the gov't says employment in America is robust. My a$$ it is. With 186 lenders shut down and realtors with no clients. Uh, that is an increase of tens of thousands of new unemployed people.

Plus, not everyone is able to collect unemployment. And from what I've heard from my other friends in the biz, unemployment is denying their claim! Unbelievable. EDD claims that if you were laid off, then there is a possible chance that you will be rehired! Sheer insanity!

Princess Mononoke said...

I refuse to inhale that dumbing spray the gov't airplanes coat every city with… LOL ;)

Princess Mononoke said...

borkafatty said...
Well then a least we will fit in with all you Wetback immigrants who smell like shit...One big happy Shit house.
November 15, 2007 11:52 PM

I don't know if you've caught on yet buy Andrew Hac is a foreigner living in another country who has been trolling on this blog! He has nothing but inept comments to post about the "Americano".

His joy is to get under our skin. So please, do us all a favor and don't stoop to his level with your racist comeback! You're proving him right. Look up the term Americano at wikipedia.org

Andrew Hac said...

Quote from "BorkAFatty":
Well then a least we will fit in with all you Wetback immigrants who smell like shit...One big happy Shit house.

#####

So Poke-A-Fatty, are you a well-educated Americano or a trailer-white-trash like your pal "Princess Mononoke" ?

If you happened to be in the second category then I am delighted to watch you and your pal Monoke going down the gutter with your sewage-mentality typical of the Americano. Answer me, right now. Had your house been foreclosed yet ? Has your car been repossessed yet ? Has your spouse split up on you to look for brighter horizon ?

If you answer 'Y' to any one of those three questions above, then: Hello, join the club of the F*CKED Americano !!!

Pitiful people...