13 posts tagged “inflation”

Original Article

New labels listing the carbon dioxide emissions associated with the production of foods, from whole wheat pasta to fast food burgers, are appearing on some grocery items and restaurant menus around Sweden. The same concept is being proposed across the EU.

Besides causing massive consumer confusion, the emissions impact of, say, a carrot, can vary by a factor of 10, depending how and where it is grown. Who is going to determine and regulate this? Will small farms & cattle ranchers be exempt? Will this lead to even more consolidation in the food industry?

All one can say at this point is the cost of producing food will be going up and producers will try to pass on that cost to consumers. I encourage my readers to grow their own food. Then take steps to learn how to can, freeze, and dehydrate that food. Even apartment dwellers can do simple gardens with the Topsy Turvy and Chia Herb Gardens

Let me start out by saying that inflation due to the FED printing money has not begun. What inflation we have right now is cost push.

Here is some anecdotal evidence from my life. The last time I orderer a large sausage pizza it was $17.75 (up from $16.50 six months ago). Last week my favorite gyro meal cost $5.95 (up from $5.25 the last time I had one). A ride on the Chicago subway went from $2.00 to $2.25, and now they want to raise fares to $3.00.

Now take a look at empirical evidence from Shadow Government Statistics. It clearly shows we never had any deflation.

Why would businesses raise prices in a bad economy? Especially if demand for their product is elastic ~ raising prices decreases total revenue. The only logical answer is cost push inflation. This is a situation where resource prices (expenses) are rising so fast, producers feel the need to pass on those costs. What expenses?

• Miminmum wage is now $7.25
• Health Insurance
• Property and Casualty Insurance
• Government fees such as inspection and licensing
• Credit card processing fees and bank fess have increased for business owners
  
• Transportation - look at the move in oil since March 2009
• Agricultural commodities (which are inputs to cows, pigs, and chickens)

There are 2 main reasons why food is skyrocketing in price:: the falling value of the US dollar (we import more food than we export) and transportation costs. 

About 25,000 food shipments arrive daily in the USA from more than 100 countries! 

That food has to be transported by boat, by rail, then by truck. On average about 1500 miles!

That’s why local organic farming is the most sustainable  way to grow and consume food.

Unemployment was reported as 9.5% today. The number is actually 16.5%. I'm using the broadest measure of unemployment - U6
U1: Percentage of labor force unemployed 15 weeks or longer.
U2: Percentage of labor force who lost jobs or completed temporary work.
U3: Official unemployment rate per ILO definition.
U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
U5: U4 + other "marginally attached workers", or those who "would like" and are able to work, but have not looked for work recently.
U6: U5 + Part time workers who want to work full time, but can not due to economic reasons.
====================================================================================
CNBC stock pickers are saying we will continue to have deflation because of high unemployment. They ignore 3 issues:

1. Commodity prices will rise as countries with the largest populations (China, India, Indonesia) will strive to consume at levels Americans have in the past
   
2. Inflation is an increase in the money supply, and the FED has increased M1 by 16% since 2008
3. There is no causation between high unemployment and deflation, look at Zimbabwe - 80% unemployment and 10,000% inflation!

While the Bureau of Labor Statistics is telling us inflation is under control, those who hide in savings bonds are getting short changed.

The stats are skewed because they exclude food and energy, but I'm sure you see that every time you fill up your car or buy groceries.

You can get a much better return using my strategy.

DXDDX - a mutual fund that moves up 2.5 times when the dollar index falls.

 Here are some reasons the dollar should continue to fall.

1. For the fiscal year ending Sept. 30, the Congressional Budget Office forecasts a record deficit of $1.75 trillion, almost four times the previous year’s $454.8 billion shortfall and about 13 percent of gross domestic product. Bear in mind that the target demanded of European nations wanting to join the euro was a deficit no greater than 3 percent of GDP.
2. David Walker, a former U.S. comptroller general, wrote in the Financial Times on May 12 that the U.S.’s top credit rating looks incompatible with “an accumulated negative net worth” of more than $11 trillion and “additional off-balance-sheet obligations” of $45 trillion.
3. The biggest problem is that external investors — particularly China — have more skin in the dollar game than in euros, yen or pounds, which makes the U.S. currency the most likely candidate to meet the cleaver in a crisis of confidence about post-crunch government finances.
4. If commodity prices rise and the US dollar falls, energy and food prices will remain relatively constant for everyone outside the United States (since all commodities are priced in US dollars)
   

Redefining Progress created the Genuine Progress Indicator (GPI) in 1995 as an alternative to the gross domestic product (GDP).

It takes into account crime, pollution, volunteering, housework, resource depletion, changes in leisure time, lifespan of public infrastructure, and dependence on foreign assets. Not surprisingly, we are not doing as well as the official government number shows!

If you have saved money or made money because of this blog, tip me. For $3 you get to download my seminars. They teach you how to save $130,000 over your lifetime by smarter spending, how to make an 11% return on your investments every year, and how to earn $800 a month in your spare time!

This is a follow up to Alternative Financial News. It's 2 minutes and 20 seconds long and well worth the time!

If you have saved money or made money because of this blog, tip me. For $3 you get to download my seminars. They teach you how to save $130,000 over your lifetime by smarter spending, how to make an 11% return on your investments every year, and how to earn $800 a month in your spare time!