4 posts tagged “interest rates”

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)

Here is an earlier post you should read. Then check out these sites:

Weakest Banks and Thrifts in the U.S.

Strongest Banks and Thrifts in the U.S.

Many people at various discussions boards have claimed the only thing they lose by signing up for a utility budget plan is the interest. I can’t argue with that, but let’s do some math and see how much you lose over the long term. Based on my earlier post, the difference was $43 over 12 months. An annuity of $43 at 11% (my rate of return) for 30 years is $1477. Now lets take the “I only lose the interest” another step – improper tax withholding. Lets use $40 as your annual refund. An annuity of $40 at 11% for 30 years is $1374. Finally, lets take the “I only lose the interest” one last step – not sweeping idle cash balances into a money market. Assume an average cash balance of  $500 at 4% for 30 years. That comes to $600.

Grand total =  $3451. WOW!  :-))

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!

Higher costs for energy and food last year pushed inflation up by the largest amount in 17 years. Meanwhile, industrial output was flat in December, more evidence of a significant slowdown in the economy. Consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006, the Labor Department said Wednesday. Consumers felt the pain when they filled up their gas tanks or shopped for groceries. Prices for both energy and food shot up by the largest amount since 1990.

I predicted this months ago so be sure to insulate yourself against rising prices, outsourced jobs, and a falling stock market: