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Economy

New 40-Year Record High Inflation, 9.1%—The Real Number is Much Worse

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The latest economic figures released by the US Bureau of Labor Statistics confirm what everyone’s been feeling in their wallets—record high inflation.

Released earlier today, the consumer price index (CPI) came in at 9.1%. The CPI measures a carefully selected basket of goods and services—the official method for measuring inflation. This is the single largest increase since 1981.

Inflation refers to the average increase of products within an economy, which indicates the loss of purchasing power. For instance, if a gallon of milk cost $8 last year, rising to $8.80, this means that the cost has remained essentially the same—but the value of the dollar has dropped by 10%.

What Prices Increased the Most?

Inflation hit the energy and food sectors most sharply, with unleaded gas prices peaking at a national average of $5 per gallon.

Removing food and energy reduces the rate to 5.9%, confirming that these sectors have risen the most.

While gas prices sharply increased by nearly 50% from last year, the price at the pump has leveled off for the most part since early June, in part due to crude oil price leveling out, falling below their $126 mid-May peak to $96 as of July.

Nevertheless, price discovery for most of the economy remains on the high side.

“The concept of price discovery—determining the fair price of a particular good or service based on supply and demand—is a primary function of every public market, from ancient souks to auction houses.”

Everyone is uncertain how far inflation will go—especially since it’s approaching the mid-70s record highs, whether a small business or a transactional conglomerate. Prices will likely continue to rise as supply chains continue to crumble, supplies decrease due to global trade upset from Ukraine and Western-bloc sanctions, and gouging by oligopolies continues, per the norm.

Price Gouging and Collusion

In simple terms, big businesses pay market analysts to forecast costs and profit changes, advising higher prices even if the impact of inflation hasn’t hit their bottom line. As a result, this triggers inflation across the economy, as large portions of the technology sector are in cahoots with each other, called oligopolies.

While most people believe businesses compete, the increasingly obvious reality is that collusion is more the norm. Why else would most retail and tech prices seem to go up at once in response to a crisis like the Ukraine conflict?

As Wall Street Journal Reporter Dion Rabouin notes in an NPR interview from April of this year,

“Inflation sort of disguises these price increases. When prices for everything around you are rising, it’s much easier for companies to raise their prices and not experience that consumer blowback.”

True Inflation Much Worse

As bad as things appear with 9.1% inflation, it’s a lot worse.

A campaign to suppress real inflation started in the 80s as a response to increasing liability obligations for social security beneficiaries.

In the 1970s, before the calculation methods changed, inflation spiked to nearly 15%.

But, strangely, after changes were implemented, the volatility of inflation was reduced.

30a Chart 1: Inflation as Measured by CPI 600×600

According to Investopedia,

“Originally, the CPI was determined by comparing the price of a fixed basket of goods and services spanning two different periods. In this case, the CPI was a cost of goods index (COGI). However, over time, the U.S. Congress embraced the view that the CPI should reflect changes in the cost to maintain a constant standard of living. Consequently, the CPI has evolved into a cost of living index (COLI).

Over the years, the methodology used to calculate the CPI has undergone numerous revisions. According to the BLS, the changes removed biases that caused the CPI to overstate the inflation rate. The new methodology takes into account changes in the quality of goods and substitution. Substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket. The overall result tends to be a lower CPI. However, critics view the methodological changes and the switch from a COGI to a COLI as a purposeful manipulation that allows the U.S. government to report a lower CPI.”

This issue is quickly summarized in a Dirty Money video entitled Why the Official US Inflation Rate is a LIE.

John Williams, a maverick economist, reveals the true inflation numbers on his site Shadowstats.com.

According to Williams’ charts, a more accurate inflation figure is about 17%—nearly double the adjusted mainstream number of 9.1%.

Note in the above chart that the two different indexes, SGS CPI in blue and CPI-U in red, were trending in unison until 1982, when the new calculation methods were implemented.

Final Thoughts

Inflation is a hidden tax on the working class—those citizens who don’t have excess capital to invest in the stock market—where prices of stocks tend to rise with inflation.

Inflation reduces the cost of debt due to the fact payments are enumerated in fixed currency amounts—your mortgage payment doesn’t go up or adjust for inflation.

This means inflation favors the wealthy and those with debt, like the US government.

What prices have you seen rise the most? What are you doing to mitigate the impact?

FED Dolling Out $250 Million PER DAY in Interest Payments to Unknown Beneficiaries as Economic End-Times Approach

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The current global, socioeconomic paradigm has allowed for a small group of mostly unidentified beneficiaries to reap hundreds of millions of dollars per day by way of interest payments. This cushy racket was all made possible by the Federal Reserves’ reverse repo program.

The impending collapse of the financial system as we know it looms on the horizon while those in a position to do so feed the crisis (and themselves) through endless money laundering schemes. 

Whether it’s the war in Ukraine, Executive orders, experimental vaccines, the push for Solar panels and electric vehicles… there are few things being heavily marketed to the world today that weren’t designed to reap maximum profits for the financial elite in Davos Switzerland and the Washington DC political establishment.

In fact, Peter Schweitzer wrote a phenomenal book about how all of this works back in 2011 called Throw Them All Out, a highly recommended read for our audience.

In response to the record inflation, caused either by the reckless or intentionally destructive spending of the Biden Administration, the FED decided to raise interest rates by 75 basis points last month – the largest increase since 1994 – in an effort to slow the Bidenflation tidal wave.

To the surprise of no one, there’s been virtually no improvement to the economy since this change. Quite the contrary, as inflation continues to trend in the wrong direction since the FEDs rate raise. Not only that, but the FED revised its quarterly projections to show negative GDP growth will be expected for the second quarter in a row, essentially proclaiming that a recession isn’t on the horizon, it’s already here.

RELATED: Key FED Indicator Suggests That The US is Already in a Recession

When faced with the hard decision to either help ease the economy back on track or raise interest rates to make the already skyrocketing inflation markedly worse, the FED chose the latter. This change quietly paved the way for a small group of mostly unidentified beneficiaries to start collecting hundreds of millions of dollars per day by way of interest payments, this is thanks to the Federal Reserve reverse repo program.

The program has seen a record 2.330 trillion in cash holdings, and interest payouts have ballooned since the aforementioned FED rate hike, totaling over 100 million per day. The 108 depositors, who hold assets in the fund, are the recipients of these absurd payouts.

As per Zerohedge:

there is a record $2.33 trillion in cash parked at the Fed’s overnight facility, doing nothing…

…Well not nothing: it was nothing when rates were zero, but at 1.55% which is the current reverse repo rate, that $2.33 trillion is a golden goose for the 108 counterparties that are parking cash at the facility, a mixture of money market funds, banks, GSEs and various other financial intermediaries.

How big is this particular Golden Goose? The chart below shows the payment in interest that the Fed makes day on this record $2.33 trillion in funds: as of today it amounts to just over $100 million every single day! That’s right, more than $100 million in interest payments on funds parked with the Fed, which is by definition the world’s only risk-free counterparty!

As ZeroHedge points out, the interest profits are only due to the FED’s past reckless spending.

Also from ZeroHedge:

“All of the above is with the Fed Funds rate at 1.75%. As a reminder, the Fed hopes to keep hiking at least another 175bps (or more) in the next 6 months, which will push the rate to 3.50% and will mean that the Fed will be paying half a billion in interest every single day to a handful of mostly unknown counterparties every day, money which for said counterparties is also known as (riskless) profit and which is only the result of the Fed’s previous money printing.”

Key FED Indicator Suggests That The US is Already in a Recession

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What has been called a “Key economic indicator” from the Federal Reserve seems to suggest that the country is not “heading into a recession”, but is already entered recession territory.

The Federal Reserve Bank of Atlanta’s GDPNow forecasting tool said on Friday that “real GDP growth (seasonally adjusted annual rate) in the second quarter of 2022 is -1.0 percent on June 30, down from 0.3 percent on June 27.”

Jeff Cox, an economic analyst, wrote at CNBC on Friday saying that the 1% contraction, “coupled with the first quarter’s decline of 1.6% … would fit the technical definition of recession.”

The GDPNow model offers a more bleak point of view for the next quarter following its assessment, claiming that:

 “the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 2.7 percent and -8.1 percent, respectively, to 1.7 percent and -13.2 percent, respectively.”

The current Federal Reserve Chairman Jerome Powell has promised Americans that the Fed would “succeed in getting inflation down to 2%.”

“The process is highly likely to involve some pain,” he said during a panel discussion at the European Central Bank, “but the worse pain would be from failing to address this high inflation and allowing it to become persistent.”

 But experts have been warning of a perfect storm of economic chaos as inflation has decimated spending across the economy while Federal Reserve efforts to stave off that inflation have seen interest rates spiking sharply.

World’s Billionaires Watch $1.4 Trillion in Wealth Swirl Down the Crapper Amid Market Turmoil

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Ryan DeLarme,
June 16th, 2022

The Bloomberg Billionaires Index, A daily ranking of the world’s richest individuals, shows a vast amount of wealth disintegrating this year as the Federal Reserve’s blunders -intentional or not– have triggered cross-asset implosions.

The 500 wealthiest people -on the books at least- lost a shocking $1.4 trillion this year alone. On Monday’s stock market rout, billionaires lost $206 billion.

Binance CEO Changpeng Zhao experienced the steepest losses amid the crypto meltdown. Bloomberg’s data shows he lost a whopping $85.6 billion as of Tuesday. His total net worth is now only $10.2 billion.

Only $10 billion? He might as well file for bankruptcy!

Jeff Bezos is next on the list, losing $66.8 billion this year, with a total net worth of $125.5 billion. Mark Zuckerberg lost $64.4 billion, now only worth $60.9 billion. Elon Musk lost $61.6 billion but still secured a solid $208.7 billion stockpile of wealth as the world’s richest person. Doesn’t your heart just ache for these guys?

Bezos, Musk, Bernard Arnault (top luxury designer and CEO of luxury goods company LVMH), Warren Buffet, and Bill Gates round out the top five spots for the world’s wealthiest people. 

In contrast, the largest gainers of net wealth this year include Indian billionaire Gautam Adani and Dubai-based Swiss billionaire entrepreneur Guillaume Pousaz. 

In a separate report via Capgemini World Wealth we see the monetary response by global central banks increased the world’s population of high-net-worth individuals jumped 8% in 2021. It showed that the US, Japan, China, and Germany are home to 64% of the world’s billionaires. 

Gains in net worth first began to reverse in late 2021 when the Federal Reserve and other central banks started to communicate to markets about how an inflation problem (now a stagflation caca-storm) would be met with hawkishness or rate hikes. Global stocks reversed in late December and have been spiraling lower ever since.

It will only take a few oversized rate hikes by the Fed this summer to get recession fears to flourish and market participants to start pricing in the next round of easing — that will be the moment when billionaires get richer. 

May Inflation Numbers Soar Beyond Expectations – CPI Hits 40-Year High

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Ryan DeLarme,
June 10th, 2022

Though it may not come as a surprise to those of us who feel it in our wallets, May’s inflation numbers were higher than expected at 8.6% – the highest numbers since 1981.

Utilities are up 30%, Gas is up 49%, and the consumer price index (CPI) is higher than expected at 8.6%.

On top of that, we saw: new vehicle prices increase, used cars and trucks, Airline prices, furnishing, medical care, apparel, and so on. I think it is fair to say that everything is up, inflation is having the broadest possible impact on the entire economy. 

Everything in this report is up, but it was shelter, gasoline, and food that were the three largest contributors in the report, and arguably the three most important things required for the average American family to function and survive.