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High Inflation Is Here To Stay


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https://reason.com/2021/10/13/high-inflation-is-here-to-stay/

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News that the September Consumer Price Index (CPI) rose by 5.4 percent on a year-over-year basis should be evidence enough for Federal Reserve Chair Jerome Powell, White House economists, and even the president to admit that we have more than a temporary inflation uptick on our hands. Better yet, it's proof that we should avoid adding fuel to the fire, even if it means cutting back on President Joe Biden's multi-trillion-dollar American Rescue Plan.

Until recently, evidence of inflation exceeding 2 percent—the Fed's traditional goal for inflation—has been dismissed as temporary or transitory, and for good reason. Newly printed stimulus money has been passing through the system. This, accompanied by serious supply-chain disruptions, might be over in another 12 months—if we're lucky.

Then in August, the Biden administration indicated that 2021's economy would show as much as 4.8 percent inflation—but, with an optimistic spin, would fall to 2.5 percent the next year. Meanwhile, there is some stimulus money pending in the yet-to-be determined infrastructure bill, and that complicates the issue.

 

Avoiding the hard truth or waiting before countering inflationary forces carries a cost. In this case, delays could mean harsher action later when, for example, the Fed hits the money brakes harder to cool the economy. In such a case we might see interest rates head to the ceiling, construction activity and high-tech investment plummet, and the economy roll into a recession.

This is not the first time politicians have obscured the truth with wordplay. In 1978, the CPI was exceeding 7.5 percent and economic growth was slowing because of deliberate Fed action to cool the economy. Economist Fred Kahn, who chaired President Jimmy Carter's inflation tax force, was asked if he believed we were headed toward a depression. Kahn and other senior officials had been warned not to use the d-word. Somehow, it was believed that saying "depression" would become a self-fulfilling prophecy. They didn't even want to say "recession," so a new euphemism was created. Kahn responded in congressional testimony: "We're in danger of having the worst banana in 45 years."

The really bad banana (or r-word, to be more specific) came later during the Reagan years, when Fed chair Paul Volcker hit the brakes long and hard and squeezed out inflation, along with employment growth. The unemployment rate hit 10.8 percent in late 1982. Kahn's bad banana forecast ended up being accurate.

Needless to say, Washington leaders have long been reluctant to call a spade a spade. But today, the no-no isn't depression or even recession. It's referring to unqualified inflation. No one in authority wants to admit that the dollars we hold are systematically losing their purchasing power. We are being quietly robbed by Washington's dollar-printing press, with politicians calling the shots. The presses are not operating without drivers.

Seemingly, it's okay for the Fed chair to recognize CPI heading north, but only if he qualifies the trip by calling it temporary. And while Washington analysts argue that COVID-19 disruptions are affecting just some key items, such as used cars and lumber—and that ports clogged with container ships waiting for workers, drivers, and trucks to be unloaded are the culprit—an analysis of the price movements in the July Consumer Spending Index, which is the Fed's preferred inflation measuring rod, shows 84 percent of included items rising.

 

The price increases are widespread, which suggests they are embedded. No matter how analysts choose to slice and dice the data, the answer is the same: The U.S. inflation rate calls for taking offsetting actions, such as avoiding direct distributions of stimulus or minimum family income dollars (though not harsh, invasive measures to cool off the economy). Let us not forget that inflation is not about rising prices. The rising price level is the result of an inflated money supply—all those trillions of stimulus dollars now out and chasing harder after goods and services.

So, what should our esteemed political leaders do? Gazing into a crystal ball and talking about things that may be transitory is what soothsayers and fortunetellers do. Just give the public the unvarnished story.

 

Good luck with the politicians giving the public the truth.  And this inflation is real, we've seen our monthly grocery/supply budget get stretched thinner and thinner over the past several months. Heck a bag of our preferred pet food went up by the $3 dollars at our local grocery in just a two-week period. So we switched to a cheaper option.

 

 

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Elizabeth Warren Is Trying To Blame Inflation on 'Price Gouging.' Don't Buy It.

https://stackoverflow.com/questions/45985554/installing-jar-file-via-nssm

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Looking for someone to blame for high and rising prices at the pump, Sen. Elizabeth Warren (D–Mass.) has found a familiar villain: big corporations.

During an appearance on MSNBC's The ReidOut on Thursday, Warren said price gouging is to blame for the pain that Americans are feeling at the gas pump these days. Amid rising inflation, the average price for a gallon of regular unleaded gasoline sits at $3.40 nationally, up from about $2.11 at this same time last year and higher than at any time since 2014. This, Warren argued, is great news for oil companies and their shareholders.

"Chevron, Exxon have doubled their profits. This isn't about inflation, this is about price gouging for these guys," Warren said as host Joy Reid nodded along. While Republicans are trying to score political points by talking about inflation, Warren says, the "oil companies say 'I think it's just another opportunity to make profits' and we need to call them out on that."

Prices at the pump have gone up. Why? Because giant oil companies like @Chevron and @ExxonMobil enjoy doubling their profits. This isn't about inflation. This is about price gouging for these guys & we need to call them out. pic.twitter.com/kxiQkC2tYa

— Elizabeth Warren (@SenWarren) November 20, 2021

 

Warren is probably right that successful multinational corporations like oil companies do respond to shifts in the economy by finding ways to turn a profit. Because, well, that's what they have to do to keep being successful multinational companies. There's hardly anything shadowy or suspicious about that. You can put gas in your car this morning because oil companies are making a profit, whether Warren approves or not.

The price-gouging claim, however, is just wildly off base and smacks of political desperation. For months, Democrats claimed that dumping trillions of dollars into the economy during the COVID-19 pandemic—in the form of direct payments, expanded unemployment benefits, and other spending—would not trigger inflation. Then they claimed inflation was transitory. Months later, it now looks like significant inflation will continue well into next year, so a scapegoat must be found.

But Warren's claim that oil companies are jacking up prices to turn a bigger profit doesn't stand up to even the slightest scrutiny.

By their very nature, high prices nudge consumers to buy less than they otherwise would. This is somehow good for the companies that make money by selling things? That's a shortsighted view that only a politician could embrace. Any business operating under the idea that the key to success is screwing over its customers by arbitrarily doubling prices won't be around very long. In Warren's view, Walmart would be more successful if it suddenly doubled the price of everything it sells because that would mean more profit.

It would be helpful to her argument if Warren could point to any evidence of this ever happening, but of course she can't.

There's a less theoretical way to test her claim, too. If Exxon and Chevron had indeed "doubled their profits," as Warren claims, that should translate into a huge boost for their shareholders. You'd expect such a sudden surge in corporate profits to be reflected in their stock prices, right?

But Exxon's stock was trading at about $62 per share on Monday morning. Six months ago, it was trading at…$59.61, according to Google Finance.

Exxon.jpg

Chevron stock is up a bit more over the past six months, but it is still underperforming the market as a whole (the S&P 500 is up more than 12 percent in the past six months):

 

Chevron.jpg Screenshot from Google Finance; November 22, 2021

Where are all those extra profits going? I'm sure Warren would answer by claiming that billionaires are hiding the cash under their gold-encrusted mattresses in the Cayman Islands and that's why the IRS needs the authority to snoop on the bank accounts of Americans earning $600 a year on Etsy—and all that makes about as much sense as blaming inflation on price gouging.

When it comes to assigning blame for any of life's unpleasantries, Warren is like a broken record. Billionaires and corporations, in Warren's view, are responsible for everything from high college costs to the lack of affordable housing to the current supply chain problems. Just as reliably, she ignores the role that government has played in creating or worsening those problems—by subsidizing student loans, imposing restrictive zoning laws, and implementing trade-limiting rules like tariffs and the Jones Act, for example.

The same is true when it comes to gas prices, by the way. Government policies are contributing to inflation already, but Warren was one of several Democrats who backed a carbon tax during the 2020 presidential primaries. Regardless of what merits a carbon tax might have as a way to curb climate change, it is undeniable that it would mean higher prices at the pump.

With inflation suddenly taking center stage in the political discourse, Warren is trotting out the same tired arguments blaming successful businesses for the consequences of failed government policy. There's no reason to believe her.

Yep, here progressive liberal rhetoric/lies are old and tired.  Nobody listens to her anymore.

 

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Thanks Biden:  https://www.dollartreeinfo.com/news-releases/news-release-details/dollar-tree-inc-reports-results-third-quarter-fiscal-2021

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“We experienced a strong finish to the quarter, as shoppers are increasingly focused on value in this inflationary environment,” stated Michael Witynski, President and Chief Executive Officer. “Our Dollar Tree pricing tests have demonstrated broad consumer acceptance of the new price point and excitement about the additional offerings and extreme value we will be able to provide. Accordingly, we have begun rolling out the $1.25 price point at all Dollar Tree stores nationwide. The continuing expansion of our key strategic initiatives, including Dollar Tree Plus, Combo Stores and the H2 format, are all going well and on, or ahead of, plan. I am very proud of our team’s efforts – especially those in our stores and distribution centers – to serve our customers by delivering incredible value on everyday products.”

 

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On 11/25/2021 at 7:24 AM, Impartial_Observer said:

Inflation is demonstratively an over abundance of money, who controls the money supply?

More Trump picks than anyone else on the current Fed. Looks like @Impartial_Observer played himself again by voting for Trump.

It's really cute to see Tories like you trying to do a throwback to Reagan with inflation, but it's not working. 

current Fed.png

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