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Page added on June 21, 2014
Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else
Have you noticed that prices are going up rapidly? If so, you are certainly not alone. But Federal Reserve chair Janet Yellen, the Obama administration and the mainstream media would have us believe that inflation is completely under control and exactly where it should be. Perhaps if the highly manipulated numbers that they quote us were real, everything would be fine. But of course the way that the inflation rate is calculated has been changed more than 20 times since the 1970s, and at this point it bears so little relation to reality that it is essentially meaningless. Anyone that has to regularly pay for food, water, gas, electricity or anything else knows that inflation is too high. In fact, if inflation was calculated the same way that it was back in 1980, the inflation rate would be close to 10 percent right now.
But you would never know that listening to Federal Reserve chair Janet Yellen. In the video posted below, you can listen to her telling the media that there is absolutely nothing to be concerned about…
And it is really hard to get too upset with Janet Yellen.
After all, she reminds many people of a sweet little grandmother.
But the reality of the matter is that she is simply not telling us the truth. Everywhere we look, prices are aggressively moving higher.
Just the other day, the Bureau of Labor Statistics announced that the price index for meat, poultry, fish, and eggs has just soared to a new all-time high.
This is something that I have repeatedly warned would happen. Just check out this article and this article.
And it isn’t just meat prices that are going up. One of the largest coffee producers in the entire world just announced that it is going to be raising coffee prices by 9 percent…
It took the Fed long enough but finally even it succumbed to the reality of surging food prices when, as we reported previously, it hiked cafeteria prices at ground zero: the cafeteria of the Chicago Fed, stating that “prices continue to rise between 3% and 33%.” So with input costs rising across the board not just for the Fed, but certainly for food manufacturers everywhere, it was only a matter of time before the latter also threw in the towel and followed in the Fed’s footsteps. Which is what happened earlier today when J.M. Smucker Co. said it raised the prices on most of its coffee products by an average of 9% to reflect higher green-coffee costs.
Not that coffee isn’t expensive enough already. It absolutely stuns me that some people are willing to pay 3 dollars for a cup of coffee.
I still remember the days when you could get a cup of coffee for 25 cents.
Also, I can’t get over how expensive groceries are becoming these days. Earlier this month I took my wife over to the grocery store to do some shopping. We are really ramping up our food storage this summer, and so we grabbed as much stuff on sale as we could find. When we got our cart to the register, I was expecting the bill to be large, but I didn’t expect it to be over 300 dollars.
And remember, this was just for a single shopping cart and we had consciously tried to grab things that were significantly reduced from regular price.
I almost felt like asking the cashier which organ I should donate to pay the bill.
Sadly, this is just the beginning. Food prices are eventually going to go much, much higher than this.
Also, you should get ready to pay substantially more for water as well.
According to CNBC, one recent report warned that “your water bill will likely increase” in the coming months…
U.S. water utilities face a critical economic squeeze, according to a new report—and that will likely mean higher prices at the water tap for consumers.
A survey by water-engineering firm Black & Veatch of 368 water utility companies across the country shows that 66 percent of them are not generating enough revenue to cover their costs.
To make up for the financial shortfall, prices for water are heading upward, said Michael Orth, one of the co-authors of the report and senior vice president at Black & Veatch.
“People will have to pay more for water to make up the falling revenues,” he said. “And that’s likely to be more than the rate of inflation.”
Of even greater concern is what is happening to gas prices.
According to Bloomberg, the price of gasoline hasn’t been this high at this time of the year for six years…
Gasoline in the U.S. climbed this week, boosted by a surge in oil, and is expected to reach the highest level for this time of year since 2008.
The pump price averaged $3.686 a gallon yesterday, up 1.2 cents from a week earlier, data posted on the Energy Information Administration’s website late yesterday show. Oil, which accounts for two-thirds of the retail price of gasoline, gained $2.49 a barrel on the New York Mercantile Exchange in the same period and $4.88 in the month ended yesterday.
The jump in crude, driven by concern that the crisis in Iraq will disrupt supplies, may boost pump prices by 10 cents a gallon at a time when they normally drop, according to forecasts including one from the EIA.
And the conflicts in Iraq, Ukraine and elsewhere could potentially send gas prices screaming far higher.
In fact, T. Boone Pickens recently told CNBC that if Baghdad falls to ISIS that the price of a barrel of oil could potentially hit $200.
Of course the big oil companies are not exactly complaining about this. This week energy stocks are hitting record highs, and further escalation of the conflict in Iraq will probably send them even higher.
Meanwhile, a “bipartisan Senate proposal” (that means both Democrats and Republicans) would raise the gas tax by 12 cents a gallon over the next two years.
Our politicians have such good timing, don’t they?
Ugh.
And our electricity rates are going up too. The electricity price index just set a brand new record high and there are no signs of relief on the horizon…
The electricity price index and the average price for a kilowatthour (KWH) of electricity both hit records for May, according to data released today by the Bureau of Labor Statistics.
The average price for a KWH hit 13.6 cents during the month, up about 3.8 percent from 13.1 cents in May 2013.
The seasonally adjusted electricity price index rose from 201.431 in May 2013 to 208.655 in May 2014—an increase of about 3.6 percent.
If our paychecks were increasing at the same rate as inflation, perhaps most families would be able to weather all of this.
Unfortunately, that is not the case at all.
As I wrote about recently, median household income in the U.S. is now about 7 percent lower than it was in the year 2000 after adjusting for inflation.
And if realistic inflation numbers were used instead of the government-manipulated ones, it would look a lot worse than that.
Inflation is a hidden tax that all of us pay, and it is systematically eviscerating the middle class.
20 Comments on "Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else"
Dredd on Sat, 21st Jun 2014 7:16 am
“… you can only understand what the neural circuitry in your brain allows you to understand … you can’t understand just anything …and this particularly is the case in political reasoning … but it’s true in many other things as well …” – Dr. George Lakoff
Washington brain circuits are defective much of the time.
Davy, Hermann, MO on Sat, 21st Jun 2014 7:36 am
A perfect example of Ponzi schemes/bubble inflation that are nearing their point of diminishing returns and the point of “Tears”. Wealth transfer can only continue so far before significant social fabric is destroyed. The productive bottom class is being destroyed by the parasitic management class currently. There is a balance that must be maintained between the two or neither of them function properly. We are reaching that point.
HalfEmpty on Sat, 21st Jun 2014 8:53 am
Yep. I saw this coming years ago. Since we’re doomed anyway, I am hoping for fast death by asteroid impact instead of peak oil followed by Global Warming. I do has best I can and grow tomatoes and inform my kittuahs of the coming disasters. They seem strangely unmoved.
BC on Sat, 21st Jun 2014 9:06 am
it seems to me that the fed is assisting aware people to prepare for the inevitable very high inflation by providing low interest rates people can get out of debt buy some productive farmland become self sufficient.thank u janet thank u ben the aware people know why you need to lie interest rates would have skyrocketed a long time ago and most people would be homeless and desperate.
rollin on Sat, 21st Jun 2014 9:22 am
So old money (savings, pensions, inheritances) will diminish, while new money will only be slightly lagging reality.
People on fixed incomes are screwed in the long run. At a 10 percent increase in cost of goods per year for twenty years, their money will only buy 12 percent of what it does today.
Since salaries fell in many areas during the recession and raises are usually below inflation, the worker is also screwed in the long run.
Theft on a grand scale.
Juan Pueblo on Sat, 21st Jun 2014 10:18 am
“The cost of living gets so high
I say: Hey! What a tribulation!”
Bob Marley
Welcome to the third world! This is still nothing. I can remember visiting Argentina during some of their crazy times and waking up in the morning every single day with no idea of what your money was worth. I can’t remember whether they had Australes or Pesos at the time. I lived like a king with my then Argentinian girlfriend in Buenos Aires for two weeks going to the best restaurants, discos, and staying in the best hotel in town and left with more money than I had taken by BTFD in the currency trades. It was as addictive as gambling. I can understand what keeps economists and rich people looking for more; it’s the thrill of the search, the Adrenalin rush.
Davey on Sat, 21st Jun 2014 11:03 am
Quite a story Juan! Great minds eye picture. I hear it is beautiful down there. I am not much on cities anymore but I would love to go to Patagonia.
Juan Pueblo on Sat, 21st Jun 2014 11:04 am
Davey, not much on cities myself. Patagonia would be lovely.
Jerry McManus on Sat, 21st Jun 2014 11:17 am
@Juan Pueblo
Interesting perspective, thanks. Makes me wonder if one could do the same thing with gold…
I’ve also read anecdotal evidence that a lucrative strategy in times of hyper-inflation is to go up to your eyeballs in debt to purchase productive assets, such as farm land and equipment, forest land with logging rights, mineral rights and mining equipment, etc.
Sounds counter intuitive, I know, but note the key word here is “productive”, going into debt to buy the latest xbox video games and widescreen tv is not a good strategy.
With productive assets under your belt not only do your tangible commodities command a high price in times of inflation, but the debt you used to buy them is inflated away to nothing.
People who hoard dollars in a bank or retirement account, on the other hand, will end up like the guy with the wheelbarrow full of worthless paper.
Davey on Sat, 21st Jun 2014 11:18 am
Juan when I was young and full of piss and vinigar, could do all-nighters, and womenized the shity was the place to be. Amazing how we age like a fine wine and look for solitude and relaxation.
Northwest Resident on Sat, 21st Jun 2014 11:47 am
On the bright side, the masses have increasingly less to spend, therefore their consumption levels are increasingly reduced, resulting in less and less burning up of natural resources and a corresponding decrease in toxic waste spewed into the atmosphere, waters and landfills. I wonder if that’s “the plan”, after all?
Davey on Sat, 21st Jun 2014 11:50 am
Or, Jerry just go off line and find spiritual riches of oneness of nature and spirit. I will admit hard to do with a family and friends still connected. I did It for 2 months 10 years ago. Fascinating! You have to be in nature and completely off the grid with no modern communications.
Juan Pueblo on Sat, 21st Jun 2014 11:52 am
Jerry and Davey, I learned a few lessons. For the middle and lower classes it was a terrible experience. Sometimes, one month’s salary would not be enough to buy 2 pounds of rice by the time they got paid. Life was day to day, enormous levels of stress, fear, and anxiety in every face. A pack of cigarrettes selling for 2 US$ was completely unaffordable for most people. You could not smoke in public without getting mobbed by people desperate for a smoke. More than half the adult population where undergoing Nicotine withdrawal which lasts about three weeks. A lot of people smoked down there back then.
Davey, I was a 19 years old spoiled brat then, I am a 25 years older spoiled brat now
Davey on Sat, 21st Jun 2014 12:10 pm
Yea, Juan but you probable earned it by now.
Davey on Sat, 21st Jun 2014 12:15 pm
N/R, I am thinking on the side of self organization over a control by an elite. If there is a control by the elite it is fleeting and will be swept away by higher forces in life. No civilization, group, tribe, family, or individual has ever had control for very long
PrestonSturges on Sat, 21st Jun 2014 12:49 pm
I predicted this 15 years ago as the go-go economy of the 90’s wound down. There was no way that consumers were going to be allowed to spend and I was pretty certain that the prices of essentials (water etc) would start zooming upwards.
Television is a good example – the cable companies would like to have the average person spending something like 5 or 10% of their income on television and internet.
But over the long haul people have started dropping cable and making their cars last much longer. And now we hear that the NSA has actually been targeting consumer advocates as potential terrorists.
PrestonSturges on Sat, 21st Jun 2014 12:50 pm
There was no way that consumers were going to be allowed to spend (LESS) and I
Northwest Resident on Sat, 21st Jun 2014 2:36 pm
Davey — “No civilization, group, tribe, family, or individual has ever had control for very long…”
Relatively speaking, that is.
A brutal dictatorship may endure for the entire lifespan of a single individual, and to that individual, the dictatorship’s rule is felt to be a long, long time. But relatively speaking, in the grand scheme of things, it is a blink of the eye or not even that.
I’m pretty sure that the “super elites” in this world got their start way back before the industrial age even began in Europe. The families accumulated wealth, passed it on through the generations, invested it in the new world, with their power and control and wealth growing exponentially through the centuries.
But eventually, and from my point of view sooner rather than later, that long-established elite’s grip on absolute control and power will diminish overnight and in the long run, will disappear entirely.
The entire established wealth and power of the elite has depended upon massive energy input, resource exploitation and manipulation of the masses.
But who knows. Those long-entrenched elites probably do have a plan to survive collapse and re-emerge like a phoenix from the fire with enough resources and command/control capability to once again exert their dominance. And that might not be a bad thing, assuming they will exert control over a world in chaos.
One thing we know about the super-elites. They love their art, their opera and symphony, their fine wines and champagnes and all those many things that without a well-established mass of peons will cease to be available to them. That should give us all hope, maybe…
Norm on Sat, 21st Jun 2014 7:52 pm
Hooray! Bring on the inflation !! Soon all the entitlement-mentality, tattooed obama-hating drug-addicted trailer trash will be living inside a corrugated drain pipe underneath a road…. where they always belonged. No more monster truck with jet-ski’s towed behind, tossing their McFatso garbage out the passenger window.
Makati1 on Sat, 21st Jun 2014 10:11 pm
Northwest, I don’t see a livable world after the chaos. If it were only the financial system that needed repair, it might work, but… There are over 400 nuclear time bombs around the world waiting to become new Fukushimas. Even worse. They will also lose their cooling pools full of thousands of tons of spent, radioactive fuel rods. Not to mention the thousands of nuclear weapons that will still be unused around the world. And the chance of a nuclear winter if it happens.
No, if the elite think they can survive, they are only fooling themselves. I see it all as a big game that bored billionaires play to keep amused. That they might survive the next 20-30 years is not on their radar. Only the next move on the chessboard of life.