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August 2023 Inflation Up Sharply

According to the Bureau of Labor Statistics CPI report released on September 13th, Annual Inflation increased from 3.2% in July to 3.7% in August. (but more precisely, it was from 3.18% to 3.67%.) Monthly inflation went from 0.19% in July to 0.44% in August. August 2023 Inflation Summary: Annual Inflation rose from 3.18% to 3.67% CPI Index rose from 305.691 to 307.026 Monthly Inflation for August was 0.44%, July was 0.19% and June was 0.32%. Next release October … [Read More...]

Can the FED Engineer a “Soft Landing”?

The ultimate dream of the Federal Reserve and those who believe in the FED’s omniscience is for them to engineer a soft landing, i.e., curbing inflation without sending the economy into a deep recession. The idea is that if they raise rates just enough, but not too much, they can find the “Goldilocks” middle ground that will magically cool inflation just enough. In today’s article, Mihai Macovei explains why that is more of a fairytale than Goldilocks herself.

Inflation Is a Huge Wealth Redistribution Scheme

In today’s article, Charles A. Smith explains how bankers and bureaucrats conspire to consistently rob the common person through inflation. We have become conditioned to believe that 2% inflation is the norm, and not only that, but it is even desirable and beneficial. Charles argues that, quite to the contrary, productivity improvements should create lower consumer prices, i.e. deflation. The reason that doesn’t happen is because, “Inflation makes bankers’ and bureaucrats’ lives easier and keeps them in power”.

When Can We Expect Lower FED Rates?

The Federal Reserve (Fed) started raising interest rates in March 2022 in an effort to combat inflation. As of the end of July 2023, the Fed’s target rate limit is 5.5%, the highest level in 15 years.

There are a few reasons why the Fed is raising interest rates so aggressively. First, inflation is at a 40-year high. In May 2023, the Consumer Price Index (CPI) rose 8.6% year-over-year, the fastest pace since December 1981. This means that the cost of goods and services is rising rapidly, which is eroding the purchasing power of consumers and businesses.

Second, the economy is strong. The unemployment rate posted a 50-year low of 3.4% in February 2023 (for January 2023). This means there is continued strong demand for goods and services, which puts upward pressure on prices following the rapid rebound and pent-up demand following COVID.

July Annual Inflation- Up Slightly

The BLS Commissioner reported: “The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in July on a seasonally
adjusted basis, the same increase as in June, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment.
The index for shelter was by far the largest contributor to the monthly all items increase,
accounting for over 90 percent of the increase, with the index for motor vehicle insurance also
contributing. The food index increased 0.2 percent in July after increasing 0.1 percent the previous
month. The index for food at home increased 0.3 percent over the month while the index for food away
from home rose 0.2 percent in July. The energy index rose 0.1 percent in July as the major energy
component indexes were mixed.”
He is saying that on a “seasonally adjusted” basis June and July were the same but on a NON-adjusted basis June was 0.32% and July was 0.19%.

They continue to harp on Shelter as it is a large percentage of the index and it was up 7.7% for the year but…
Transportation Services was up 9% for the year and
Food away from home was up 7.1% for the year.

And as we’ve been saying for a while now energy has been a major factor in bringing down annual inflation
because Biden has been depleting the Strategic Petroleum Reserves drastically over the last year.

Do Private Corporations Cause Inflation?

We often hear the cry that those greedy corporations are raising prices and causing inflation. If they would only bite the bullet and stop raising prices all would be well. They even have a name for it “greedflation”. As recently as April 27th 2023, Bloomberg published an article entitled ECB (The European Central Bank) Wakes Up to Greedflation as Key Culprit in Price Struggle. The article tells us that French politician and President of the European Central Bank Christine Lagarde blames “corporate margins” for inflation. Today’s article looks at the problems with that view.

Without looking at inflation-adjusted prices it is difficult to see where gasoline prices actually stand. Back in 1918 gasoline was $0.25 a gallon and by 1932 prices had fallen to 18 cents a gallon! But as we all know over the last 100 years the purchasing power of the dollar has fallen drastically so in order to get the true picture we can’t just say that the lowest price of gas was 18 cents per gallon, we need to adjust the price for inflation. When adjusting for inflation there are two prices… the first is called the “nominal price” and that is the actual price you would have paid for gas at the pump. The key price though is the inflation-adjusted price which calculates what the price would have been if we were spending current dollars on a specific date. In this case, we are basing our calculations on the value of a dollar in January 2020.

Inflation Adjusted Housing Index since 1890

Inflation Adjusted Real Estate Prices- Lets take a look at the idea that housing prices always go up. Of course, each neighborhood is different, so some neighborhoods might be going down while a few miles away housing prices are skyrocketing but by looking at the nationwide average we can get a better picture of the overall trend. The St. Louis Federal Reserve publishes the following chart that shows the S&P/Case Shiller National Home Price Index and by adjusting those prices for inflation we can get a better picture of how real estate prices really act. Is a home a good investment or not?

Today’s Featured Post

August 2023 Inflation Up Sharply

Latest Articles

Can the FED Engineer a “Soft Landing”?

Inflation Is a Huge Wealth Redistribution Scheme

When Can We Expect Lower FED Rates?

July Annual Inflation- Up Slightly

Do Private Corporations Cause Inflation?

Inflation Adjusted Gasoline Prices

Inflation Rate of Electricity Prices

Inflation Adjusted NYSE Index

Inflation Adjusted Natural Gas Prices

Inflation Adjusted Housing Prices

Inflation Adjusted Bonds