The world has a global economy. It’s no longer possible to survive as an isolationist. Macroeconomics will tell you that it is most efficient to have each country produce what it can produce cheapest so that all may prosper due to lower-cost goods and increased production. Not surprisingly, the U.S. is the world’s largest importer and also it is no surprise that we import a lot of stuff from China. According to the U.S. Census bureau, in 2018, we imported $539,675.6 Billion worth of goods from China while only exporting $120,148.1 Billion to China for a total trade of $659,823.7. So, in many ways Canada is actually a better trading partner than China since although we imported $318,824.2 … [Read more...]
February Inflation Falls to 2.33%
The U.S. Bureau of Labor Statistics (BLS) released its February Inflation report on March 11th, 2020, for the 12 months through the end of February 2020. Annual Inflation Falls Annual inflation fell from the high set at 2.49% in January to 2.33% in February. CPI Index in February was 258.678 up from January's 257.971, December was 256.974, November was 257.208 down from October's 257.346 Monthly Inflation for January was 0.39%, while February was 0.27% down from 0.42% in February 2019. Next release April 10th Currently, the inflation rate is above the FED's target 2% rate. But the FED is concerned with a market meltdown due to falling Oil prices and the Coronavirus so … [Read more...]
How the Economy Works
The economy might seem complex, but it is actually based on three simple processes that are repeated over and over again. These processes are based on human nature and the fact that most people tend to act in their own best interests. The following information is based on a presentation by Ray Dalio. Who is Ray Dalio? According to Wikipedia, Raymond Dalio was born August 8, 1949 and is an American billionaire investor, hedge fund manager, and philanthropist. Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds. Bloomberg ranked him as the world's 58th wealthiest person in June 2019. https://youtu.be/PHe0bXAIuk0 The Three Main Forces of … [Read more...]
Inflation: The Hidden Tax
The media and the Central Bank (i.e. The U.S. Federal Reserve aka. the "FED") tells us that a little bit of inflation is a good thing. Inflation gets the ball rolling, greases the wheels of commerce, and stimulates the economy. The FED sets as a goal 2% inflation, so inflation must be good for us, right? Two Forms of Inflation Well, it is good for someone but not necessarily for you i.e. the consumer. The first problem comes because there are two different types of “inflation” and by interchanging them we end up with a form of Orwellian “double-speak”. The first kind of inflation is “monetary inflation” i.e. an increase in the overall money supply. This is accomplished by a complex process … [Read more...]
How the FED Controls the Money Supply
When the government spends more money than it receives in taxes it has a “deficit” situation. In order to deal with this deficit, it engages in some fancy bookkeeping. The government is made up of a variety of agencies, so the other agencies request money from the Treasury Department. If it doesn’t have enough money the Treasury Department issues an IOU (called a Government Bond). The Treasury gives the Bond to the Federal Reserve (which is theoretically not part of the government). The FED writes a check to the Treasury for the bond. It then breaks up the bond into smaller bonds and sells them to individual banks. The banks then sell them to individual investors and groups of … [Read more...]
January Inflation Spikes to 2.49%
The U.S. Bureau of Labor Statistics (BLS) released its January Inflation report on February 13th, 2020, for the 12 months through the end of January 2020. Annual Inflation Jumps Up Again Annual inflation tops the 2019 high set in December at 2.29% reaching 2.49% in January. CPI Index in January was up almost 1 point to 257.971, December was 256.974, November was 257.208 down from October's 257.346 Monthly Inflation for January was 0.39%, December was -0.09% up from 0.19% in January 2019. Next release March 11th Annual inflation for the 12 months ending in January was up to 2.49%. Annual inflation in December was 2.29%. The CPI index itself rose almost exactly a full … [Read more...]
December Inflation is Up
The U.S. Bureau of Labor Statistics (BLS) released its December Inflation report on January 14th, 2020, for the 12 months through the end of December 2019. December Inflation Jumps Up Annual inflation tops the 2019 high set in November at 2.05% reaching 2.29%. CPI Index in December was 256.974, November was 257.208 down from October's 257.346 Monthly Inflation for December was -0.09% up from -0.32% in December 2018. Next release February 13th The CPI index itself decreased again this month (i.e. prices were actually lower this month than last month). October's CPI Index was 257.346, November's decreased to 257.208 and December's decreased again to 256.974 but each time … [Read more...]
November Annual Inflation Jumps Up But…
The U.S. Bureau of Labor Statistics (BLS) released its November Inflation report on December 11th, 2019, for the 12 months through the end of November 2019. November Inflation is Up Annual inflation in November was 2.05% up from October's 1.76%. The last time inflation was this high was in April. Inflation has been in a narrow range through much of 2019. 1.79% in May, 1.81% in July, 1.65% in June, with a high of 2.00% in April. Inflation peaked at 2.95% in July 2018. The CPI-U index in November was 257.208 down from 257.346 Monthly Inflation for November was -0.05% much higher than -0.33% in November 2018. Next release January 14th The CPI index itself actually … [Read more...]
October Inflation has Slight Increase
The U.S. Bureau of Labor Statistics (BLS) released its October Inflation report on November 13th, 2019, for the 12 months through the end of October 2019. Annual Inflation is Up Very Slightly Annual inflation in October was 1.76% up from September's 1.71% and still virtually unchanged from August's 1.75%. Inflation has been in a narrow range throughout 2019. 1.79% in May, 1.81% in July, 1.65% in June, with a high of 2.00% in April. Inflation peaked at 2.95% in July 2018. The CPI-U index in October was 257.346 Monthly Inflation for October was 0.23%, September was 0.08%, August was -0.01%, July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was … [Read more...]
Modern Monetary Theory
Recently Freshman Congresswoman Alexandria Ocasio-Cortez (AOC) thrust Modern Monetary Theory (MMT) into the popular limelight by suggesting that MMT was how the U.S. could pay for her "Green New Deal". What is MMT and how is it different from good old "Money Printing"? History is rife with examples of countries that tried to print money without any “governor” on the quantity of money printed. Recent examples include Argentina, North Korea, Zimbabwe, and Venezuela. See: 27 examples of hyperinflation from ancient Egypt through modern-days. In today's article Charles Hugh Smith of Daily Reckoning looks at why Modern Monetary Theory Won't Work. We've reprinted the following article by … [Read more...]
