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...]
Investing to Fight Inflation
While inflation has been low in most developed countries over the last decade, there are places where it is starting to pick back up, with stronger growth outlooks for several major economies. As we can see from the chart below the OECD is projecting massive inflation in 2020 for both Turkey and Argentina at 12.6% and 22.7% respectively. The average of all OECD countries is a low 2.4%. The OECD Inflation projection for the European Union (EU) is also surprisingly low. Who would have thought that countries like Italy, Spain and Portugal could maintain such low inflation rates, with the highest being Hungary at 3.8%. Back in June 2019, the Telegraph published an article about how the … [Read more...]
Cumulative Inflation By Category 1996-2016
I recently came across an interesting article by Paul O'Brien on Quora. For those who may not know, Quora is a site where individuals can ask questions and get a variety of different answers from people in the community (hopefully subject matter experts). I have been participating in answering questions on Quora for a few years now. But I particularly liked this answer and thought I would share it with you. Although the original question was "Is capitalism failing? Why or why not?" Paul chose to answer based on the inflation rate of various categories of consumer goods. ~Tim McMahon, editor Is Capitalism Failing? Why or Why Not? By Paul O'Brien Let’s run down … [Read more...]
If Everything Big is Increasing in Cost at Some Rate Faster than Inflation Why Hasn’t Inflation Risen to Match?
I recently answered this question on Quora. And I thought I would share an expanded answer with you as well. Whenever a question starts with an assumption you need to examine whether that assumption is in actuality true. If the assumption is vague enough it can be fairly difficult to determine and we might be tempted to go with the basic assumption. In this case, the assumption is that "everything" "big" is increasing in price faster than average. We have no clue what he means by "everything" (I'm sure he isn't being literal) and what does he mean by "big"? Large as in houses, and cars, or expensive like Yachts and Lamborghinis, or things that are a large portion of the average person's … [Read more...]
September Inflation Virtually Unchanged
The U.S. Bureau of Labor Statistics (BLS) released its September Inflation report on October 10th, 2019, for the 12 months through the end of September 2019. Annual Inflation is Down Very Slightly Annual inflation in September was 1.71% 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, peaking at 2.00% in April. Inflation peaked at 2.95% in July 2018. The CPI-U index in September was 256.759 up from 256.558 in August. Monthly Inflation for 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 0.53%, March was 0.56%. … [Read more...]
How Does Inflation Affect Businesses?
The fallout from inflation doesn’t always receive a balanced, informed portrayal from the media. This is somewhat understandable since, unless inflation makes a drastic move, its slow steady erosion of purchasing power is not considered newsworthy. However, as with most economic forces, not everyone “loses” when inflation boosts the everyday cost of living. Inflation can actually either benefit or destroy American businesses, and individual preparation for its eventual, inevitable impact often decides how detrimental or beneficial it is. Foreign Exchange International purchases become more costly as inflation diminishes the dollar’s purchasing power relative to other currencies. This … [Read more...]
August Inflation Report
The U.S. Bureau of Labor Statistics (BLS) released their August Inflation report on September 12th 2019, for the 12 months through August 2019. Annual Inflation is Down Slightly Annual inflation in August was 1.75% very similar to the 1.79% in May and the 1.81% in July. But still above the 1.65% in June, and below the 2.00% in April. Inflation peaked at 2.95% in July 2018. CPI Index in August was 256.558. July was 256.571, June was 256.143, May was 256.092. April's was 255.548 and March was 254.202. Monthly Inflation for August was disinflationary -0.01%, July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was 0.53%, March was 0.56%. Next release October … [Read more...]
How the Currency Exchange Rate Can Affect Business
In finance, an exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country's currency in relation to another currency.~Wikipedia Currency depreciation happens when a nation’s currency exchange rate (e.g. the Chinese Yuan) decreases in value in comparison to another country’s currency (e.g. the U.S. Dollar). So, if the dollar increases in value compared to the Yuan, it means U.S. based businesses or individuals could receive more for their money from an overseas supplier than they did previously, even if the price in the foreign currency is unchanged. On the other hand, Chinese companies will pay more for … [Read more...]
How Does Inflation Affect the Cost of Insurance?
What is Inflation and How does it Impact Insurance? Well, to understand the effects that inflation has on insurance, it is crucial to understand what inflation is. Generally, there are two types of inflation "Price inflation" and "Monetary inflation" (i.e. an increase in the money supply). Price inflation is primarily caused by monetary inflation. In this article, we will use the common meaning of inflation and refer to Inflation as a general rise in prices. To understand inflation's impact on insurance, we must first understand that insurance is a monetary instrument i.e. a contract generally between an individual and a company that involves a series of small payments from the … [Read more...]
