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. ~Tim McMahon, editor. There Is No Fed Magic Trick to Achieve a Soft Landing Economic growth in the United States accelerated to a 2.4 percent annualized rate in the second quarter of 2023, picking up from 2.0 percent in the first … [Read more...]
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". ~Tim McMahon, editor. Inflation Is a Giant "Skim" on the American People The price of a McDonald’s hamburger in the United States has inflated 3.75 percent annually over the … [Read more...]
When Can We Expect Lower FED Rates?
Why Has The FED Been Raising Interest 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 was at a 40-year high. In June 2022, the Consumer Price Index (CPI) rose 9.06% year-over-year, the fastest pace since December 1981. This means that the cost of goods and services was rising rapidly, which was eroding the purchasing power of consumers and businesses. Second, the economy is still strong. The unemployment rate posted a 50-year … [Read more...]
July Annual Inflation- Up Slightly
According to the Bureau of Labor Statistics CPI report released on August 10th, Annual Inflation increased from 3% in June to 3.2% in July. (but more precisely, it was from 2.97% to 3.18%.) Monthly inflation was 0.25% for May 2023, 0.32% in June, and 0.19% in July. July 2023 Inflation Summary: Annual Inflation rose from 2.97% to 3.18% CPI Index rose from 305.109 to 305.691 Monthly Inflation for July was 0.19%, down from 0.32% in June Next release is September … [Read more...]
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. ~Tim McMahon, editor Private Corporations Don't Cause Price Inflation. Governments Do. By Daniel … [Read more...]
No Surprise… FED Raised Rate by 1/4%
The market was predicting a 1/4% raise in the FED Funds rate with 99% certainty and that is exactly what they got. We were wondering if because of last month's drop in annual inflation (due primarily to a mathematical anomaly) the FED would not raise rates this month. But apparently their previous pause was sufficient under the circumstances. By applying the slight rate increase at this point, it should present the impression to the general public that they are on top of things, when the 1/3% rebound in inflation that we expect for July shows up. FED Chairman, Jerome Powell has left the door open for further increases (or not) with his comment, “Looking ahead, we will continue to take … [Read more...]
How Inflation Impacts Merchants
Just like the old joke, "How do you eat an elephant? ...one bite at a time", inflation is constantly "eating" away at your purchasing power. Some years your purchasing power might decline by 1%, and other years, it might decline by 5% or even 10%. As we can see from the chart above, back in 1980, purchasing power declined by an average of 13.55% over the whole year. But from April 1979 to April 1980, prices increased (and thus purchasing power declined) by a whopping 14.76%. And that was on top of 10.09% from April 1978 to April 1979. So, in just two years, from April 1978 to April 1980, prices increased significantly. How much? Well, due to compounding, you can't simply add 14.76% and … [Read more...]
What is the Difference between the CPI-U and the CPI-W
The Consumer Price Index (CPI) is a widely used economic indicator that measures changes in the prices of goods and services over time. It measures the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services. Being an index, a date was chosen to be equivalent to 100, and as the price of the goods in the "basket" increased the index increases as well. The percentage difference between the index a year prior and the current index is the inflation rate. Having a reliable index is an essential tool for policymakers, economists, and individuals alike to assess inflation and make informed decisions. However, there are different variations … [Read more...]
June 2023- Inflation Falls to 3%
According to the Bureau of Labor Statistics CPI report released on June 13th, Annual Inflation declined from 4.0% in May to 3% in June. (but more precisely, it was from 4.05% to 2.97%.) Monthly inflation was 0.25% for May 2023, and 0.32% in June. June 2023 Inflation Summary: Annual Inflation fell from 4.05% to 2.97% CPI Index rose from 304.127 to 305.109 Monthly Inflation for June was 0.32% Next release August 10th 2023 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 2022 7.48% 7.87% 8.54% 8.26% 8.58% 9.06% 8.52% 8.26% 8.20% 7.75% 7.11% 6.45% 2023 6.41% 6.04% 4.98% 4.93% 4.05% 2.97% What … [Read more...]
