The Bureau of Labor Statistics reported that the Annual Inflation Rate rose again in November. Inflation Summary: Annual Inflation highest since May 1982. CPI Index rose from 276.589 to 277.948. Monthly Inflation for November was 0.49% Next release January 12, 2022 Inflation for the 12 months ending in November was Up again from October. October 6.22% -- November 6.81% The earliest millennials were born somewhere between 1980-1985 (depending on which definition of millennial you use), just as we were coming off one of the highest Inflation spikes the U.S. has seen since they began tracking the CPI in 1913. In March of 1980, Inflation topped at 14.76%. By May of 1982, … [Read more...]
Is Bitcoin a Better Inflation Hedge Than Gold?
Proponents of the digital cryptocurrency Bitcoin are touting it as the latest Inflation hedge... perhaps better than gold... but is it? Although gold may fluctuate significantly in the short run, this precious metal has fared relatively well as a hedge against inflation over the long term. One of gold's significant benefits is that it is a commodity that if held in physical form is neither paper, nor government-controlled, nor another person's liability. Gold's other major advantage is its limited supply (i.e., requiring quite a bit of effort and energy to mine). Recently, Bitcoin has arrived on the scene and become a "digital commodity" independent of the government, which has gained … [Read more...]
How Nixon’s Revolutionary Move Influenced U.S. Inflation For 50 Years
Nixon is not remembered well by history because of the single defining moment of Watergate and the high inflation rate during his Presidency. However, according to a 2017 C-SPAN Presidential Historians Survey, Nixon actually ranked 10th among all presidents for his foreign policy. And the Siena College Research Institute, Presidential Expert Poll of 2010 ranked him 11th on foreign policy accomplishments. Of the 21 different categories, this survey ranked Nixon an average of 27.6th out of 44 presidents... so only slightly worse than average. Nixon’s China Visit One of Nixon’s foreign policy actions was to open diplomatic relations with China. This one action would have long-lasting … [Read more...]
Inflation: The New Normal?
After decades of low inflation and even fears of deflation, inflation concerns are once again dominating the headlines in the contemporary financial media. As the global economy grappled with the fallout of the coronavirus pandemic, major central banks embarked on an unprecedented monetary easing program. This was an attempt to shore up the flagging economic growth by increasing the money supply. This resulted in the shortest recession in economic history but also created problems of its own. With widespread shortages spooking consumers and investors alike, central banks are now having to contend with persistent supply chain disruptions, decaying consumer confidence, and the looming … [Read more...]
Annual Inflation Soars to Highest Level in 31 Years
The Annual Inflation Rate exploded in October, according to the Bureau of Labor Statistics report. Inflation Summary: Annual Inflation highest since October 1990. CPI Index rose from 274.310 to 276.589. Monthly Inflation for October was 0.83% Next release December 10th Inflation for the 12 months ending in October was Up Sharply from September. September 5.39% October 6.22% Current levels have exploded through the pink resistance line. Exceeding the 5.60% Oil Peak of July 2008, and coming very close to the October 1990 peak at 6.29%. If next month takes it up even slightly we will have to go all the way back to 1982 to see higher inflation. BLS … [Read more...]
How Businesses Cope With Inflation
With the Producer Price Index for manufacturing industries increasing by over 15% on a not seasonally adjusted annual basis for the last couple of months, businesses are facing rapidly increasing costs. To remain profitable, companies only have two options, either raise prices or cut costs. In the short run, larger corporations can postpone the inevitable by taking a 3rd option, i.e., “to squeeze margins to maintain volumes” (which is just a fancy way of saying “eat the increased costs”. Small businesses are generally in a weaker position to adjust themselves when inflation knocks at their doors. It is more difficult for Small and Mid-size Enterprises (SMEs) to cope with the situation … [Read more...]
How Foreign Currencies Act as an Inflation Hedge
One method investors can use to hedge against inflation is investing in a variety of foreign currencies. The key of course is which currencies you choose as an inflation hedge. You need to invest in those countries' currencies, which will provide you with better protection from exchange rate changes to be successful at hedging against inflation. Inflation in the United States has been relatively tame since the 1980s but it is currently at risk due to massive money creation by the FED via Quantitative Easing. However, inflation risk can be mitigated with the help of investment diversification. One method investors who are looking to protect their money against inflation would use is to … [Read more...]
How Insidious Inflation Affects the Affordability of Tuition and Fees
While the pandemic began to alter the way we live in 2020, its ripple effect on the economy has continued the devastation. Initially, people were not spending as much as they would have if they didn’t have to remain at home. Once the government relaxed the restrictions in November 2020, people began traveling and satisfying their pent-up demand. This surge in spending overwhelmed the limited supply, which caused short-term inflation (when demand exceeds supply, prices go up). Several other factors have affected inflation since then, and households have been reeling due to the hikes in the prices of everyday items. However, hardly anyone talks about the effect of inflation on American … [Read more...]
Do Housing Prices Always Go Up?
In the last few years, housing prices have skyrocketed, and investors are once again jumping on the housing bandwagon as an excellent way to make money. The same sentiment existed in the early 2000s as housing prices were rising rapidly then as well. These periods both created the impression that “housing prices always go up”. But is that actually true? If we look at the “nominal” prices of houses, i.e., the cost in dollars BEFORE adjusting for inflation, it does appear that housing prices go up fairly consistently. In the following chart, we see housing prices since 1890. The blue line is the nominal housing price, and we can see a very gradual increase up through the early 1970s. Prices … [Read more...]
The Travel Industry, the Pandemic and U.S. Inflation
Inflation has been apparent in the United States, making many people worry about financial stability in the nation. With the COVID-19 pandemic, there have been rising prices, labor shortages, and people wary about spending. In this overview, we’ll explore how the U.S. inflation brought on by the pandemic has contributed to changing the financial and business landscape of the travel industry. At First Glance “The pandemic not only caused the shutdown of many companies and organizations but had also discouraged consumers from traveling to abide by social distancing mandates,” says Kendra Banks, a business writer at Uktopwriters. Rising airfares, price hikes on used vehicles, and people … [Read more...]
