The following probably will not shock you. Still it contradicts everything you have been promised for months. Make that for years.
Once again, inflation numbers for last month (January 2024) are awful, coming in way above target at 3.1 percent per annum. It would have been much worse without sudden declines in fuel oil. Food away from home is up 5.1 percent and transportation 9.5 percent year over year.
The “sticky price” index, which excludes food and energy, is up 3.9 percent, or twice the target.
This is very hot inflation. It’s still going on right now, despite all the wishful thinking.
Pay no attention to the headlines in The Wall Street Journal, which are routinely gaslighting you with the ridiculous word “cooled,” as in “inflation cooled.” It did not. The other headline was more accurate. Inflation is “stubborn.” Yes, if this means that it keeps not going away, contrary to every single promise.
The word stubborn is a personality trait. We associate it with children and jerks. Inflation is not sentient. It is a measure of what happens when government and the central bank mismanage their jobs.
In the presence of this mess, you have been lied to. Over and over. For three years now! You know this. Everyone knows this. And yet every official spokesperson says the opposite.
Keep in mind too that these are just the official numbers. They do not take account of hidden fees, which are as prevalent as landmines in a war zone, or of shrinkflation, which is unbearably obvious. If inflation were calculated the way it was in the 1990s, we would be running at double and triple the rates they are admitting.
This whole thing has become a giant farce. It was three years ago that Janet Yellen and the entire Biden administration was going on about how the inflation was merely “transitory.” No one asked what that meant. It sounds like temporary, right? That’s not the word they used. Transitory means to transition to something. But to what?
The transition turns out to mean one to your dramatically lower standards of living.
The problem is revealed in the data. Since 2020, we’ve seen consumer prices in the official data rise by 21 percent or so. But producer prices are up over the same period by 34 percent or so. Even if you want to add another 5 percent on both ends, this gap still needs to be closed. That is happening with consumer prices now.
Sellers at every stage of production must find ways to make the accounting work. They are doing this with cuts in management costs, hidden fees, and shrinkflation but also with old-fashioned price increases. Which method they choose is affected by producers’ own assessment of the “price elasticity of demand,” which is the extent to which consumers are willing to keep buying despite higher prices.
For now, retail demand is still high. Plenty of restaurants are still packed. The phrase “doom spending” is now in vogue as people are blowing every last dime to sustain their lifestyles despite record credit-card debt and very high fees on revolving accounts.
We seem to be in this in-between moment: acting like we are still prospering even while poverty is growing and wealth is being depleted. Part of the reason is the rising stock market, which itself is reflecting inflationary pressures. After all, the prices for financial assets are subject to the same forces as prices in general. And remember: The stock market does not reflect the reality of macroeconomic conditions.
Meanwhile, pessimism is everywhere in sight. Consumers have a grim outlook for the future, and so do businesses. There is a real gap between the two, but both are dramatically down by any historical standard. Meanwhile, economists continue to say that we are not in recession, citing all the fake data out there on jobs, inflation, and output.
Even for me, it’s a bit of an adjustment to realize that everything the financial press has said for two years is a lie. There is no real respite from inflation despite every promise.
For months now, the Fed has even been speaking about lowering rates. The presumption is that inflation is now conquered. The battle is won. Now the Fed can get back to preventing recession. There are no dangers ahead, they have been telling us. Everything is back on track.
This path could lead to disasters a few years from now.
Remember that the hugely disastrous inflation of the 1970s stole 60 cents of purchasing power from the dollar, from 1969 to 1980. It came in three rounds. Each time, the Fed figured that they had won the battle and stopped fighting it with higher interest rates.
So you have to ask yourself: Have we just finished round one of a major wave and now can expect another and then perhaps another? This is what the history tells us. This happened because the Fed believed it had won and then decided to play politics. Are they going to do this again to us?
This much we know. The smarties with degrees from the best institutions and all the power in the world to rule our lives have utterly failed in every respect. Meanwhile, they are also shameless. They do not admit error. They dare to go on TV day after day and repeat the same assurances that they know exactly what they are doing.
We only need to trust them to do the right thing!
We’ve trusted and trusted, and look where we are. We are pillaged. We are gaslighted. We are ruined. This is what they did to us.
Meanwhile, the big news out of Washington is that the U.S. Senate just passed a $95 billion spending bill to secure borders abroad while ours are overrun and the media is urging families in the Northeast to take refugees into their homes.
We are ruled by people who do not have our best interests in mind. And that’s an understatement.
