How Ben Bernanke Sentenced The Poorest 20% Of The Population To A Cold, Hungry Winter

Tyler Durden's picture

The following chart prepared recently by JPMorgan demonstrates something rather scary, and makes it all too clear how the Chairman's plan to "assist" the US population via some imaginary "wealth effect" due to QE2, is about to backfire. As is now becoming very evident, the prices of energy and food products are about to surge, and in many cases have already done so, but courtesy of some clever gimmicks (Wal Mart selling what was formerly 39 oz of coffee as a 33.9 oz product for example) the end consumers haven't quite felt it yet. They will soon. There is a limit to how much every commodity can open limit up before it appears on the SKU price at one's local grocer. And while a marginally declining "core CPI" is irrelevant for this exercise as it measures only items that are completely outside of the scope of everyday life, what will be far more important to end consumers will be the push higher in food and energy costs. The problem, however, is that for the lowest 20% of Americans, as per the BLS, food and energy purchases represent over 50% of their after-tax income (a number which drops to 10% for the wealthiest twenty percentile). In other words should rampant liquidity end up pushing food and energy prices to double (something that is a distinct possibility currently), Ben Bernanke may have very well sentenced about 60 million Americans to a hungry and very cold winter, let alone having any resources to buy trinkets with the imaginary wealth effect which for over 80% of the US population will never come.

Here is how JPM explains the phenomenon:

When the Fed considers the possible consequences of a falling dollar resulting from QE2, it should perhaps focus on food and energy prices as much as on traditionally computed core inflation.  First, the food/energy exposures of the lower 2 income quintiles are quite high (see chart).  Second, the core  CPI has a massive weight to “owner’s equivalent rent”, which suggests that the imputed cost of home occupancy has gone down.  Unfortunately, this is not true for families living in homes that are underwater, and cannot move to take advantage of it (unless they choose to default and bear the consequences of doing so).   Due to the housing mess, there has perhaps never been a time when traditionally computed core inflation as a way of measuring changes in the cost of things means less than it does right now.

Since nothing else appears to have jarred America from its prime time TV/iPad hypnosis yet, perhaps this is for the best, and a few hungry months in subzero temperatures is precisely what several tens of millions of Americans need to finally march on Constitution avenue.


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slaughterer's picture

Food and heat, Bitchez!

frankTHE COIN's picture

Unintended Consequences Wenches!

infotechsailor's picture

heres a walmart trick for you:

start selling U.S. Gasoline by the Litre

Cheesy Bastard's picture

Hey, they already did that with booze years ago.  Enough is enough dammit! :)

Ratscam's picture

the higher the price of gas, the more parking around in the city!

Feeling a bit sorry for the uneducated who are not reading ZH and act accordingly.

rocker's picture

Even if they read ZH. The poor will not have the ability to act accordingly. Like a Deer in headlights. Ouch.

cossack55's picture

Ah, a man with his priorities in proper order. Well done, Sir.'s picture

watch when all the white yuppies favorite water beverage goes up 100%, or taxed for green environment issues. i wonder if this latest water buying craze will end. consumption of plastic water products just ridiculous in this country. wonder how much profit these corporations make. the water in glass containers cost more because they weigh more in shipping costs. i am very confused how BIG drinking water in containers got.

Cheesy Bastard's picture

But lovey, the market is up, and what shall I mix with my scotch?  Surely not tap water...By the way, turn the air conditioner on.  Fresh air is for poor people....'s picture

your a funny cheesy bastard. i guess i just want a bastard in my life, maybe you will do. but for sure cheese gives most folks gas.

Cheesy Bastard's picture

I am just the guy who sorta reminds you of the guy you really want, and you are on the rebound.  Bas-tard, though, was brilliant, and I love a chick who plucks the low hanging fruit...

Janice's picture

Enquiring minds want to know.  Is there something that we don't know?  Is there something that you don't know?   Or something that we know that we think no one knows?  Or something that you think that you know that we don't know?  Or something that we all know?     : )


High Plains Drifter's picture

There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.

Donald Rumsfeld's picture

touché bastard

i thought

Bas-tard was a good one as well.

i thought i loved him.

Cheesy Bastard's picture

You are a very sweet girl.  Now go sign up for that home defense shotgun course! :)

A_MacLaren's picture

Mixing or diluting your Scotch whisky is an outrage. 

Drink it neat, or don't drink it all.


Cheesy Bastard's picture

Sigh. I suppose he has a point.  You don't need to dirty up a glass that way.

Gully Foyle's picture


Hey now my little moppet let me you in on some news.

My theory is every now and then tv tests, or maybe insiders actually slip out the plan. Anyway the Kiwi's ran this nifty little show called This is not my life.

One of the minor mentions slipped in was the Carbon credit instead of money idea. See all god's chillun had Carbon credits for food, travel, utilities so on. If you went beyond your monthly allowance you could but more. If you could afford them.

Then I stumbled on this

The plan - and, no, I’m not joking - is to put Norfolk Islanders on rations to fight both global warming and obesity.

Funded by the Australian Research Council, and approved by the Socialist Left Science Minister Kim Carr, researchers from the Southern Cross University will give each volunteer on the island a “carbon card”.

Every time they buy petrol, electricity or an air flight, they will have “carbon units” deducted from the fixed allowance on their card.

More units will be lost each time they buy fatty foods, or produce flown in from a long way away.

If, at the end of each year or so, they have carbon units left over, they can sell them. If they’ve blown their allocation, they must buy more.

But each year, the number of carbon units in this market will be cut, causing their price to soar - and thus the price of extra food, power and petrol to rise - because the idea is to cut greenhouse gases and make Norfolk Islanders trim, taut and terrifically moral.




Sean7k's picture

You can't call it science until you've run the appropriate trials and gathered data. There are trials going on all around us, in an effort to keep it objective, they don't tell the subjects. Scary huh?

If you want it all to end, stop playing the game. Use banks as a last resort. Trade in silver and gold. Stop voting. Turn off your TV. Turn off your compute

Oh regional Indian's picture


Carbon Credits are actually THE sure fire investments for this time. They will be a part of any upcoming basket because it is a trading protocol that has been universally agreed to and is monitored by a UN committee.

Fait accompli. I'm off to research by CC calls. Any one have sources, ideas?


OutLookingIn's picture

kathy, Barrel of oil (42 US gallons) or 158.9873 litres = $84.00

Aquafina Water 1 litre bottle = $1.69

Therefore a barrel of drinking water is valued at $268.68

Belief that capitalism will solve lifes problems? Priceless! 

Problem Is's picture

"Hey, they already did that with booze years ago. "

Bathtub booze and home made beer, bitchez...

DaveyJones's picture

exactly, it will become currency

A Nanny Moose's picture

Carboys and airlocks....bitchez!

claycalhoun's picture

Think yourselves lucky, we in the UK are already paying $usd9.00 per  imperial gallon (= $usd 7.60 per us gallon)

Goes up on jan 1 / 2011 with increase in VAT by 2.5%

dark pools of soros's picture

well that should tell you that you are buying the wrong gallons you non-imperialist!

go beg for your peasant gallons!

Cojones's picture

$8 per Gallon here in the Netherlands.

fudstampz's picture

Does $8.00 gas and free healthcare beat $3.00 gas and capitalist style healthcare?

BigJim's picture

Depends on how much you drive, and how much you're ill

DaveyJones's picture

what if you drive someone else ill? 

Indrid Cold's picture

"free healthcare" ain't free.  You know who pays.  It all comes out of the consumers' pockets one way or another.



Gully Foyle's picture

Indrid Cold

Heinlein was the man.

A society that gets rid of all its troublemakers goes downhill.
Robert A. Heinlein's picture

i am a troublemaker. i go downhill,

S L I D E , cheeks

tmosley's picture

Where do you live that you are getting "capitalist style" healthcare?

Uncle Remus's picture

Macht nichts. Different sides of the subsidy coin.

DaveyJones's picture

so THAT'S why your cars are so much smaller. I thought it was our egos's picture

davey, i have a small gas station at the corner of pine and folsom. two pumps. owned by chinese couple, that work on Volvo's. they are the best. drive in old school style, hand them two twentys, pump up and off for a couple of months or more. my friend Nate uses this same station. i swear gas stations in america have gone apeshit CORPORTE. what an unbearable experience to use the gas stations lining america anymore. breathe of fresh air finding a user friendly gas pump it yourself with some dignity. honest, i bet a lot here haven't had the luxury of this type of gas pumping experience. i have only put two thousand miles on my audios in a years time. as Nate told me he feels sorry for his friends that drive a F150 light truck that has to fill up twice a week. i feel sorry for you if you have to buy gasoline.

101 years and counting's picture

I thought about that as well, but, when you're still done filling up, the fiat amount still doesn't change ($30...then $40...then $50, etc).  However, if you can pay in gold or silver, gas prices have been going down.

chinaguy's picture

Yes, the IBs & The HF's will take their new ZIRP funny money & send oil back to $150/barrel ...shit, cretins could figure that one out.....but NOT the FOMC

Mako's picture

Tyle has become king of the idiot Lemmings.  Tyler is running like the rest... blaming everyone but himself... I bet even now he is searching for yield on his investments without actually doing any work what so ever.  Tyler just curious, you point your finger but please tell us what your job is, what real job do you have? 

Tyler you are searching for yield just like the rest of the stupid Lemmings but you can't find it... so you blame everyone but yourself.

Shocker's picture

I really feel bad for the little guy that is going to pay for all this mess that is going on. Its bad enough people that are struggling, but then add on the people that are jobless. Suck situation, and people need to wake up. I see the list daily and its amazing to say the least.

mogul rider's picture

I fell even worse for the poor b@stard or bitchez making over 100K.

You can be fully assured that anyone making that much will be broke by next year. Obama wants your sorry ass.


To hell with the little people - let them eat cake.


Signed mogul rider antoinette