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Inflation is Already Here… But It's Being Masked

Phoenix Capital Research's picture




 

Since 2007, the world’s Central Banks have collectively put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.

 

This kind of money printing is literally unheard of in modern history. And it has set the stage for a roaring wave of inflation to hit the financial system. Indeed, the first signs are already showing up... not in the “official” Government data (which is bogus) but in how those who run businesses around the globe are acting.

 

Most people believe that when inflation hits, prices have to go higher. This is true, but higher prices can be manifested in multiple ways. Firms usually do not simply raise prices in nominal terms as price elasticity can kill revenues because it would hurt sales.

 

Instead, companies resort to a number of strategies to maintain profit margins without hurting their sales. One of them is to simply leave part of a package EMPTY, thereby selling LESS product for the SAME price (a hidden price hike).

 

Food manufacturers, like the politicians currently debating health reform, may have a solution to the obesity crisis: Feed Americans a lot of hot air. But this heated air is not just a figure of speech for packaged goods companies including Ralcorp Holdings' (RAH) Post Foods and PepsiCo (PEP) subsidiaries Frito-Lay and Quaker.

 

In many packaged products, as much as 50% of the contents is just empty space, an investigation by Consumer Reports reveals. And we consumers are buying that nothingness every day.

 

http://www.dailyfinance.com/2009/12/08/how-much-for-the-air-as-much-as-half-of-food-packaging-is-empty/

 

Another tactic corporation use is to simply sell smaller packages for the SAME price (another means of selling less for MORE= a price hike).

 

U.S. Companies Shrink Packages as Food Prices Rise

           

Large food companies have recently announced that they will raise the prices they charge grocery retailers for commodities-based products. For example, a chocolate bar will cost more soon: Hershey last week announced a 10% increase for most of its confectionery goods.

 

Of course, straightforward price hikes could cause consumers to buy less of those products or to choose less costly store brands. So in many cases, food companies are trying a different tactic: Keeping the price of an item the same while decreasing the amount of food in the package. The company recoups the costs of the rise in commodities and hopes consumers don't notice that they're getting less of the product for the same price.

 

http://www.dailyfinance.com/2011/04/04/u-s-companies-shrink-packages-as-food-prices-rise/

 

However, perhaps the most scandalous policy employed by companies looking to engage in stealth price hikes is to swap out higher quality ingredients for lower quality/ lower cost alternatives. One bigname coffee maker was caught doing this just a few years ago.

 

Reuters is reporting that many of America's major brands have been quietly tweaking their coffee blends. While most coffee companies consider their blends trade secrets, and are loath to disclose exactly what goes into them, both circumstantial and direct evidence suggests they're now substituting lower-grade Robusta beans for some of their pricier Arabica, and degrading the quality of our coffee…

 

At least one coffee roaster has admitted it. In November, Massimo Zanetti USA, which roasts for both Chock full o'Nuts and Hills Bros., publicly confirmed upping its Robusta usage by 25% this year.

 

Why the switcheroo? Prepare to not be shocked. The answer is: price.

 

Last year, a shortage of Arabica caused prices of the premium bean to spike as high as $3 a pound -- $2 more than what a pound of Robusta would cost. This compares to a five-year historical trend of Arabica costing closer to 70 cents more than Robusta. In recent weeks, the trend has reversed, with Arabica prices falling to just a 62-cent premium over Robusta.

 

http://www.dailyfinance.com/2012/06/19/noticed-that-your-coffee-tastes-funny-heres-why/?a_dgi=aolshare_twitter

 

In simple terms, inflation is already around us, though it’s not yet showing up in LITERAL price hikes. Instead, we’re all paying MORE for LESS. And it’s only a matter of time before the situation really gets out of control.

 

For a FREE Special Report on an uniquely profitable inflation hedge, swing by….

http://phoenixcapitalmarketing.com/goldmountain.html

 

Best Regards

Graham Summers

 

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Mon, 01/06/2014 - 21:22 | 4306257 MeelionDollerBogus
MeelionDollerBogus's picture

when prices were cheaper I stocked up on LOTS of honey. Honey's very good for you if you're not diabetic.

Honey is being adulterated with other sugars.

How can you tell? It separates. you get lots of crystals with no honey in it after a while.

Actual good honey, pure honey, shouldn't do this.

Especially if you heat it all up & let it melt together again. If it keeps separating maybe it's cane-sugar or beet-sugar added. Yet another attempt to hide inflation. Bees are in danger & their product, honey, comes from them, so not only is inflation in pricing a factor but inflation in a decreasing supply can also become a factor.

Mon, 01/06/2014 - 12:07 | 4304414 Inflation Guy
Inflation Guy's picture

Well, it's true that quality changes represent an increase in prices without an actual change in prices, but it isn't true that this is "masked." The BLS, and other statistical agencies, account for quality changes (which include actual changes in quality - some of which are called "hedonic" adjustments and people scream about them as well as changes in quantity like changing a 15oz bag to be a 12 oz bag for the same price). So this is no mystery, and it is included in the price indices in most cases.

Sun, 01/05/2014 - 10:05 | 4301443 deerhunter
deerhunter's picture

I was with American Family Insurance for 14 years and priced my two autos insurance with State Farm and saved 40% same coverage.  After cancelling my American Family policies,,, never a peep or call from my old agent.  FU,  Thank you,  could we work with you?  Notta.  FIRE businesses often offer the big FU as a thanks when they are done "servicing" you.  Oh,  in addition to all that I am still in court with previous insurer for a hit and run wreck that blew out my left shoulder and had to hire a lawyer and it has been 3 and a half years so far.  Insurance companies are not your friends.   

Sun, 01/05/2014 - 10:01 | 4301441 Son of Loki
Son of Loki's picture

some sectors (stocks, houses for example) still very inflated Bubbly...other sectors way too low like PMs, oil, for example.

Sat, 01/04/2014 - 22:58 | 4300942 Northern Lights
Northern Lights's picture

I do my own car maintenance when it comes to oil and filter changes.

I purchase Mobil 1 full synthetic 5w-20.  My vehicle needs 7 litres.  It used to be I could buy one big 5 litre jug and then two extra 1 litres bottles to make up the 7 litres necessary.

In late 2011, Mobil 1 got rid of the 5 Litre jugs and replaced them with the 4.4 Litre jugs.  So now I'm forced to buy a 3rd extra 1 litre bottle to make up for the half litre missing from the jug.

 

Mon, 01/06/2014 - 21:27 | 4306281 MeelionDollerBogus
MeelionDollerBogus's picture

stockpiling oil may be a pain in the ass but if you do the math you could have 8x 4.4's and that's 35.2 litres, giving you 5x 7 so 5 fills even. I know, it's a hassle but it means no 1 litres in the middle. To do this previously obviously you'd need 7 x 5L so I guess what costs more, $ for 8 jugs of 4.4 or $ for 7 jugs of the 5L?

Sat, 01/04/2014 - 20:50 | 4300655 NoWayJose
NoWayJose's picture

I have seen product size reductions on a regular basis. Just this week I can add Chobani going from 6.0 ounces to 5.3 ounces. The 5.3 ounce size does come with an 'Olympic supporter' label... And here is one I almost missed... I have a toilet in the basement which is lightly used. After taking care of business I reached for the roll of Charmin which is several months old. Hmmm... this seemed wider than the roll of Charmin on our main toilet. A quick measure shows a drop from 4-1/4 inches on the old roll to 3-7/8 inches on the current roll. That's a 3/8 inch drop. No inflation? Right...

Sun, 01/05/2014 - 05:06 | 4301307 cbxer55
cbxer55's picture

That is another stealth price increase that occurred some several years ago. 

Apparently the author of this article is a modern day Rip Van Winkle.

Sat, 01/04/2014 - 20:28 | 4300607 cbxer55
cbxer55's picture

This article is preaching to the choir! This has been happening for several years now that I've noticed. I've talked about it with friends, family and co-workers for at least that long. It sucks, and I simply have stopped buying a lot of things I used to buy frequently. What do they think we are, stupid? I don't eat candy at all. Rarely eat chips and stuff like that. The upward cost of things, and the smaller packages have caused me to lose weight, which is a good thing. 

Maybe families with kids to feed do not have a choice. Us single guys can weed out a lot of unnecessary stuff, and in essence, starve the beast. I'm not starving by any means, just eating beter stuff, and less of it.

There was an article posted on a motorcycle forum I frequent that said milk was going to hit $7.00 a gallon this year. I love vitamin d milk, but I'll reduce the amount I consume should this come to pass. A lot!

Fuck them!

Sat, 01/04/2014 - 20:48 | 4300645 Parrotile
Parrotile's picture

The cheapest (and best) route to more vitamin d is via sun exposure, as long as it's in moderation.

Maybe this goes a little way towards explaining why our many local (and overseas) Naturist friends all seem far healthier than their much-derided "textile" compatriots!

Sat, 01/04/2014 - 18:50 | 4300371 goldinpenguin
goldinpenguin's picture

NEVER BE A LOYAL CUSTOMER - especially for services, the supplier will gouge you.

I was with Liberty Mutual for about 15 years car and home never a claim and I switched to GEICO and cut my cost in half, a friend of mine was being gouged 3:1 by Lib Mut.

i always alternate my CATV between VZ andCablevision every couple years, Walmarthas a couple deep discount cell carriers now (straight talk and "family" )

Everycouple years I deliberately let my credit card expire to stop the monthly auto billings to force myself to examine if I really want/need them. Once they're off the tit they'll bombard you with "please come back offers".

Sat, 01/04/2014 - 22:44 | 4300919 Northern Lights
Northern Lights's picture

I agree with you with regards to the "please come back offer".

I follow this mostly with regards to the Sirius radio satellite in my summer sportscar.  When I purchased the car new, i received a 1 year subscription to the service.  Loved it.  First renewal came due in late October.  I called Sirius and cancelled the service.  Two months later I get an email offering 6 months for $30.  Called and reset the subscription to kick in April 1st the following year.  Again, October rolls around, I cancel.  Two months later, renewal at $30 for 6 months, and on and on.  I believe a regular subscription is something like $20 a month.  I feel bad for loyal subscibers to the service.  They're pretty much subsidizing the deals I've been getting.

 

 

Sat, 01/04/2014 - 20:43 | 4300637 Parrotile
Parrotile's picture

"Loyal" Customers are regarded with the same disdain as "Traditionally Loyal" electorates. Why spend money on them if you know they will always vote your Party in time after time.

That is why electorates with a reputation for a "swinging vote" always get a far, FAR better deal from their "elected representatives" - in Politics, self-interest is a major motivator.

Sat, 01/04/2014 - 18:37 | 4300349 goldinpenguin
goldinpenguin's picture

Electric bills (hydro in hoser-speak) ususually have 2 main components; the energy component which is the cost of the electricity (usually purchased wholesale by the local ute) and the delivery charge - which is the cost of maintaining the distribution network.

The electric wholesale purchases are normally a mix of short (daily), medium and long term purchases which can range out to a few years. The plummeting price of gen fuel (largely nat gas now) isn't reflected immediately because of the long term purchases.

The cost of maintaining and upgrading the network is a mix of operating and capital expenses, labor and cost of capital. Labor costs are probably not increasing much and the cost of capital SHOULD have declined during ZIRP if utes refinanced.

I live in NJ which has deregulated the purchase of energy (electric and gas) and usually the savings are modest (single digit %) but often the deregulated energy companies provide incentives for switching ($50-100 debit cards) which normally exceed the savings on the energy purchase - so it pays to bounce around. Because of the plummeting nat gas prices my local gas co recently cut their prices about 25% so I swiched back.

 

Sat, 01/04/2014 - 17:33 | 4300245 Sufiy
Sufiy's picture


Frank Holmes: Gold Stocks - What to Expect in the New Year

 Frank Holmes starts new year with the very insightful outlook for Gold and Gold miners. China buys record amount of Gold in 2013 and UK and German authorities are investigating Gold market manipulations now. Chances are that this manipulation can go forever with Gold flowing by tons from the West to the East. Chart above from KWN demonstrates that Gold is in the most oversold sate in its history now.

 

http://sufiy.blogspot.co.uk/2014/01/frank-holmes-gold-stocks-what-to-exp...

Sat, 01/04/2014 - 15:11 | 4300065 Rising Sun
Rising Sun's picture

Inflation?  Bull fucking shit.

 

This is the best we can inflate after 6 years of print billions per day.  50M Americans remain on food stamps.  60 inch flat screens at Walmart for $99.

 

Deflation will ramp up once again - whether POMO continues or not.  No one is spending including corps.

Sat, 01/04/2014 - 19:33 | 4300458 Grouchy Marx
Grouchy Marx's picture

So by your estimation, if I hike down to Walmart and buy one of those flat screen TVs with my EBT card, all is well.

Or at least until I ask for fries with it. 

Sat, 01/04/2014 - 14:41 | 4300010 no more banksters
no more banksters's picture

"Yes, but it is controlled. We control it. When money start to spread in the society "above acceptable limits", we create financial crises to take them back. We dictate governments to take measures and apply austerity policies directing money back to us. We keep money valuable to everyone and secure our profits."

http://failedevolution.blogspot.gr/2013/12/an-imaginary-dialogue-between...

Sat, 01/04/2014 - 14:21 | 4299961 besnook
besnook's picture

in the big picture borrowing costs are de facto less than the inflation rate. you are being paid to borrow money but only unofficially. in the economics as a manually manipulated math model the official inflation rate is used to rationalize the purchase of water cooled printing presses so money and assets can be directly funneled to the people with the least need for them with the cost borne by those in most need of money and assets.

Sat, 01/04/2014 - 13:41 | 4299902 Stuck on Zero
Stuck on Zero's picture

There has been a lot of inflation in politicians, too.  We used to get sold statesmen.  Now we get mostly air.

 

Sat, 01/04/2014 - 13:18 | 4299854 LaoTzu60606
LaoTzu60606's picture

duh

lt

Sat, 01/04/2014 - 12:55 | 4299818 Hongcha
Hongcha's picture

Own exactly what they do not want you to own.  What they are telling you over and over again not to own.  Silver and gold.  And maybe a few well-tended cannabis plants ...

Sat, 01/04/2014 - 11:22 | 4299641 Mad Muppet
Mad Muppet's picture

Sizes will continue to be decreases until what used to be a bulk purchase becomes a single serving. At that time a NEW! Larger! Super Saver! size will be introduced. Wash, rinse, repeat.

Sat, 01/04/2014 - 10:25 | 4299560 paint it red ca...
paint it red call it hell's picture

12 bucks for a pulled pork BBQ sandwich, 2 sides and no drink with cafeteria like ambiance does not qualify as masked....

Sat, 01/04/2014 - 10:19 | 4299547 Mad Muppet
Mad Muppet's picture

Blah, blah, blah...now back to Dancing With the Stars /s.

Sat, 01/04/2014 - 09:50 | 4299506 MathWins
MathWins's picture

Dear food producers -

We HAVE noticed that you are selling us less product for the same money, and in many cases, for more money.  A favorite cake box mix of mine, whose brand shall go nameless, started putting less cake mix in their box.  I couldn't understand why my cakes weren't raising like they use to until I found an old cake mix box in the cubboard. I should have known. Those bastards were putting less mix in the box!  When I started spreading the word to my family and friends, everyone else was having the same "problem" with their cakes.  I have gone back to baking from scratch.  And I've stopped buying a lot of other prepackaged items.  Back to basics for us!  Healthier too.

When the government says there is hardly any inflation I just laugh.  Yeah, if you don't have to eat or buy gas.  No one I know is buying their bullshit.

 

Sat, 01/04/2014 - 08:53 | 4299435 tradewithdave
tradewithdave's picture

Demand destruction. It's the new black. The irony about the vegan lady story is not only does she starve the Cargill/Monsanto's, but she starves the health care system too. She's harnessing the solar power of chlorophyll.... really bad for GDP. "But where do you get your protein (read animal protein)?" Got Milk...Beef it's what's for dinner...Pork the other white meat. Whodathunk kale is loaded with protein and your wife ends up wearing size 4 Levi's.

Sat, 01/04/2014 - 07:42 | 4299372 JoBob
JoBob's picture

I just bought a bag of Iam's Senior Diet dog food - the same as I have used for years. I had finally gotten used to paying the same price for the the 17.5 pound bag that replaced the 20 pound bags a year ago.  The new bag is now 15 pounds and is exactly the same size and price as the 17.5 pound bag. The only change in the bag was the weight printed on the front and the missing contents.

I suppose there is some comfort in that. It won't be long before the next new bags will be 12 pounds...but with a price increase.

Sat, 01/04/2014 - 10:55 | 4299589 FredFlintstone
FredFlintstone's picture

I thought that this was going to be about people on Social Security eating dog/cat food.

Sat, 01/04/2014 - 09:41 | 4299498 d edwards
d edwards's picture

This is not a joke. I thought I noticed that our toilet paper roll(s) were not as wide as before. We use Charmin at our house, and keep a good reserve supply on hand. I found a roll from before the size change and place both on end on a table top. Sure enough, the "new" roll was 1/4 inch narrower that the old. No shit! (sorry, couldn't help myself)

Sat, 01/04/2014 - 06:12 | 4299313 Gringo Viejo
Gringo Viejo's picture

As Rome fell, it was dillution of metal content and coin clipping. As we fall, it's corporate downsizing of product per same currncy unit. You gotta love these fuckin' sociopths.

Sat, 01/04/2014 - 03:46 | 4299250 WTFUD
WTFUD's picture

Free Pork!

Sat, 01/04/2014 - 03:34 | 4299244 WTFUD
WTFUD's picture

It's a scientific impossibility to crisp up a rasher of bacon in a frying pan.
The volume of water emitted also contaminates the quality and flavour of the expensive oil.
Lose/Lose

Sat, 01/04/2014 - 06:49 | 4299345 cynicalskeptic
cynicalskeptic's picture

Thick cut bacon has gone from under $4 to over $7 in the last two years locally.

Shopping for baking supplies I was dumbfounded to find Domino sugar now coming in 4lb bags instead of 5lb.

Dial soap has had a huge scoop out of the back of the bar for some time now, decreasing the amount of soap and the time it pasts.

Meanwhile, something like a rib roast  - which is pretty straight forward - has gone from $30 to $60.

 

I won't get into things like heating oil - going from under $1 to over $4 in 20 years or my local property taxes - which have more than tripled in the same period....the same holds true for things like cedar clapboard - up by a factor of 3 -4 and other costruction materials.   I WILL concede the the price of tools has held remarkably well now that production of all such things occurs in China or some such place.  My father would be astounded at the prices for mechanics tool sets (though the quality is clearly lower - his 1960's era Craftsman sockets and wrenches are FAR thinner/stronger than anything I can buy today.  Same can be said for things like toasters - they're cheap but really don't last.   Maybe that's why the CPI counts toasters and not bread.

Sat, 01/04/2014 - 04:20 | 4299271 kurt
kurt's picture

I often grease up my rasher while the NSA watches.

Fri, 01/03/2014 - 23:57 | 4298833 SAT 800
SAT 800's picture

I wish it was masked. if it's supposed to be masked, I think the mask slipped. Am I supposed to forget about the doubled gas prices and hot dog prices, too? What mask?

Fri, 01/03/2014 - 23:19 | 4298717 Moe Hamhead
Moe Hamhead's picture

I thought all that air in the bag was to keep the chips from breaking !!

Fri, 01/03/2014 - 22:19 | 4298604 Ned Zeppelin
Ned Zeppelin's picture

Life lately seems a giant waiting room and you've read all the magazines.

Fri, 01/03/2014 - 21:35 | 4298413 kareninca
kareninca's picture

Since my husband and I are nearly vegan, our food price jumps happened about seven years ago.  I vividly remember standing in Safeway circa 2007 and and realizing that onions were now typically 99 cents a pound.  For onions!!!!!  And at the same time, seeing in Trader Joe's that the organic tofu went from $1.09 to about $1.69, and the organic sprouted soy bread from $1.69 to $2.89, and the peanut butter from $1.79 to about $2.79, and dried beans from 99 cents a pound to about $1.89/lb. (these are all estimates but I have a good memory for food prices).  Suddenly all my "eat well for a dollar a meal" cookbooks were like a bad joke, and a big pot of "something" was not a cheap proposition.

But since then, vegan ingredients have not gone up much (we don't eat much processed).  I don't think that they are now watering the tofu or the bread; I think it actually hasn't gone up for a while, or when up only a little.

I am NOT doubting that animal products have gone up a lot (as the quality has plummeted, and stuff is pumped full of water).  And so have some regular ingredients, like sugar (though that is a really distorted market).  And so have the processed foods; cookies are ridiculous (I don't buy them but I notice).  But it is odd that the vegan basics had a different price-rise time frame.

Our electricity bill, in any case, has doubled in the past eight years.

Sat, 01/04/2014 - 13:13 | 4299850 the grateful un...
the grateful unemployed's picture

TJs finally raised the price of two buck chuck to $2.50, and i tell people sure, its more expensive, but it tastes better. then i noticed other consumer brands, sutter and beringer, lowering their prices, $3 sometimes. and although chicken is 1.29 full price, FF is anywhere from .69 to .99 on sale somewhere. additionally i am getting good organic produce for almost the same price as regular. most people blow up their food budget by eating out. i understand how it works, first you say to yourself, groceries are too expensive, then there is nothing to eat in the house, then you say, lets call dominos.

Sat, 01/04/2014 - 02:15 | 4297966 TrustbutVerify
TrustbutVerify's picture

Do increases in health insurance from $310 a month to Obamacare rates of $540 per month count as inflation?  

What is that?  ...a 74% increase?  

"Thank you, sir.  Can I have another."

Sat, 01/04/2014 - 10:58 | 4299596 FredFlintstone
FredFlintstone's picture

"Thank you, sir.  Can I have another." Yes you may, and you will.

Fri, 01/03/2014 - 17:38 | 4297864 The Reich
The Reich's picture

Inflation is part of the system, so where's the news?

Fri, 01/03/2014 - 17:13 | 4297791 the grateful un...
the grateful unemployed's picture

if you buy the unsweetened chocolate the price is still low, like a lot of things the value added component is where the inflation resides

Fri, 01/03/2014 - 16:14 | 4297544 Arthur
Arthur's picture

What a bunch of nonsense.  

What has happened to the price of energy in the USA over the last five years?   DOWN.  What percentage of our economy is effected by the cost of enregy?  A lot.  No inflation yet.

We may have to pay the piper for the printing but the fact is most of the dollars "printed"  are not really printed and are not in circulation, the "new" dollars are sitting on banks books where the $'s collect interest as we keep the banks alive, fat and happy little pigs.  Do not like it, but infationary........NOPE

The theory maybe ultimately be correct but not your facts.

Last year, a shortage of Arabica caused prices of the premium bean to spike as high as $3 a pound -- $2 more than what a pound of Robusta would cost. This compares to a five-year historical trend of Arabica costing closer to 70 cents more than Robusta. In recent weeks, the trend has reversed, with Arabica prices falling to just a 62-cent premium over Robusta.

Read the last sentence of your own quote.  No inflation here.

 

Fri, 01/03/2014 - 18:37 | 4298009 Agstacker
Agstacker's picture

So why does my rent keep going up?  

Sat, 01/04/2014 - 10:56 | 4299601 FredFlintstone
FredFlintstone's picture

Ask you landlord.

Fri, 01/03/2014 - 19:12 | 4298130 akak
akak's picture

If your reality does not match Bernanke's propaganda, then you must not be experiencing reality.

QED

Fri, 01/03/2014 - 18:08 | 4297929 Osmium
Osmium's picture

The price of energy down in the last five years?  Is that why my current electric bill has a fuel surcharge of $55?

Basic service charge of $11.74, Resource Adjustment of $6.91.  $73.65 and that doesn't even include the charge for the electricity.

Sat, 01/04/2014 - 03:52 | 4299257 Arthur
Arthur's picture

Five year gas chart below.  If you live in a competitive electric market like ComEd Chicago, your electric power cost have tracked the gas market.  Look at the facts not your anecdotal experience.  

Source:  

 

Source:http://www.marketwatch.com/investing/future/natural%20gas/charts?symb=NG...

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