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Companies Are Raising Prices… Good Thing Inflation's Too Low!
The signs of inflation continue to appear in the economy.
The Fed is ignoring this because the Fed is afraid of deflation… despite food prices, energy prices, healthcare costs, home prices and stocks soaring.
· FedEx is increasing prices by 42% for some shipments.
· Commonwealth Edison is raising electricity rates by 38% in June.
· Chipotle is raising prices for the first time in three years.
· Netflix is raising prices on new customers.
· Colgate-Palmolive is raising prices.
These are simply explicit price increases. Many companies have been raising prices via a “stealth” price hike by simply charging the same price for less of a product. The latest example of this is bacon, but companies such as Kellogg’s, Snickers, Tropicana, Bounty, Heinz, and others have been using this tactic for some time.
Against this backdrop, the Fed is openly stating that it wants to create inflation. Put another way, the Fed is not only oblivious to the fact inflation is already appearing in the broader economy, the Fed actually wants to create more inflation!
Small wonder the US Dollar is teasing with breaking multi-year support.
In its quest to fight the brief deflation of 2008-2009, the Fed has unleashed a wave of inflation. These developments take time to unfold. But the signs are already there. The grand theme for 2014 will see prices moving higher.
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It is all about creating more (governmental and private) debt that can't be re-payed (money as debt ) and then using this debt as an excuse to increase taxes and confiscate the possessions of the ones that can't keep up with the tax/debt treadmill.
It is a silent shift to communism / feudalism / an new unknown system / a mix of these systems? If this process continues mathematically the end result will be the elimination of private property. The process starts at the bottom and slowly but steadily moves up the ladder until there is only a small elite left that will own everything.
The only thing you need to know this, is to use logical reasoning that cuts through all the BS distraction that politicians and economists produce to keep people fighting each other (and therefore the effects, not the source of all economic mayhem), sadly logical thinking is the one thing the masses lack. And most of them who do are easily distracted through the fog and noise that is spewed out by the system for exactly that reason.
There is a big leak in the pool, and all people do is argue over the sort of buckets to be used to keep pouring water in the pool. Nobody looks for the leak that is eroding bigger and bigger..
So there is little hope things will ever change. People will keep believing that the economy is a organic process like the climate, while there is no such thing as coincidence or unexpected effects in this 100% planned and controlled economy.
I realize that this post is a waste of time, like throwing pearls before pigs. It is only a way to ventilate frustration about the idiocy of the masses that will never be able to understand any of it. Not even the fact that if all the money in the world would be taken and used tomorrow to repay all debts, there still would be debt left unpayed.
I am very curious to see how this will play out in the coming decades and how people will adapt to new realities. And if all this chaos and confusion will eventually lead to a better or a worse system. (I refuse to say 'how this will end', because as long as there is life on the planet there is no end, only an ever changing reality, nothing lasts forever good nor bad: http://ancienthistory.about.com/od/tablescharts/a/120610-Fall-Of-Rome-Ti... )
But now lets get back to the important stuff:
Miley Cyrus: Giving A blowjob to a male blowup dolhttp://www.youtube.com/watch?v=rcfASdwCWSM
You're frighteningly on point, Mr. Free Lunch.
History may not repeat itself, but it does rhyme.
Watch this (admittedly poor video/sound quality) documentary of what happened in Argentina, and the parallels are frequent and obvious.
https://www.youtube.com/watch?v=VK494Judxvg
There are various ways of creating inflation. The current buffoonery is a poor substitute for the inflation pressure of increased aggregate demand for goods and services which barring government meddling, leads to increased, preferably domestic, production.
“Bankster engineered” inflation drives people into destitution and homelessness.
What is happening right now is theft. Plain and simple. The beneficiaries of this insanity play an insignificant role in total demand for the majority of goods and services (excepting ultra high class hookers, top of the line aircraft, yachts, cars, etc..). However, they can continue to acquire your assets at a discount in a modern day version of carpetbagging.
Stay alert. Get involved in local politics. The only way you will keep your property and some of your savings is to ensure that local governments do not spend beyond their means.
Only you can make the decision to survive.
Laomei,
Look up US history 1800 -1913 and make your argument again that deflation is bad and that "moderate" inflation created by a central authority is good. Review 1971 -2014 and show how "moderate" inflation has been good for anyone except the top 10 -20%, but mostly the top 0.1 %.
In his classic book, The Economic Consequences of the Peace (1920), John Maynard Keynes observed:
“Lenin (the founder of the former communist Soviet Union) was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose”.
Many people do not realize that inflation is with us, and it is an extremely destructive hidden tax, especially on the poor of all nations of the world. Inflation reduces the buying power of your money, so you become poorer, even if you have the same amount of money in the bank or in your pocket.
Suppose, for example, the inflation rate is 3.5%. If you have $30,000.00, in ten years it will only buy $20,550.00 worth of goods. If the inflation rate is 5.5%, (which is closer to reality, as inflation is often underestimated by the government’s measurements), your $30,000.00 is worth only $16,650 in ten years. This should be enough to scare anyone. Let us explore what inflation is and why it is occurring.
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"Inflation is actually an old, secret method of taxing the people without their knowledge. This may sound strange because no one talks about inflation as a tax. However, I will explain.
When extra money is printed up and put into circulation, it costs the government very little. The only cost is that of printing. Each paper bill of any denomination from $1 To $1,000 or more costs less than fifty cents to manufacture. So it is almost free money for the government.
They just run the printing press and it suddenly exists. It seems like they can create value out of nothing. It is wonderful for the government, which is why most governments do it all the time. Most nations, by the way, do it far more than the United States. We are not used to inflation, but in other nations of Africa and Asia, it is business as usual.
The government can then lavish the money on all their favorite projects without worrying about the people complaining, because the money seems to be “free”.
However, it is not free. What it does is to slowly dilute the money that is in existence already, like diluting the milk in the analogy above. So all the money the people already have, including all their savings, salaries and all the rest, slowly start to be worth less. In this sense, inflation is a very hidden tax, or way the government confiscates the people’s real wealth.
If the government gave its new printed money to each of us to spend, it wouldn’t be so bad. Then at least we would all have more of the diluted or less valuable money. But they never do this, as a rule. They give it their favored friends and projects. Everyone else is just cheated out of some of their wealth. This is indeed a sneaky way to tax people because:
· It happens so slowly that few people see it.
· It is hidden, as there are no tax forms to fill out or taxes added to your purchases or bills.
· Unlike other taxes, no one seems to force you to pay up on April 15 or any other day
· People actually feel richer because often their salary and the price of their house goes up. In fact, many actually have more money, but of course all that cash is worth less.
· Inflation does not require any new laws that people could debate and vote down. Thus it happens silently and secretly."
Read on: http://www.drlwilson.com/Articles/INFLATON.htm
I've figured real inflation has never really fallen below 5% a year and back in the Carter/Reagan days was often much, much higher.
Bernanke said in 2008 that he wanted nominal inflation - and never got it. There was real inflation, but barely half of it was ever admitted to government numbers. Was Bernanke satisfied? I dunno, it surely failed to monetize all that real estate.
I figure today's real inflation is at least 5% a year whatever the official numbers, so a 3% treasury bond is actually losing money even before taxes.
It appears the central banks of the world have made the crux of their existence a balancing act. You can almost imagine these bankers standing atop a fence. On one side lays a field of inflation and on the other a deep pit of deflation.
A new round of easing by central banks to combat a slowdown in growth may again be in the cards but do not be surprised if this time it is less successful. The magic of this policy is losing its luster. More on this in the article below.
http://brucewilds.blogspot.com/2013/11/central-banks-try-to-balance-on-f...
rating: 2.
Reason: still using the false USDX as if it indicates anything. It is a measure of incorrect ratio to other fiat currencies only for fx/trading and nothing at all to do with actual prices of actual goods & services, ever.
After much thought I have come to the conclusion that while inflation appears tame and is not showing up in a big way the seeds have been planted, and the number of them is somewhat shocking.
Inflation lurks beneath the surface and is hidden away in the dark corners of our future. Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters. The article below delves deeper into some of the ways inflation hides away.
http://brucewilds.blogspot.com/2013/06/inflation-lurks-beneath-and-hidde...
The Fed is already tightening by tapering-what more do you want?
Tapering is not tightening. It is just printing less. While they make funny money deals with EU countries to buy their fake money.
My chickens don't lay inflated eggs. However, their feed has gone up. Yeah, no surprise. So glad I get the free stuff from restaurants, salad prep fixings. Then head over to the brew pub and pick up either spent grain or the spilt grain. My chickens are so spoiled...but then the eggs are the best. I steal them from the chickens. I call it "banking".
Long lead every chance I get. Anyone been to Bluefields, Nicaraqua? Need a place to hole up for the winter next.
Breaking News!!!!
Consumers stopped spending years ago. Corps have to figure out new ways to drive margin using same price/smaller package strategy.
I tend to agree with you OrangeGeek. I just don't see enough demand right niow to rocket prices up on everything. Sure some stuff is going up. Health insurance. Thanks Obummer. Electricity - thanks again Obozzo. My small biz customers tell me biz is slow. And I went out to the bars tonight and only found one busy bar at 10:45 pm on a saturday night! 3 years ago half the bars were packed at that hour. We are in a recession right now. no doubt.
Texas Roadhouse Early Bird Special:
2011 = $6.99
2013 = $7.99
2014 = $8.99
That's 28%+ higher, but "no inflation"?
True. And that's most of why we don't go out to eat anymore.
Wow, you are pretty retarded if you think deflation is a good thing.
Things cost less, great for the savers, except the majority lives hand to mouth.
So things cost less, which means that wages fall, but debt does not.
Maybe you're one of the lucky ones without debt but with some good savings, good for you I guess.
Except now, you are living in a society that is highly polarized, as companies have debts, as do the people who grow things like food.
Deflation ain't a good thing as it also encourages hoarding and delaying purchases and investments (cus it will only get cheaper). It destroys companies, results in massive unemployment and generally speaking, causes massive wealth redistribution from the poor to the rich. For an investor, it means that "safe" investment are money-losing and much riskier options are the only thing left.
Inflation ain't a *bad* thing, the problem is that the system has been rigged and manipulated as many things are inflation-linked. It's all goal-seeking and sadly, they have bought their own bullshit at this point. There is a massive gap between the official numbers and reality because if reality was allowed to be realized, it would be devastating to the entire system. The QE thing has resulted in a type of deflation as safe investments do not keep up with inflation real or imagined, further compounding the systemic risk. Epic amounts of cash are flying towards bullshit on the mere chance it might pan out. When the penny drops though, it will be highly devastating to all apart from the insiders.
What is needed is stability, moderate inflation, moderate deflation, but a general trend of stability. The key is that it needs to be firmly grounded in reality, and not these fictional numbers.
Ronald Reagan once famously declared that inflation is a tax, but sadly most Americans did not really grasp what he was talking about. If the American people truly understood what inflation was doing to them, they would be screaming bloody murder about monetary policy. Inflation is an especially insidious tax because it is not just a tax on your income for one year. It is a continual tax on every single dollar that you own. http://theeconomiccollapseblog.com/archives/inflation-is-a-tax-and-the-f...
Look up debt slave...
The only winners in deflation are the banks and the rich. If you think your 50~100k a year candy ass income will stay that way in actual deflation when prices and revenue (and profit) is falling...you're dreaming. Sure, everything might be half price, but your salary will be less than half it was to begin with, while any debt you have will be full value, and interest rates will be obscene.
Common sense should be preached everywhere. I will never tier of it.
Skilled labor should demand thier slice of the pie. Or walk. It is that simple.
Sure they can replace burger flippers. Try replacing a good master tech. Or a good solid worker bee? The best are still employed. I can find another job because I am a bad ass. And I can back my shit up in the shop.
My advice to everybody is get some real skills. Lots of them.
Yep- I've been a Tech for 20 years, and if i had to close my shop tomorrow morning, i'd have a job easily before lunch. Anywhere.
Its nice to have marketable skills that pay well, but not many of the sheeple out there have mechanical skills. Plus when you have the ability to fabricate stuff, fix almost anything, your costs are reduced significantly, wheather it is home, vehicle, whatever.. What you earn goes a lot farther for other things. And to think that they can just pick up some real skills is unrealistic. Think about how hard it is to find good Techs in the business. Young men and women don't want to perform our kind of work even though for many of them it would be a far better route than trying to get a degree. Much of it is mind-set.
Too true Andy. Salaries/wages have been kept artificially low for the last 50 odd years. Multinationals have been able to milk the global system for all it is worth and then park their profits offshore. People need to wake up to this reality and demand higher wages. They will get paid more if they fight for it....its that simple. Multinationals can move factories but it is costly and time-consuming....they don't like to do so...especially as the Chinese and others are getting uppity and actually fighting for higher wages too! Workers of the world unite!! Support your local union! Bring on the down arrows!
Asking for higher wages when there are 50 people who would be happy to take your job at the current rate is not a smart way to go.
It's a small satisfaction to sit around the house thinking that you're way better than the guy they hired to replace you.
Too much supply and not enough demand. Deserves got nothing to do with it.
Fifty unemployed wish they could do my job. The last few places I was are still crying.
Hire me and I will make you piles of money. I just get shit done. That gets me in the door. Say that shit and back it up things will work out.
VW -- You're right of course but how crazy is it when common sense needs to be preached on a blog like ZH.
Pretty fucking crazy 2014
Two years ago there was a spike in grain prices that resulted in an increase in the prices of milk and meat. Those increases have returned recently with the same result, along with the pork virus and the western drought. The diversion of corn into ethanol (stupidly) has not helped. It has only resulted in the diversion of land into corn production and the recruiting of new land into corn. These are all engines for inflation in food prices that is unfolding. Published CPI figures have been distorted by the drop-off in the prices of imported clothes and electronics, along with "hedonic" adjustments. But the basis for a rapid inflation has been laid.
This is why I support the rise of a minimum wage to say, 15 bucks an hour.
Not because I want to reward burger flippers. Although I appreciate anyone that does honest work for a living.
No, my reasoning is this: the fed (and their central bank brethren) have managed an Orwellian-Goebbels propaganda of "no inflation" for decades now, with a complicit media obviously. They have managed to manipulate the bond market (so much for the dreaded "bond vigilante") and thoroughly denuded the precious metals market which would have theoretically given warning signs.
But alas, despite everything rising in price and/or shrinking in size (and natuarally hedonically adjusted), no "inflation" officially appears.
This is because as long as wages are suppressed, there will never, ever be "inflation" according to the fed. A rise in wages is inescapable and impossible to hide inflation. This is what happened in the 70s, because unions had automatic COLAs (using the old formulas) built into their salaries. Volker could not fuck around with those numbers, so rates had to go into orbit.
Until we have a positive feedback loop from all of this printing, expect to fall further and further behind. Inflation will be officially denied, but your wallet won't be able to deny it.
Double the Minimum wage and say goodbye to the barely skilled first time job holder and watch the new help wanted sign say 2 years experience only. The low skilled will never become employable because learning on the job becomes economically impossible.
The result will be fewer higher production employees to offset the doubling of wage hikes. Many business that use min. wage labor operate with very thin margins and cannot increase prices enough to remain profitable.
There ain't no free lunch and a bunch of former minimum wage earners will end up with no lunch other than what the newly expanded unemployment rolls will get them.
The sad fact is that there are too few jobs and far too many people who want them to make raising wages sensible.
My costs have gone up. Why would I not pass those costs on? If my competition does not they will go BK. Lucky for me my stuff is tight. You want it done right? Pay me my price. Its good to have skills!
First a trickle, then the flood. What happened in the mid-80's will happen again soon.
Yep, because if there's 1 thing that causes humans to get mad, it's falling prices!
What, that boat isn't $20,000 - it's $2,000 now. Well, I'm pissed off. I wanted to pay more so people would think I'm rich!
Only complete morons are afraid of deflation. People buy more when prices go down.
Just look at electronics. Computers, printers, etc. have been deflating in price for YEARS.
There's absolutely nothing wrong with deflation, except in the mind of an addle-pated economist who wouldn't know his asshole from a hole in the ground.
"Only complete morons are afraid of deflation."
And central banks of countries that have SHITLOADS of debt.
Deflation turns the debt into "debt".
I like cheaper prices ... but I like having a job better.
Thats' Deflation, which is far far worse for the Economy than Inflation.
Short term Deflation is good for consumers but bad for Investors. Where as Inflation is the Opposite. But once Investors start pulling out to save what's left of their Investment, there won't be any businesses left standing. And it's much harder to recover from Deflation than Inflation.
The best thing that can happen is HyperInflation, where a wheel barrow of Money buys you a loaf of bread. The sad thing is, most Umericans still believe that can't happen here because this is Umerica and I'm an Umerican.
Yep,
and farmers are happy to sell agricultural and dairy products
for less than it cost them to plant, harvest, and tend.
Falling prices are win-win for everybody.
I'm sure they would be happy for the price of feed, fuel, fertilizers, pesticides and equiptment falling.
Unfortunately for the farmers,
they must purchase their feed, seed, etc. long before they can bring the products to market at the deflating prices.
But I guess the dimension of time can, conveniently, be dismissed in the world of economic fantasies.
The primary losers in a deflationary environment are debtors.
The primary winners are lenders (who can still collect their debts).
+1000. Bingo. The #1 hater of deflation is the asshole entity thst is $17 trillion in debt and wishes for negative interest rates (we actually have negative interest rates if the true inflation rate is included).
People pulling money outta banks out of every asset class except gold has been great for the economy (sarc).
How is your avg investor ever suppose to own a house or invest in the stock market with these inflated prices. Where are the poor and middle class American suppose to park there money?
so they achieved there goal-INFLATION; why don't they claim victory? oh, pssst, the fucking bankers haven't fucked everybody to serfdome yet...
Don't you worry your little hearts -- it is all going to balance out.
The prices of what we NEED will go up and the prices of what we already own will go down.
See how fair it will be , little ones.
Inflation, such a good idea to make sure the wealth gets transfered from the 99.9 to the 0.1% by destroying the buying power of average wages that are not raised and making labour cheaper for corporations to maximize profits on the back of the 99.9%. Inflation the hidden tax that is sold to the braindead as a being a good thing.
And as a bonus it will destroy the dollar eventually, making room for a global currency that probably will make sure the wealth transfer will happen globally!
The best part is that it will never change because most people are idiots who are incapable of recognizing BS because they lack any potential for logical thinking. So those who can feel like aliens watching the greatest show on earth..
Why is there so much debt? http://www.positivemoney.org/issues/debt/
We interrupt this blog for a brief rant: http://healthvsmedicine.blogspot.be/2008/05/we-interrupt-this-blog-for-b...
Economics is Bullshit: http://healthvsmedicine.blogspot.be/2008/06/economics-is-bullshit-cont.htmlA plea for deflation: http://www.cato.org/sites/cato.org/files/serials/files/policy-report/199...
Jokes on you, I don't own anything
You're so right. What was the name of the $500,000 watch again?
DavidC