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No Inflation Friday: 42.4% Increase In The Price Of Being... Poor?

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man blog,

One of the most intellectually disingenuous statements made by western policymakers is that inflation is tame… nonexistent.

For example, the minutes released this week from the most recent Federal Reserve policy meeting said that the Fed saw NO inflation risk in ‘fueling job growth’ [i.e. printing money].

So by their own admission, the Fed thinks they can conjure hundreds of billions of dollars out of thin air without any consequences whatsoever. Zero risk.

Every time I hear something like this it just makes my skin crawl… and I always think, “go get on a plane.”

Inflation is out there in the rest of the world. To deny its existence is massively arrogant, insensitive, and just plain wrong.

Foreign central banks, particularly in developing countries, are desperately trying to expand their money supplies as rapidly as the Fed is expanding the supply of dollars.

They’re failing.

While the Fed expanded total credit by more than 20% last year, places like Indonesia are straining the system to expand at half that rate.

Yet inflation in Indonesia (officially) is north of 7%, and on the street much higher.

The US can get away with printing lots of money. At least for now.

The rest of the world is induced to mop up US dollars; foreigners buy US bonds and hold US dollars as reserves overseas.

And since so many dollars are held outside of the US, there’s fewer of these freshly created dollars circulating within the US economy to push up the prices of goods and services.

But foreign countries can’t do that.

Nobody holds Indonesian rupiah as a major reserve currency, nor buying Indonesian government bonds as a cash equivalent.

As such, when Indonesia prints money, a lot of that money stays in the local economy. This means there’s more money chasing the same amount of goods and services.

This creates price inflation.

And the only reason they’re printing so much money to begin with is because the US, Europe, and China are all doing it.

They call this ‘competitive devaluation’. If everyone else is reducing the value of their currencies, and you don’t, then suddenly your export commodities will be too expensive to sell abroad.

This is the death knell for emerging markets who generate growth through exports. And so, they print. They inflate.

Perhaps the most striking example is the World Bank, which is now considering a massive revision to how they define ‘poverty’.

The global poverty line used to be defined as living on $1/day or less. Then they had to increase that to $1.25 in 2008, since, even for the world’s most impoverished, one dollar wasn’t such a big sum anymore.

Now the World Bank is looking at increasing that poverty line even further, to $1.78. That’s a 42.4% increase.

All of this is because new economic data from Centre for Global Development and the Brookings Institution showed that the number of people living on less than $1.25 has halved.

It’s not because there are that many fewer poor people in the world. It’s that you can’t even be poor anymore on $1.25/day.

Thanks to all the money printing that has taken place around the world, it takes a much greater sum these days… just to be impoverished.

Not that there’s any inflation.

 

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Fri, 05/23/2014 - 15:49 | 4789576 john39
john39's picture

>>there is no inflation

'don't piss down my back and tell me that its raining...'

 

Fri, 05/23/2014 - 15:52 | 4789583 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, + 1

Fri, 05/23/2014 - 16:36 | 4789711 pods
pods's picture

I take back everything bad I ever said about Simon. Pure gold this piece.

Well, I still will joke about the Alpaca brigades.

pods

Fri, 05/23/2014 - 17:35 | 4789829 lordylord
lordylord's picture

The thing about poor people is that there are a lot of them and they are easily fooled.

Fri, 05/23/2014 - 15:58 | 4789599 LawsofPhysics
LawsofPhysics's picture

Yes +1000!!  Damn my "lying eyes".

 

More importantly, how the fuck do I "price" anything when price discovery is not allowed?!?!?

Fri, 05/23/2014 - 16:05 | 4789618 Relentless101
Relentless101's picture

Bingo.

Fri, 05/23/2014 - 16:08 | 4789629 kchrisc
kchrisc's picture

"Eeny, meeny, miny, moe"

Fri, 05/23/2014 - 16:37 | 4789715 Libertarian777
Libertarian777's picture

no no no.

You need to use a statistical mathematical model using the Higgs Boson as a constant and Black and Scholes model interpolated using non-Euclidean distances to determine the weighted variance of the inverse sine function of the time to expiration, with assumed negative risk free rate with 0 volatility.

 

in otherwords..i dunno wtf i'm talking about but i'll apply this method to everyone in the world, because I can.

It will work...

 

in theory

Fri, 05/23/2014 - 16:10 | 4789635 eatthebanksters
eatthebanksters's picture

We all know that the Fed, the gubbermint, the Prez and his admin are ful of horseshit....but what the fuck is anyone doing about it?  SO many people of this country are so arrogant, ignorant and/or stupid that they say nothing even when they are getting fucked in the ass daily. So many talkers...

I'm checking out...I am tired of fighting crooks in power and tired of hanging out with sheep that like to be spoonfed candy tasting horseshit.  

Best of luck everyone, I hope your efforts are rewarded.

Fri, 05/23/2014 - 16:14 | 4789655 eclectic syncretist
eclectic syncretist's picture

Congrats on going your own way off the beaten path. 

No one need do anything about your concerns now.  It will be when they try to make a reset that things will need to be done if we are to make a better future for the unborn.

Fri, 05/23/2014 - 16:40 | 4789721 kchrisc
kchrisc's picture

"...but what the fuck is anyone doing about it"

No the question is: "What are YOU doing about it?!"

I am preparing: gold/silver, steel, lead, "justice lists," food, etc. I have quit paying what I think that I can get away with in the immediate term and I am planning to quit paying more soon. I have quit playing and to the degree that I can, I am not obeying.

I have also read every book on revolution, insurrections, tactics, and survival, etc that I can get my hands on--thanks PirateBay!

None of this may serve me, but then if I need it I will have it.

 

"My guillotine is ready too."

Fri, 05/23/2014 - 16:10 | 4789639 cossack55
cossack55's picture

I find the "Magic 8-Ball" works especially well.  Just remember to shake it.

Fri, 05/23/2014 - 16:34 | 4789703 Charles Wilson
Charles Wilson's picture

...And the Magic 8 Ball as well...

Fri, 05/23/2014 - 16:18 | 4789665 eclectic syncretist
Fri, 05/23/2014 - 17:58 | 4789890 Cattender
Cattender's picture

don't tell me that our Rain is like Piss..

Fri, 05/23/2014 - 15:55 | 4789579 DoChenRollingBearing
DoChenRollingBearing's picture

Liars all over the world.  Now even the World Bank wants to pull an Italy (Hookers & Blow) by tinkering with the numbers...

Yet Peru's Sol is holding up OK.  Wow, imagine, Peru has a responsible financial system, for now anyway.

 

EDIT:

Lying turkeys in .gov!  Why not just enjoy seeing the wild turkeys instead?

http://4.bp.blogspot.com/-FIcnouY59RM/U3e15BX6sJI/AAAAAAAABsA/VFXdACJ5YA...

 

Fri, 05/23/2014 - 16:14 | 4789654 kchrisc
kchrisc's picture

The unanswered question from Italy: If a gun and badge thug arrests a hooker, isn't that destructive to the economy?!

Fri, 05/23/2014 - 16:17 | 4789660 john39
john39's picture

you know that the money changers will not be satisfied until every second of every day, for every person, from birth to death, is measured, documented and commoditized...  then pooled, bundled and sold (by them of course).   their version of utopia.

Fri, 05/23/2014 - 16:41 | 4789724 kchrisc
kchrisc's picture

I wonder how much masturbation will be worth?!

Fri, 05/23/2014 - 15:53 | 4789585 WillyGroper
WillyGroper's picture

Apparently being rich comes with a different set of perils.

22nd floor. Splatt

From Jesse's

http://www.finalternatives.com/node/27121

 

Fri, 05/23/2014 - 16:01 | 4789610 dontgoforit
dontgoforit's picture

Sad nonetheless.  What time of day or night I wonder?  Was the wife home?  Witnesses?  Were his hands tied behind his back? 

Fri, 05/23/2014 - 16:10 | 4789624 ZerOhead
ZerOhead's picture

Stone Point’s general counsel, David Wermuth, called Hertz “an outstanding lawyer and trusted adviser” who the firm “routinely called for our most complex transactions.”

The most complex or the most criminal?

22 floors... that's gotta Hertz..

Fri, 05/23/2014 - 16:05 | 4789619 Dr. Engali
Dr. Engali's picture

Was he shooting himself with a nail gun on the way down ?

Fri, 05/23/2014 - 16:12 | 4789644 quasimodo
quasimodo's picture

Yes, and according to one witness grabbed his 26 Glock and double tapped for good measure before eating terra firma, at which time he rolled down a steep embankment.

Fri, 05/23/2014 - 16:12 | 4789647 cossack55
cossack55's picture

No.  His air hose was not long enough.

Fri, 05/23/2014 - 16:10 | 4789637 LawsofPhysics
LawsofPhysics's picture

well, it's a start.  Sad that it wasn't on of the real criminals...

Fri, 05/23/2014 - 16:22 | 4789675 shovelhead
shovelhead's picture

EWWWWWWW

Imagine...there you are getting ready to put some ketchup on a Nathans hotdog and you squeeze...

Kerblooie!

Ketchup and some grey matter crap all over your dog.

That would ruin your lunch.

Fri, 05/23/2014 - 19:09 | 4790019 kchrisc
kchrisc's picture

That's why I felt better today.

 

"My guillotine is sad that one got away."

Fri, 05/23/2014 - 15:56 | 4789594 Relentless101
Relentless101's picture

Haha! Competitive devaluation. Yes, that may work. IF WE ACTUALLY MADE ANYTHING! LOL. 

Fri, 05/23/2014 - 16:02 | 4789603 Dr. Engali
Dr. Engali's picture

I'm telling you Luddites that all we need is a world currency like a SDR or something coupled with a world governing body and all these devaluation problems go away. We will have peace in our lifetimes, and the whole world will rejoice.

Fri, 05/23/2014 - 16:29 | 4789692 shovelhead
shovelhead's picture

Ooh Ooh...(waves hand)

Can I be Master of the Palace Dogs?

I like dogs.

Fri, 05/23/2014 - 15:59 | 4789606 TheRideNeverEnds
TheRideNeverEnds's picture

Fuck the poor, they shouldnt have tried to fight the FED; if they just realized that the trend is their friend and bought the dips they would be 'aight.  Its not hard; it is free money with no risk.  

Fri, 05/23/2014 - 16:01 | 4789609 kchrisc
kchrisc's picture

Inflation is a behavior problem. If one would just quit buying groceries, gas and electricity, one would not have the problem.

 

Just in case: /s

Fri, 05/23/2014 - 16:02 | 4789613 dontgoforit
dontgoforit's picture

Let 'em eat dirt.

Fri, 05/23/2014 - 16:10 | 4789628 AdvancingTime
AdvancingTime's picture

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. Once unleashed this monster will take a very large toll! More on this subject in the article below.

 http://brucewilds.blogspot.com/2013/06/inflation-lurks-beneath-and-hidde...

 

Fri, 05/23/2014 - 16:10 | 4789633 OC Sure
OC Sure's picture

 

 

 

Inflation is another term of tyranny that hides the devastation of modern economics.

Inflation of what?

Inflation of money [productive work] is GOOD; it increases purchasing power.

Inflation of counterfeit [theft] is BAD; it decreases purchasing power.

To say inflation without defining which currency, money or counterfeit,  keeps the lies alive.

Stop the counterfeit, stop the theft; Stop the theft, stop the tyranny.

Tyranny of whom?

Tyranny of those who make money.

Fri, 05/23/2014 - 16:12 | 4789642 q99x2
q99x2's picture

Got to somehow get the fat off of all those fat fuckers out there. It ain't like they are going to go jogging any time soon.

Fri, 05/23/2014 - 16:15 | 4789657 q99x2
q99x2's picture

foreigners buy US bonds 

Brussels owns the United States of America bitchez. They ain't no dang foreigners.

Fri, 05/23/2014 - 16:17 | 4789661 blindman
blindman's picture

it is not a "money" system, "economic"
system or a "financial" policy/system of
law and order. it is a slave system transcribed
by law and ordinance, converting what was
obviously abhorrent, detrimental and evil into the status
quo, become acceptable or passable normal vernacular
and systemic design and behaviour;
previously known as repugnant usury by old world
order reason, understanding and law.
the cycles of growth and decline abominated into
god like printing of
donationstargiftstarlargessstarpremiumstarprizestarreward
stargrantstargratuitystarpaystarpresentstarrecompensestar.....
to the sycophants.
.
authority and power from the thin air are just irresistible
it seems, no oversight or transparency in this shadow money
government. techno digital holographic fascism modifying, manipulating,
educating and entombing your fellow fellows.

Fri, 05/23/2014 - 16:18 | 4789664 Waterfallsparkles
Waterfallsparkles's picture

Well, the fed may not be worried about inflation but just look at retail sales.

For most the cost of higher food prices, gasoline, heating oil, energy prices, there is just nothing left to spend.  And many will reduce their consumption of even the basics.

How can American Companies survive without anyone to buy their products and services?

You can only ignore the obvious for so long before it really hits the economy.

Fri, 05/23/2014 - 16:26 | 4789684 disabledvet
disabledvet's picture

the problem is with equating "the market" with "the economy."

sure...we can "celebrate" all time record low yields in treasuries...but that's like celebrating the rise of Adolf Hitler. "there is no such thing as a good reason why treasury yields hit one record low after another."

And of course "we have the defense budget to show for it."

The fact of the matter remains that while equities continue to explode to the upside treasuries continue to say "the reality of the economy is that there isn't one."

Just look at the poll numbers for confirmation. A forty percent approval rating with voter participation collapsing says this war has not been a victory for pretty much anyone. Yet still there isn't an acknowledgement of what the problem is...let alone "how we get there from here" (other than MOAR of course.)

So indeed...we'll see if Putin has the balls or not. That six hundred billion dollar defense budget passed with no problem whatsoever. Should be interesting to see how the veto threat works.

Fri, 05/23/2014 - 16:35 | 4789707 shovelhead
shovelhead's picture

I'd like to think my $.53 a day was a merit raise.

 

Yeah, I'm that good.

Fri, 05/23/2014 - 16:52 | 4789748 Duc888
Duc888's picture

 

 

 

Food is off the fucking hook.  Insane.  I don't buy anything in a box.  Just the basics...and it's getting crazy.

 

 

Fri, 05/23/2014 - 22:04 | 4790374 TheMeatTrapper
TheMeatTrapper's picture

YASBYBIC

 

You ain't seen bad yet but it's coming.

Fri, 05/23/2014 - 17:07 | 4789780 orangegeek
orangegeek's picture

stop spending on everything but essentials - get your water from a tap, stop buying clothes and furniture, stop drinking any and all booze

 

stop driving unless essential, cancel your cable service and netflix account (use torrents instead)

 

the government handjobs are gaming the system to jack prices - that's fine

 

if you stop spending, they can figure out what to do with their excess inventory - perhaps dump it in fields beside to vast fields of brand new cars that are left to the elements to rot

Fri, 05/23/2014 - 18:37 | 4789956 1stepcloser
1stepcloser's picture

"stop drinking any and all booze"

 

I can't...my name is 1stepcloser and I'm an Alcoholic.

Fri, 05/23/2014 - 22:36 | 4790448 Peanut Butter E...
Peanut Butter Engineer's picture

Don't forget grow your own food, hunt if you know how and rise small flock of life stock; ducks,chicken etc.

You still will buy food from grocery store but doing any of things above will reduce your food bill.

Fri, 05/23/2014 - 17:19 | 4789798 1stepcloser
1stepcloser's picture

https://www.youtube.com/watch?v=wBHAA6jcQtA

 

Those Pussies looking better every second

Fri, 05/23/2014 - 17:36 | 4789831 WillyGroper
WillyGroper's picture

Well, this FL Rep won't go hungry.

Where's Nmewn?

http://www.youtube.com/watch?v=wk2dyF5Fvv8

 

Fri, 05/23/2014 - 18:26 | 4789944 Waterfallsparkles
Waterfallsparkles's picture

Ignoring inflation does not make it go away. 

Fri, 05/23/2014 - 18:46 | 4789973 logicalman
logicalman's picture

I'm sure now that I'm asleep and having the most bizzare dream.

Italy has just decided to add hookers and blow to the GDP and it now costs 42% more to be destitute.

I'm sure the world will make sense when the alarm clock goes off!

WTF????

Sat, 05/24/2014 - 01:19 | 4790678 Aussiekiwi
Aussiekiwi's picture

I'm not happy, does this mean hookers will be 42% more expensive, and if they are now in the system can I get an invoice for tax purposes?

Sat, 05/24/2014 - 03:42 | 4790813 jonytk
jonytk's picture

This breaking-news!

it's true! you cannot longer be even be alive with 1 $ per day.

Fri, 05/23/2014 - 19:42 | 4790082 Me.Grimlock
Me.Grimlock's picture

No poverty and no inflation make Homer something something...

Sat, 05/24/2014 - 00:11 | 4790602 John_Coltrane
John_Coltrane's picture

Well, good persistence in your posting Simon.  Despite the previous insults this article is first class in its analysis and conclusions.

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