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No Inflation, Thanks to ObamaCare

EconMatters's picture




 

By EconMatters  

 

Healthcare Data Skewed

 

On Thursday the Personal Income and Outlays Report came out also known as the spending report and just like yesterday`s GDP downward revision the Healthcare component is playing havoc with the overall numbers, and it is pretty obvious due to the newly enacted Affordable Care Act also known as Obamacare.

 

Just throw out any comparisons or expectations regarding any government data for the foreseeable future because Obamacare is going to skew all the historical comparisons as it effects the calculations that go into the Healthcare component of any government report.  The data in the calculation of Healthcare has changed, and from here to eternity the Healthcare component is going to massively under-report healthcare spending, just throw any previous assumptions out the window regarding Healthcare spending. 

 

Many Data Points Show Healthcare Costs Continue to Rise

 

The government now has another measure which under-reports inflation by accounting chicanery.  We all know actual healthcare costs continue to rise, and only 7 million actually signed up for Obamacare, and far less are properly qualified and using the system, but yeah Healthcare costs went down despite data in other reports of a non-governmental nature that point to the contrary! This just tops the cake, and at this point all government data is losing more credibility by the hour, just try to read between the lines and get the big picture, because the actual data points are so unreliable and flawed.

 

Real PCE Price Index Over 2%

 

PCE Price Index -- Y/Y change came in at 1.8 %; the real number is probably above 2% if the Healthcare component was properly calculated and conducted, basically any proper comparison has to strip out the healthcare component for an apples to apples real comparison. Way to go Obama the entire team is working together from Janet Yellen at the Fed to bean counters at the Whitehouse reassuring the American people that there is no real inflation in the economy! Yet every American experiences inflation in almost every category that is above the government calculated numbers!

 

 

No Inflation Here

 

Have you noticed car prices these days? What about Chicken, Fish and Beef? Apartment prices are going up because most Americans cannot afford houses. The affordability index for houses is not where one would expect after a massive recession and housing collapse with an economy growing at roughly 2% for the past 5 years in a consistent fashion. It is inflation, inflation is everywhere one looks! It`s great that the government can change how Healthcare spending is calculated to artificially show that look, Healthcare costs are coming down and Obamacare was the savior that we knew it would be! But throw out any items that aren`t necessary for surviving as those are in essence worthless components in any inflation calculation. Because in the end, consumers just don`t acquire those items that they cannot afford, these become 'luxury items', and prices seem cheaper than they are because of demand, and this skews the inflation numbers.

 

 

Inflation Methodology Flawed

 

This is why government inflation calculations and methodology always underreport inflation and are basically a joke! Focus on the items that consumers have to buy to stay alive.  Food is number one, if humans don`t eat food they die, they have to buy these items! Energy is another, if they don`t buy gas, they cannot commute to work, lose their job, and cannot buy food! Focus on Apartment Rents, if they don`t pay for minimal housing in the form of Apartment Rent, then they are living with family, shelters or under a bridge! All three of these essential areas are going up, and quite notably in many cases, and yet the Fed refers to them as “Noise”!

 

Read More >>> This Is A Trader's Market

 

Increasing Purchasing Power Should be the Focal Point of Fed Policy

 

How much higher does the stock market have to go? Does it really matter relative to improving the quality of lives of average Americans by bringing down Real Inflation in the economy? How about instead of being so focused on raising wages to keep up with soaring inflation costs, which never seem to keep pace Janet, bring down inflation so that it is commensurate with a 2% growing economy, that in the end does so much more for the majority of the population?

 

Janet Yellen might just realize that by getting Inflation in line with the actual growth of the economy and wages, that she would vastly improve the Consumer`s Purchasing Power, and thus be stimulating the economy! The Fed has it all backwards, and they wonder why they keep having to implement these stimulus programs, it is because they don`t work – except for creating asset bubbles in stocks and bonds!

 

Wealth Redistribution Policy at Federal Reserve

 

Fed Chair Yellen had better start focusing on Inflation or she is going to have an economy that starts slowing down and enters a stagflation stage because the tepid retail sales numbers are a direct correlation to rising inflation pressures in the bulk of the economy. Struggling college students need this money to fill up their tanks to get to school and a job, forget about the fancy outfit or the new Coach Handbag! This is the real world that many Americans live in, not one characterized by ‘Noisy Inflation’ interpretations to peddle more easy money to rich Wall Street Banks at the expense of the majority of the population! 

 

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Fri, 06/27/2014 - 08:28 | 4901603 NEOSERF
NEOSERF's picture

Shadowstats.com has the correct inflation numbers...don't manage your expectations or life around government communications of any kind.

Fri, 06/27/2014 - 05:58 | 4901379 NoPension
NoPension's picture

For the benefit of the few who still don't know;
Every dollar created, either by the fed ( not US .gov) or by a bank, is a debt instrument. Designed to be paid back with interest. Pay off the debt, you destroy that "money". More debt required to pay interest.
Even when you get your head around this, it still doesn't make sense or seem logical.
A normal person would simply conclude, why can't our currency simply be a paper claim on a physical item, such as gold? Seems simple. I seem to recall reading it used to be............

Thu, 06/26/2014 - 21:58 | 4900761 dexter_morgan
dexter_morgan's picture

They need to get the NOAA and NASA folks involved in these calculations because they are 100% accurate and  pure as the driven snow so they wouldn't manipulate thos numbers..

Thu, 06/26/2014 - 21:43 | 4900701 AdvancingTime
AdvancingTime's picture

During the "boom times" when asset values are going up lots of people think they are getting rich. In inflationary times government also does well as tax revenues grow. Not only does government get to spend the money they print, the side effects of inflation on taxes are good for government, though bad for their subjects.

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. said John Maynard Keynes. As the central banks print like crazy to control interest rates on bonds they devalue the currency.

While there are not many Bond Vigilantes there are many Currency Vigilantes. Changes in the value of a currency directly affect "buying power" and the value of assets. Inflation, deflation, what is something worth? More on this subject in the article below.

http://brucewilds.blogspot.com/2014/02/when-will-inflation-strike_1.html

Thu, 06/26/2014 - 21:31 | 4900648 moneybots
moneybots's picture

"The Fed has it all backwards, and they wonder why they keep having to implement these stimulus programs, it is because they don`t work – except for creating asset bubbles in stocks and bonds!"

 

The author has it backwards.   The FED's purpose is to "peddle more easy money to rich Wall Street Banks at the expense of the majority of the population!"

By the Bankers, of the Bankers and for the Bankers

 

 

 

Thu, 06/26/2014 - 21:16 | 4900590 moneybots
moneybots's picture

"All three of these essential areas are going up, and quite notably in many cases, and yet the Fed refers to them as “Noise”!"

How much noise does social unrest make?

Thu, 06/26/2014 - 20:36 | 4900441 SuperCycleBear
SuperCycleBear's picture

Health care spending likely to be impacted by roll out of digital technology in massive jump in productivity. See https://www.youtube.com/embed/r13uYs7jglg

Thu, 06/26/2014 - 20:08 | 4900347 Bemused Observer
Bemused Observer's picture

" The affordability index for houses is not where one would expect after a massive recession and housing collapse with an economy growing at roughly 2% for the past 5 years in a consistent fashion. It is inflation, inflation is everywhere one looks!"

Yes, because houses were not permitted to decline in price in response to the actual economic conditions. They were artificially propped up.

But is that really inflation?

Thu, 06/26/2014 - 21:54 | 4900741 AdvancingTime
AdvancingTime's picture

What we have seen may of been the "deflationary" part of the cycle totally skewed by the Feds actions. in my opinion we are about to start a massive inflationary cycle because of the massive expansion of the money supply. The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario.

A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. More on this idea in the article below.

http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....

 

Thu, 06/26/2014 - 20:30 | 4900415 doctor10
doctor10's picture

And housing prices were not "permitted" to decline because if they did the entire market for mortgage backed securities blows out. Most municipal tax bases would have blown out as property values plummeted.

Had the dead wood been flushed in 2008 we'd all be coming out of it healthy by now.

 

Heck-the Fed could have paid off every putstanding property  loan and mortgage in th ecountry as of 2008 and we'd ALL be a hundred times better off than with the mess they've made at this point.

Fri, 06/27/2014 - 05:46 | 4901368 NoPension
NoPension's picture

....and cut the chains of all of those debt slaves? But..but.. How would the banks survive?

Thu, 06/26/2014 - 21:19 | 4900600 moneybots
moneybots's picture

"And housing prices were not "permitted" to decline because if they did the entire market for mortgage backed securities blows out. Most municipal tax bases would have blown out as property values plummeted.

Had the dead wood been flushed in 2008 we'd all be coming out of it healthy by now."

 

That would mean that the flush out is still in the future.  The thing about math is that 1+1 ALWAYS = 2.

Thu, 06/26/2014 - 21:09 | 4900564 Bemused Observer
Bemused Observer's picture

Oh, of course. And if all bad debt had been defaulted we'd be growing for REAL right now, with no need to fake the data.

But they never cared about doing anything about the debt burden, their only concern was preserving the continued payments on that debt so the whole house of cards didn't come down.

And paying off all the debt would create a problem I think...these loans are repackaged so many times, God knows HOW many people depend on the returns? If you pay it off, it stops returning anything to anyone.

They couldn't be sure we wouldn't use the money to pay off debt instead of going shopping, so they decided to cut out the middleman, and just give it directly to the banks.

Thu, 06/26/2014 - 21:56 | 4900748 AdvancingTime
AdvancingTime's picture

A great deal of our economic system is about debt. It is important to remember not all debt is created equal. A mirage is a naturally occurring optical phenomenon in which light rays are bent to produce a displaced image of distant objects. Joining the idea of a mirage and contagion with the reality of collapsing debt forms an interesting subject.

It is important to remember all debts and obligations do not come due at the same time. Also, it must be noted when a bill is not paid or defaults it often starts a long and drawn out legal battle, this collection process that may extend years without harsh consequences. This my friends is the reality of modern life in America and much of the world. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/05/debt-mirage-always-moving-into-di...

 

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