High Inflation

We Should Be Shocked By What Inflation Is Doing To Home Prices, Because We Have Never Seen This Before

If you are shopping for a home right now, I really do feel sorry for you.  Home prices in many areas of the country have officially crossed the line into “absurd” territory, and they just keep going higher.  Thanks to wild spending by the federal government and the economic malpractice that has been happening at the Federal Reserve, we now have way too many dollars chasing way too few goods and services.  Inflation is showing up in every sector of our economy, but it is not showing up equally in all sectors.  One area where inflation threatens to spiral completely out of control is in home prices.  Right now we are seeing the wildest bidding wars in U.S. history, and in many, many cases buyers end up paying way over listing price.

Let me give you an example of what I am talking about.  When a fairly ordinary three bedroom home in Berkeley, California was recently listed for more than a million dollars, the real estate agent that listed the property was absolutely stunned by what happened next…

A three bedroom, mid-century home on a cul-de-sac in Berkeley, California, with an expansive view of the San Francisco Bay was nearly a one-of-a-kind property, said Jill Carrigan, an agent with The Grubb Company who listed it this spring.

“It ticked all the boxes for a lot of people,” she said. “I’ve never had a property with 29 offers and buyers were upping their offers without us even countering. The Bay Area is always competitive, but this was something I’d never seen before.”

This wasn’t a property that was particularly special.  You can see a photo of it right here.  In my opinion, there is no way in the world that such a house should ever sell for a million dollars.

Of course it didn’t sell for a million dollars.

When the dust finally settled, it sold for 2.3 million dollars…

Listed at $1.15 million, the home sold in two weeks for $2.3 million in cash, double the asking price.

You might think that such extreme bidding wars are rare, but they aren’t.

In fact, CNN is reporting that 940 U.S. homes sold for more than half a million dollars above listing price in March, and 310 U.S. homes sold for more than a million dollars above listing price in that month alone.

That is just one month!

Now that our leaders have turned the U.S. dollar into “wheelbarrow money”, this is the sort of thing that is going to happen.

In this sort of an environment, a “fixer upper” in Colorado Springs that was completely trashed by a former tenant can sell for $590,000…

A ‘formerly majestic’ Colorado Springs home left in ruin and covered in graffiti by an angry former tenant has gone on the market for $590,000.

Listed as an ‘investor special’ on Zillow, the 3,598 square-foot home is advertised as a fixer upper after it was destroyed by the prior tenant who covered the walls with spray-painted messages including ‘evict me b***h’ and left a pile of rotten meet in a freezer.

As long as this frenzy continues, I am going to recommend that young couples look to rent instead of buy, but rents are going up rapidly too.  This week we learned that rental prices just increased at the fastest pace in 15 years during the month of April…

Single-family rents were up 5.3% year over year in April, rising from a 2.4% increase in April 2020, according to CoreLogic. That is the largest gain in nearly 15 years.

Rents for single-family detached homes (not townhomes), were up an even stronger 7.9% compared with a year ago, as millennials in particular seek more outdoor space. Nearly half of millennials surveyed by Corelogic, and 64% of baby boomers, said they, “strongly prefer” to live in a single, stand-alone home.

Yes, the U.S. has wrestled with inflation at various times in the past, but what we are witnessing here in 2021 is completely insane.

Just look at what is happening in the restaurant industry.  In upstate New York, the cost of chicken wings has gone up 99 percent and the cost of fryer oil has gone up more than 120 percent so far in 2021.

How are you supposed to run a profitable restaurant with prices spiking like that?

Since the beginning of the pandemic, our leaders have pumped trillions and trillions of fresh dollars into the system, and all of that money is creating a tremendous amount of inflationary pressure.  At this point, things have already gotten so crazy that pieces of “artwork” that Hunter Biden has created are selling for up to $500,000…

President Biden’s son, Hunter Biden, has taken a turn into artistry and the first paintings he’s selling are going for as high as $500,000.

The first son’s first foray into the art world has seen his pieces picked up by art dealer Georges Berges, who has priced the younger Biden’s artwork between $75,000 and $500,000 depending on the size and scope of the collage artwork.

Now that Hunter Biden is trying to go clean and sober, I suppose that he has to try to make a living somehow.

But are there people that will actually be willing to pay half a million dollars for a piece of his “art”?

I find that hard to believe, but of course I find a lot of things hard to believe these days.

On Wednesday, the Federal Reserve finally took a few very small steps in the direction of acknowledging the crisis that we are facing…

As expected, the policymaking Federal Open Market Committee unanimously left its benchmark short-term borrowing rate anchored near zero. But officials indicated that rate hikes could come as soon as 2023, after saying in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.

Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement continued to say that inflation pressures are “transitory.” The raised expectations come amid the biggest rise in consumer prices in about 13 years.

Of course those moves by the Fed won’t actually do anything to get the “inflation monster” that they have created under control.

As long as our politicians in Washington continue their wildest spending binge ever, and as long as the Fed continues to pump more money into the financial system, the “inflation monster” will continue to grow.

So if you are looking to buy a home, there might not be any relief for the foreseeable future.

We are going down the same road that the Weimar Republic once did, but our leaders keep insisting that somehow we will get a much different result.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook, Twitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

Inflation Is Starting To Get Really Crazy – And It Is Worse Than You Think

Inflation is making headlines all over the country, but the mainstream media is not being honest about the true severity of the crisis.  We are being told that the official rate of inflation is still in single digits, but what we aren’t being told is that the way inflation is calculated has changed dramatically over the years.  In fact, according to Forbes “the government has changed the way it calculates inflation more than 20 times” over the past 30 years.  The rate of inflation directly affects so many other things in our system, and the government would like to keep that number as low as possible.  So they tinkered and tinkered with the formula until they got it just where they wanted it.

But even with the highly modified formula that they are now using, the rate of inflation still rose at the fastest pace in almost 13 years last month…

The consumer price index, which represents a basket including food, energy, groceries, housing costs and sales across a spectrum of goods, rose 5% from a year earlier. Economists surveyed by Dow Jones had been expecting a gain of 4.7%.

The reading represented the biggest CPI gain since the 5.3% increase in August 2008, just before the financial crisis sent the U.S. spiraling into the worst recession since the Great Depression.

We all remember what happened in the months following August 2008.

Hopefully we will not have a repeat of that.

Of course the truth is that consumer prices are not just rising at a 5 percent rate in the United States right now.

According to John Williams of shadowstats.com, if the rate of inflation was still calculated the way that it was back in 1990, it would be above 8 percent right now.

And if the rate of inflation was still calculated the way that it was back in 1980, it would currently be sitting at about 13 percent.

But 5 percent inflation sure sounds a whole lot better than 13 percent, doesn’t it?

One thing that I am keeping a very close eye on is food inflation.  Earlier today, I came across a story from one CBS affiliate in which they used the term “sticker shock” to describe what consumers are now experiencing at the grocery store…

You may have noticed a significant jump in prices at the grocery store.

More and more grocery shoppers are experiencing sticker shock every day. The price of food — especially meat, fruit and vegetables — is going up.

If prices were increasing at just a 5 percent annual rate, that wouldn’t be a big deal.

Sadly, the reality is much worse than that, and that is especially true for meat prices.  According to one deli owner, the true rate of inflation for meat prices is “probably closer” to 20 or 30 percent…

Jeff Cohen, a deli owner and meat wholesaler, said those factors are making the price of meat out of control.

“They said on national news it’s 10 percent. But that’s not true. it’s probably closer 20, 30 percent,” Cohen said.

We will continue to get a lot of happy talk from the Biden administration and from the Federal Reserve, but this is becoming a real national crisis.

When CBS News interviewed one shopper in Maryland, she said that she is now spending about twice as much on groceries as she did before…

Abby Walter said she started noticing her grocery bill creeping up earlier this year. Prior to January, the Maryland resident had typically spent about $75 a week on groceries. Now her bill is averaging about $150 or even more.

I still remember when I could get an entire shopping cart of food for just 25 dollars.

Now if I can get an entire cart of food for less than 200 dollars, I consider that to be a monumental achievement.

I try really hard to take advantage of sales and make every dollar stretch as far as I can.  But these days some of the sale prices are higher than the old regular prices.

As global commodity prices have exploded higher in recent months, companies have been forced to pass those increases along to consumers, but they are attempting to use language that will not cause widespread alarm…

If you ask Pampers maker Procter & Gamble Co., it’s not raising prices, it’s “taking pricing.” Rival Unilever, known for Dove soap and Axe body spray, says it’s been “very active with pricing.” The prize for creativity — so far at least — has been home-improvement retailer Lowe’s Cos., whose finance chief told investors Wednesday that it was “elevating our pricing ecosystem.”

What in the world is a “pricing ecosystem”?

I would love to have a representative from Lowe’s define that for me.

Executives from General Mills are also using language that borders on the absurd…

Then there’s cereal maker General Mills Inc., whose jargon includes arcane phrases like “strategic revenue management” and “holistic margin management,” which is not language you’d ever find on the back of a box of Lucky Charms. The company uses those terms so often, in fact, that its CEO now just refers to them by the acronyms SRM and HMM.

Why can’t they just say that they are “raising prices”?

These days, I cringe whenever I go down the cereal aisle.  It is hard for me to believe that cereal prices are so high now, but I know that they will eventually get a whole lot higher.

We have way too many dollars chasing way too few goods and services, and instead of taking emergency measures to get inflation under control our leaders seem intent on making things even worse.

The Biden administration wanted to spend 2 trillion dollars on infrastructure, but a group of U.S. Senators is currently working on a “compromise deal” that would only provide 1.2 trillion dollars in new infrastructure spending.

This is on top of the trillions upon trillions of dollars that we have already borrowed and spent during this crisis.

We can’t do this anymore.

It is complete and utter insanity.

But our politicians in Washington don’t seem to care.  They are going to continue to borrow and spend giant mountains of money that we do not have, and the Federal Reserve is going to continue to shovel enormous gobs of cash into the financial system.

So more inflation is on the way, and the standard of living for most Americans is going to continue to go down.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook, Twitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

5 Signs That America’s Raging Inflation Crisis Is Accelerating

The pace at which conditions are changing is catching a lot of people off guard.  Here in the United States, we have been in a low inflation environment for most of the past four decades, and so many Americans don’t even have a frame of reference for what a highly inflationary environment looks like.  But now we are facing an inflation crisis that is unlike anything that we have seen since the Jimmy Carter era in the 1970s.  In response to the COVID pandemic, governments around the world have been borrowing and spending colossal mountains of money, and global central banks have been absolutely flooding their respective financial systems with new cash.  These measures were taken to stimulate the worldwide economy, but in the process a horrific inflation monster has been created, and it will not be tamed easily.  In fact, national governments and global central banks continue to do the very same things that created the horrific inflation monster in the first place.

Moving forward, things look very bleak.  The following are 5 signs that America’s raging inflation crisis is accelerating…

#1 Inflation tends to hit those at the bottom of the economic food chain the hardest, but at this point even most millionaires say that they are “concerned about inflation”…

This is a major worry for most wealthy investors, according to CNBC’s latest millionaire survey. As many as 65% of millionaires are concerned about inflation caused by recent government spending, according to the report. Of those, 34% said they were very concerned.

The survey, conducted online in April and May by Spectrum Group on CNBC’s behalf, had 750 respondents with investable assets of $1 million or more.

#2 The biggest banks in the world are now sounding the alarm about the inflation crisis.  This week, a team of analysts from Deutsche Bank warned that “neglecting inflation leaves global economies sitting on a time bomb”…

We worry that inflation will make a comeback. Few still remember how our societies and economies were threatened by high inflation 50 years ago. The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. An explosive growth in debt financed largely by central banks is likely to lead to higher inflation. We worry that the painful lessons of an inflationary past are being ignored by central bankers, either because they really believe that this time is different, or they have bought into a new paradigm that low interest rates are here to stay, or they are protecting their institutions by not trying to hold back a political steam roller. Whatever the reason, we expect inflationary pressures to re-emerge as the Fed continues with its policy of patience and its stated belief that current pressures are largely transitory. It may take a year longer until 2023 but inflation will re-emerge. And while it is admirable that this patience is due to the fact that the Fed’s priorities are shifting towards social goals, neglecting inflation leaves global economies sitting on a time bomb.

#3 Housing prices continue to soar into the stratosphere in the United States.  These days, investment funds, wealthy individuals and foreigners are all gobbling up homes in anticipation of making huge profits, and this is making things extremely difficult for ordinary home buyers.  Earlier, I found the following message from one exasperated home shopper on a popular discussion forum…

It’s crazy. Soon as it hits the market tons of offers.

Mostly Investors and flippers.

Real estate Agent’s telling me things like.

“We’ve got Rich guys as far out as Hawaii buying houses sight unseen. They’ll even buy them in bulk. Anything from dumps to mansions.’

We’ve got Chinese snatching up properties, Bill Gates, Businesses, and like I said flippers. It’s Impossible!

Auction sites along with gov seized properties are flooded with the same types.

Can not compete you’ll be outbid by thousands upon thousand of dollars way above market value.

Any tricks or strategies to buy a house? Anything that may not have all the greedy bastards swarming over them?

A family seriously needing to actually live in a place seems completely s.o.l

It’s not just my area that’s hot right now its everywhere.

Please if anyone has good advice would be appreciated. Thanks

#4 Used car prices have now officially entered “absurd” territory.  This week, we learned that the Used Vehicle Value Index has shot up by 26 percent so far in 2021…

Prices of used vehicles sold at auctions around the US in May spiked by 4.6% from April, by 26% year-to-date, and by 45% from April 2019, according to the Used Vehicle Value Index released today by Manheim, the largest auto auction operator in the US and a unit of Cox Automotive.

I used to recommend buying used vehicles to people because I thought that most of the time you could get a better value, but at this point I am reversing my recommendation.

In this environment, I would strongly encourage everyone to consider buying new vehicles because used vehicles have become so ridiculously expensive.

#5 Food prices continue to surge higher, and I continue to see reports of intermittent shortages around the nation.

Down in Florida, Papa Bee’s Owner Lorie Hamm says that only a limited number of cases of chicken wings are being made available to restaurants in her area, and she also says that the price for such cases has nearly doubled since the start of 2021…

“There’s 300 cases that are allocated for two counties I believe, they were gone in two minutes,” Hamm said.

At the beginning of the year, a case of wings sold for $70-90 a case. Now they are about $150 a case.

When you begin to wildly create new money, this is what happens.  Prices go haywire and shortages tend to occur.

Unfortunately, our leaders don’t seem to have even a basic understanding of the laws of economics, and the pain that we have experienced so far is just the tip of the iceberg.

If they were smart, global authorities would be taking emergency measures to get inflation under control before it is too late.

Of course that is not happening.  Instead, they just continue to feed the monster.

This crisis is going to go from bad to worse, and you should prepare accordingly.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on Facebook, Twitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

Low Inflation? The Price Of Ground Beef Has Risen 17 Percent Over The Past Year

Inflation Public DomainThanks to the Federal Reserve, the middle class is slowly being suffocated by rising food prices.  Every single dollar in your wallet is constantly becoming less valuable because of the inflation the Fed systematically creates.  And if you try to build wealth by saving money and earning interest on it, you still lose because thanks to the Federal Reserve’s near zero interest rate policies banks pay next to nothing on savings accounts.  The Federal Reserve wants you to either spend your money or to put it in the giant casino that we call the stock market.  But when Americans spend their paychecks they are finding that they don’t stretch as far as they once did.  The cost of living continues to rise at a much faster pace than wages are rising, and this is especially true when it comes to the price of food.

Someone that I know wrote to me today and let me know that she had to shut down the food pantry that she had been running for the poor for so many years.  It isn’t that she didn’t want to help the poor anymore.  It was that she just couldn’t deal with the rising food prices any longer.  Now she is just doing the best that she can to survive herself.

Perhaps you have also noticed that food prices have gotten pretty crazy lately.  In particular, meat prices have become absolutely obscene.  For example, the average price of ground beef has risen to a new record high of over $4.09 a pound.  Over the past twelve months, that works out to a whopping 17 percent increase…

The average price for a pound of ground beef climbed to another record high–$4.096 per pound–in the United States in September, according to data released today by the Bureau of Labor Statistics (BLS).

In August, according to BLS, the average price for a pound of all types of ground beef topped $4 for the first time–hitting $4.013. In September, the average price jumped .083 cents, an increase of 2.1 percent in one month.

A year ago, in September 2013, the average price for a pound of ground beef was $3.502 per pound. Since then, it has climbed 59.4 cents–or about 17 percent in one year.

The “intellectuals” over at the Federal Reserve insist that “a little bit of inflation” is good for an economy, but the truth is that inflation slowly robs us of our buying power.

In a previous article, I shared a chart that showed how food inflation has risen dramatically since the year 2000.  For this article, I wanted to show how food inflation has risen since the 1970s.  As you can see, the rise in food prices has been absolutely relentless for more than 40 years…

Food Inflation 2014

If our paychecks were going up at the same rate or even faster that would be okay.

But they aren’t.

In fact, CNN is reporting that our paychecks have fallen back to 1995 levels…

Americans also don’t feel any better off. While more people may have jobs, they aren’t bringing home fatter paychecks. Wages and income have remained stagnant for years, making it tough for folks even though inflation is low. Median household income, which stood at $51,939 last year, is back to 1995 levels.

Consumers expect a median income boost of 1.1% over the next year, Curtin said. But that won’t keep up with their inflation expectations of 2.8%.

“American households, on average, are still struggling with their living standards slowly eroding,” he said.

This is one of the primary reasons why the middle class is disappearing in America.

The purchasing power of our dollars is continually diminishing.

And this could be just the beginning.  Right now, severe drought is affecting some of the most important agricultural areas around the globe.  Most people are aware of the nightmarish drought in California, but did you know that things in Brazil are even worse?  Brazil is one of the most important food exporters in the world, and so they definitely need our prayers.

In addition, a “black swan event” such as a worldwide explosion of the Ebola pandemic could quickly drive food prices into the stratosphere.

Just this week, we learned that food prices in the Ebola-stricken regions of Liberia, Guinea and Sierra Leone have already risen by an average of 24 percent…

Infection rates in the food-producing zones of Kenema and Kailahun in Sierra Leone, Lofa and Bong County in Liberia and GuDeckDedou in Guinea are among the highest in the region. Hundreds of farmers have died.

The three governments quarantined districts and restricted movements to contain the virus’ spread. But those measures also disrupted markets and led to food scarcity and panic buying, further pushing up prices, WFP and the Food and Agriculture Organization have said.

“Prices have risen by an average of 24 percent,” said WFP spokeswoman Elisabeth Byrs, adding an assessment of major markets showed the price of basic commodities was rising in Guinea, Liberia and Sierra Leone and in neighboring Senegal.

If you have been storing up food, I think that you will be very happy with your decision in the long run.

Without a doubt, food prices are only going to be going up from here.

But the Federal Reserve continues to insist that inflation is under control.

One of the ways that they make the “official numbers” look good is by playing accounting games.  They regularly change the way that inflation is calculated in order keep everyone calm.

You don’t have to take my word for it.  Posted below is an excerpt from an article by Mike Bryan, a vice president and senior economist in the Atlanta Fed’s research department…

The Economist retells a conversation with Stephen Roach, who in the 1970s worked for the Federal Reserve under Chairman Arthur Burns. Roach remembers that when oil prices surged around 1973, Burns asked Federal Reserve Board economists to strip those prices out of the CPI “to get a less distorted measure. When food prices then rose sharply, they stripped those out too—followed by used cars, children’s toys, jewellery, housing and so on, until around half of the CPI basket was excluded because it was supposedly ‘distorted'” by forces outside the control of the central bank. The story goes on to say that, at least in part because of these actions, the Fed failed to spot the breadth of the inflationary threat of the 1970s.

I have a similar story. I remember a morning in 1991 at a meeting of the Federal Reserve Bank of Cleveland’s board of directors. I was welcomed to the lectern with, “Now it’s time to see what Mike is going to throw out of the CPI this month.” It was an uncomfortable moment for me that had a lasting influence. It was my motivation for constructing the Cleveland Fed’s median CPI.

I am a reasonably skilled reader of a monthly CPI release. And since I approached each monthly report with a pretty clear idea of what the actual rate of inflation was, it was always pretty easy for me to look across the items in the CPI market basket and identify any offending—or “distorted”—price change. Stripping these items from the price statistic revealed the truth—and confirmed that I was right all along about the actual rate of inflation.

It is all a game to them.

It is all about getting to the “right number” to release to the public.

But anyone that goes to the grocery store knows what has been happening to food prices.

The next time you get to the checkout register and you feel tempted to ask the cashier what organ you should donate to pay for your groceries, please keep in mind that it is not the fault of the cashier.

Instead, there is one entity that you should blame.

Blame the Federal Reserve – their policies are slowly pushing the middle class into oblivion.

Don’t Worry – The Government Says That The Inflation You See Is Just Your Imagination

Redd Fox HypnotizedIf you believe that there is high inflation in the United States, you are just imagining things.  That is the message that the U.S. government and the Federal Reserve would have us to believe.  You might have noticed that the government announced on Wednesday that the cost of living increase for Social Security beneficiaries will only be 1.5 percent next year.  This is one of the smallest cost of living increases that we have ever seen.  The federal government is able to get away with this because the official numbers say that there is hardly any inflation in the U.S. right now.  Of course anyone that shops for groceries or that pays bills regularly knows what a load of nonsense the official inflation rate is.  The U.S. government has changed the way that inflation is calculated numerous times since 1978, and each time it has been changed the goal has been to make inflation appear to be even lower.  According to John Williams of shadowstats.com, if the inflation rate was still calculated the same way that it was back when Jimmy Carter was president, the official rate of inflation would be somewhere between 8 and 10 percent today.  But if the mainstream news actually reported such a number, everyone would be screaming and yelling about getting inflation under control.  Instead, the super low number that gets put out to the public makes it look like the Federal Reserve has plenty of room to do even more reckless money printing.  It is a giant scam, but most Americans are falling for it.

Meanwhile, the prices of the things that most Americans buy on a regular basis just keep going up.  The following are just a few examples of price inflation that we have seen lately…

-McDonald’s has killed the dollar menu because it is becoming impossible to “make any money selling burgers for $1“.

But don’t worry – the government says that the inflation you see is just your imagination.

-Amazon.com has raised the minimum order size required for free shipping from $25 to $35.

But don’t worry – you can afford to order more stuff thanks to the great new job that you got during this “economic recovery”.

-It is being projected that those using natural gas to heat their homes will see their heating costs rise by 13 percent this winter.

But don’t worry – “global warming” should kick in to high gear any day now.

-The price of chocolate has gone up by 45 percent since 2007, and it is being projected that it will now be increasing at an even faster pace.

But don’t worry – eating chocolate is bad for you anyway.

-Thanks to Obamacare, the health insurance premiums of many American families are absolutely skyrocketing.  As I wrote about the other day, one family down in Texas just got a letter informing them that their health insurance premiums are going up by 539 percent.

But don’t worry – this is just “health care reform” in action.

Meanwhile, things just continue to get tougher for middle class American families.  Household incomes have actually been declining for five years in a row and total consumer credit has risen by a whopping 22 percent over the past three years.

The quality of our jobs continues to go down and our paychecks are not keeping up with inflation.  In fact, 40 percent of all U.S. workers are now making less than what a full-time minimum wage worker made back in 1968 after you account for inflation.

So what do the “authorities” say that the solution to our problems is?

They want even more inflation of course.  According to CNBC, many Federal Reserve officials (including Janet Yellen) believe that what the U.S. economy really needs is a lot more inflation…

Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.

Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment.

The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.

The rest of that article goes on and on about how wonderful inflation is for an economy and about how the U.S. economy desperately needs some more of it.

Well, if that was actually true, then the Weimar Republic should have had one of the best economies in the history of mankind.

But this inevitably happens when a nation starts producing fiat currency that is backed by absolutely nothing.  There is always a temptation to just print a little bit more.

In the end, we are going to be destroyed by our own foolishness.  We have the de facto reserve currency of the planet, and the rest of the world has trusted it for decades.  But now we are systematically destroying our currency, and the rest of the globe is looking on in horror.

If you want to see a very good example of the impact that inflation has had on our economy in recent years, just check out this amazing chart which shows what the Federal Reserve’s reckless policies have done to the prices of commodities.

Ultimately, the U.S. dollar will be destroyed, and we will have done it to ourselves.

Many people are attempting to protect themselves against this inevitability by putting a lot of their money into hard assets such as gold and silver, but before you do that you might want to make sure that you don’t have a vengeful spouse that will toss it all into a dumpster someday.  The following is from a recent New York Post article…

A Colorado man was so angry at his ex-wife for divorcing him that he had the couple’s life savings of $500,000 converted to gold — then tossed it in a dumpster so she couldn’t have any of it, the Colorado Springs Gazette reports.

In June, Earl Ray Jones, 52, of Divide, Colorado, was ordered by a judge to pay $3,000 a month to the woman he’d been married to for 25 years, so he pillaged the couple’s retirement account and had it converted into 22 pounds worth of gold and silver bars,  the paper reports.

Jones claims he then tossed the modern-day treasure into a dumpster behind a motel, where he had been living temporarily, later telling the judge he had no money to give his ex-wife, according to the paper.

Did that story make you smile?  It sure did the trick for me.

But that story is also a picture of what the Federal Reserve is doing with our dollar.

Our currency has been used for decades by almost everyone else around the planet.  In fact, more U.S. dollars are used outside of our country than inside of it.

But now the Federal Reserve is systematically trashing the dollar and the rest of the globe is starting to lose faith in it.

Instead of realizing their mistakes, Fed officials say that we need to create even more inflation and they just keep on wildly printing more money.

In the end, we will all pay a great price for their foolishness.

Stagflation 2011: Why It Is Here And Why It Is Going To Be Very Painful

Are you ready for an economy that has high inflation and high unemployment at the same time? Well, welcome to “Stagflation 2011”.  Stagflation exists when inflation and unemployment are both at high levels at the same time.  Of course we all know about the high unemployment situation already.  Gallup’s daily tracking poll says that the U.S. unemployment rate has been hovering around 10 percent all year so far.  But now thanks to rapidly rising food prices and the exploding price of oil, rampant inflation is being added to the equation.  Normally inflation is a sign of increased economic activity, but when the basic commodities that we depend on to run our economy (such as oil) go up in price it actually causes a slowdown in economy activity.  When the price of oil goes up high enough, it fundamentally changes the behavior of individuals and businesses.  Suddenly certain types of economic activities that were feasible when oil was very cheap are not profitable any longer.  When the price of oil rises to a new level and it stays there, essentially what is happening is that more “blood” is being drained out of our economy.  Our economy will continue to function when there are higher oil prices, it will just be a lot more sluggish.

In some way, shape or form the price of oil factors into the production of most of our goods and services and it also factors into the transportation of most of our goods and services.  A significant rise in the price of oil changes the economic equation for almost every business in the United States.

Today, the price of WTI crude soared past 100 dollars a barrel before closing at $98.10.  The price of Brent crude increased 5.3 percent to $111.25.  The protests in Libya are certainly causing a lot of the price activity that we have seen over the past few days, but the truth is that oil has been going up for a number of months.  Right now we are only seeing an acceleration of the long-term trend.

Things are likely to get far worse if the “day of rage” planned for Saudi Arabia next month turns into a full-blown revolution.  Up to this point, the revolutions that have been sweeping the Middle East have been organized largely on Facebook, and now there are calls all over Facebook for the “Saudi revolution” to start on March 20th.

That date is less than 4 weeks away.  If Saudi Arabia plunges into chaos, the price of oil is going to go through the roof.

A rapidly rising price for oil is really bad news for the U.S. economy, because it is going to mean lots of inflation.  Unfortunately, this also comes at a time when the economy is also feeling the inflationary effects of more quantitative easing by the Federal Reserve.

So if rising oil prices are going to cause more inflation and if rising oil prices are also going to cause our economy to become even more sluggish, what does all of that add up to?

It adds up to stagflation.

Wikipedia defines stagflation in the following manner….

In economics, stagflation is the situation when both the inflation rate and the unemployment rate are persistently high.

This is going to rapidly become the “new normal” for America.  High oil prices are going to cause the cost of just about everything to go up, and high oil prices are also going to cause the economy to slow down thus making the unemployment numbers even worse.

It is going to be just like the 1970s all over again.

Only worse.

Economists differ as to how much rising oil prices affect U.S. GDP, but almost all of them agree that rising oil prices do cause a decline in U.S. GDP at least to some extent.

If American families have to spend $10 or $20 more each time they visit a gas station, that means that they are going to have less discretionary income.  They won’t be able to spend as much at the stores.

Not only that, but since the price of oil affects the price of almost everything else, Americans will find that their dollars have reduced purchasing power.

An oil crisis would force American families to stretch their already overburdened budgets even farther.

So where is the price of gasoline going from here?  Well, the average price of gasoline in the United States is rapidly sneaking up on the $3.20 a gallon mark.  Almost everyone believes that it is going to be going significantly higher.

Tom Kloza, the chief analyst for the Oil Price Information Service, was recently quoted in USA Today as saying that he believes that the average price for gasoline in the United States will reach somewhere between $3.50 and $3.75 a gallon by April.

As I wrote about yesterday, there are other analysts that believe that we are going to see $4.00 gasoline in the United States by the end of the year, and there are some that believe that we could see $5.00 gasoline if revolution sweeps Saudi Arabia.

If gasoline becomes that expensive and it stays there for a while, it is going to seriously start affecting the behavior of American businesses and American consumers.

Just remember what happened back in 2008.  Andrew Busch of BMO Capital Markets recently told CNBC the following….

“Remember when oil was last at $140 (a barrel), Americans reacted and cut the amount of miles they drove.”

Can you imagine what it would do to the economy if millions of Americans start sitting in their homes instead of doing their normal amounts of driving and flying?

In addition, one of the biggest problems with a higher price for oil is that it would cause our trade deficit to explode.  According to the U.S. government, more than half of the oil that we use is imported.  So every month we send the rest of the world billions and billions of our dollars and they send us massive amounts of oil.  We rapidly consume all of the oil they send us and we continually need more.  So we keep sending larger and larger amounts of money overseas and they keep sending us larger amounts of oil.  In the process, our national wealth is being drained at an astounding rate.  It is one of the greatest transfers of wealth the world has ever seen.

When the price of oil rises substantially, the transfer of wealth accelerates.  This is a very bad thing for the U.S. economy.  For example, when oil prices were above $100 a barrel back in 2008 our trade deficit for the year was almost 700 billion dollars.

It would be great if the Middle East would settle down and oil prices would start declining because that would really help out the U.S. economy.  Unfortunately, it does not look like that is going to happen.  Instead, it appears that we are steamrolling directly towards stagflation.  Anyone that lived through the stagflation of the 1970s knows that it is not a lot of fun.

The cold, hard reality of the matter is that without cheap oil our lifestyles are going to change.  Our economy was not set up to run on expensive oil.  If oil moves well above $100 a barrel and it stays there it is going to bring about significant societal changes.

For the rest of 2011, the price of oil will be the number one economic indicator to watch.  If it gets too high it is going to be an absolute disaster for the U.S. economy.

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