Inflation? Only If You Look At Food, Water, Gas, Electricity And Everything Else

Wheelbarrow of MoneyHave you noticed that prices are going up rapidly?  If so, you are certainly not alone.  But Federal Reserve chair Janet Yellen, the Obama administration and the mainstream media would have us believe that inflation is completely under control and exactly where it should be.  Perhaps if the highly manipulated numbers that they quote us were real, everything would be fine.  But of course the way that the inflation rate is calculated has been changed more than 20 times since the 1970s, and at this point it bears so little relation to reality that it is essentially meaningless.  Anyone that has to regularly pay for food, water, gas, electricity or anything else knows that inflation is too high.  In fact, if inflation was calculated the same way that it was back in 1980, the inflation rate would be close to 10 percent right now.

But you would never know that listening to Federal Reserve chair Janet Yellen.  In the video posted below, you can listen to her telling the media that there is absolutely nothing to be concerned about…

And it is really hard to get too upset with Janet Yellen.

After all, she reminds many people of a sweet little grandmother.

But the reality of the matter is that she is simply not telling us the truth.  Everywhere we look, prices are aggressively moving higher.

Just the other day, the Bureau of Labor Statistics announced that the price index for meat, poultry, fish, and eggs has just soared to a new all-time high.

This is something that I have repeatedly warned would happen.  Just check out this article and this article.

And it isn’t just meat prices that are going up.  One of the largest coffee producers in the entire world just announced that it is going to be raising coffee prices by 9 percent

It took the Fed long enough but finally even it succumbed to the reality of surging food prices when, as we reported previously, it hiked cafeteria prices at ground zero: the cafeteria of the Chicago Fed, stating that “prices continue to rise between 3% and 33%.” So with input costs rising across the board not just for the Fed, but certainly for food manufacturers everywhere, it was only a matter of time before the latter also threw in the towel and followed in the Fed’s footsteps. Which is what happened earlier today when J.M. Smucker Co. said it raised the prices on most of its coffee products by an average of 9% to reflect higher green-coffee costs.

Not that coffee isn’t expensive enough already.  It absolutely stuns me that some people are willing to pay 3 dollars for a cup of coffee.

I still remember the days when you could get a cup of coffee for 25 cents.

Also, I can’t get over how expensive groceries are becoming these days.  Earlier this month I took my wife over to the grocery store to do some shopping.  We are really ramping up our food storage this summer, and so we grabbed as much stuff on sale as we could find.  When we got our cart to the register, I was expecting the bill to be large, but I didn’t expect it to be over 300 dollars.

And remember, this was just for a single shopping cart and we had consciously tried to grab things that were significantly reduced from regular price.

I almost felt like asking the cashier which organ I should donate to pay the bill.

Sadly, this is just the beginning.  Food prices are eventually going to go much, much higher than this.

Also, you should get ready to pay substantially more for water as well.

According to CNBC, one recent report warned that “your water bill will likely increase” in the coming months…

U.S. water utilities face a critical economic squeeze, according to a new report—and that will likely mean higher prices at the water tap for consumers.

A survey by water-engineering firm Black & Veatch of 368 water utility companies across the country shows that 66 percent of them are not generating enough revenue to cover their costs.

To make up for the financial shortfall, prices for water are heading upward, said Michael Orth, one of the co-authors of the report and senior vice president at Black & Veatch.

“People will have to pay more for water to make up the falling revenues,” he said. “And that’s likely to be more than the rate of inflation.”

Of even greater concern is what is happening to gas prices.

According to Bloomberg, the price of gasoline hasn’t been this high at this time of the year for six years…

Gasoline in the U.S. climbed this week, boosted by a surge in oil, and is expected to reach the highest level for this time of year since 2008.

The pump price averaged $3.686 a gallon yesterday, up 1.2 cents from a week earlier, data posted on the Energy Information Administration’s website late yesterday show. Oil, which accounts for two-thirds of the retail price of gasoline, gained $2.49 a barrel on the New York Mercantile Exchange in the same period and $4.88 in the month ended yesterday.

The jump in crude, driven by concern that the crisis in Iraq will disrupt supplies, may boost pump prices by 10 cents a gallon at a time when they normally drop, according to forecasts including one from the EIA.

And the conflicts in Iraq, Ukraine and elsewhere could potentially send gas prices screaming far higher.

In fact, T. Boone Pickens recently told CNBC that if Baghdad falls to ISIS that the price of a barrel of oil could potentially hit $200.

Of course the big oil companies are not exactly complaining about this.  This week energy stocks are hitting record highs, and further escalation of the conflict in Iraq will probably send them even higher.

Meanwhile, a “bipartisan Senate proposal” (that means both Democrats and Republicans) would raise the gas tax by 12 cents a gallon over the next two years.

Our politicians have such good timing, don’t they?

Ugh.

And our electricity rates are going up too.  The electricity price index just set a brand new record high and there are no signs of relief on the horizon…

The electricity price index and the average price for a kilowatthour (KWH) of electricity both hit records for May, according to data released today by the Bureau of Labor Statistics.

The average price for a KWH hit 13.6 cents during the month, up about 3.8 percent from 13.1 cents in May 2013.

The seasonally adjusted electricity price index rose from 201.431 in May 2013 to 208.655 in May 2014—an increase of about 3.6 percent.

If our paychecks were increasing at the same rate as inflation, perhaps most families would be able to weather all of this.

Unfortunately, that is not the case at all.

As I wrote about recently, median household income in the U.S. is now about 7 percent lower than it was in the year 2000 after adjusting for inflation.

And if realistic inflation numbers were used instead of the government-manipulated ones, it would look a lot worse than that.

Inflation is a hidden tax that all of us pay, and it is systematically eviscerating the middle class.

So what are prices like in your neck of the woods?

Is your family feeling the pain of inflation?

Please feel free to share your thoughts by posting a comment below…

Inflation Is Too Low? Are You Kidding Us Bernanke?

BernankeFederal Reserve Chairman Ben Bernanke said this week that inflation in the United States needs to be higher.  Yes, he actually came right out and said that.  It almost seems as if Bernanke is trying to purposely hurt the middle class.  On Wednesday, Bernanke told the press that “both sides of our mandate are saying we need to be more accommodative“.  Of course he was referring to the Fed’s dual mandate to keep unemployment and inflation low, but Bernanke has a very unique interpretation of that mandate.  According to Bernanke, inflation in the U.S. is now “too low“.  The official inflation rate is currently sitting at about 1 percent, and Bernanke insists that such a low rate of inflation is not good for the economy.  He would prefer that the rate of inflation be up around 2 percent, and he is hoping that more “monetary accommodation” will help push inflation up and the unemployment rate down.

But what Bernanke will never admit is that the official inflation rate is a total sham.  The way that inflation is calculated has changed more than 20 times since 1978, and each time it has been changed the goal has been to make it appear to be lower than it actually is.

If the rate of inflation was still calculated the way that it was back in 1980, it would be about 8 percent right now and everyone would be screaming about the fact that inflation is way too high.

But instead, Bernanke can get away with claiming that inflation is “too low” because the official government numbers back him up.

Of course many of us already know that inflation is out of control without even looking at any numbers.  We are spending a lot more on the things that we buy on a regular basis than we used to.

For example, when Barack Obama first entered the White House, the average price of a gallon of gasoline was $1.84.  Today, the average price of a gallon of gasoline has nearly doubled.  It is currently sitting at $3.49, but when I filled up my vehicle yesterday I paid nearly $4.00 a gallon.

And of course the price of gasoline influences the price of almost every product in the entire country, since almost everything that we buy has to be transported in some manner.

But that is just one example.

Our monthly bills also seem to keep growing at a very brisk pace.

Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row, and according to USA Today water bills have actually tripled over the past 12 years in some areas of the country.

No inflation there, eh?

Well, what about health insurance?

Yup, that has been going up rapidly as well.  Since 2010, employee health insurance premiums have been rising an average of between 8 and 9 percent a year.

So where is this low inflation that everyone has been talking about?

It certainly cannot be found in college tuition costs.  Since 1986, the cost of college tuition in the United States has risen by 498 percent.

What about at the supermarket?

We all have to buy food.  It sure would be nice if inflation was low there.

Unfortunately, anyone that shops for groceries on a regular basis knows exactly how painful food prices are becoming.

And over time, those increases really add up.  An article by Benny Johnson details how the prices of many of the things that we buy on a regular basis absolutely soared between 2002 and 2012.  Just check out these price increases…

Eggs: 73%

Coffee: 90%

Peanut Butter: 40%

Milk: 26%

A Loaf Of White Bread: 39%

Spaghetti And Macaroni: 44%

Orange Juice: 46%

Red Delicious Apples: 43%

Beer: 25%

Wine: 60%

Electricity: 42%

Margarine: 143%

Tomatoes: 22%

Turkey: 56%

Ground Beef: 61%

Chocolate Chip Cookies: 39%

So how in the world can Bernanke possibly come to the conclusion that inflation is too low?

Is he insane?

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

Meanwhile, paychecks are not rising at the same pace that inflation is.  In fact, median household income in the United States has fallen for four years in a row.  Overall, it has declined by over $4000 during that time span.

So the cost of living just keeps rising, but the middle class is making less money than before.

That certainly is not good news.

Of course a big reason for this is because the quality of jobs in America continues to steadily decline.  Only 47 percent of adults have a full-time job at this point, and 53 percent of all American workers make less than $30,000 a year.

Most families are just barely scraping by from month to month, and Bernanke has the gall to say that he needs to try to get prices to rise even faster.

Is Bernanke also going to increase all of our paychecks in order to make up for the “inflation tax” that is being imposed on all of us?

Of course not.

And sadly, it appears that the number of Americans that are losing their jobs is starting to move upward again.  We just learned that initial claims for unemployment benefits rose to 360,000 last week.

That is getting dangerously close to the 400,000 number that I keep talking about.

The middle class in the United States is shrinking with each passing day, and Bernanke seems absolutely clueless.

His answer to every economic problem always seems to involve printing more money.  Thankfully, about 1.8 trillion dollars of that money is being stashed away at the Fed and has not gotten out into the real economy yet.

But someday that money will be unleashed on the real economy, and it will create crippling inflation.

Unfortunately, Bernanke doesn’t seem to really be too concerned about the mountains of cash that the big banks have parked at the Fed.  He is just happy that his reckless money printing has pumped up the stock market to new all-time highs.

He should enjoy this little period of euphoria while he can, because this bubble will burst like all false financial bubbles eventually do.

And when this bubble bursts, the foolishness of Bernanke and the Federal Reserve will be glaringly apparent to everyone.

 

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