Government Debt Levels

What Will You Do When Inflation Forces U.S. Households To Spend 40 Percent Of Their Incomes On Food?

Did you know that the price of corn has risen 142 percent in the last 12 months?  Of course corn is used in hundreds of different products we buy at the grocery store, and so everyone is going to feel the pain of this price increase.  But it isn’t just the price of corn that is going crazy.  We are seeing food prices shoot up dramatically all across the industry, and experts are warning that this is just the very beginning.  So if you think that food prices are bad now, just wait, because they are going to get a whole lot worse.

Typically, Americans spend approximately 10 percent of their disposable personal incomes on food.  The following comes directly from the USDA website…

In 2019, Americans spent an average of 9.5 percent of their disposable personal incomes on food—divided between food at home (4.9 percent) and food away from home (4.6 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.1 percent, driven by a declining share of income spent on food at home.

Needless to say, the poorest Americans spend more of their incomes on food than the richest Americans.

According to the USDA, the poorest households spent an average of 36 percent of their disposable personal incomes on food in 2019…

As their incomes rise, households spend more money on food, but it represents a smaller overall budget share. In 2019, households in the lowest income quintile spent an average of $4,400 on food (representing 36.0 percent of income), while households in the highest income quintile spent an average of $13,987 on food (representing 8.0 percent of income).

Needless to say, the final numbers for 2020 will be quite a bit higher, and many believe that eventually the percentage of disposable personal income that the average U.S. household spends on food will reach 40 percent.

That would mean that many poor households would end up spending well over 50 percent of their personal disposable incomes just on food.

At one time that would have been unimaginable, but now everything is changing.  As I noted above, the price of corn his increased 142 percent since this time last year…

Corn prices have jumped roughly 142% over the past year to $7.56 per bushel, the highest price seen in eight years for the crop.

A drought in Brazil and increased demand in China have put pressure on global suppliers.

In other areas we are seeing more moderate inflation, but overall we just witnessed the largest increase in food inflation “in almost nine years”…

The average prices in March of 2021 for pork chops and chicken breasts are both up more than 10% compared to March of 2020. Eggs and cheddar cheese are both up 6%.

Looking at all consumer goods as a whole, the latest inflation data in the Consumer Price Index from the U.S. Bureau of Labor Statistics shows the largest month-to-month increase in almost nine years.

Meanwhile, the price of lumber just continues to shoot even higher.

In New Jersey, one man says that the total cost of lumber used in building his new home will reach $70,000…

Tom McCarthy can’t finish building a home in Bergen County, New Jersey because of the lumber shortage.

“There are pieces of wood that we can’t find,” said McCarthy, a real estate broker with the Chen Agency who also builds homes with his father on the side.

McCarthy estimates the cost of lumber for the home will hit $70,000, nearly double the cost of building the exact same home in a nearby town just eight months ago.

Isn’t that nuts?

Instead of building a new home, you could try buying an existing one instead, but real estate prices in many areas have gotten completely insane.

In northern California, one house recently sold for more than a million dollars over listing price…

When a house in Berkeley sold for more than $1 million over its list price in late March 2021, it was covered in media outlets across the Bay Area, including this one.

While the Berkeley sale was particularly sensational — it sold for double its list price and received 29 offers — these individual stories are becoming more common in today’s real estate market, according to recent data and anecdotes from real estate professionals.

I never imagined that I would see such a thing happen.

But one real estate agent says that such wild bidding wars are becoming increasingly common…

And that’s especially true in the East Bay. “People are not surprised when a home goes $1 million over,” said Josh Dickinson, the founder of real estate agency Zip Code East Bay. “When my clients see a house for $1.9 million they’re almost conditioned to think it’ll go over $3 million in Piedmont or North Berkeley.”

This is what the beginning stages of hyperinflation look like, but Federal Reserve officials insist that we have nothing to be concerned about.

In fact, Eric Rosengren just told the press that the crazy inflation we are seeing now “is likely to prove temporary”…

Boston Federal Reserve President Eric Rosengren in an interview with MarketWatch on Wednesday dismissed talk of scaling back asset purchases as premature, and said temporary factors pushing up inflation this spring won’t last.

“My view is that this acceleration in the rate of price increases is likely to prove temporary,” Rosengren said Wednesday.

Do you believe him?

I don’t.

As Simon Black has pointed out, the federal government is just going to continue to borrow and spend trillions upon trillions of dollars…

This is the big one. The US federal government is hoping to spend a whopping $11 TRILLION this year, between the regular budget, COVID stimulus already passed, and all the new legislation they’re proposing.

And it’s only May.

Obviously Uncle Sam doesn’t have the money. So they have to borrow it.

Almost everybody loved it when the federal government started sending out big, fat stimulus checks.

But you aren’t going to love it when a cart of food costs you $400 at the grocery store.

Whenever the government hands out “free money”, someone has got to pay for it, and one way we are paying for it is through higher prices.

If you do not believe that this is a major national crisis yet, you will soon, because it won’t be too long before most of the country is loudly complaining about how nightmarish inflation has become.

***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.

We Are Dangerously Close To “The Tipping Point”

Every dollar that the federal government borrows and spends puts us even closer to a day of reckoning.  Many Americans (especially those on the left) seem to think that we can endlessly spend trillions upon trillions of dollars without ever suffering any consequences.  If that was true, why hasn’t any other society in all of human history ever been able to do such a thing?  Unfortunately, the truth is that the United States is not immune to the laws of economics.  Wildly creating money and driving up our national debt to absurd heights is inevitably going to crush our economic system.  And at this point, our debt-to-GDP ratio is already higher than Greece’s debt-to-GDP ratio was when the economy of that country finally collapsed…

But it’s worth noting that the US debt-to-GDP ratio—essentially a country’s debt compared to its annual economic output—was 129 percent at the end of 2020. In other words, the official US debt was nearly a third larger than the entire US economy.

That is considerably higher than Greece’s debt-to-GDP ratio in 2010, when it received a bailout from the International Monetary Fund to avoid defaulting on its obligations.

Even though we are already at such a dangerous level, the Biden administration wants Congress to pass another four trillion dollar spending package…

Senate Minority Leader Mitch McConnell, R-Ky., said Monday that he did not expect any Republican senator to support President Biden’s push for a $4 trillion spending package on infrastructure and other projects.

Biden has outlined a two-part tax and spend proposal with funding for physical infrastructure projects as well as initiatives favored by his administration, such jobs training, elderly care and universal preschool. McConnell reiterated that the $4 trillion price tag was a nonstarter for Republicans, as well as some Democrats, who favor a smaller plan directly tied to infrastructure projects such as roads and bridges.

We simply don’t have the money to do what Biden wants.

In fact, we didn’t have the money for any of the “stimulus packages” that have been passed since the start of the pandemic.

We had to borrow every single dollar that went out in the “stimulus checks”, and now Democratic lawmakers are “clamoring” for a fourth round of those checks…

Democratic lawmakers in both chambers of Congress are clamoring for a fourth round of stimulus checks to help Americans who are still struggling financially during the coronavirus pandemic.

Such a move could lift more than 7 million people out of poverty, according to a recent analysis from the Urban-Brookings Tax Policy Center, a nonpartisan think tank.

If more money is the solution, then why don’t we send out five billion dollars to every American citizen?

That would certainly fix all of our problems, right?

Everyone would be a “billionaire”, and then life in American would be glorious.

Or not.

Sadly, the truth is that our “leaders” are systematically destroying the value of our currency and are plunging us into an abyss of debt from which our nation will never recover.

I warned that once the government started sending checks directly to the American people that it would never be enough.

At this point, people are begging for more checks even though 34 percent of all U.S. income now comes directly from the federal government…

Putting that number in perspective, in the 1950s and 1960s, transfer payment were around 7%. This number rose in the low teens starting in the mid-1970s (right after the Nixon Shock ended Bretton-Woods and closed the gold window). The number then jumped again after the financial crisis, spiking to the high teens. And now, the coronavirus has officially sent this number to a record 34%!

And that’s how creeping banana republic socialism comes at you: first slowly, then fast.

We are not on the road to socialism.

We are already there.

In fact, the U.S. has been a socialist country for quite a while now.  We may not use the term “socialist” to describe ourselves, but that is precisely what we have become.

As our system melts down right in front of our eyes, many in the financial community are trying to figure out how to protect themselves.

For example, legendary investor Sam Zell has never been very enthusiastic about gold, but now he is suddenly changing his tune…

“Obviously one of the natural reactions is to buy gold…It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

Other Americans are preparing for the coming meltdown in other ways.  As crime rates in our cities continue to spike, more Americans than ever before are buying guns…

The FBI conducted more than 3.5 million gun-related background checks last month, a 20% year-over-year increase from April 2020, according to the latest FBI figures released Monday.

Nearly 1.7 million of those gun background checks were specifically for gun purchases, according to the National Shooting Sports Foundation, a firearms industry trade group that cross references FBI data with actual sales figures provided by gun merchants to determine how many guns are sold monthly.

NSSF spokesman Mark Oliva said the firearms industry sold more guns last month than in any April on record.

Deep in their guts, most people can feel that our society is rapidly approaching a “tipping point”.

Nobody knows the exact moment when we will have passed the point of no return, but just about everyone can sense that it is coming.

Every single day, U.S. consumers go into even more debt.

And every single day, U.S. corporations continue to binge on debt as if tomorrow is never going to arrive.

State and local governments continue to pile up record levels of debt, and the federal government is literally stealing more than 100 million dollars from future generations of Americans every single hour of every single day.

We should be thankful that this unprecedented debt bubble has been able to persist for as long as it has, but there is no way that this party can go on forever.

Soon it will end, and that means that our current way of life will soon come to an end as well.

***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.