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The cost of gasoline has more than doubled since 2005. That is an average of 15% per year. What it has done in the past year is irrelevant as statistics can be manipulated in shorter terms.
In addition if a quarter of the CPI-U is made up of food and energy then to be statistically accurate, the average household expense would also have to spend roughly 25% of its income on food and energy.
While that statistic may be close for the minority of high income households it is not even close for majority low income households.
There are lies, damn lies, and the worst lies, which are government statistics.
the price of oil will continue to go up. demand around the world is increasing. get used to it. that's not inflation - that's supply and demand of a finite resource.
bottom line is - for most people, they are spending less on gasoline this year than in prior years. what's the price done since 2008?
No inflation? I do not know about you but I am paying $4.00 / gal for gasoline, a decent steak is about $6.00 lb. and my electric rates were just raised by 12%. Let’s add to that the increases in health insurance and both auto and homeowners insurance. Everything regular people need to survive has experienced mass inflation while governments use tricks like hedonics and substitution along with removing food and energy from the CPI index to lie to the people about the true inflation rate. Companies are using every trick from shaving quantities to pumping air into food products to keep from raising prices.
Oil and food prices are the effects of dozens of causes in a totally separate market than the U.S. money market. You cannot reduce a complex economic system to: "My gas bill went up - therefore inflation due to QE."
Inflation is a market phenomena. QE moves the money supply, but the money demand (velocity) its elasticity will ultimately determine inflation. For the rate of inflation to increase, the money demand must increase faster than the supply, and that is simply not happening. Corps are still deleveraging.
Casual observations are fun and all, but you cannot determine 100% of the system from less than 5% of the information.
One of the most overlooked aspects of the western economies is that they have been, for the most part, charades right from their beginnings. That's the beauty of modern day capitalism, very few question it's shadowy, dubious side. The present day spectacle of western nations struggling to achieve some balance between their central banking schemes and the fact of a bigger than life size debt burden proves to be a humorous circus of financial dips and dives that would give the average acrobat performer reason to fear. American's cannot fathom a world without them at it's center, Romans were of this same mindset, and we still talk about them as though they simply made a few wrong turns.
From the soaring heights of Wall street leverage madness to the depths of derivative hell we've seen the best and worst of America's Guru's vainly attempting a fix, like master mechanics, these legions of legendary financial illusion work like crazy to convince the uninitiated that "recovery" is just around the bend. One of the main events in this circus is that the clowns who got us into this are now posturing as though they have the answers, and one of them was the reasoning that Mitt would ride into the center arena with tool box at his side and "just deal with it". Sadly, we can only stand by and watch this dog and pony show carry on with the new savior, Obama, looking like the proverbial Deer in the headlights, sidestepping the real issues in order to confront the "loyal opposition" whose antics will throw the citizens off the trail. Just listen to the radio crap that attempts to make something from nothing in order to rile the troops, while Washington burns.
Crash??? How about a slow painful demise that will be reminiscent of the final days of those other once great empires now covered in dust. Everybody thought that the real end was imminent after the 2008 financial fires of wall street began winding down, from that smoking rubble we've seen a new threat rising, yes, it looks familiar, and it has as it star performers the same cast and crew that set those fires some five years back. Lloyd from Goldman basking in luxury, Robert the Rubin, is he just gettin by, how's Timmy the Geit doin anyway? And whatever happened to Hank Paulson, boy he really had some great ideas. Empires fall, that's the one certain thing you learn when studying history, they say it takes time to ruin a civilization, but, time is all it takes........
http://www.google.com/url?sa=t&rct=j...NUY9Qjk9lp_EKg
In 2010 Jamie Dimon said that we could most probably expect another market crash in 2015.
This is approx. 7 years after the beginning of the crash of 2008-2009.
In recent years many people including Harry Dent, David Stockman, Peter Schiff, and Michael Pento have all pointed to 2015 as the year of the next crash.
While we all know that crashes are part of the economic cycle and one is coming at some point down the road, is there any reason to believe that 2015 will be an especially critical year?
Some people point to the building bond bubble being created by the Fed as the catalyst of the next crash.
While bubbles are usually a cause of over investment by the public using borrowed money, I suppose the Fed could theoretically replace the public by becoming the primary market and causing a bubble by themselves.
I would like to hear some educated thoughts on this.
i don't think there will be a crash as soon as 2015.. i think the obama administration will be able to inflate the bubble a bit longer till about 2017 i reckon.. but then again, defaulting on debt can happen whenever the government decides its necessary.
One of the most overlooked aspects of the western economies is that they have been, for the most part, charades right from their beginnings.
Circumnavigation of the globe, steam engine, canals and railways, electricity, telegraph and telephone, internal combustion engine, tractors, interchangeable parts and assembly-line production, scientific industrial management, transcontinental road travel, refridgerators, global air travel, antiobiotics, air-conditioning, space travel, organ transplants, computers, internet, email, smart phones, global telecommunications via voice, data, and video, integration of information and telecommunications technology, etc., etc., etc., are charades?
Geez, I like to play charades, then. Beats working the land with my back, one zap at a time, for some bread and a plate of lentils which could fail any year with the weather and no one to help, and in any case rotten teeth and probable death by infectious disease by age 30.
Yes, the countries of early industrialization are in relative decline, mainly because industrialization has spread globally, and yes, also because of complacency, aging, getting fat around the middle, and stupid subsidizing of stupid overconsumption, but no, no crisis of production.
Yes, civilizations come and go, and we are all in slow demise from the very beginnings, from the womb, but we, as physical organisms, do not live in the long run, we live in a series of short runs. Yes, I know that is hard to accept. But, as physical organisms, we are no better than that.
For the moment, then, we live in relative physical comfort, that is the only purpose of industrialization, and it is spreading throughout the globe, sustainable or not, they're gonna try.
Anyway, if a crash, i.e. a 20% or so dip in 2015, then buy the dip and hope for the best, just like in 2008-2009 and other crashes before that. Because if we don't emerge phoenix-like from the umpteenth crash, what's the difference?
I would like to hear some educated thoughts on this.
I don't care.
Seriously, if it would be up to me, there wouldn't even be a stock market. Stock markets are not necessary for a properly functioning economy, and as it stands, the stock markets have no relationship to the economy, nor are they a reflection of the economy.
People are too damn dumb to realize that it's a global economy; that US corporations are global; that foreigners buy US stocks; and that people who buy stocks aren't banking on an improvement in the US economy, rather they are banking that the global US corporation will have good profits globally.
Having said that, I do actually pay attention to the stock markets, since one of my criticisms of the Trustees for the OASDI and HI (Medicare) Trust Funds is that they rely heavily on the Taxation of Benefits as a source of revenues for those Trust Funds, and the amounts are unrealistic.
In other words, the numbers the Trustees are seeing now are the result of retirees on very generous pension plans. Those pension plans are what pushes retirees over the threshold so that their Social Security Benefits are taxed.
Those very generous pension plans will give way to those pensioners on meager pension plans, eventually giving way to 401(k) plans.
The 401(k) plans will not generate retirement funds even remotely equivalent to pension plans, and the result is that the revenues from the Taxation of Benefits will decline over time, not increase (as the Trustees predict), even with the $25,000 threshold being static.
That also raises another issue, in that down-turns in the stock market can negatively impact 401(k) plans and that compounds the problem related to the Taxation of Benefits.
Quote:
Originally Posted by jimhcom
The economy cannot suffer from overconsumption, that is an oxymoron.
Of course it can. Over-consumption leads to excess Demand, and if Supply remains static or decreases, then prices rise.
At that point, we must look at Price Elasticity -- determined mostly by the number of available substitutes. Quite possibly, there could be "Demand Destruction" for a given product or service.
Quote:
Originally Posted by jimhcom
The economy is suffering from great losses of good jobs due to outsourcing.
And technology.
As I have explained repeatedly, you have Surplus Labor and no place for it to go ---- the exact same situation that caused the Great Depression --- and without a major world war in which you'd have to draft 6 Million troops, you will have Surplus Labor indefinitely, until such time as people come to terms and accept reality, at which point your unemployment rate will decline, but your E-Pop Ratio will be incredibly low.....so low that you will not be able to fund Social Security or Medicare or any kind of universal health plan without increasing the tax rates to levels that will further harm your economy, creating even more Surplus Labor.
As far as out-sourcing, either you out-source and lose jobs, or don't out-source and lose an even greater number of jobs....your choice....choose wisely.
Engaging in protectionist policies is the fastest way to push America into a 3rd World State.
Quote:
Originally Posted by jimhcom
No inflation? I do not know about you but I am paying $4.00 / gal for gasoline, a decent steak is about $6.00 lb. and my electric rates were just raised by 12%.
You just cited three examples of Cost-push Inflation, and three examples of Demand-pull Inflation.
The Federal Reserve is not responsible.
In the case of gasoline, the issue is the over-consumption which you claimed was an oxymoron, and government interference.
Quote:
Originally Posted by jimhcom
The cost of gasoline has more than doubled since 2005. That is an average of 15% per year. What it has done in the past year is irrelevant as statistics can be manipulated in shorter terms.
The Bush Administration implemented EPA Tier 2 --- gasoline must be 30 ppm Sulfur.
As I have explained ad nasuem, the Sulfur Redux process is neither free nor instantaneous...it takes both time and money to reduce Sulfur in gasoline to 30 ppm.
The additional cost is passed onto you, the consumer. The additional time required lowers the production capacity of the refineries, resulting in a reduced Supply of Gasoline for the US markets, and if Demand is constant or increases, then the price of gasoline rises.
The Obama Administration implemented EPA Tier 3 -- gasoline must be at 10 ppm Sulfur.
Once again, the Sulfur Redux process is neither free nor instantaneous...it takes both time and money to reduce Sulfur in gasoline to 10 ppm.
Once again, the additional costs are passed onto you the consumer. Once again, the additional time required to run the Sulfur Redux process causes a decline in gasoline production, which causes gasoline prices to rise if Demand remains constant or increases.
As I have mentioned ad nauseum, you had 49 operating oil refineries in the US, but only 17 produced gasoline --- as in the Supply of Gasoline in the US is limited; static; flat; increasing etc etc etc --- the other 32 refineries produced your hedonistic life-style and standard of living.
Three refineries have since closed, leaving you with 46 operating refineries, of which only 16 produce gasoline, because the other 30 are producing your hedonistic excessive life-style.
Because you have no light sweet (low sulfur) oil to speak of, you must import light sweet (low sulfur) oil
for your hedonistic life-style and standard of living, which means the bulk of your gasoline comes from West Texas Intermediate.
That leaves you with nasty West Texas Sour, East Texas Sour, California Heavy, Oklahoma Sour, North Slope, Louisiana Sour, Illinois Intermediate, Unita Basin Black Wax and junky tar sands from Canada.
Now, if I'm Valero, what should I do?
1] Run the Sulfur Redux to meet EPA Tier 3.....but then I cannot sell the gasoline at a price to make a profit in the US; or
2] Skip the stupid stuff, don't run any Sulfur Redux, and export the gasoline to countries that don't have idiotic EPAs and make massive profits?
Well, Valero et al are doing #2.
Why are US exports of diesel and gasoline increasing?
Now you know why......they're refining high Sulfur oils and selling the gasoline and diesel to other countries.
One other thing...it's Summer now, and many State EPA offices require reformulated gasoline, and that is neither free nor instantaneous.....you cannot mix reformulated with non-reformulated, and so the tanks have to be bone dry....resulting in a minor drop in the Supply of Gasoline until non-reformulated stocks are exhausted, causing the prices to rise for a few weeks.
And one more thing....as I correctly predicted, the corn harvests were a bust....the Supply of Corn in the US is severely limited, and that increases the price of corn, which in turn increases the price of ethanol, which in turn increases the price of gasoline.
And the real drought hasn't even started yet.
The electric is the same story.......EPA regulations have resulted in power plants being shut down, resulting the in Supply of Electricity to decrease, and the price to rise, and then that is compounded by increased competition for fuels for power plants.
Same thing for meat...meats are corn fed, the price of corn rises, so the price of meat rises, and then if transportation costs rise, the price of meats rises.
Again, the Federal Reserve is not responsible.
Quote:
Originally Posted by jimhcom
Let’s add to that the increases in health insurance and both auto and homeowners insurance.
Those would be examples of Cost-push Inflation via government over-burdening regulations.
Again, the Federal Reserve is not responsible.
Quote:
Originally Posted by jimhcom
Everything regular people need to survive has experienced mass inflation while governments use tricks like hedonics and substitution along with removing food and energy from the CPI index to lie to the people about the true inflation rate. Companies are using every trick from shaving quantities to pumping air into food products to keep from raising prices.
What you're describing is Demand-pull Inflation (and to a lesser extent Cost-push Inflation).
Again, the Federal Reserve is not responsible.
The "True Inflation Rate" would be Real (Monetary) Inflation + Cost-push Inflation + Demand-pull Inflation + Wage Inflation + Interest Inflation + Natural Inflation
There's nothing wrong with Substitution.
The prices of goods and services are independent of the Federal Reserve, independent of the price of gold, independent of wages and a lot of other things.
2nd World States transitioning to 1st World States, 3rd World States transitioning to 2nd World States and 4th World States developing to 3rd World States is going to put severe pressure on the Demand side of the equation, causing the prices of goods and services to rise.
If that is a problem, then you need to stop consuming, in order to lower Demand, or increase production to increase Supply to match Demand, so that prices stabilize.
Anyway, instead of fussing over things which the Federal Reserve is not responsible, and useless things like stock markets, you might want to start worrying about the hits your economy is going to take in the future.
the price of oil will continue to go up. demand around the world is increasing. get used to it. that's not inflation - that's supply and demand of a finite resource.
bottom line is - for most people, they are spending less on gasoline this year than in prior years. what's the price done since 2008?
The demand for oil is shrinking not increasing, in addition the introduction of fracking has increased oil production significantly.
The effect of people going from 10mpg SUV's to more fuel efficient vehicles should have resulted in the same kind of reduction in oil prices seen throughout the 80's and early 90's but it has not because of inflation.
Face it, your cash is loosing value due to massive printing by the Fed. Do you really think you can add 40 billion dollars a month to the money supply without some kind of effect on inflation?
Seriously, if it would be up to me, there wouldn't even be a stock market. Stock markets are not necessary for a properly functioning economy, and as it stands, the stock markets have no relationship to the economy, nor are they a reflection of the economy.
People are too damn dumb to realize that it's a global economy; that US corporations are global; that foreigners buy US stocks; and that people who buy stocks aren't banking on an improvement in the US economy, rather they are banking that the global US corporation will have good profits globally.
Having said that, I do actually pay attention to the stock markets, since one of my criticisms of the Trustees for the OASDI and HI (Medicare) Trust Funds is that they rely heavily on the Taxation of Benefits as a source of revenues for those Trust Funds, and the amounts are unrealistic.
In other words, the numbers the Trustees are seeing now are the result of retirees on very generous pension plans. Those pension plans are what pushes retirees over the threshold so that their Social Security Benefits are taxed.
Those very generous pension plans will give way to those pensioners on meager pension plans, eventually giving way to 401(k) plans.
The 401(k) plans will not generate retirement funds even remotely equivalent to pension plans, and the result is that the revenues from the Taxation of Benefits will decline over time, not increase (as the Trustees predict), even with the $25,000 threshold being static.
That also raises another issue, in that down-turns in the stock market can negatively impact 401(k) plans and that compounds the problem related to the Taxation of Benefits.
Of course it can. Over-consumption leads to excess Demand, and if Supply remains static or decreases, then prices rise.
At that point, we must look at Price Elasticity -- determined mostly by the number of available substitutes. Quite possibly, there could be "Demand Destruction" for a given product or service.
And technology.
As I have explained repeatedly, you have Surplus Labor and no place for it to go ---- the exact same situation that caused the Great Depression --- and without a major world war in which you'd have to draft 6 Million troops, you will have Surplus Labor indefinitely, until such time as people come to terms and accept reality, at which point your unemployment rate will decline, but your E-Pop Ratio will be incredibly low.....so low that you will not be able to fund Social Security or Medicare or any kind of universal health plan without increasing the tax rates to levels that will further harm your economy, creating even more Surplus Labor.
As far as out-sourcing, either you out-source and lose jobs, or don't out-source and lose an even greater number of jobs....your choice....choose wisely.
Engaging in protectionist policies is the fastest way to push America into a 3rd World State.
You just cited three examples of Cost-push Inflation, and three examples of Demand-pull Inflation.
The Federal Reserve is not responsible.
In the case of gasoline, the issue is the over-consumption which you claimed was an oxymoron, and government interference.
The Bush Administration implemented EPA Tier 2 --- gasoline must be 30 ppm Sulfur.
As I have explained ad nasuem, the Sulfur Redux process is neither free nor instantaneous...it takes both time and money to reduce Sulfur in gasoline to 30 ppm.
The additional cost is passed onto you, the consumer. The additional time required lowers the production capacity of the refineries, resulting in a reduced Supply of Gasoline for the US markets, and if Demand is constant or increases, then the price of gasoline rises.
The Obama Administration implemented EPA Tier 3 -- gasoline must be at 10 ppm Sulfur.
Once again, the Sulfur Redux process is neither free nor instantaneous...it takes both time and money to reduce Sulfur in gasoline to 10 ppm.
Once again, the additional costs are passed onto you the consumer. Once again, the additional time required to run the Sulfur Redux process causes a decline in gasoline production, which causes gasoline prices to rise if Demand remains constant or increases.
As I have mentioned ad nauseum, you had 49 operating oil refineries in the US, but only 17 produced gasoline --- as in the Supply of Gasoline in the US is limited; static; flat; increasing etc etc etc --- the other 32 refineries produced your hedonistic life-style and standard of living.
Three refineries have since closed, leaving you with 46 operating refineries, of which only 16 produce gasoline, because the other 30 are producing your hedonistic excessive life-style.
Because you have no light sweet (low sulfur) oil to speak of, you must import light sweet (low sulfur) oil
for your hedonistic life-style and standard of living, which means the bulk of your gasoline comes from West Texas Intermediate.
That leaves you with nasty West Texas Sour, East Texas Sour, California Heavy, Oklahoma Sour, North Slope, Louisiana Sour, Illinois Intermediate, Unita Basin Black Wax and junky tar sands from Canada.
Now, if I'm Valero, what should I do?
1] Run the Sulfur Redux to meet EPA Tier 3.....but then I cannot sell the gasoline at a price to make a profit in the US; or
2] Skip the stupid stuff, don't run any Sulfur Redux, and export the gasoline to countries that don't have idiotic EPAs and make massive profits?
Well, Valero et al are doing #2.
Why are US exports of diesel and gasoline increasing?
Now you know why......they're refining high Sulfur oils and selling the gasoline and diesel to other countries.
One other thing...it's Summer now, and many State EPA offices require reformulated gasoline, and that is neither free nor instantaneous.....you cannot mix reformulated with non-reformulated, and so the tanks have to be bone dry....resulting in a minor drop in the Supply of Gasoline until non-reformulated stocks are exhausted, causing the prices to rise for a few weeks.
And one more thing....as I correctly predicted, the corn harvests were a bust....the Supply of Corn in the US is severely limited, and that increases the price of corn, which in turn increases the price of ethanol, which in turn increases the price of gasoline.
And the real drought hasn't even started yet.
The electric is the same story.......EPA regulations have resulted in power plants being shut down, resulting the in Supply of Electricity to decrease, and the price to rise, and then that is compounded by increased competition for fuels for power plants.
Same thing for meat...meats are corn fed, the price of corn rises, so the price of meat rises, and then if transportation costs rise, the price of meats rises.
Again, the Federal Reserve is not responsible.
Those would be examples of Cost-push Inflation via government over-burdening regulations.
Again, the Federal Reserve is not responsible.
What you're describing is Demand-pull Inflation (and to a lesser extent Cost-push Inflation).
Again, the Federal Reserve is not responsible.
The "True Inflation Rate" would be Real (Monetary) Inflation + Cost-push Inflation + Demand-pull Inflation + Wage Inflation + Interest Inflation + Natural Inflation
There's nothing wrong with Substitution.
The prices of goods and services are independent of the Federal Reserve, independent of the price of gold, independent of wages and a lot of other things.
2nd World States transitioning to 1st World States, 3rd World States transitioning to 2nd World States and 4th World States developing to 3rd World States is going to put severe pressure on the Demand side of the equation, causing the prices of goods and services to rise.
If that is a problem, then you need to stop consuming, in order to lower Demand, or increase production to increase Supply to match Demand, so that prices stabilize.
Anyway, instead of fussing over things which the Federal Reserve is not responsible, and useless things like stock markets, you might want to start worrying about the hits your economy is going to take in the future.
Economically...
Mircea
Please kindly explain how the Fed can add 40 billion a month to the money supply without it being inflationary. They must be frickin magicians.
While you are at it explain why the dollar has lost ground against almost every other currency worldwide in the past 20 years. Then explain how the Fed can loan money at interest to the US government without the result being an ever increasing Federal Debt.
Then explain why prices continue to rise at a rate of high inflation while we are in a deflationary environment in which waning demand should by all logic of economics be pushing prices in the other direction.
Bottom line is no matter how much you lie about it, prices are going up at an alarming rate and when prices rise in a recessionary environment it is because your money is loosing value at a faster rate than the recessionary forces can overcome. The statistics have been offset by dropping prices in real estate up to present, but with real estate prices firming up the real inflation rates will soon be impossible to hide and when that happens, the Fed will have to ease up on QE which will in turn cause the markets to lose the only real support they have.
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