German friend of mine used to say "if you believe in official inflation numbers published by government, you probably also believe in easter bunny and Santa Claus".
For last 20 years, inflation has been running rampant, home and rents have become unaffordable. If you are in early 20ties or 30thies there is huge probability that you will never own home. Prices are simply absurd. Even with 2 incomes, it is getting more and more difficult to cover basic necessities, let alone dream about homeownership.
For 2 decades we have been told that middle class is well an alive, but it is just "squeezed", but at this point it is clear, that US middle class has been sold by the Congress to the highest bidder and is dying painful death.
Sad thing is, that this will be probably, one of the last blows US middle class will be able to endure, when this is over there wont be any left anymore. It is safely to say, that US middle class has been outsourced to China together with manufacturing jobs.
And every time I see, US politicians mention Russia and need to help Ukraine, I just shake my head. War in Ukraine has been going for 2 Months now, and US Congress has appropriated over $35 Billion of Aid, this is almost 1% of US budget for 2022. At the same time, we are being told, that there is absolutly no money for issues at home and that any additional spending will just aggravate inflation. How is it possible, that there is never money for Americans, but there is money for everyone else, be it defense of our rich allies in Europe (Germany, UK, US, Sweden, Norway and other rich states) and now Ukraine. While for Americans, there is absolutly nothing. At this point, more US politicians have been to Kyiv than to US southern border.
I read a funny comment other day on YouTube, that people of Detroit and other poor areas in US should hang couple of Ukrainian flags around the area, so some US politician would mistake them for Ukraine and do something for them, since as it seems that Money Printer for Ukraine is working 24/7.
No wonder that US middle class is dying, because for Congress, everything else is more important.
PS. please don't get me wrong, this is not against Ukraine or our allies, but against US Congress, who will do everything except take care for Americans
"Perhaps the senior senator from Massachusetts should spend a little more time in the private sector." <--This is really the core of the issue. We are ruled by a wealthy class of oligarchs who haven't the faintest idea what it's like to be poor.
Our election system has developed into a contest that only the rich (or those with extremely rich friends) can afford to enter. And once in office, these politicians mysteriously become even wealthier--far beyond what their Congressional salaries would account for.
These people don't even have a lens available to look through that would let them understand poverty. To them, the poor are nothing more than a faceless class to be exploited for votes. They have perfected the art of pretending to care about the poor, while crafting policies that sound "compassionate" but *keep* people poor, not merely for the present, but for generations to come.
Perhaps, rather than term limits for political office, we need wealth limits: no one who has ever, at any point in their life, had an income of 6 figures should be eligible for office.
But such laws will never be made--just as simplified tax laws will never be created--because those in power will do anything to hang onto it.
This ain't rocket surgery. Not only do we know what they are doing, THEY know what they're doing. First, inflation is always and everywhere a monetary phenomenon. (HT to Milton Friedman) What does that mean? It means that when you print money from thin air, it is worth less - i.e. inflated. Second, why would they do that? Because of two things: they want more money for themselves because money is power, and they want you, the middle class, to have less money for the same reason. The titular "Biden" administration is doing this deliberately and it is about control.
There is only one thing you need to know about inflation. Inflation is a tax. Nothing more, nothing less. But it is a particularly heinous tax because it not only hits your income, it hits anything you have saved. It is also a "regressive tax" because it hits hardest those with the least money - the poor.
How do the monied classes respond? They hold hard assets - land, gold, silver, foreign assets. Stocks will go up and down, but since they are valued in dollars, as the dollar value goes down they typically go up by the same percentage as inflation PLUS some return above inflation.
We are under an unprecedented assault from all directions. Just remember, there is NEVER deflation, so any money you lose today is gone forever. Elections - especially cheated elections - have consequences. Remember that in November.
My husband and I are just back from a 6 A.M. walk around the piers of Portland, ME. No one but a few old salts were about. One was named Jamie, and he was prepping his trawler to go out for haddock. Paying $6.05 for a gallon of diesel and an acute shortage of workers, Jamie said it won’t be long before he quits going out.
Perhaps an unscientific sample of one with a margin of error of +\- 100, but Jamie was one of the many, many skippers who had tied their boats up at the docks; and each one is making the same calculation. I couldn’t help feeling we haven’t even begun to feel the impact of the inflationary forces eddying out there.
Thank you for this article. My husband used to be shocked (until he got so used to it that it wasn't shocking) when he spoke to economic and business school students on universities and discovered that they believed that the government has money. He tried to explain to them that the government can take money from some and give to others, or else they can print money, thereby making everyone's money worth less. These students, all with high IQs and lots of education, felt that the answer to all problems was the government giving out more money. My guess is some of these students are now adults who believe the "It's Putin's fault" or other gobbledygook. This article is so straightforward that even a college student should be able to understand it.
What do you expect when you elect people who simultaneously shutter industry by violating the Nuremberg Code with medical mandates(scattering our mfg base), effectively shut down ALL domestic energy, and then print trillions of extra dollars that are unneeded?!? Oh, and then let's 'encourage' Ukraine, who produces 40% of the worlds fertilizer, to 'battle' Russia on behalf of US politicians...
This shit ain't hard to understand. For those of you who insisted Dementia Man had to be installed to achieve the above - and this is all by design otherwise it wouldn't be happening - you must answer for it.
I remember watching a news program about inflation in either Venezuela or Argentina (can't remember which) in the early 1970s, during which a shopper at a supermarket told the reporter that she saw what inflation had done when she realized she had just paid the same price for a pack of gum that she had paid (in pesos) for her house ten years earlier. My first house was a small farmhouse on 20 acres across from a creek that cost all of $27,500 in 1972. Most cars now cost at least double that. Let's hope the price of gum stabilizes!
All true. Also, the Federal government has all kinds of policies that have been in place for years to appease constituents but drive up prices for everyone. A selected sampling:
* Requiring ethanol in gasoline is nothing more than a farm subsidy. There is scientific debate about whether more energy is required to create ethanol than it produces (currently leaning towards being a net negative). But all agree that it's very close to a wash. However, one needs to look beyond energy production to other cost/benefits. Using a huge amount of farmland that could be allocated to other crops and allocating a huge percentage of feed-stock to fuel raises the price for everything that includes corn as an input. Even environmentalists are now arrayed against corn ethanol (example: https://e360.yale.edu/features/the_case_against_ethanol_bad_for_environment). Don't expect things to change though - there's the farmer's lobby, not to mention the Iowa caucuses. Now President Biden has asked for higher levels of gasoline ethanol to lower fuel prices. This is anti-science and economically illiterate.
* The federal government spends $4B annually to subsidize sugar farmers. Helps the farmers. Doesn't help consumers who must pay more for products that use higher priced sugar inputs.
* The Jones Act. Requires shipping between US ports to be carried out by US flagged ships. So you have supply chain issues? Let's make cargo shipping between ports slower and more expensive. Smart.
* While the Biden administration removed Trump's additional steel tariffs, there are still limits on imported steel (https://www.piie.com/blogs/trade-and-investment-policy-watch/biden-and-europe-remove-trumps-steel-and-aluminum-tariffs). Free trade allows competition to lower prices. That's not to say that there are no other considerations – purchasing integrated circuits exclusively from other countries is likely not a good strategy. But neither is a blanket opposition to free trade.
* And the granddaddy of them all, restrictions on fossil fuel production in the US. There have been multi-page economics articles written, but here are a few points. (1) If an incoming administration states that they want to end the fossil fuel industry, affected companies aren't going to be willing to invest (2) If new LNG pipelines are not allowed to be built, and current pipelines are at capacity, there is no point in producing more gas; and Biden has promised to export gas to the EU? (3) The world still requires fossil fuels and the Biden administration has gone begging to Saudi Arabia, the Emirates, Venezuela, and Iran to pump more oil. If you are an environmentalist, and the world is going to burn a certain amount of fossil fuels, would you rather have it pumped in the US and Canada where there are strict environmental controls or those countries? Also, do you want countries that oppress their people and in some cases support terrorism to gain additional revenue?
* Spending, spending, spending . . .
And in case one thinks that I'm dumping on Democrats, I would point out that Trump loved tariffs that contributed to increased prices. Even George W. Bush couldn't resist the urge to implement steel tariffs to appease the steel unions. And neither political party is willing to take on the corn, sugar, and other subsidies.
Our government is run by people who are either blind ideologues or cynics that worry much more about their reelection prospects than they do about you
There's also inflation caused by rising minimum wages in many states. People suddenly have more money in their pocket and landlords, grocery stores, and other businesses are reacting to the increased demand by raising prices. This is why raising the minimum wage doesn't really help people, it just resets the price floor to a higher level and leaves people exactly where they started.
If you’re interested in the 70 year trend of wealth transfer that actually got us here I recently posted a stack on the topic. Monetary easy and modern monetary theory fundamental exist to transfer wealth from the poor to the wealthy, and more fundamentally from the people to the government.
There’s a lot of time spent bemoaning “big business” these days - and those people are half right. Big business is a huge part of the problem - the enormous government and the regulation, taxation, and interest rate management that created the environment in the first place are the actual culprit.
We want the American dream back? Deregulation (a return to actual corporate competition), a massive reduction in the tax base, and long term yields above 3% (the almost universally agreed to absolute cost of capital) MUST happen. Any and everything else is just playing games that will continue to cost the bottom half of the country in monetary and life expectancy terms while the top 5% continue to live a life unimaginable even two generations ago…
When will we finally ask these questions: what is the role and what are the limitations of the federal government? And does the ineptitude , vindictiveness and pettiness of our elected officials affect the answers? Our leading economists, at least those in government, have discarded the insights and brilliance and research of guys like Milton Friedman for soundbites on television. They are to economics what many scientists today are to science: political beings first and foremost. Only elections can change the trajectory we are on.
Succintly stated, thank you. Sadly, even though the majority of Americans are intelligent enough to understand these concepts, many of them don’t bother to learn them; or don’t know where to learn them; or are too busy salivating over what CNN and other msm tells them, while actively not engaging their brains; actively not considering alternate explanations; actively not challenging the “facts” as presented. We get what we deserve.
I loved Biden's comment that Milton Friedman wasn't running the show anymore. That is obvious as we wouldn't be in this mess if he was. Maybe these politicians need to read his work more and understand what is going on. Wishful thinking I know.
German friend of mine used to say "if you believe in official inflation numbers published by government, you probably also believe in easter bunny and Santa Claus".
For last 20 years, inflation has been running rampant, home and rents have become unaffordable. If you are in early 20ties or 30thies there is huge probability that you will never own home. Prices are simply absurd. Even with 2 incomes, it is getting more and more difficult to cover basic necessities, let alone dream about homeownership.
For 2 decades we have been told that middle class is well an alive, but it is just "squeezed", but at this point it is clear, that US middle class has been sold by the Congress to the highest bidder and is dying painful death.
Sad thing is, that this will be probably, one of the last blows US middle class will be able to endure, when this is over there wont be any left anymore. It is safely to say, that US middle class has been outsourced to China together with manufacturing jobs.
And every time I see, US politicians mention Russia and need to help Ukraine, I just shake my head. War in Ukraine has been going for 2 Months now, and US Congress has appropriated over $35 Billion of Aid, this is almost 1% of US budget for 2022. At the same time, we are being told, that there is absolutly no money for issues at home and that any additional spending will just aggravate inflation. How is it possible, that there is never money for Americans, but there is money for everyone else, be it defense of our rich allies in Europe (Germany, UK, US, Sweden, Norway and other rich states) and now Ukraine. While for Americans, there is absolutly nothing. At this point, more US politicians have been to Kyiv than to US southern border.
I read a funny comment other day on YouTube, that people of Detroit and other poor areas in US should hang couple of Ukrainian flags around the area, so some US politician would mistake them for Ukraine and do something for them, since as it seems that Money Printer for Ukraine is working 24/7.
No wonder that US middle class is dying, because for Congress, everything else is more important.
PS. please don't get me wrong, this is not against Ukraine or our allies, but against US Congress, who will do everything except take care for Americans
"Perhaps the senior senator from Massachusetts should spend a little more time in the private sector." <--This is really the core of the issue. We are ruled by a wealthy class of oligarchs who haven't the faintest idea what it's like to be poor.
Our election system has developed into a contest that only the rich (or those with extremely rich friends) can afford to enter. And once in office, these politicians mysteriously become even wealthier--far beyond what their Congressional salaries would account for.
These people don't even have a lens available to look through that would let them understand poverty. To them, the poor are nothing more than a faceless class to be exploited for votes. They have perfected the art of pretending to care about the poor, while crafting policies that sound "compassionate" but *keep* people poor, not merely for the present, but for generations to come.
Perhaps, rather than term limits for political office, we need wealth limits: no one who has ever, at any point in their life, had an income of 6 figures should be eligible for office.
But such laws will never be made--just as simplified tax laws will never be created--because those in power will do anything to hang onto it.
Its even worse when you recognize the hidden inflation of smaller servings in the items purchased. Pretty sure that won't be transitory.
This ain't rocket surgery. Not only do we know what they are doing, THEY know what they're doing. First, inflation is always and everywhere a monetary phenomenon. (HT to Milton Friedman) What does that mean? It means that when you print money from thin air, it is worth less - i.e. inflated. Second, why would they do that? Because of two things: they want more money for themselves because money is power, and they want you, the middle class, to have less money for the same reason. The titular "Biden" administration is doing this deliberately and it is about control.
There is only one thing you need to know about inflation. Inflation is a tax. Nothing more, nothing less. But it is a particularly heinous tax because it not only hits your income, it hits anything you have saved. It is also a "regressive tax" because it hits hardest those with the least money - the poor.
How do the monied classes respond? They hold hard assets - land, gold, silver, foreign assets. Stocks will go up and down, but since they are valued in dollars, as the dollar value goes down they typically go up by the same percentage as inflation PLUS some return above inflation.
We are under an unprecedented assault from all directions. Just remember, there is NEVER deflation, so any money you lose today is gone forever. Elections - especially cheated elections - have consequences. Remember that in November.
My husband and I are just back from a 6 A.M. walk around the piers of Portland, ME. No one but a few old salts were about. One was named Jamie, and he was prepping his trawler to go out for haddock. Paying $6.05 for a gallon of diesel and an acute shortage of workers, Jamie said it won’t be long before he quits going out.
Perhaps an unscientific sample of one with a margin of error of +\- 100, but Jamie was one of the many, many skippers who had tied their boats up at the docks; and each one is making the same calculation. I couldn’t help feeling we haven’t even begun to feel the impact of the inflationary forces eddying out there.
Thank you for this article. My husband used to be shocked (until he got so used to it that it wasn't shocking) when he spoke to economic and business school students on universities and discovered that they believed that the government has money. He tried to explain to them that the government can take money from some and give to others, or else they can print money, thereby making everyone's money worth less. These students, all with high IQs and lots of education, felt that the answer to all problems was the government giving out more money. My guess is some of these students are now adults who believe the "It's Putin's fault" or other gobbledygook. This article is so straightforward that even a college student should be able to understand it.
What do you expect when you elect people who simultaneously shutter industry by violating the Nuremberg Code with medical mandates(scattering our mfg base), effectively shut down ALL domestic energy, and then print trillions of extra dollars that are unneeded?!? Oh, and then let's 'encourage' Ukraine, who produces 40% of the worlds fertilizer, to 'battle' Russia on behalf of US politicians...
This shit ain't hard to understand. For those of you who insisted Dementia Man had to be installed to achieve the above - and this is all by design otherwise it wouldn't be happening - you must answer for it.
I remember watching a news program about inflation in either Venezuela or Argentina (can't remember which) in the early 1970s, during which a shopper at a supermarket told the reporter that she saw what inflation had done when she realized she had just paid the same price for a pack of gum that she had paid (in pesos) for her house ten years earlier. My first house was a small farmhouse on 20 acres across from a creek that cost all of $27,500 in 1972. Most cars now cost at least double that. Let's hope the price of gum stabilizes!
All true. Also, the Federal government has all kinds of policies that have been in place for years to appease constituents but drive up prices for everyone. A selected sampling:
* Requiring ethanol in gasoline is nothing more than a farm subsidy. There is scientific debate about whether more energy is required to create ethanol than it produces (currently leaning towards being a net negative). But all agree that it's very close to a wash. However, one needs to look beyond energy production to other cost/benefits. Using a huge amount of farmland that could be allocated to other crops and allocating a huge percentage of feed-stock to fuel raises the price for everything that includes corn as an input. Even environmentalists are now arrayed against corn ethanol (example: https://e360.yale.edu/features/the_case_against_ethanol_bad_for_environment). Don't expect things to change though - there's the farmer's lobby, not to mention the Iowa caucuses. Now President Biden has asked for higher levels of gasoline ethanol to lower fuel prices. This is anti-science and economically illiterate.
* The federal government spends $4B annually to subsidize sugar farmers. Helps the farmers. Doesn't help consumers who must pay more for products that use higher priced sugar inputs.
* The Jones Act. Requires shipping between US ports to be carried out by US flagged ships. So you have supply chain issues? Let's make cargo shipping between ports slower and more expensive. Smart.
* While the Biden administration removed Trump's additional steel tariffs, there are still limits on imported steel (https://www.piie.com/blogs/trade-and-investment-policy-watch/biden-and-europe-remove-trumps-steel-and-aluminum-tariffs). Free trade allows competition to lower prices. That's not to say that there are no other considerations – purchasing integrated circuits exclusively from other countries is likely not a good strategy. But neither is a blanket opposition to free trade.
* And the granddaddy of them all, restrictions on fossil fuel production in the US. There have been multi-page economics articles written, but here are a few points. (1) If an incoming administration states that they want to end the fossil fuel industry, affected companies aren't going to be willing to invest (2) If new LNG pipelines are not allowed to be built, and current pipelines are at capacity, there is no point in producing more gas; and Biden has promised to export gas to the EU? (3) The world still requires fossil fuels and the Biden administration has gone begging to Saudi Arabia, the Emirates, Venezuela, and Iran to pump more oil. If you are an environmentalist, and the world is going to burn a certain amount of fossil fuels, would you rather have it pumped in the US and Canada where there are strict environmental controls or those countries? Also, do you want countries that oppress their people and in some cases support terrorism to gain additional revenue?
* Spending, spending, spending . . .
And in case one thinks that I'm dumping on Democrats, I would point out that Trump loved tariffs that contributed to increased prices. Even George W. Bush couldn't resist the urge to implement steel tariffs to appease the steel unions. And neither political party is willing to take on the corn, sugar, and other subsidies.
Our government is run by people who are either blind ideologues or cynics that worry much more about their reelection prospects than they do about you
Well done. Excellent article. When will we wise up and start voting these clowns out of office? #sendeveryincumbenthome
There's also inflation caused by rising minimum wages in many states. People suddenly have more money in their pocket and landlords, grocery stores, and other businesses are reacting to the increased demand by raising prices. This is why raising the minimum wage doesn't really help people, it just resets the price floor to a higher level and leaves people exactly where they started.
Inflation, the cruelest tax.
If you’re interested in the 70 year trend of wealth transfer that actually got us here I recently posted a stack on the topic. Monetary easy and modern monetary theory fundamental exist to transfer wealth from the poor to the wealthy, and more fundamentally from the people to the government.
There’s a lot of time spent bemoaning “big business” these days - and those people are half right. Big business is a huge part of the problem - the enormous government and the regulation, taxation, and interest rate management that created the environment in the first place are the actual culprit.
We want the American dream back? Deregulation (a return to actual corporate competition), a massive reduction in the tax base, and long term yields above 3% (the almost universally agreed to absolute cost of capital) MUST happen. Any and everything else is just playing games that will continue to cost the bottom half of the country in monetary and life expectancy terms while the top 5% continue to live a life unimaginable even two generations ago…
When will we finally ask these questions: what is the role and what are the limitations of the federal government? And does the ineptitude , vindictiveness and pettiness of our elected officials affect the answers? Our leading economists, at least those in government, have discarded the insights and brilliance and research of guys like Milton Friedman for soundbites on television. They are to economics what many scientists today are to science: political beings first and foremost. Only elections can change the trajectory we are on.
Succintly stated, thank you. Sadly, even though the majority of Americans are intelligent enough to understand these concepts, many of them don’t bother to learn them; or don’t know where to learn them; or are too busy salivating over what CNN and other msm tells them, while actively not engaging their brains; actively not considering alternate explanations; actively not challenging the “facts” as presented. We get what we deserve.
I loved Biden's comment that Milton Friedman wasn't running the show anymore. That is obvious as we wouldn't be in this mess if he was. Maybe these politicians need to read his work more and understand what is going on. Wishful thinking I know.