At what stage will we see massive rise in CPI – even in real terms versus whether instead we will experience a currency collapse caused by widespread derivatives?
Bogus Official Numbers and Fed QE (et al) policies have artificially inflated Equities Prices – they are a “Mirage” as Carl Icahn says.
And they have greatly distorted other Markets’ Prices as well. Indeed, if one looks at the Real Numbers, one realizes the Economy is not recovering and is in fact weakening. And on that basis one can reasonably conclude the S&P is 65% overvalued.
But the foregoing Realities mean that Nasty Market Surprises (and thus Opportunities) Await Investors, and sooner rather than later.
There are certain facts that are difficult to face in the world. One is that the currency you have spent you life working for isn’t worth what you thought it was. In reality, it may not even be worth the paper that it’s printed on. The United States paper currency has been very slowly devalued for over a century now. This was accelerated into high gear on August 15, 1971 when Nixon took the United States off the gold standard. By removing the gold backing (value) from the United States currency, it opened the door to the unfettered money printing that we have today.
This Is What Stealth Inflation Looks Like.
Stealth inflation is how the authorities hide the devaluation of the dollar in plain sight. Do you think political decisions at the county, state and federal levels would be shown in a different light if your food bill had been VISIBLY raising by 20% to 30% per year for consecutive years?
The images in this article tell the difficult truth for all to see, and the numbers don’t lie.
One of the least discussed, but potentially most significant, provisions in President Obama’s budget is the use of the “chained consumer price index” (chained CPI), to measure the effect of inflation on people’s standard of living. Chained CPI is an effort to alter the perceived impact of inflation via the gimmick of “full substitution.” This is the assumption that when the price of one consumer product increases, consumers will simply substitute a similar, lower-cost product with no adverse effect. Thus, the government decides your standard of living is not affected if you can no longer afford to eat steak, as long as you can afford to eat hamburger.
Changing government statistics to exploit the decline in the American way of life and benefit big spending politicians and their cronies in the big banks does nothing but harm the American people.
If 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…
Real unemployment is increasing in the U.S.A., and has now risen to a record 23.4%!
This is significant not only because of the devastating impact on the poor souls who cannot find work, (and reflects indeed the increasing impoverishment of the USA’s middle class) but also because it means that the U.S. Consumer – 70% of the U.S. Economy – is not going to be able to generate or sustain an economic recovery.
The U.S. is already Threshold Hyperinflationary with Real CPI at 9% (generated by ongoing Massive Central Banks’ QE) and Real GDP a Negative -1.98%. These increasing CPI numbers signal an Opportunity for those who Invest with an eye to the coming Hyperinflation and a Threat to those who do not.
We all know that our cost of living in increasing, but how much?
The official government statistics assure us that inflation is running around 2% per year. It reminds me of the line attributed to Groucho Marx, “Who are you going to believe, me or your own eyes?”
According to the surveys, real people think their personal inflation rate is around 8% per year with a significant percent of the responders claiming 9 – 11% or more per year. Are you going to believe what the government is telling you or your own experience?
Submitted by Adam Hamilton:
The US stock markets enjoyed an incredible first quarter, with the flagship S&P 500 stock index (SPX) surging 10.0%. New cyclical-bull highs were achieved on an amazing 3/7ths of all Q1’s trading days! But the most interesting one was certainly the last. On Q1’s final trading day, the SPX edged up to a new all-time record high. Though celebrated with great fanfare, adjusted for inflation it was far from a record.
Thanks to central banks rapidly inflating their fiat-money supplies, long-term price comparisons are problematic. As the Fed relentlessly injects new money into the US economy every day, the purchasing power of each dollar slowly erodes away. A dollar today buys less than a dollar did 5 years ago, and the farther back you go the greater the disparity. Considering inflation is essential in any long-term analysis.
Submitted by Deepcaster:
“I don’t know when it’s going to end. But my guess is it’s going to end very badly. And it’s going to end very badly because, again, when you get the biggest price in the world, interest rates being manipulated, you get a mis-allocation of resources and this is going to end in one of two ways: with a mal-investment bust which we got in 07-08 […] Or it could end with just monetizing the debt and ‘off we go’ inflation. So that’s a very binary outcome. They’re both bad.”
The Fed’s and other Central Banks’ Money Printing is surely facilitating Serious Malinvestment, which almost inevitably leads to a Bust i.e., to Economic Stagnation or even Depression.
But that Money Printing is also already leading to Inflation. Result: Stagflation is impending, or, more likely, Hyperstagflation.
Submitted by Deepcaster:
“There is no paper money in 2014 or 2015 that will be worth much of anything.” – Jim Rogers
Investors are increasingly concerned, understandably, about the Reliability of Official or Quasi-Official (e.g., those emanating from Too-Big-To-Fail Banks and Ratings Agencies) Statistics and other Financial and Economic News.
Understandably so, given that the actions of Participant Mega-Financial Institutions in the LIBOR Scandal cost Borrowers Billions.
Understandably so, if the allegations in the Ratings Agency litigation are proven true, Investors in deceptively “Rated” Mortgage-Backed Securities, and other commercial Paper have taken a Financial Bath there also.
Understandingly so, given the continuing Flood of Bogus Official Economic Statsitics.
But the Mismatch between Bogus “Statistics” and “News” on one hand and the Real Numbers and Real News on the other provides Opportunities to Profit and Protect. This is because Bogus Statistics and Disinformation give rise to inherently Unsustainable Trends and misallocation of Capital.
In the latest Schiff Report, Peter Schiff discusses a topic regular SD readers are familiar with- the government’s manipulation of public perception of inflation due to the bogus CPI statistic.
Schiff states that The CPI is no longer a tool to accurately measure inflation, but an instrument of propaganda the government uses to hide accelerating inflation from the public and financial markets. Modest CPI increases over the past several years do not reflect an absence of inflation, but a design flaw in the index that fails to fully capture the magnitude of price increases. Central bankers drawing economic conclusions regarding inflation and monetary policy based on this highly flawed data point are making a major policy error.
Schiff’s full report below:
Submitted by Deepcaster:
The five year chart of the CRB Index (a Broad Measure of Commodities Prices) shows three descending tops, which is suggestive of Deflation. But to conclude that Deflation is likely to be The Ruling Force in the Economy in 2013 would be a Dangerous Error.
Indeed, it is critically important for Investors to understand whether or not we are in an Inflation or Deflation, or both (we later explain how this is possible). Failure to understand The Reality about Deflation and Inflation is likely lead to poor or even lethal Investment decisions.
Here we explain The Inflation/Deflation Reality and indicate how to Profit.
In 2013, we will continue to see inflation in terms of the US dollar currency, and deflation in terms of gold.
Submitted by Deepcaster:
The proposed forced Investment of Present and Prospective Retirees 401(K) Assets in U.S. Treasury Paper about which we earlier wrote, is now followed by yet another prospective attack on Retirees’ Security, and indeed on the Wealth Security of those who hold $US Denominated Assets.
The Prospective Rigging of the CPI Calculation Protocol would , yet again, make the “Official” CPI even further removed from The Inflation Reality. The Reality is that the current U.S. Inflation Rate, 9.82%, is already Threshold Hyperinflationary.
Absent manipulation, Gold and Silver would be the monetary “Canaries” of the Financial World, whose prices would long ago have warned of Excessive Monetary and Credit Creation. Well, in the past decade their price appreciation certainly has “warned” of that, but not in the past few months. Gold and Silver prices are subject of ongoing Price Suppression by a Fed-led Cartel. But Gold and Silver Price Suppression, cannot last forever.
Submitted by Deepcaster:
The Prospective Rigging of the CPI Calculation for Social Security recipients would , yet again, make the “Official” CPI even further removed from The Inflation Reality. The Reality is that the current U.S. Inflation Rate, 9.4%, is already Threshold Hyperinflationary.
The Key Point for Investors is understanding the Motivation behind Government and Mega-Banks pushing for Mandatory Government Securities Investment, and changing the way Inflation is calculated.
The Powers-that-Be in the Global Banking and Finance community know that the ever-increasing Money Printing – QE to Infinity – is already leading to increasing Price Inflation, which they wish to hide, and thus eventually to Massive Sales of Paper Treasury Securities, for which they wish to have Buyers, via 401(K) Funds.