Administrations in the United States always release bad news late on Friday afternoons after most reporters have taken off work a little early and lined up at their local watering holes.
Apparently Saturday morning is the Chinese equivalent.
Today China announced that inflation in June his 6.4%, solidly above the 6.2% analysts had expected, clocking in at a 3-year high (according to Bloomberg).
This is one of Beijing’s big worries, and it contradicts recent comments from Premier Wen Jiabao that inflation in China had been whipped.
If the Chinese act quickly, they can probably get a good deal on a warehouse full of “Whip Inflation Now” buttons and bumper stickers left over from the Ford administration.
On the other hand, we might want to hold on to them because it’s pretty sure that we’re going to need them soon, too.
Dr. Marc Faber is known as Dr. Doom because, unfortunately, he’s a contrarian whose dark forecasts have been right on the money. He publishes a pithy monthly investment newsletter called The Gloom, Boom & Doom Report.
Here are five questions and answers we plucked from a recent interview with the Daily Bell:
Question #1:
Daily Bell: Do you still expect hyperinflation? Marc Faber: In my view, the debt level, especially in the US, if we include the unfunded liabilities of Medicare, Medicaid, Social Security and these entitlement programs, is beyond repair. And this will necessitate printing more money. Also, in my view, there is no real political will to address the issues, because who ever would cut entitlements, will not be re-elected. So we have a tyranny of the masses.
It was inevitable. It had to happen sooner or later. Consumer inflation has hit a three-year high with no evidence of economic strength to ameliorate it.
Reuters reports:
The Labor Department said on Wednesday its Consumer Price Index, excluding food and energy, increased 0.3 percent, the largest gain since July 2008, after rising 0.2 in April.
What caused the leap? Well, core inflation was impacted by jumps in motor vehicle and apparel prices. Of course, economists (the only people who do their jobs more poorly than meteorologists without getting fired) say they had expected the number to rise by just 0.2 percent last month. What the hell. They were only off by 50%, which is better that they usually do, so we say let’s cut ‘em some slack.
Over the course of the last twelve calendar months, consumer prices rose a worrisome 3.6%.
We fear that 3.6% will be a really attractive number in the years to come. We’ll long for the good ol’ days when we only had 3.6% inflation per year instead of per month.
Inflation is a ravenous monster that consumes everything – well, almost everything – in its path. And it’s coming your way. There are, however, some things you can do to confront it.
Think of yourself as an economic boy scout. Be prepared. The more prepared you are, the better the odds that you can survive, thrive and come out alive when the world descends into chaos.
Here are some common sense inflation survival tips:
We’re enveloped in a big, gooey cloud of euphoria whenever we hear “the experts” predict the future. It doesn’t seem to matter how many months in a row they’re wrong, they just keep making new predictions and the media just keeps reporting them.
Reuters actually reports the story with a straight face:
I get asked about what I think about our economic system. Why me? I read the Wall Street Journal a couple times a week and I guess that makes me an expert in some people’s minds. I accept this heavy burden that has been thrust upon me and willingly offer up opinions. Like this one:
I think we are in trouble. Maybe not Depression-era trouble, but serious trouble all the same.
Our money system is based upon trust. As long as people trust that a buck will buy $1 worth of stuff, you have no inflation. However, the actual supply of money bears no relation to that trust.
It’s a lot like banking. Suppose you decide to set up a bank. You rent a building, buy a nice safe and a burglar alarm, hire a few cheerleaders who can count and make change, and throw some money in the safe. You’re in business. Now, people come in, you lend them the money you have in the safe, but they don’t take it out of the bank. Nope, they write a *check*. So, while that money’s just sitting there, you can loan it out to somebody else. They also write a check, and so you can keep on loaning out the same money time and again.
Is that unethical? Well, it has been going on for a long time and is part of accepted banking practices, so, by that measure, it is not. It isn’t as risky as it used to be — way back, the banks had a lot of people who used savings accounts, and would want to be able to withdraw their money in actual silver or gold. If the customers all got scared, they could withdraw all their savings, clean out your safe, and your bank would go under since you didn’t actually have all that money on hand.
ChartBin.com put together an interesting world map that shows the current inflation rate in every country.
While the map is interesting, we’re not sure how accurate it is. If you’ve filled your car with gas or your shopping cart with groceries lately, you might dispute the fact that the Unites States’ official inflation rate is a mere 1.4%.
And common sense tells you that Zimbabwe’s stats are the result of even more government spin. After all, you don’t end up printing $100 trillion bills if your inflation rate is only 5%.
No matter how accurate the numbers are, we must say that we enjoy seeing that Venezuela has the world’s highest officially-reported rate of inflation at 29.8%. While we feel bad for the plight of the Venezuelan people, we shed no tears for Hugo Chavez, it’s elected leader.
Check out ChartBin.com’s scrollable interactive version here.
The New York Times calls out the sellers of packaged foods for the con game they are playing with consumers. If you are an astute shopper you’ve already noticed what’s going on at the market — companies are putting less and less food in packages, and keeping the prices the same (or raising them).
If you eat, and I think you do, it’s an interesting story on food inflation.
Chips are disappearing from bags, candy from boxes and vegetables from cans.George Boyle | Stockbyte | Getty ImagesAs an expected increase in the cost of raw materials looms for late summer, consumers are beginning to encounter shrinking food packages.With unemployment still high, companies in recent months have tried to camouflage price increases by selling their products in tiny and tinier packages. So far, the changes are most visible at the grocery store, where shoppers are paying the same amount, but getting less.
Minyanville wrote a piece on Bill Lapp’s predictions for the price of food in 2015. Lapp is president of Advanced Economic Solutions, a consulting firm in Omaha, Nebraska, and the former chief economist for ConAgra Foods (CAG), on the future price of food.
In the last nine months, he says, the prices of corn and wheat have doubled; the price of corn alone (nearly $7 a bushel) is three times higher than the previous norm. Lapp estimates that the higher prices for these commodities — for the grains we eat and those used to feed livestock — amounts to some $40 billion in costs not yet passed on to the consumer. But the higher price tags are coming “sooner rather than later,” says Lapp. He calls it a “big liability in front of us.”
The article provides the details, but here is a summary of prices in 2015:
Loaf of bread: $2.16
Gallon of milk: $4.00
Ground Beef: $5 a pound
Boneless Chicken Breast: $4.37 a pound ($9.50 in New York)
Fruit: just 1-5% increase per year overall
Margarine: $1.50 a stick
Average 6-pack: $6.35 ($8.76 for Bud in New York).
While the Federal Reserve insists there is no inflation, the cost to create a dollar bill as risen 50% in the last three years, due to the rising cost of cotton and linen. Printing the dollar has become so expensive now, the government is considering switching the dollar from paper to coin. Listen to Peter Schiff tell the ironic story.
At the heart of the original uprisings in the Middle East is the cost of food. It had become so expensive that people rioted in the streets in protest. Now, inflation is firing up Americans as well. In this case, a 50% increase in the price of a Taco Bell Beefy Crunch Burrito was enough to drive a man insane.
Police say a San Antonio Taco Bell customer enraged that the seven burritos he ordered had gone up in price fired an air gun at an employee and later fired an assault rifle at officers before barricading himself into a hotel room.
San Antonio police Sgt. Chris Benavides says officers used tear gas Sunday night to force the man from the hotel room after a three-hour standoff. The man is charged with three counts of attempted capital murder. Authorities have not released his name.
Brian Tillerson, a manager at the Taco Bell/KFC restaurant, told the San Antonio Express-News that the man was angry the Beefy Crunch Burrito had gone from 99 cents to $1.49 each.
It’s a good thing he doesn’t shop for organic goods where my wife does.
On Wednesday’s two-year anniversary of the bull market, cycle watcher Charles Nenner is sticking with a forecast of Dow 5000 sometime over the next three years.
With over seven million views and growing financial media attention, Porter Stansberry’s “End of America” video has become a nationwide phenomenon. Yahoo Finance’s Tech Ticker video news series recently interviewed Porter about the predictions he’s made and how investors can protect themselves from this coming crisis.
WASHINGTON (AP) — World Bank President Robert Zoellick says global food prices have hit “dangerous levels” that could contribute to political instability, push millions of people into poverty and raise the cost of groceries.
The bank says in a new report that global food prices have jumped 29 percent in the past year, and are just 3 percent below the all-time peak hit in 2008. Zoellick says the rising prices have hit people hardest in the developing world because they spend as much as half their income on food.
The World Bank estimates higher prices for corn, wheat and oil have pushed 44 million people into extreme poverty since last June.
Zoellick said he expects food prices to continue to rise, and that export bans and weather disruptions are partly to blame.
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EriktheRed: I like how it’s “fortunate that the crisis is confined to the E.U.”- what’s unemployment in the U.S. right now? How about the millions of foreclosures you’ve had already? Tent cities, anyone? Deficit spending at $3.5 bn a DAY? HMM!
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Arkansas Slim: Update. Oil hit 105 per barrel yesterday, 2 20 12. Gas US Avg => 3.50 per gallon. Cloward Piven Theory of Economics: Tipping point of US Electorate => 51%. Nevada odds for Obama RE Election 6/10 on thier sport boards. EU/Greece set to collapse, dominos arranged. Socialistic...
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Rider I: How the US has historically used mineral rushes to get it out of Deficits and stop foreign economic take over. In the US’s historical past the Druids have used and impressed upon the US leadership to use mineral resources to stop economic warfare, along with military take over....
