Page 1 of 3 123 LastLast
Results 1 to 10 of 24

Thread: Ever increasing Inflation: Companies paying more But stolen through inflation.

  1. #1

    Default Ever increasing Inflation: Companies paying more But stolen through inflation.

    Companies scrambling to get and keep qualified employees have had to compete and are paying on average 2.8% more. Inflation at 5.4 percent has already robbed them of any real benefit.

    https://amp.cnn.com/cnn/2021/08/10/b...ges/index.html

  2. #2

    Default

    Quote Originally Posted by jjmcwill View Post
    Companies scrambling to get and keep qualified employees have had to compete and are paying on average 2.8% more. Inflation at 5.4 percent has already robbed them of any real benefit.

    https://amp.cnn.com/cnn/2021/08/10/b...ges/index.html
    Here is a fact that 'they' never tell you.

    If wages increase 3% and inflation (CPI) 5% in a year, you think you are 2% behind the game.

    You are actually more.

    Example. Joe makes 50,000 bucks and spends 95% and saves 5%.( guessing pretty typical)

    So his wages go up by 1500 to 51,500. He loses 25% to income tax and payroll ( guessing for US) So he now has 1500 - 375 or $ $1,125 in extra purchasing dollars
    His expenses go up by 5% ( 95% x 50,000 ) or $2,375.

    So he has 1,125 more to spend but he has 2,375 more to pay for. That is he is out 2.5% not 2%

    Who gets to pocket most, if not all of that difference? 1 guess.

    Guess who like inflation, especially if they can hold their borrowing costs artificially low ? ( which creates more inflation)

    Guess who gets screwed even more than advertised?

  3. #3

    Default

    Jim Rickards recently presented some fresh perspective in some of his latest opinions & predictions.

    Basically, he is calling for the dollar to rise short term & slide after that. He gives a lot more detail though. He lists some interesting reasoning, as he usually does. I found the piece to be through provoking - https://dailyreckoning.com/a-global-...s-is-underway/

    He sees currency wars in the mix. He seems to see under reported inflation. He seems to believe that Biden & Yellen are both getting set up for a big tumble. He sees liquidity problems on the horizon (which seems strange to me, with the Fed keeping the tap open). It sounds like he thinks that midterm elections could be a blood bath for the Dems. If someone was going to get set up as a scapegoat, Biden & Yellen would be prime picks. Both are so old that they can't be punished for long, & Biden seems so disconnected that he might not even know what is happening.

    One passage I did not get on board with 100% was this - "Foreign governments are reducing their holdings of U.S. Treasury securities. This does not signal an aversion to the dollar. It signals that foreign banking systems are desperate to obtain dollars and will sell Treasuries to get them." I need to ponder that a little more.
    Last edited by SilverPalm; 08-15-2021 at 10:54 PM.

  4. #4

    Default

    According to this - https://mises.org/power-market/who-joe-manchin

    A senator is calling out the Fed & asking why they don't start to taper. Will that be the pin that pops the bubble?

  5. #5

    Default

    Quote Originally Posted by SilverPalm View Post
    Jim Rickards recently presented some fresh perspective in some of his latest opinions & predictions.

    Basically, he is calling for the dollar to rise short term & slide after that. He gives a lot more detail though. He lists some interesting reasoning, as he usually does. I found the piece to be through provoking - https://dailyreckoning.com/a-global-...s-is-underway/

    He sees currency wars in the mix. He seems to see under reported inflation. He seems to believe that Biden & Yellen are both getting set up for a big tumble. He sees liquidity problems on the horizon (which seems strange to me, with the Fed keeping the tap open). It sounds like he thinks that midterm elections could be a blood bath for the Dems. If someone was going to get set up as a scapegoat, Biden & Yellen would be prime picks. Both are so old that they can't be punished for long, & Biden seems so disconnected that he might not even know what is happening.

    One passage I did not get on board with 100% was this - "Foreign governments are reducing their holdings of U.S. Treasury securities. This does not signal an aversion to the dollar. It signals that foreign banking systems are desperate to obtain dollars and will sell Treasuries to get them." I need to ponder that a little more.
    More from Mr. Rickards, this time mostly on gold. https://youtu.be/wWTr3Bix1lY

    He pokes holes in arguments against a gold standard.

    He gives an interesting report of Bernanke's research into the effects of the gold standard on the Great Depression. A new perspective emerges, based on Milton Freeman's reports, & supposedly confirmed by Bernanke.

    Mr Rickards reminds us that the August 15 1971 retraction of the gold standard was said to be temporary. Of course it was not.

    He seems to be warming up to certain types of crypto, such as "credit cards" that are backed by gold rather than USD. Of course, that would carry the usual counter party risk.

    I found it interesting that he reports the US gold is owned by the US Treasury, & the Fed only holds an IOU for it. Again, I am reminded that I would love to see an accounting of the US gold stocks.

    One place I disagree with Mr. Rickards is when he claims that Americans hate central banks. In my opinion, most Americans don't know enough about central banks to have an opinion on them. It is nice to hear him reminding us of Andrew Jackson killing the second US central bank.
    Last edited by SilverPalm; 08-16-2021 at 11:05 AM.

  6. #6

    Default

    I still have 3 questions that no one in the financial industry or government ever address. Perhaps I missed the explanations.

    1) why is a 2% inflation rate desirable?. Why is 0 not more desirable as per their original mandate.

    2) Why does everyone seem to just subtract the inflation rate from average wage increase and say that is how much the worker is falling behind?
    If expenses increase 7%, and you spend all your money or almost all, like most do, then that is what you need. If wages increase 4.5%, they are talking about gross wages, so you
    need to subtract 25% to 35% off of that for income and payroll taxes and that is what you are left with to pay the full amount of expenses.
    Remember this pay increase is at the top end of your wages, hence your highest marginal tax bracket.
    I never hear anyone say the worker is behind by at least 3.5%, only that he is behind by 2.5%.

    3) Why do they always compare inflation today with inflation pre 1990`s? It is calculated differently,(lower) which would result in either
    a) a much lower pre 90`s inflation rate or b) a much higher post 90`s inflation rate - depending on which calculation you normalize with.

    " Oh, what a tangled web we weave, when first we practice to deceive!"

  7. #7

    Default

    Brutus I wasnt aware that they were not officially targeting 2% Inflation until 2012.

    "As such, the FOMC adopted an explicit inflation target of 2 percent in January 2012." It is uniform for all the banks today.

    Here are three reasons given

    1. Measurement Bias
    [O]ne reason that central banks like the Fed have tended to settle on a numerical target thats above zero is that measuring inflation precisely is very difficult, Wheelock said. He explained that the price indexes that are used to estimate inflation dont necessarily include all goods and services in an economy.

    Furthermore, these indexes have a slight upward bias. So, when the observed rate of inflation is, say, 1 or 2 percent the true measure is actually probably lower than that, closer to zero, he explained.

    2. Room to Cut Interest Rates
    Another reason that some people give for having a positive inflation target is that interest rates and inflation tend to be proportional, Wheelock noted. That means that a higher inflation rate tends to be associated with higher interest rates.

    A higher level of interest rates gives the Fed a little more room to cut in the event of a recession, he said. So its a bit of a cushion that allows monetary policy to operate a little more through its traditional interest rate channel.

    3. Avoiding Deflation
    A third reason that Wheelock discussed for targeting a positive number relates to providing insurance against deflation. Deflation is a general, sustained downward movement of prices for goods and services.

    [S]ome people think that the effect of deflation of a given size would be more harmful for the economy than a positive rate of inflation of the same number, Wheelock said.

    So, in other words, the costs of a negative 2 percent inflation rate, or a 2 percent deflation rate, would be higher than the costs of a 2 percent positive inflation rate. So, you want to err on the side of having a positive number, he explained.


    https://www.stlouisfed.org/open-vaul...rget-2-percent



    Ultimately, according to this document from the st. louis FED more than anything it seems to be a psychological ploy. Tell people what the future is going to be so that they adjust their finances accordingly.

    They are failing miserably at balancing on a razors edge.

  8. #8

    Default

    Interesting Jimcwill. I never seen this and thanks for showing to me.


    Seems to me a strange explanation by Fed

    Inflation is only under reported in the minds of Central Bankers. No one in the real economy would consider the CPI underreporting inflation.

    Funny in 2012 he states that wants a positive 2% inflation so the Fed can lower rates, as traditionally a 2% inflation rate would mean a 2.5% FFR or thereabouts
    That means they could lower the rate in an emergency. What happened to that thinking in the past decade. Rates are 0 and inflation is 7% Ha Ha

    Deflation is just fine for working people. ( lower prices) Might not be so fine for those that hold a lot of assets ( just will not make fake profits) and the government and other big debtors. ( inhibits their ability to expand, and probably need to contract)
    Deflation is the natural order ( take the technology companies for instance - I do not see them suffering

    Just wish they would come out and say the obvious. Our policy is designed for the benefit of the top 10% of population. Hopefully some of you other guys can benefit a bit, but if not there is always
    welfare and food stamps, if things get too bad for you " Let them eat cake"

  9. #9

    Default



    From jjm's quote above of the Federal Reserve:

    "Furthermore, these indexes have a slight upward bias. So, when the observed rate of inflation is, say, 1 or 2 percent the true measure is actually probably lower than that, closer to zero, he explained.

    Another reason that some people give for having a positive inflation target is that interest rates and inflation tend to be proportional"


    Anyone who tells me this I will consider nuts, no matter how well dressed, paid, and manicured -- not someone to listen to due to extremely poor observational skills and an inability to even lie well. We have had one of those here (now properly kept in the "Rants" section).

    Really, you can learn more from listening to deranged man talking out loud in the street. Not worth my time and consideration, and I pitty those who think such utterances are. Facts of my life and observation: the sun rises in the east, sets on the west, the federal reserve ALWAYS mistakes the true rate of inflation to a lower number, and since for over a decade, intrest rates have been far lower than inflation. I have no desire to debate what are facts, an awareness of basic facts that have helped me in life, anyone who will think it is otherwise, I will just dismiss as nuts or a bad liar, no matter how many fancy words they know, nor worth engaging with.
    Last edited by motocat; 01-27-2022 at 06:42 PM.
    Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.Daniel Webster (1782-1852)

  10. #10

    Default

    Quote Originally Posted by brutus2 View Post
    Here is a fact that 'they' never tell you.

    If wages increase 3% and inflation (CPI) 5% in a year, you think you are 2% behind the game.

    You are actually more.

    Example. Joe makes 50,000 bucks and spends 95% and saves 5%.( guessing pretty typical)

    So his wages go up by 1500 to 51,500. He loses 25% to income tax and payroll ( guessing for US) So he now has 1500 - 375 or $ $1,125 in extra purchasing dollars
    His expenses go up by 5% ( 95% x 50,000 ) or $2,375.

    So he has 1,125 more to spend but he has 2,375 more to pay for. That is he is out 2.5% not 2%

    Who gets to pocket most, if not all of that difference? 1 guess.

    Guess who like inflation, especially if they can hold their borrowing costs artificially low ? ( which creates more inflation)

    Guess who gets screwed even more than advertised?
    Plus if his income jumps to the next higher tax bracket he gets screwed even more on his "increased" earnings. Ditto when you sell your half million dollar house and declare your "profit" because you purchased it 30 years ago at $100,000. So $400,000 profit. Same thing for stocks held long term and anything that's inflated because the gov't can't keep from printing more money. Your "profit" is nothing but inflation adjusted pricing. But not as far as the gov't is concerned.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

Page 1 of 3 123 LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •