Wednesday, September 23, 2009

The Art of Not Seeing the Inflation Right in Front of Your Eyes

It is remarkable to me that analysts like the widely-read Mike Shedlock continue to miss the inflation that is going on all around us. It's like a passenger on a boat remarking on how slow the boat is going, when the engines are running 101 mph against a 100 mph current. [Of course, he also misses the obvious destruction unleashed by so-called free trade and is only just now hedging over to the side of debt-forgiveness, so it is probably accurate to say he is more clever than intelligent.]

Even the CPI, which is a misleading piece of junk when it comes to measuring total economy-wide inflation, is showing inflation. And this is in the face of the greatest destruction of household wealth in history, a worldwide industrial collapse, a worldwide credit collapse, and the highest levels of unemployment since the Great Depression. And inflation only took a couple months vacation!

The consumer price index peaked in August 2008 and bottomed in December 2008 (source). From then to August 2009, just a bit over half a year, the cpi has risen 2.7%.

To put this in perspective, from December 2000 to December 2006, the average increase in the CPI was 2.6% per year. So how is it that even during an historic collapse in consumer credit, household wealth, and employment, we are seeing higher than normal inflation on the consumer level???

And let's remeber, the CPI doesn't even measure the inflationary investment environment, aka bubblenomics, such as the bubble in stocks or the bubble in government bonds, or the previous inflation in home values prior to 2008.

Combine the above facts with the slow death spiral of the US dollar and the surging rate of federal debt spending, not to mention the monetization of the debt. The upcoming inflation is not going to be pretty.


Nitsuj said...

Seems you're being inconsistent. The tagline under your blog says "The solution to our debt deflation depression..." Yet now you're spouting inflation. So, which is it?

Anonymous said...

I would like to post something totally off topic.
I did a little research on biblical Jubilee ( well actually very little research, I opened one book).
Tony Campolo wrote "The Kingdom of God is a Party" in 1990.
I will paraphrase Chapt 2.
Apparently Moses wrote about Jubilee in Leviticus 25:8.
According to the law of God as related to the sabbath, the Jews were supposed to have a debt cancellation every 50 years. All land was to be returned to the original owners and every one in prison was to be set free. ( In those days most people were in prison for debt, other crimes were punishable by death).
The book says biblical scholars believe the Jews never observed the Jubilee. The rabbis gave justifications for nonobservance but basically never fulfilled the complete law of the sabbath.
Now bear with me here because this is the point.
Isaiah 61 says fulfillment of the law of Jubilee will remain as something the Messiah will do when he comes.
So I wonder if the fact that Jubilee is even being discussed, points to something darker coming for the world- like Revelations?


Justin said...

Nitsuj (real original there buddy), The original problem was debt deflation. Our gov't solution is inflation, rather than the correct solution, Jubilee. So we are now tracking continued deflation in some sectors (like real estate), while tracking inflation in others.

Justin said...

Morgan, many signs to point to this as the End Days. But I think the spiritual fullfillment of Jubilee already took place, in the first coming of Christ. See, for example, Luke 4:16-21.

My proposal is more along the lines of a biblically-inspired modern Jubilee, an application of those godly principles to our modern world.