I Just Broke A Dozen Eggs. The Claims Adjuster Is On His Way!
There is much truth and humor in Facebook wisdom….
Hardly a day goes by without my wife raising her voice about inflation and skyrocketing prices. Without realizing it I’ve probably tuned it out…. Not anymore!
Last weekend she roped me into helping her clean out the kitchen and pantry. Every can, bottle, box, or tube past the expiration date got pitched.
Jo’s grocery list grew accordingly, along with anger about what it will cost to restock our supply. Attempting to calm her down, I foolishly tried to minimize things, “It can’t be that bad!” Shouldn’t have said that… She wasn’t happy. “OK, we’re going to the grocery store together ….
Our grocery cart was full and the bill, with no meat, was double what I thought it would be. Damn! Might be cheaper to eat out…. Jo was right, grocery prices are outrageous!
Friend Frank Trotter’s recent LinkedIn post caught my eye:
“Yah, that’s kind of what we thought, it’s not just eggs…
It’s one of those things that just creeps up on you. Looking at the checkbook in the old days and the credit card statement today and you start to think – what happened?
The grocery store may be the place where we visit most frequently and where all of the prices stare out at you from the shelves, but keep looking around the rest of your spending and there it is.
It’s not just the eggs.”
Our trip to the grocery store was a rude awakening. Frank is right, it’s not just eggs or the whole grocery cart; the prices of auto expenses to zippers, and everything in between have skyrocketed.
Wolf Street reports:
“Worst Month-to-Month Acceleration of CPI since Aug 2023, on Spikes in Used Vehicles, Non-Housing Services, Food, Energy.
Inflation has been going in the wrong direction relentlessly month-to-month since June.
Month-to-month “Core” CPI, which excludes food and energy components to track underlying inflation, jumped by 0.45% (+5.5% annualized) in January from December, the worst increase since April 2023.”
I did a quick check – since 2022 – insurance premiums are up 62% and our favorite pizza restaurant jumped 44%.
Frank continues:
“In the US the BLS reports for January a 3% year-on-year rise in inflation for Urban Consumers, with the PCE up 3.8%.
But what do you believe?”
| “The only statistics you can trust are the ones you have falsified yourself.”
— Winston Churchill |
Moreso, who DON’T you believe?
In our article When The Scorekeeper Lies, We All Lose, we discussed the phony calculations:
“There are two benchmarks for the public to gauge inflation in helping with financial planning to protect wealth; government statistics (known to be false) and gold prices.
Ed Steer and the Gold Anti-Trust Association have been vocal about gold price suppression:
‘Their objective is to deprive the independent observer of any reliable benchmark against which to measure the eroding value, not only of the US dollar, but of all fiat currencies. Equally, they seek to deny the investor the opportunity to hedge against the fragility of the financial system by switching into a freely traded market for non-financial assets.'”
John Williams at Shadowstats calculates inflation using the same method done in 1980, using a constant basket of goods, no silly games. His current calculation comes in around 10%.
Governments don’t want the public understanding the true inflation number and buying precious metals as a hedge. They want investors buying bonds, financing their ever-growing, outrageous government deficit spending.
Politicos know if inflation gets too high, citizens will storm the palace. Inflation, and the government telling us not to believe our lying eyes, were major factors behind Trump being elected.
Arguing over the numbers is a diversion, masking three major issues:
- How does the government turn inflation around?
- What can investors do to protect their wealth?
- How can citizens continue to pay their bills?
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Government
Frank addresses the cause:
“We’re out there in the camp that is currently cast aside that thinks money supply and the interrelated government deficits are the key elements of creating and possibly forecasting inflation over the long term. Given the growth in money supply over the past 20 years that should imply persistent inflation now and in the future.”
Frank’s not alone, the International Monetary Fund explains:
“Inflation was declared Public Enemy No. 1 in the United States—by President Gerald Ford in 1974. What, then, is inflation, and why is it so important?
…. Long-lasting episodes of high inflation are often the result of lax monetary policy. If the money supply grows too big relative to the size of an economy, the unit value of the currency diminishes;…its purchasing power falls and prices rise.
…. Politicians have won elections with promises to combat inflation, only to lose power after failing to do so.”
President Trump campaigned on bringing down inflation. What remains to be seen is if he, or any president, has the power to do so; particularly in the short term. His efforts with DOGE cost cutting are a good start. He’s taking steps to help boost the economy, which should improve tax revenue. Whether it reduces the deficit is still undetermined.
Congress marches to a different drummer. The recent senate budget resolution is a perfect example.
The Hill tells us:
“The Senate adopted a budget resolution…to serve as a blueprint to deliver the first part of President Trump’s agenda.
Senators voted 52-48, mostly along party lines.
…. The resolution helps pave the way for Republicans to pass roughly $340 billion in funding, including $175 billion in for border…enforcement and to carry out Trump’s ambitious deportation plans, as well as $150 billion in defense spending.”
The Washington Post reports:
“Defense Secretary Pete Hegseth has ordered senior leaders at the Pentagon and throughout the U.S. military to develop plans for cutting 8 percent from the defense budget in each of the next five years, according to a memo obtained by
The Washington Post…— a striking proposal certain to face internal resistance and strident bipartisan opposition in Congress.”
What’s going on? Congress wants to increase the military budget by $150 billion – yet the Secretary of Defense instructed his senior leaders to cut 8% each year over the next five years….
Ronald Reagan’s economic plan was intended to grow the economy, generating enough additional tax revenue to balance the budget. He sadly lamented:
“The simple truth is: No matter how hard you work, no matter how strong this economy grows, no matter how much more tax money comes to Washington, it won’t amount to a hill of beans if government won’t curb its endless appetite to spend. Overspending is the subject we must now address.
…. You know, sometimes the big spenders in Congress talk as if all that money they spend just kind of magically appears on their doorstep, a gift from the Internal Revenue Service.
…. Well, there is no magic money machine.”
Are senate republicans listening? Trump’s inflation plans are doomed without Congress making an honest effort to radically cut spending.
How about freezing defense spending at current levels until Hegseth can sort things out? Citizens are tired of paying for never-ending wars. Politicos campaign on representing the people; is anyone in Congress really listening to the voters?
Protecting your wealth
John Williams’ analysis, comparing gold prices to his honest inflation calculations, indicates gold has done the job.
Note the red dot when phony CPI calculations began. The gold price not only beat the phony CPI numbers, but also kept up with true inflation as calculated consistently for the last 45 years.
Hard assets like real estate, prime land and metals generally rise along with inflation.
Paying the bills
We can’t overlook another major issue; how do we keep up with the ever-rising cost of living – much more than the price of eggs?
Workers hope their wages rise ahead of inflation so they are not losing buying power each year.
Retirees have a bigger challenge. Let’s use an example of a baby boomer who managed to retire 10 years ago and save a hefty $1 million in a 401k. We’ll use the government inflation calculator:
Since retirement, after paying all the bills and taxes, to maintain the same net worth, the nest egg needed to grow 32.5% to $1,325,058.29 – and that’s using phony government numbers!
Holding gold may help protect the nest egg, but where is the money to pay the bills coming from? Any investment returning 10% after taxes is likely to be high risk; something retirees should avoid.
There are a few options:
- Continue to work as long as you can. This will help pay some of the bills.
- Invest in inflation type assets that provide some income along the way. Solid mining stocks and mining royalty stocks are one example. While real estate is good, I’m personally wary of many Real Estate Investment Trusts. Shopping centers and other commercial sectors are vulnerable. Be very selective….
- Diversification; holding metals and solid metal stocks helps offset part of the inflationary loss of wealth.
- Dividends are a factor. Owning solid dividend payers helps generate income.
The problem is much bigger than the price of eggs!
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On The Lighter Side…
Last week’s article struck a nerve. While I received several positive comments and encouragement; keep telling it like it is – I also received some political hate mail. I regularly emphasize that government (all political parties) are to blame, many see this as a democrat/republican issue. I disagree.
Our founding fathers crafted the Constitution to create a limited government. Imagine riding a horse or a wagon several hundred miles to Washington and being out of touch with your families for months on end. It was a real sacrifice to serve your country. The intent was for “citizen legislators” to do their civic duty – temporarily. Career politicians never dawned on them – or term limits would be in the Constitution.
Today’s political class, many in office for decades, have created an untenable bureaucracy – not what our founders envisioned.
President Trump is the only true outsider to become president in my lifetime; never holding any political office before. I don’t always agree with him, particularly about additional tax cuts, but I’d welcome more successful business leaders into the Oval Office as opposed to government lifers – regardless of their political party.
As expected, the empire, along with the media, is striking back. The Atlanta Fed recently forecasted a downturn in GDP. The BLS will likely publish the true inflation numbers (higher), attempting to manipulate public opinion.
Frank Trotter nailed it when he said, “money supply and the interrelated government deficits are the key elements of creating …. inflation over the long term.” If deficits don’t come down our economy will collapse under the weight of debt and the bureaucracy.
I don’t give a damn which political party gets the job done. So far, both have demonstrated they are incapable and/or unwilling to do what’s right – and now a political outsider is giving it a shot! The battle taking place is a political outsider versus the bureaucratic empire.
The issue is much bigger than the price of eggs, immigration or men participating in women’s sports …. Will we end up with a government of the people by the people for the people as our founders envisioned, or a country run by career political elites for their benefit?
I don’t mean to offend anyone, but that’s reality as I see it….
Quote of the Week…
“If two parties with two sets of bad ideas cooperate, the result is not good policy, but policy that is extremely bad. What we really need are correct economic and political ideas, regardless of the party that pushes them.” — Ron Paul
And finally…
We will close this week with some Facebook wisdom:
Family tree of Vincent Van Gogh
And my favorite, (I can relate):
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Verti Gogh
Gotta Gogh Stop N Gogh U. Gogh Where-diddy-Gogh A. Mee Gogh Gring Gogh Can’t Gogh Tang Gogh Flamin Gogh Way-to-Gogh Poe Gogh Go Gogh Winne Bay Gogh There Ya Gogh! Lum Bay Gogh |
Until next time…
Dennis Miller
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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