economics

Inflation

There are those who think that I am being alarmist. They claim that inflation isn’t so bad right now, if you only ignore housing, food, and energy. Ignore the three largest expenses in every household, expenses that are more than 62 percent of the average household budget, and things aren’t so bad.

In 2020, Housing was 33% of the average American household budget. Energy was 16% of the budget. Food uses up another 13%. Nearly two thirds of the average American household budget was spent on those three items- items that the government doesn’t consider when calculating inflation.

Housing is increasing. New home prices are skyrocketing (up 16 percent in the past year). With rentals, it gets more complicated. States like New York, California, Illinois, and Washington are seeing decreases in rent. Florida, Texas, Nevada, and Colorado are seeing massive increases. The largest is Henderson, Nevada, which has seen a 49% increase in rental costs in the past year. Orlando rents are up more than 25 percent in the past year, with most of that (20 percent) since January. Still, overall rents are skyrocketing with there being a nationwide 15% increase in rents over the past 8 months.

Food costs are rising, but in order to see that, you have to look past the official government statistics. (Hint: the government’s inflation numbers are no more realistic than the results of the 2020 election) According to Bloomberg (hardly a right wing source), food prices in July were up 31% from the same month last year. 

What about energy? The average price of a gallon of gas was $2.11 in December, but that has risen to $3.09 as of last week. That is a 46% increase in 9 months. Other energy costs are also rising. The average cost of electricity has risen from 13 cents to 14 cents per kilowatt hour in the past year, a 7% increase. Overall, energy is costing Americans about 23 % more than it did last year.

So to sum things up: The weighted average of the increases in those three expenses is enough to put the actual rate of inflation at more than 12 percent, but that is area dependent. Some areas of the country are seeing inflation rates of 30 percent, and others are as low as 8 percent. Much of the variation is due to varying costs of housing and gasoline.

No matter what, the government reported inflation rates are far too low.

By Divemedic, ago

Inflation and rent

For months, I have been telling you that the eviction moratorium is killing the rental market. The US dollar is taking a beating. These two factors are coming together to increase rents more than they ever have before.

The central Florida area has seen rental prices increase by more than 20 percent in the past 8 months. This is a housing inflation rate of 30 percent. At this rate, rents will double every 2.5 years. To put this in perspective, the average rent increase seen before COVID was 7%, but this year is seeing rents increase at three times that rate.

This means that our inflation is far, far higher than what we are being told. I am guessing that overall inflation is somewhere near 25% or so. The wheels are coming off.

By Divemedic, ago

Quote of the day

Goes to John at Wilder, Wealthy, and Wise.

The (metaphorical) printing presses have been shoveling money into the economy under the mistaken assumption that all we need is additional debt to keep the engine going. It’s like a demented congressman who doesn’t understand engines deciding to open up the hood of an F-150® to just pour gasoline on it using the dim understanding of a toddler that, “gasoline makes engines go, so if I pour enough gasoline on the engine, it will be as fast as a spaceship.”

The US is falling apart. We are looking at a complete economic collapse. Right after the dollar goes, the government will follow. Go, read the whole thing.

By Divemedic, ago

Why is it my responsibility?

Amanda Rinehart is a mother in Pennsylvania who left her job to care for her 8 year old child. She complains that her child is too young to receive a vaccine, so she has to keep her child out of school until there is a vaccine for children. For that reason, the US taxpayer should continue to pay for her to not go to work, according to her. In all, she has received more than $37,000 from the government since she quit working, if you only count unemployment, the free money for having a kid, and the COVID stimulus money.

On the other hand, only 39 percent of the US public paid Federal taxes last year. I was one of them. While a large part of the US population was sitting at home for the past year, not doing anything, I was working, investing, and providing the money for her to sit on her ass and complain that she isn’t getting enough of MY money.

I would argue that Ms. Reinhart isn’t losing HER unemployment. She is merely losing her ability to suck even more of my money out of my wallet, and the wallets of my fellow taxpayers.

You will note that there is absolutely no mention of a Mr. Rinehart. Where is the father of this child? How am I responsible to provide for his child, yet he is not?

The people on the left will say that I am greedy because I don’t want to help her. I have no problem helping the poor, as long as they are attempting to help themselves. I don’t see how it is greedy for me to want to keep my money for my own use, yet not greedy for this woman to demand access to my money with the only claim to it being that she couldn’t keep her legs closed.

By Divemedic, ago

No credit scores

Something that missed my eye when it came out back in May was this story. It says that banks are going to be issuing credit cards to those in the US without credit scores. The claim here is that there are as many as 50 million people in America who do not have a credit score. Who in America has no credit score? That would mainly be people with no Social Security number, or those who deal only in cash.

Illegal immigrants? Criminals? This strikes me as a two fold policy:

  1. Allow illegals to get access to credit cards.
  2. Bring those who deal in cash, and are thus largely untraceable, into the full view of the government.

This will also give a large amount of short term spending cash to those who don’t otherwise have credit. Where did this idea come from? The Biden administration. They call it “Project REACh.”

REACh stands for Roundtable for Economic Access and Change and brings together leaders from the banking industry, national civil rights organizations, business, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy.

Office of the Comptroller of the Currency

Who were the people that the administration brought together to come up with this idea? Representatives from the National Black Farmers’ Association, US Hispanic Chamber of Commerce, the NAACP, Credit Karma, and the National Diversity Coalition, among others.

Fundamental transformation, great reset, and all of that. Minorities will think this is a great idea. It isn’t- not for them, not for investors, and not for the economy. This is another way for banks to get more people owing them more money. It will also increase consumer spending, which will increase inflationary pressure by injecting more money into the economy.

By Divemedic, ago

Market Forces

In a comment to my post on subscription products, an Anonymous user had this to say:

The marketplace is a feedback mechanism to discover what buyers want. The feedback vendors are getting is that products with remote controls leased on a subscription are acceptable, because buyers keep accepting them. This is not a “market failure”, and we don’t need communism to force other people to give us what we want.

No policeman would stop you if you made and sold an aftermarket engine computer for a tractor. Farmers can buy a $300,000 350 HP 8-wheel-drive tractor, but all farmers nationwide can’t chip in $500 each to hire a techie to car-customize it? Why do you trust farmers to vote?

To tackle the first paragraph: The problem is that this isn’t a free market. In a free market, companies that are poorly run go out of business. This means that businesses in a free market have a disincentive to make poor decisions. In this market, they get a bailout, pay huge bonuses to the executives that made the poor decision, and continue business as usual.

Businesses getting bailed out has become a huge part of what the government does. Just in the last 20 years, the following bailouts have happened:
GM and Fiat Chrysler received multiple bailouts for a total of $85.6 Billion, Amtrak: $1 billion, Adidas $3.3 Billion, US air carriers have received $26.6 Billion, Bear Stearns $25 Billion, Citigroup $45 Billion, Bank of America $45 Billion, AIG received $180 Billion, Fannie Mae $116 Billion, Freddie Mac $71 Billion, the list goes on. Over the past 20 years, bailouts have totaled over $1 trillion.

Addressing your second paragraph: The reason that farmers can’t just modify a truck or tractor to circumvent that software is simple: Federal Law prohibits it. It is a felony under the Digital Millennium Copyright Act (DMCA) to modify the software of a product that has some of its capabilities controlled or restricted by software. So those subscription based devices, vehicles, and tools? They have the full protection of the might of the US government.

That isn’t a free market.

By Divemedic, ago

Inflation and shortages

All sorts of excuses are being made, but inflation seems to be hovering around 20 percent. There seem to be all sorts of shortages.

When I was on my lobster trip to South Florida, we ate at Frigates in West Palm Beach. They were out of hogfish and lobster. Seafood restaurants all over the country are reporting shortages and higher prices.

My wife and I went to Longhorn steakhouse on Friday. They were out of strip steaks and lava cake.

Welcome to socialism.

By Divemedic, ago