Economy

Peter over at Bayou Renaissance Man says that readers claim inflation isn’t here. Let me show you how it sneaks up on you. A Denny’s commercial from 1997:

Note that one of those breakfasts was this one:

2 strips of bacon, two link sausages, two eggs, and two pancakes. This is the breakfast that Denny’s calls the “Original Grand Slam.” For $1.99.

How much is this breakfast now? $9.29, or 467% more than it was 24 years ago. That works out to an annual inflation rate of 6.7%. The published rates for that period were anything from negative 0.2 all the way to 3.0. The official inflation rates say that this breakfast should only cost $3.28 today.

When I was in high school nearly 40 years ago, I remember being able to go to McDonald’s and eat my fill for less than $4. A Big Mac was only $1.09. Krystal Hamburgers were 25 cents. Compare them to today’s prices.

It isn’t just food. In 1999, you could purchase gasoline for less than $1 a gallon. The hit is even larger than that- because in 2005, Congress mandated that all gasoline be diluted with alcohol.

But wages haven’t kept pace. In 2000, the starting pay for a Paramedic right out of school was $14 an hour. Today, that same new paramedic would start at – $13 an hour.

Prices have been increasing at a rate of 6 to 7 percent per year, while wages have remained static.

Jack brings up some good points in comments when he points out that many people will want to just allow the commies to take over, in the hopes that they will get eaten last. They want to protect their pensions, their property.

Let me point out that we are just a few weeks into the takeover, and in that time, there are troops fortifying DC, the President has declared war on the NRA and gun owners, taken steps to shut down our oil industry, which has raised average gas prices by 25% nationwide. He has signed 55 Executive orders in all- just 28 days into his regime.

The US government, over the past year, printed or electronically created over 40% of all the dollars that have ever existed.  Ask yourself how long that can continue. A large part of our economy is at a standstill. Ford had to shut down its assembly lines. We aren’t producing anything except stimulus checks. Things are getting worse. The police in Portland are being used to keep people from raiding grocery store dumpsters.

The insane policies of the ‘great reset’ are killing the country’s economy. These are the canaries in the coal mine.

New York has been bleeding residents for years. People fleeing the high taxes and restrictive laws for lower tax states like Florida has been going on for a long time. Now that COVID has taught companies that you don’t need to have your employees operate out of expensive Manhattan offices, that trend has accelerated. So how does New York respond to that?

As we all know, the Democrat answer to ANY problem is more taxes, so why not propose a 0.5% tax on every stock transaction? This was the entire plot of Office Space.

This will KILL the New York Stock Exchange. I hope it doesn’t come to Florida. See, the people who come here from New York haven’t learned their lesson on what voting for leftists does, so after moving here, they keep voting for the same politicians and policies that caused their problem to begin with.

To live here means listening to New York transplants constantly telling us how they “do things up north” and how much better things are “up north.” So, you ask, why did you leave? Then you get two answers: “It’s cold,” and “taxes.”

No shit.

There is an article coming out of Oregon Public Broadcasting that is complaining about a company that has been evicting people from rental housing, even with the nationwide eviction moratorium.

The article follows Leonardo Cruz, who they claim is being evicted from his apartment because he has a “service dog” and uses this as a springboard to launch into an attack of a management company called “Income Property Management, (IPM)” which is a for profit company that, along with other companies, manages various rental property for “Home Forward,” which is a nonprofit owner of low income housing in the Portland area.

Some of the rental properties are managed by Home Forward themselves, while others are managed by various contractors. Home Forward manages 2400 units itself, with half of the remaining units being managed by IPM. Why doesn’t Home Forward simply manage the properties themselves? The answer lies further down in the article:

“the nonprofit invests in its staff — a $20 minimum wage, pensions, comprehensive benefits” besides trying to “work with tenants and try to avoid evictions.” So why is this preventing Home Forward from managing their own properties?

The subject of the article, Leonardo Cruz, was admittedly at least six months behind on his lease. Letting people stay in your rental property without paying, while at the same time paying your employees high wages and lavish benefits is how you go out of business- nonprofit or not.

The national eviction moratorium says you can’t evict people for nonpayment. So the management company, with a tenant who hasn’t paid rent for more than half of a year, finds another reason to evict.

Demanding that companies provide people with free products while paying lavish salaries and benefits is a sure way to insolvency. Socialists never understand this economic reality, and this is why socialism has failed every single time it has been tried.

On my post about hyperinflation from yesterday, my advice was to move finances into assets like precious metals or real estate. An anonymous commenter had this to say:

I think precious metals are a fools errand. First, when the crisis strikes you will be making your target – meaning that you are going to risk your life for a thing. Second, it is not worth much for day-to-day transaction. I am aware of several who accumulate gold bars and coins. You cannot simply shave off parts of the bar for doughnut, and you are almost invariable going to get a lot less for the coins than it is worth.

I decided that this would be a good time to share my thoughts on this. My wife and I do have SOME savings in physical metals. Metals are not bought as a way to carry out day to day transactions. They are a hedge against inflation, and not meant to be used as currency to purchase things in some sort of a ‘Mad Max: SHTF’ scenario. Honestly, ammo and food would be worth far more in such a case.

No, I am talking about storing your wealth in a medium that will preserve your life savings during the high interest/high inflation economic troubles that will surely follow the idiotic policies that are being put in place by our new communist overlords.

I personally think that more than a few ounces of PMs are a bad idea. There is a loss buying in (a one ounce gold coin costs 5% over melt value), there is a loss selling (another 5 to 10%), and the coin is a nonperforming asset- meaning that it doesn’t make money for you, other than being an inflation hedge.

Real estate is different. If you own real estate, it can make money as rental property, as well as the fact that it gains value at a higher than inflation rate.

My wife and I discussed our options yesterday and have decided to close all of our accounts (other than IRAs and 401k accounts) and use the money to buy more real estate.

In an inflationary economy, you are better owing money than having money. A fixed rate loan for real estate is denominated in pre-inflation dollars, but paid with inflated dollars. If the loan is a fixed rate loan, the Fed increasing rates won’t affect your loan.

There are other pitfalls to owning real estate, but there are ways to reduce those risks. That is an entirely different and more complicated conversation.