Consumer Prices, Vacations, Reflections on Deflation

First things first:  The latest Consumer Prices report is hot off the wire from the Bureau of Labor Statistics:

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index declined 0.1 percent before seasonal adjustment. Increases in the energy and shelter indexes more than offset a decline in the food index and were the main factors in the rise of the seasonally adjusted all items index.

The energy index rose 1.1 percent as advances in the gasoline and fuel oil indexes outweighed declines in the electricity and natural gas indexes. In contrast, the food index declined 0.2 percent, with the food at home index posting its largest decline since April 2009.

The index for all items less food and energy rose 0.2 percent in March, the same increase as in January and February. Along with the shelter index, a broad array of indexes rose in March, including medical care, used cars and trucks, apparel, new vehicles, household furnishings and operations, and recreation.

The index for airline fares, in contrast, declined for the fourth time in the last 5 months. The all items index declined 0.1 percent for the 12 months ending March. The energy index declined 18.3 percent over the span, more than offsetting increases in the indexes for food (up 2.3 percent) and all items less food and energy (up 1.8 percent).

See that first line?  Over the past 12 months (before adjustments) the all items index prices have declined?  Friend, we call that deflation.

We have other metrics we look at, too.

One is the Triple A Fuel Gauge Report.  It shows that a year ago, gas was going for $3.657 and this morning nationally gas is down to just $2.429 – almost a buck twenty-three a gallon less.  Just the year for a driving vacation, maybe?

Some numbers:  Let’s say you decide to do a trans-con trip.  6,000 miles.  Maybe west on I-90 (or east) and then back on 80 or 40….  6,000 miles in a 30 MPG car is $200 gallons of gas, and if prices keep sliding, you’d be looking at a gas bill of $485 and change.

If you take time to smell the roses and do 500 miles per day, that would be about 12 nights in motels, so $1,200 worth of motel and no telling how much for food.

Still, not a bad deal, at all.  Provided you a) have a job and b) would still have one when you got back.

The market is whining about consumer prices, though. 

Remember out chat a while back about how the market is operating upside down, lately?  Where good news is bad news and bad news is good?

Well, when consumer prices come in as they did this morning, the LOGICAL thing for the market to do would be rally.  After all, if deflation isn’t really here, then the Fed might be able to actually raise rates.

But that would be bad for markets because the Fed would then be disinclined to keep pumping out nearly free money.  Futures down 130.

Funny Money

The real low-down on today’s pending decline in the market is not due to the Consumer Prices report, but the fact that last night we got the first look at the Fed’s H.6 money stocks measure.  While it’s true that M1 is still going up at a 10.7% rate (three month basis annualized), a glaring change in monetary policy jumps out:  M1 declined from February’s $2.9922 trillion down to $2.988 trillion.

Huh?

Here’s how this rolls, Bucko:  When there is less money, it’s purchasing power goes where?  UP, so it doesn’t take as many dollars to buy things.  But if consumption remains the same, then rates will firm.  And that’s gonna scare the bond market like crazy and while it could lead to an increase in stock prices to new record highs in time, the commercials will drive down prices on any excuse they can find in order to sop up stocks cheap.

Of course, if none of the companies are turning a profit, a different problem, but we will simply watch our Trading Model and see how to play it.  Trying to outthink an insane market is genuinely a waste of time.

I think what the market will go through over the next few weeks might be called (new word) turdbulence.

SOWWDS’s Latest Trip

The high bidder for the next presidency is making headlines again – this time for flying home coach and carrying her own bags.

MSM pointless snews at its finest, if’n you ask.

During all of the hype on this, did the TSA personnel get to grope her?  Or did she go through the trusted travelers line? 

The campaign jet must be in the shop.  It’s OK, our old Beechcrate is in the shop to, hon.  Life’s tough.

Mindless Minions

Looks like the corporate globalist checkbook as been outvoting the people again with the Rubber Stamp Department (congress) about to approve “fast track” trade deals. Both corporate put-up parties have dirt on their hands in this one.  But why not?  Corporations via their donations own both outright.

Which is why we already know SOWWDS (she of whom we don’t speak) will be the next corporate anointed nominal titular yada , yada.

Yessir…just what we need.  More sleights of hand and less review.  Due process just became “do process…and right now.”

Goodbye Oil Resource

imageChina has constructed a 3 km runway on the disputed Spratly Islands in the South China Sea.  Another source.

Possession is 99% of the law in international affairs and now they have built a runway, you don’t suppose they will just hand it over to Vietnam, Taiwan and the Philippines?

Nope.

China is putting down concrete and that means they are taking possession by force and although this will be a big deal in the press, a look at the map shows why China wants the additional territory.

In order of closest to farthest, it’s Philippines (210 miles), Malaysia (255), Vietnam (363), and China (650 miles).  But when you’re looking for Lebensoil…know what I mean?

Coping: Life at the “End of the String” ElectriPrepping

Real Life Prepping Time!  This morning’s column will be published in sections due to power outages in our area.

The power went off (inconveniently) just as I was sitting down to write this morning’s column which was going to focus on our pals Gaye and Sheldon (Gaye writes www.backdoorsurvival.com) who are taking their ham radio tests this weekend.  I wrote an article for Gaye on programming their Baofeng HandyTalkies using CHIRP software.  It can be read over here.

As you may remember, UrbanSurvival is solar powered.  Out first big investment came in 2007 and that means our battery bank (8 large golf cart batteries) is aging.  The second 8 aren’t far behind.  We keep it up with regular watering, but with the air conditioning on and some other decent loads, battery string #1 decided to give up the ghost about half way through the first run-through on writing this column.

Since the SuperComputer is on a great big backup, I didn’t worry about it – which goes to show you who the idiot is.

Never to be undone, though, I took a laptop (the one from my alternate work station in the house) and fired it up.

Things I’d thought through seem to be holding together for now, but here are some gotchas to consider.

1.  Will I have coffee?

I lucked out on this.  I’d just made 8 cups in the machine, so no issues there.  Had I not, it would had added 20 minutes to fire up the BBQ and set about doing coffee the old-fashioned way.

2.;  Will I have food?

No problems there:  Breakfast lately has been a handful of vitamins and supplements – along with exactly three almonds.

This morning – screw it – a bag of Oberto Teriyaki beef jerky and more coffee.

3.  Will I have Internet?

Yes – and no. 

Yes, the satellite system is up (Excede) but the DSL on one phone line is down (see earlier note about one inverter stack going offline) and the other is in the house for convenience.  So we’re down to one on-ramp to the net and one string of batteries.

Since I don’t know a) how long before power comes back on and b) I don’t want to run out to the power center and keep looking at meters, I will just update this periodically until 6:30.

4.  Is this an end of the world EMP event?

No.  But it certainly does a good job of cranking up the brain cells and gets me back to my marine electrical days when systems that are robust and dependable were (and are) the order of the day.

I don’t like being on emergency power, but that’s where we are this morning.

Sort of like Universe is handing us a pop quiz about survival planning.

Everything worked – and even with an inconvenient backup failing (which means a small fortunate into fresh batteries) it will means that we persisted and prevailed…a good thing and I am sure there’s a lesson in here somewhere…

What lessons, exactly?

1.  When you have older golf cart batteries, you need to periodically do discharge tests and replace them preemptively. I didn’t  because it’s a big expense.  There are a total of 16 golf carts and that can put a hole in the party & entertainment budget for months.

2.  We did the right thing having all three modems/networks are on different power sources.  HOUSEDSL is on mains power.  WILDBLUE is on inverter 2 and battery string 2, WESTELL is on inverter 1/battery string 1.

WILDBLUE is the one that’s up this morning and has survived so far.  Point is, where you need ultra high reliability, and the cost isn’t too bad, spread your bets around so you have power when and where you need it.

3.  Have lots of extension cords and keep them in good repair.

If the power isn’t on in a reasonable time, say 10 AM, or so, by which time the solar should be putting out decent power, we will run an extension from the power center to the fridge in the house.  The freezer is out in the storage room. 

4.  How is the propane?

No worries there!  I just a couple of weeks ago filled up two twenty pounders and a forty pounder.  So that would be enough to make coffee for a while. 

After the small bottles of propane are done, we have 400 gallons of the stuff in our big tank.  And with two rocket stoves behind that, we will not want for heat or fire.

5.  Batteries and flashlights?

We have a place that serves as a bar when company comes over.  (Oilman 2 came by a month or two back, for example).  But when there’s no company around, that’s where all of our flashlights live.

Someone you don’t appreciate when the power goes out – if you haven’t been through it for a while is…

a.  Using the bathroom is a bit different when done by flashlight.

b.  Doing dishes by flashlight is different – and you’ll see the value of solid  high level interior lighting in short order.

c.  Finding things (around the house, like a bag of beef jerky from the prep kit) is a lot easier with light than without.

6.  What about Wireless Accessories

Oh, yeah…THEM!

I came out this morning, turned on SuperComputer and actually believed the outage may have been EMP because a keyboard was on the fritz.  Nope.  Just a low battery.  We’ve become huge faces of the ultra long-life lithium batteries, with apologies to native people of Bolivia.

We always have a bunch on hand.  Amazon has the Energizer Ultimate Lithium AA Size Batteries – 20 Pack for about $35-bucks, which is what’s running the keyboard again.

Just in the past few minutes, the power came on again.  Long enough to run the a/c unit at the house for five minutes.  But then it went off again.

Whatever the problem is, it’s confounding the power crews.

7. When should we start the generator?

Ah…thought about that.  It has diesel in it and is (more or less) ready to go.  (power just came on, maybe it will stay up this time?)

The problem with the generator is that it is a PITA to set up and run.  One thing I’ve been thinking about is getting one of those 10 kW power take off units for the Kubota.

If you’re a city slicker, the PTO is the shaft on the tail end of a tractor that various farm implements plug into.

And that gets us to the problem with farm PTO units.  I don’t know when the last time you pulled a piece of power equipment off a tractor, but it verges on real work.

First, you have to put the tractor where you want the piece of equipment dropped.  Then, you might want to put some 4X4 blocking under it, so it doesn’t go all the way to the ground.  Makes hook up next time a bit easier.

Then you get on the shaft, which has a spring loaded collar on it – it’s greasy and filthy or you haven’t been working your tractor.  Once the PTO shaft is loose, you can tie it up or block in place because when you put the equipment back on the tractor, it’s a pain to try and get things aligned just so.

Then off come three hitch pins big as your thumb and you finally have a “free tractor.”

Reverse the process at the next piece of equipment, backing up just so will take a minute, and then go through the same spasms of effort and flood of curse words all over again.

You should now be on the verge of understanding why I haven’t invested the dough for a tractor PTO driven generator.  They aren’t cheap.  Amazon has the PTO Generator Kit 10 kW (10,000 Watt) 3 Point Carrier and PTO Shaft Drive Line Included listed for a tad over $2,026.

Northern Tool has a 13 kW generator down the page over here for $1,500, but that’s before you get a shaft, mounting kit, or a trailer to drag the thing around on.

Most people (unfarmerly types, if that’s a word) don’t appreciate that when a PTO is pushing out 10-13 kW of power there’s a fair bit of torque involved, so you can just let the genset flop around on the ground.  Wide base or mobile mountain is mandatory and I like the look of the Amazon unit that mounts on a three point rig, because that is designed to pick up the torque issue. 

Not that you’d see a trailer flop around, but I’ve never figured out just how many foot pounds of torque is involved when the house A/C unit kicks on.  It’s a big starting load  because our 6 kW diesel whines, complains, belches out black smoke and just barely won’t get the job done.

A 7-8 kW unit would work, but at long as we’re talking checkbooks and dreams, how about a 10-13 kW unit for a little safety margin?

Also on this kind of generator solution, be ready to pay an electrician ($500_) labor to hook up a transfer switch ($600-$1,000) and then get the right cables to power everything up according to Hoyle.

Even if we popped for the dough, here’s the problem:  We would be in the unenviable position of trying to figure out when to take off the bush hog (a thrashing mower we use all the time…think of it as a five food WeedWhacker).  Doing this kind of labor at night in the rain (invariably when it’s needed) is just not my cuppa tea.

Since we’re having this impromptu refresher on prepping for power outages,  I have to give you my speech about backfeeding and how dangerous that is.

If you EVER hook up a generator in an emergency situation, make triple-damn sure you have isolated your home, ranch, office, or whatever, from the Grid.  In other words, pull the main breakers so you CAN NOT FEED POWER BACK DOWN THE LINE.

This is critical.  BACKFEEDING KILLS LINEMEN!

It’s also why I love the Outback Grid Interactive system we chose almost 10 years ago.  The beauty of it is that when the grid fails, the Outback system physically disconnects from the line with a relay and that makes backfeeding impossible.

I’ve set ours up so that even when the power comes back up, it will wait a full minute for power to come back on.  I want it to sniff the incoming power really well, and make sure that it’s not just a bump of wires as linemen do their work.

Well, there we have it.

A column on emergency power and I didn’t even plan for it.  The mains power came up about two minutes ago, the inverter/chargers are now refilling the battery banks, and Mr. Ure may put on a fresh pot of coffee.

Nothing left to do but chew beef jerky and wait for the Consumer Price report and wait for word from our airplane mechanic on an issue with wing attach point bolts.

Yeah, the weekend may be on the horizon, but we’re not quite having fun yet.  The power may be back on only long enough so I can find my checkbook and weep.

Good Peoplenomics™ tomorrow:  We talk about Disruptive Technologies that are coming to get us.  If the power stays on….

Write when you break-even

George   george@ure.net