Most people don’t have any idea what their CPI exposure is. In other words, how much more do you need to make (per hour, monthly, or annually) to actually keep even with the price of things going up?
Given that we have been running somewhere around the 2% Cost of Living Range, do you have a plan – as opposed to hopium – to make up the difference over the next year?
It’s a given that you will need to make more than the actual cost of goods number. Because government will (and take this one to the bank) be increasing taxes because CV-19 is an “expense” that will get “spread around the public.” This is done by raising taxes.
Tax Outlook? Rising (of course!)
As a planning guide? Picture government trying to expand (at the rate of inflation, or 2% range) while the number of people actually holding jobs last year at this time was around 157.895-million. And this year (August data here) the number working is 147.288-million. That’s 6.7% fewer people working.
It’s therefore not unreasonable to expect that once we get past the election, we will see government begin to raise taxes – at a pretty good clip – because they will talk about all the costs of “fighting CV-19.” As we’re fond of saying, “Everything’s a Business Model.”
One further point: If break-even taxes need to go up 6.7% (among surviving workers) and government wants 2% more to “take care of its own” – then an 8.7% tax increase could be in the cards. So, the way you make it possible for people to pay this is how? Why, though the magic of inflation, of course! If wages seem like they’re going up, naturally taxes will rise.
We could model this all day long, but the reason for all the short-term lower-for-longer is to set the stage for an inflation to come. Which will lower the purchasing power of the dollar. Which means it will “take more dollars to buy the same goods” and that will make it look like gold, food, stocks and whatever are going up.
Not to worry, it’s just the money cratering, but for now, not until after the election.
53-days to run.
Watering Down the Paper
One more thing before we get into the CPI press release: Here’s the latest moves reported by the Fed on M1 and M2 money supplies:
Here’s my “magic decoder ring” on how to interpret Fed money-handling.
First we look at the M1 column. If the 13-week annualized rate of increase (blue circle) is smaller than the 26-week rate of increase (red circle) then there is not likely a whole lot of upside pressure on the market. Remember, shrinking money makes it MORE VALUABLE and that means it doesn’t take as many dollars and so it looks like the market is going down. When, in reality, the money is becoming worth more – which can be good for bonds (where lower rates are a higher return on previously issued (at higher rate) bonds.
(No quiz needed because you know all this stuff.)
The yellow highlight says “Since we know from high to low, the March market panic dropped about 33% of market value, and since the money was jacked up just shy of 38%, then yeah – it would make sense for the market to be priced higher than the February high. Whee!
The CPI Guts
So much for the foreplay – returning to Action Central:
” The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis after rising 0.6 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment.
The monthly increase in the seasonally adjusted all items index was broad-based; a sharp rise in the used cars and trucks index was the largest factor, but the indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed. The energy index rose 0.9 percent in August as the gasoline index rose 2.0 percent. The food index rose 0.1 percent in August after falling in July; an increase in the food away from home index more than offset a slight decline in the food at home index.
The index for all items less food and energy rose 0.4 percent in August after increasing 0.6 percent in July. The sharp rise in the index for used cars and trucks accounted for over 40 percent of the increase; the indexes for shelter, recreation, household furnishings and operations, apparel, motor vehicle insurance, and airline fares also rose. The indexes for education and personal care were among the few to decline.
The all items index increased 1.3 percent for the 12 months ending August; this figure has been rising since the period ending May 2020, when the 12-month increase was 0.1 percent. The index for all items less food and energy increased 1.7 percent over the last 12 months. The food index increased 4.1 percent over the last 12 months, with the index for food at home rising 4.6 percent. Despite recent monthly increases, the energy index fell 9.0 percent over the last 12 months.
Cool enough now to lay in some seed stock?
The Predictable Congress
How long has it been since I told you “No additional CV-19 Relief” until at least after the election? (But in truth, once the election is over, and the House and Senate and potentially White House are in democrat hands, why bother with relief…since there’s no election to worry about for two years….)
Well, duh: Senate Democrats block Republican Covid relief proposal. Which is tantamount to the democrats saying “We’re going to fight so hard for you, we are going to kill you….” (Give the Rs a point for trying, take 5 from Peloser and Scummer. They can’t figure out a hamburger is better than no cheeseburger – which is the dem’s wrong-headed notion. “Ya’ll just starve until these bastards swing for a Cheeseburger and you just wait – super sized fries and an apple turnover, too. It’ll be a grand meal – even though you may die waiting…”
Shitheads leading lemmings. It’s the (IQ90) American way.
Next prediction: Unable to actually FIX anything, the Capitol Clown Posse will come up with a “New Program” (or several) as an alternative to actually solving anything. Because with programs you can be taxed for life and nothing ever changes. Which is why China’s kicking our ass. Thanks, stupes!
In the Shorts
An abbreviated dose of verbal venom today. I have to go deal with more stupid. Car “safety inspection” time. But look here: If driving is down 50% (and more) why not go two years between inspections? Like the tires will rot off in a year…what?
No, can’t have that, by God. Government is NOT flexible and NOT responsive an d doesn’t care about Reality so much as itself. I dated a girl like that, long ago…
Where was I???
(Like I’ve “gone Andy” on you, sorry…where’s the headlines?)
Hey CNN! No, No, No…it’s not climate, you fools! (Lord save from these people.) The fires raging out West are unprecedented. They’re also a mere preview of what climate change has in store. You mean like the fire department cuts due to budgets and runaway forestland management rules based on excessive environmentalism and la Nina aren’t primary? Hand over that crack pipe. Let’s go swim in underwater Midtown!
My ff/emt son’s still on the White River fire up in Oregon. (Where he is a CV-19 technical specialist on the lines – which is why I read stories like:) Coronavirus live updates: Israel reportedly heads for second nationwide lockdown; Heathrow reports 81.5% drop in travelersy.
Idiots of Portland Dept: Portland Issues Sweeping Ban on All Facial Recognition Use. So, antifa, and the violent subs within BLM and such…it’s bonus time thanks to the impaired socialists out that! Yipee. But wait! Oregon voters disapprove of Portland protests, feel police aren’t using enough force, poll finds. Too late, we fear. The city has shit-canned it’s economic prospects for how long to come based on unchecked lawlessness?
God…lemme out of here. More on Peoplenomics tomorrow. Dow futures +125 after the data. Lookout below at the close or Monday…
Write when you get rich,