Two topics hold our rapt attention these days. Money and Viruses.
Being “old people” on Social Security as we are, much of our Quality of Life is defined by a) Money and b) What we can do with it.
Cost of Living: General
Government fixes the annual Cost of Living adjustment for Social Security in the fall. So it’s baked in our thinking that going into fall, the numbers will never be allowed to reveal true hyperinflation, even if there are some instances of that. Like energy prices as you’ll see in a sec.
On the other hand, the “good news” – such as it is – has that commodity inflation has only been a short-term event, so far. One of our favorite metrics has been lumber prices which soared a couple of months ago to the astronomical level of $1,732 in May and this morning has collapsed to the $712 range. That means the price of lumber is now at levels not seen since last August. If things level-out here, an annual rise of lumber prices of 5-10% seems a reasonable outlook.
Another metric is the 10-year Treasury note. A year ago (August) it had popped up to 1.75%. But recently, it had semi-stabilized around 1.363% which doesn’t seem like a problem, but it really is. A big one.
Low rates benefit Big Government and Screw Little People.
If the interest on the National Debt – this morning that’s $28,485,495,680,238.32. $28.5 trillion, between friends.
If the interest on the National Debt ran at the 10-year rate (it doesn’t and the problem is vastly more complicated, but let’s just say it did) then the annual interest would come to $388,257,306,121.64. $388-billion among pals.
Which then means (with payroll employment of 151,602,000 working stiffs) that everyone with a job will owe (on average) $2,561 per year in Federal Tax just to break-even on the Nationial Debt interest costs. (Any services are additional, of course. And Joe’s got trillions dreamed up…)
Tough sell? Especially with Social Security coming to its wall – when people will realize the so-called Trust Fund was busted (under cover of interagency lending at unrealistic rates) to spend-happy agencies. Allowed by an irresponsible Congress.
For now, though, the low rates are serving government very well. Downscaling lifestyles and bringing in a new underclass for the elites and pol-hacks from South America through open borders. What a scam, huh?
How Little Folks Get Screwed
Let’s pretend Elaine and I know this couple that did very well in their working days. They made a good-sized nest egg that in normal times (7% per year) should have given them about $200,000 a year. Toss in Social Security and Medicare and you can see how they planned to live a very comfortable lifestyle on this.
However, when bond rates of return (and bank CDs are even lower) are one percent, look at the math:
Nest egg (which hypothetically might have been $200,000/.07 = $2.857 million) which had been planned for “them Golden Years” to contribute $200,000 annually by the “financial planner types” is suddenly paying less than 1-percent (much less on CD’s actually), or just $28,571 per year.
Oh – further salt in the wound? Taxable, depending on where the money’s parked, too.
Now, don’t get me wrong, that’s OK – but it’s not the “living large Poster Child of Success” that might have come along. Which is the main work of Economic Depressions (even invisible ones like the one we’re in:) to destroy savings.
Hard to see a claim on interest as savings – we won’t walk you through a whole econ class this morning – but trust me, any claim on future money IS “savings” and that’s what this Depression (no one talks about) is doing.
Key takeaway for Kids (under 50) if your financial planner is not conversant in the workings of long wave economic cycles (Kondratieff/Kondratiev, et. al) consider that most retirement and pension funds have the same problem and could begin to blow over in domino fashion any time, as well.
The “financial press” such as it is, does a horrible job of putting systemic risk into words. But maybe that’s because everyone including advertisers have their hands in the same cookie jar.
There’s a good report over on ZeroHedge this morning: The Fed’s Complete Taper Timeline. We’ve taken the liberty of filing the reported Fed Taper plan with similar works of Twain, Grisham, Christy, Cussler, and other works of…well, you figure it out.
COL Data: +11.3% Annualized
Which all sets up the discussion of where the cost of living figures put us today because that will ripple like a boulder in a mud puddle:
“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in June on a seasonally adjusted basis after rising 0.6 percent in May, the U.S. Bureau of Labor Statistics reported today. This was the largest 1-month change since June 2008 when the index rose 1.0 percent. Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment; this was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.
The index for used cars and trucks continued to rise sharply, increasing 10.5 percent in June. This increase accounted for more than one-third of the seasonally adjusted all items increase. The food index increased 0.8 percent in June, a larger increase than the 0.4-percent increase reported for May. The energy index increased 1.5 percent in June, with the gasoline index rising 2.5 percent over the month.
The index for all items less food and energy rose 0.9 percent in June after
increasing 0.7 percent in May. Many of the same indexes continued to increase, including used cars and trucks, new vehicles, airline fares, and apparel. The index for medical care and the index for household furnishings and operations were among the few major component indexes which decreased in June.
The all items index rose 5.4 percent for the 12 months ending June; it has been trending up every month since January, when the 12-month change was 1.4 percent. The index for all items less food and energy rose 4.5 percent over the last 12-months, the largest 12-month increase since the period ending November 1991. The energy index rose 24.5 percent over the last 12-months, and the food index increased 2.4 percent.
Not much we can do about it, but read ’em and weep.
Closely related to the CPI is this look ahead from the National Federation of Independent Business:
Owners raising average selling prices hit highest reading since 1981
“WASHINGTON, D.C. (July 13, 2021) – The NFIB Optimism Index increased 2.9 points in June to 102.5, the first time the Index exceeded 100 since November 2020. Seven of the 10 Index components improved and three declined. The NFIB Uncertainty Index increased four points to 83.
“Small businesses optimism is rising as the economy opens up, yet a record number of employers continue to report that there are few or no qualified applicants for open positions,” said NFIB Chief Economist Bill Dunkelberg. “Owners are also having a hard time keeping their inventory stocks up with strong sales and supply chain problems.”
Other key findings include:
- Owners expecting better business conditions over the next six months rose 14 points to a net negative 12%, an improvement but still in very negative territory.
- Earnings trends over the past three months improved six points to a net negative 5%.
- The net percent of owners raising average selling prices increased seven points to a net 47% (seasonally adjusted), the highest reading since January 1981.
Somehow, we ain’t surprised…
We’ve been quietly planning ahead (toilet paper, food, critical supplies) for what we figure will be a second lockdown sequence. After all, the first lockdown was a marvel of government control (and it was a dandy excuse for the economy and jobs not even coming back to 2019 levels…). I mean what policy-maker wouldn’t love that? Let’s do it again!
We are not saying it WILL happen, but follow along with some of these news stories and see if you notice a trend:
- Let’s begin with France: France Sets Stricter Health Rules for COVID Variant – Variety. Vaxports for bars?
- Also overseas: Ahead of U.S., Israel starts administering third dose of Pfizer vaccine to at-risk adults (chron.com)
- Here in the USA, low vax rate states are being put on notice: ‘Surprising Amount Of Deaths’ Will Soon Occur In These US Regions From Increased Covid-19 Cases, Expert Says – CBS Baltimore.
- This specifically points to “flyover states” where people are allowed to be openly skeptical. Reason? Stories like “FDA adds new warning on Johnson & Johnson vaccine related to rare autoimmune disorder (msn.com). Just makes you think…
The Wuhan Virus, as we have said since day one, sure acts like a bioweapon, even if it isn’t one. We say this because?
- Major reason is it has provided “cover” for a failing economy. Like the Internet Bubble of 2000-2003 collapse was “covered-up” by “terrorism” and 9/11, and like the Housing Bubble fail was covered up by blaming “no-doc loans” so too, the present “crisis” is covering up a systemic lack of new (quality) employment opportunity.
- Second reason is the political machine is steam-rolling: .
- Even more frightening is the “echo attack on American-style freedom” that comes through in “Do People Want Their Pre-Pandemic Freedom Back? – Reason.com.
Elaine and I are willing to “self-isolate” indefinitely. We ARE anxious to take a vaccine, but ONLY under three simple conditions.
- Any vaccine we take MUST have passed the standard Clinical Trials protocols. ALL present vaccines are still on Emergency Use Authorizations (EUA’s).
- There must be NO waiver of liability required. My understanding is that everyone getting the present vaccines – even those “shamed into it” – are required to sign a waiver of ALL liability and it states the vaccine was taken “voluntarily.” (Haha…that’s a good one!)
- The vaccine must be genuinely voluntary and all data disclosed. The Constitution is a contract and medical experiments are not in it. As you may have read, there are reliable reports that healthcare facilities were paid – effectively bonusing – reporting higher numbers of CV-19. We want absolutely clean data and no one seems to be able to give us – especially when there are co-morbidities – a reasonably “clean” statistical view.
We are strong believers in Vaccines, in Science and in Data. We also believe in Integrity and expect nothing less from our government. We routinely take our boosters for vaccines that can save us from obvious risks, such as the pneumonia vaccine.
But we also don’t waive rights. Absent clinical trials data, we will continue in the “control group.”
That ship already sailed: W.H.O. Experts Seek Limits on Human Gene-Editing Experiments. Genes are like guns. Just different gangs. All about money, though. Regulations only impact the honest.
Blame the State Department neocons? Reporters, Democrats blame US embargo for protests, poor conditions in Cuba. We would point the left-leaning Cuba idolizers (“worker’s Paradise” don’t ‘cha know…) to Cuba protests: Arrests after thousands rally against government, as well.
Weather versus Drought: Politicization of science continues: This Governor Withdrew From A Climate Pact. Days Later, He’s Pleading For Help With Drought.
Withhold D.C. Statehood Talk: Until they fix their murder rate! Washington, DC, records 100 homicides by July 10 for first time since 2003. We don’t need another law enforcement sink-hole, do we? (OK…They can keep their Crimes on the Hill, sadly…)
Around the Ranch
Off to reload propane this morning. Another six-months of cookery planned.
On the reading list: What’s the Difference Between Flexibility and Mobility (and Why Should You Care)? from LifeHacker. That, collagen, and magnesium from schlepping heavy stuff.
Two parts to Peoplenomics tomorrow: Mechanics of how the mainstream media has fallen apart plus a “Day without the Web.”
After the screaming inflation data, Dow futures were down
30 -88, -48.
Write when you get rich,