Markets Get Some Data – Much Hype

While we await the Big Data Point of the week (the CPI figure tomorrow) it is interesting to see that bonds have retreated on the yield site – and again, it tells us that the Fed-in-a-Box model is still useful.

Were you to click over here and inspect the 1-year view of the 10-year treasury (2.40% Monday) you would notice that rates were almost a quarter point higher back in March (2.61%).  I’m pretty sure my deflationist pal (Dr.) Jas Jain will be heartened by this.  It goes hband-in-glove with the long wave economic mode.

This model says (vastly simplified) that there are regular peaks and valleys of interest rates over a time-scale of 46 to 90+ years.  And that when you pass a major top (1980-1981) you can almost set a 40-year alarm clock and expect to be in the vicinity of either a long wave low, or well on your way to it.

(Continues below)

 

The problem with the long wave in economics is people can look at the data (including the maximum zoom-out on the 10-year), see the long wave decline staring them full-face, and then go back to “normal life” like it doesn’t matter.

Ah, but it does.

Because due to all those many long years of compounding interest, what passes for “money” in today’s world has been sorrowfully debased out of public view.

But let’s go back to 1913, before the cowardly Congress abdicated its lawful role to manage the nations money.  At that instant in time, one dollar had one dollar’s worth of purchasing power and zero debt bound up in the currency.

Fast-forward to present day and there is on the order of four-cents(!!!) of purchasing power remaining.  The balance of the “money” is accumulated debt and that is “backed-up) not by a reserve capacity to make more goods and services.  Rather, it’s backed-up by the government’s power to increasingly TAX its citizens.

Along the way, various crooks and scoundrels figure out how to seize and manipulate the reins of power, but in the end, most are caught.

Which reminds me, you did see where the Department of Justice may ask for a special prosecutor like Mueller to go look into Hillary Clinton?  That holds promise of being an interesting one to follow.  Again, though, don’t hold your breath for “breaking news.”  There is simply so many “beholden to power” in the Establishment’s NE Media Circus that the facts may be very slow to appear.

Back to point,…

How Money’s Remaining Value is Overstated

I think it’s fair to believe the sincerity of the Minneapolis Federal Reserve’s Inflation Calculator that you can find on their home page here.  It works.

Using it, starting with $100 in 1913, and using  2017 as our ‘end date’ we can see that in order to buy what would have cost $100 in 1913 now costs an amazing $2,472.67.

Turning it around, we see it means the present dollar has only 4.0442-CENTS of purchasing power remaining.  The other 96% of “money” is debt and IOUs.  Like the Federal Budget Deficit, which is well north of $20-trillion dollars.  Given there are only 153.861-million people working (date here, page 3) it means each worker is “on the hook” for $133-thousand, plus or minus a cheeseburger.

If you think that’s bad?  It’s only the start.

Because if you could find someone dumb-enough to hand you even that 4.0442 cents, that would only have been valid back in early January.

As we will find out tomorrow, like oil depletion, debt never sleep, either.  If we assume that real inflation this year is 2.5%, it means we can take those 4-cents and multiple them times recent inflation.

OK, down to 3.943-cents.  And we have more to go.

Remember that one this hypothetical fool hands you the dough, you are on the hook for income taxes before spending.  Yeah – ugly stuff to mention, that Life works like that.  Say you’re in the 28% bracket.  Care to guess what happens to your 3.943 cents now?

It’s down to 2.839-cents of actual spendable if you were “given” the money.

But we’re not done yet!

We also have to consider that if we go out and spend money, both the state legislature, and probably a city, too will want their pound of flesh.

Let’s use a nice round number like 10%.  If you live in rural East Texas, like we do, maybe 6.75% is arguable.  But there’s only a few dozen of us out here.   Some places not to live based on taxes?

  1. Chicago, Illinois and Long Beach, California: 10.25 percent.
  2. Birmingham and Montgomery, Alabama and Baton Rouge and New Orleans, Louisiana: 10 percent.
  3. Seattle and Tacoma, Washington: 9.6 percent.

Ure is in a terrible generous mood.  I’m going to use ONLY  10% sales tax to illustrate my point:  Now your nominal 4-cents of purchasing power has been paddy-whacked down to?

2.551-CENTS.

Which means, if you are especially slow and not able to keep up with the class today, that if you had $100 to spend in 1913, to ACTUALLY get the same purchased goods today, you would need how much?

$3,920.03

And so I look at the Minneapolis Fed data which claims you’d need just $2,472.67 and mention that are lying.  They are under-reporting inflation by almost 37%.  Or, if someone offers you the Fed inflation – hold out for a further 58%.

Economics problems are always done basis “all things equal” or ceteris paribus. Which Wiki’s out like so:

Ceteris paribus or caeteris paribus is a Latin phrase meaning “other things equal”. English translations of the phrase include “all other things being equal” or “other things held constant” or “all else unchanged“. A prediction or a statement about a causal, empirical, or logical relation between two states of affairs is ceteris paribus if it is acknowledged that the prediction, although usually accurate in expected conditions, can fail or the relation can be abolished by intervening factors.”

All of which is a free bit of morning advice on how “the game is rigged” to make it seem like this old Financial Titanic isn’t shipping water as the band plays on.

But Ure a damn fool if you haven’t seen it before now:  In 1913 people didn’t have their “money jacked.”

Sure, death tax (inheritance) was taxed started in 1900, but it wasn’t until the 1930’s that States – hard-hit by the Great Depression – began to hit people up for state income and sales taxes.

The sad truth (basis ceteris paribus) is that in Illinois, we can whack another 4.95% off the “mythically reported” inflation-adjustments. That’s because my sales tax corrections didn’t include state income taxes.

State of Illinois income tax rate increased to 4.95 percent. The Illinois Income Tax rate for individuals has increased from 3.75 percent (.0375) to 4.95 percent (.0495), effective July 1, 2017

Our bottom line – if you live in Chicago – is that your remaining purchasing power (net of tax effects) is 2.4247-cents compared with a 1913 dollar and tax environment.

There, bet you feel all better now?  Let me summarize: We’re all working for 2.5-cents on the dollar, close-enough.

Didn’t mean to ramble off a Peoplenomics report here, but we do – at some point – have to stop BS’ing ourselves.  Everything’s a business model.  The “truth” is hidden by lies through omissions, and yeah, they are coming to get us all.

Pill?

Hot off the Press Release

From the Labor Department:

The Producer Price Index for final demand increased 0.4 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.4 percent in September and 0.2 percent in August. (See table A.) On an unadjusted basis, the final demand index increased 2.8 percent for the 12 months ended in October, the largest rise since an advance
of 2.8 percent for the 12 months ended February 2012.

Within final demand in October, prices for final demand services rose 0.5 percent, and the index for final demand goods moved up 0.3 percent.

Prices for final demand less foods, energy, and trade services rose 0.2 percent in October. For the 12 months ended in October, the index for final demand less foods, energy, and trade services advanced 2.3 percent.

Final Demand

Final demand services: The index for final demand services rose 0.5 percent in October, the largest increase since moving up 0.5 percent in April. Three-quarters of the October advance can be traced
to a 1.1-percent rise in margins for final demand trade services. (Trade indexes measure changes in margins received by wholesalers and retailers.) The index for final demand transportation and
warehousing services increased 0.8 percent. Prices for final demand services less trade, transportation, and warehousing edged up 0.1 percent.

Futures are not impressed – Dow is set to open down 30-40.  Ure remains short, expecting a lower close.  Rum-soaked stogie, bub?  My Scrooge McDuck suit may look stupid, but it’s shtick…what can I say?

Janet Yellen’s remarks at a in-consequential awards deal are here if you run out of Ambien.

Future of Cash

NY Times has a good article on the future of cash over here.

We’ve been telling our Peoplenomics readers for years that when the next Depression comes, cash will be outlawed and private holdings of everything (gold, silver, crypto’s – the whole she-bang) will have to be placed in a bank and with A.I. will come auto-taxes.  Slavery with software.  Is this progress, or what?

Someone Read Our AndyPet Piece?

That’s what comes to mind when I read about this fancy new pet droid. Quick – let’s rush robo-fleas to market.

Maybe we could infect ’em with plague, since that’s the coming pandemic rolling into view.  Wonder if The Network/PTB have development grants to off useless eaters, huh?

Just trying to be practical and make a buck.  Morality has nothing to do with money, as I’m sure you’ve figured by now.

Readings and Rantings

How many times have we said that destruction causes economic growth?  Here we go again as Home Depot lifts full-year forecasts on boost from hurricanes.

No MAGA Effect?  Think again: CoreLogic Reports Mortgage Delinquency Rates Lowest in More Than a Decade. Unless you’re a democrat, in which case it’s just “luck” and statistical quirks, of course.

New Blood Pressure Guidelines

Some new blood pressure guidelines out say that oldsters (moi) should be treated for high blood pressure when it’s over 130/80.  Download the whole report (282 pages worth) from this page.

Or, just take your BP in the afternoon.  Mine was 113/75 P57 yesterday.  When I read political stories (in the morning) my ears bleed.  Everything in balance…

This must mean phama companies have new product coming or they need an income boost…oh for shame, I shouldn’t say that.  Hand me another pill?

Oh-Duh Department

Last weekend’s Peoplenomics documented the link between rising mass shootings (we forecast a central tendency for 18 to occur in 2018).

And today we see this: Rising Teen Suicides and a Surge in Social Media Use: Is There a Link?

Outlook for gold in Peoplenomics tomorrow.  Time to go research and write…


Comments

Markets Get Some Data – Much Hype — 20 Comments

  1. Quote: Let me summarize: We’re all working for 2.5-cents on the dollar, close-enough.

    George, I have compared the results of the calculator on the Minneapolis Fed webpage and come to the conclusion that they are 2 decimal places off, “realistically” so your $0.025 is really $0.0025 ……. two and one half tenths of a cent, yes we have been raped

  2. And this is why I rail against “minimum wages…” When the minimum wage goes up, entry level jobs go away (not all, as the scaremeisters would have you believe, but some.) Johnny Q sees an increase in his paycheck, which will equalize out to exactly where his spending power was, within 6-8 months, as the wage increase filters through the supply chain.

    The one thing no politician (‘cuz they’re stoopid) or economist (‘cuz they’re ignorant or agenda-driven toward communism) will EVER TELL YOU is the effect of “bracket-creep” on the tax liability of the newly-blessed minimum wage earner.

    ==> $8.25/hr is $16500/yr, which yields a very low tax liability.

    However, $15/hr is 30k, which will cost the minimum wage earner an additional $1200 (or more) in tax liability @ 15%.

    Once the market balances out from a wage-boost, the net results are fewer entry-level jobs, and those who ARE working ALWAYS become poorer in real purchasing power due to “bracket-creep.”

    • Phew..against the minimum wage..
      The only reason the minimum wage and minimum age limits exists is to discourage sweat shops. Unfortunately non of that applies to those people that are illegal immigrants truly down and out or have bad credit either from some bad decisions or medical expenses. Those people are subject to slum lords loan sharks etc.
      The only reason someone takes a minimum wage or day labor , part time position is because the have to out of necessity. Employers paying minimum wage are also forcing those employees to seek out the very social programs that they more than likely complain about.
      Where by increasing the minimum wage to keep income over poverty level will actually reduce the money needed for the social programs.
      Many times low income positions are held by single mothers young college students and families that have extensive expenses.
      Around here a waitress for an example will make less than a dollar an hour. Her income sends on her tips. When I delivered pizzas we got ten cents a mile the cost per mile was in actuality nineteen cents a mile. I picked the wealthiest neighborhood after two weeks I told the boss at morning meeting I was going to have to quit. His comment was why I said I can’t afford to put gas in the car where at this moment everyone started to laugh. They had been taking bets on how long I would last. He said there is a reason why we bribe drivers to deliver there the wealthy don’t tip. It’s the same here with minimum wage. Big companies will hire low to increase profits so that they can get more in bonuses. Manufacturers of old the ones that built their companies had a different attitude than those today your employee was family.
      I walk into a restaurant where I’ve eaten a few times and a millionaire I can guarantee that I not only will get better service but my food won’t be cold my coffee hot.
      Because I’m a good tipper I tip the dishwasher and the cook.
      I have a vast amount of serious health issues. I wasn’t doing well and could barely do anything with my arthritis. A friend took me to my normal restaurant of choice. Three waitresses proceeded to bring me all my favorite foods. I didn’t have to move.
      Now if their employer treated them like they belonged or was valued he would in turn receive the same attitude take a smaller profit. My father worked for an international company. That man would visit his outlying companies frequently with thousands of employees world wide he knew who I was and all my siblings. My father was a delivery man not an executive. He made sure every one of his employees that retired while he owned it was cared for with pay and medical. Several other companies with global ties the same way.. that was the old guys. Today many can’t even tell you who it is that dumps their trash much less who their families are.
      Which with a business attitudes like that makes having a decent minimum wage that much more important.
      Just my honest opinion

  3. “If we assume that real inflation this year is 2.5%, it means we can take those 4-cents and multiple them times recent inflation.”

    Lol lol lol funny..the increase in my budget was more than double that. Lol
    Discussing budget with a friend yesterday they mentioned that their company announced a decrease in hours

  4. Future of Cash’

    My response to ALL wealth being put into the ‘system’…IS when your lead ‘stored’ for ‘future use’..becomes ‘expendable’….imho

    • The wealth you maintain in the form of knowledge, materials, and tools cannot easily be placed, or coerced, into the “system”. The more you do for yourself, the less you’re dependent on cash equivalent assets and their flow.

  5. “How many times have we said that destruction causes economic growth?”

    That’s why some people need WAR, INMO!
    The problem in our world is that a few people are too smart for their own good (and that of humanity!), and the majority is just too stupid to comprehend that they are alive; Me included, perhaps.

    • Sure, well look into what that crafty smart fella made on the twin towers when they were demolitioned. Got paid twice by the insurance bookies. There is a lot of moulah in destruction planning and lots of money in rebuilding, but only if you are on the right side of the group think tank.

  6. George, I hear you on the significant devaluation (~25x in 100+ years) of the US dollar, but never understood the concluding argument. Aren’t we just adding a zero on a piece of paper? So, if both money adjusts to things and also things adjust to money, the market becomes more accurate more quickly, no? Or is the point that wages go up slower than devaluation? Or that it’s a hidden tax? But on the other hand, doesn’t Greece (or Italy) wish it had kept its own currency so it could have devalued its way (like Iceland) out of its crisis? Or is the point that we need to stop running up the deficit, but I haven’t heard any of that talk lately on the money shows. So, if you could amplify upon the conclusion part, would appreciate it. Thanks, Mike.

    • Mike,
      Last year spent a month travelling in Japan. Experienced sticker shock at prices. Everything we are familiar as consumers, multiply price by 100 or so. Can of Coca Cola around 150 yen. Meal at a nice restaurant 2000 yen, breakfast at McD 500 yen. When withdrew cash from ATM, figures were amazing. In a few days, became accustomed to prices where everything seemed normal. Seems to me its the ratio of income/expenses that decides well being. Agree with you its wages/devaluation ratio that determines standard of living. Would be interesting if George could graph this ratio over the years.
      -Cheers

      • Anonymous,

        “Would be interesting if George could graph this ratio over the years.”

        Go ahead and make it (a graph) happen then post here.

        Respectfully,

        :)

    • The thing is we’re going to have a one global economy it’ll be like the new world order wanted except it won’t be under their authorization it will be under the new major players.
      And the ones who are subordinate to the previous powers that were as players will fade into the background until a new opportunity because of opportune.
      Because the new parameters will have bees been set Everything Will Change from A to Z and from 1 to 10 or 1 to 9 depending on your numerology system.
      Companies will have their Trotter changed so they won’t be able to do the same things that they have been doing but of course this is a repeat of the past charters of Corporations have been changed before in the past and then read change slowly as time goes on to benefit the power structure of the elite.
      If you’re looking for some scare tactics this can scare your future.and include tomorrow because it has been created decades ago.
      https://m.youtube.com/watch?v=HipTO_7mUOw

      Thoughts have wings and may all beings be lovingly fulfilled. it can happen for you

  7. Well Mr. Ure don’t forget Medicare deduct, social security deduct and the 10 k a year deduct for insurance out of pocket. With your sliding scale gold should be between 1666 an ounce to approx. 2000 an ounce.

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