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2021-11-11 07:00 by Karl Denninger
in Macro Factors , 723 references Ignore this thread
Transitory Eh? Uh, No
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The all items index rose 6.2 percent for the 12 months ending October, the largest 12-month increase since the period ending November 1990. The index for all items less food and energy rose 4.6 percent over the last 12 months, the largest 12-month increase since the period ending August 1991. The energy index rose 30.0 percent over the last 12 months, and the food index increased 5.3 percent.

Note the graph.  Note also that the start of this was roughly March of this year.  What have I said for over a decade: Policy changes require about a year to 18 months to show up in the CPI.

When did we start throwing money at the problem?  In March of 2020 and who did that?

Trump.

When did the problem show up?

Almost exactly one year later.

What else does this tell us?

If we stop today, and we're not with one big spending bill already passed and another on deck, it will be another year, at least, from the time we stop until the stupid begins to subside.

Of particular harm to consumers in the tables are:

  • Piped gas, up 26% from last year.  You don't heat your house with natural gas, do you?
  • Fuel oil, up 59% (!!!!!) from last year.  God help you if you need heating oil.
  • Gasoline, up 49.5% from last year.  You don't use that, do you?

Food was a "piker" by comparison, up "only" 5.4%.  Of course if you're not well-off you spend a wildly-disproportionate amount of your money on food.  Between that and trying to stay warm this winter you're screwed.

Food inflation was particularly bad this month, up 1% on the month alone.  That's a 13% run rate annualized.

Don't think you get away from this with the power bill -- it's up 6.5% from 12 months ago and a huge part of that is the demand to keep going toward "green" energy sources, which are wildly more-expensive and less-reliable.  Thanks Joe.

Healthy (that is, protein and fat based foods) were up double-digits almost without exception.  Ham and Chicken managed to remain under 10%, but not by a lot.  Obesogenic foods such as potatoes were only up 1.7% and candy was up 1.6%.  Have some more dieeeeeebetus peasants!

Propane is a monster kick in the nuts as well, up 34.7%, along with firewood and kerosene.  Who uses those?  Rural people, mostly.  Congratulations to Brandon there, along with the rest, but don't feel singled-out as the city and suburban dwellers got bent over the table on natural gas also.  We must spread the love, you know, whether you want it or not.

Hope you don't need appliances; they're up big too, especially minor little things like a washing machine (14.9%.)  Laundromat owners rejoice -- and add another slot to the coin drop.

One bit of good news: If you drown your sorrows and remorse for cheering on all this stupidity in the bottle that's only up 2.2%.  A bargain, up until it destroys your liver of course.

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Thegreatunwashed
Posts: 111
Incept: 2021-09-13


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A good time to stock up on rice and pasta now since GAINING weight may become more of a priority than losing weight in a couple of years for people. Tip: stick your rice in the freezer a week before storing to kill off any tiny insects or eggs.
Zappafan
Posts: 5600
Incept: 2007-11-30

Atlanta
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Somewhat interestingly, I read that airline fares were down as well. Everything else - up.

I don't think that can last too much longer. The fuel cost increase will destroy their earnings. Chucky gonna have to pay more next summer for that flight to Florida.

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The illusion of freedom will continue as long as it's profitable to continue .. @ the point where the illusion becomes too expensive to maintain, they'll just take down the scenery, they'll pull back the curtains, they 'll move the tables & chairs out of the way & you'll see the brick wall at the back of the theater/FZ
Horseyhefler
Posts: 35
Incept: 2020-04-07


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I've been going to a local salvage store, their prices are going up as well, but at least I have a few items to take home to show for it. My laundry has been drying on the line for a while, also...
Prof_dilligaf
Posts: 54
Incept: 2021-09-02

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If we stop today, inflation would be the least of our worries, as this tard train would jump the tracks pretty much immediately as all the manically spun plates stop and drop straight to the ground. Just hinting at the most minuscule rate hike causes sphincters of all sorts to seize up, and nobody on the supply side of the equation has even pretended that the CNTL-P is ever going to stop cuz that's gear-ron-teed suicide.

I honestly don't see a way out, and assume that in the near future (1-3 years), we'll all be looking back with longing at these inflated prices as we chew pensively on our BLTs (that is, badger, lichen and tumbleweed) in the crawlspace.
Blanca
Posts: 254
Incept: 2020-07-25

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Stock market at record valuations. Interest rates at record lows. What do you do to avoid the loss of purchasing power by the dollar?

This is how wicked and corrupt governments ruin the middle class.
Greenacr
Posts: 326
Incept: 2016-03-15

Northern Ohio
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Regarding Appliances. My son is a manufacturing supervisor for Whirlpool in Findlay, Ohio. That factory has over 1.2 M dishwasher orders on backorder due to the chip shortage and other supply chain issues........ They are apparently getting ready to raise prices again.

Everything I have read and am seeing is that we are still on the front side of this "supply chain" issue. Things are going to get worse before they get better.
Bobn
Posts: 59
Incept: 2007-12-02

Chicago Suburb IL
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Once upon a time, a Fed chairman addressed this by raising interest rates such that mortgages were as high as 18%. It was brutal for a while for a lot of people. But it worked. I think that, along with business-friendly policies, gave us the Reagan economy.

I don't think that works when the U.S. has $30 Trillion in debt. I could be wrong, maybe it's almost all long-term - on the other hand as Karl points out, we're still feeding this beast.
Greenacr
Posts: 326
Incept: 2016-03-15

Northern Ohio
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Karl -

I believe I remember hearing in your pod cast that it is more like a 12 - 18 month period before the affects of all this stimulus show up in the economy as inflation. I am wondering if that time period is more like 18 - 24 months due to the fact that a bunch of money from previous spending packages is still not spent and other factors such as Labor and the chip shortage are pushing inflation on their own.

I don't see this ending until we get to your previously predicted inflection point in 2024.

I always look forward to your New Year predictions and am curious if that 2024 date is moving forward. Thanks for your Blog. I always look forward to your posts and the discussion forum that follows.
Bluto
Posts: 675
Incept: 2021-07-10

Florida
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All of this so-called infrastructure (once you get past all the graft and port) will require lots of blue-collar labor. You know, the same guys the Biden regime is threatening with firing if they don't take the clot shot.

You think those guys had pricing leverage before? The regime just handed them a fistful of aces by increasing the demand even more for their services!

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"History shows again and again how nature points out the folly of man." -- Blue Oyster Cult "Godzilla"
Bluto
Posts: 675
Incept: 2021-07-10

Florida
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Follow-on to above post: Wouldn't it be ironic if the laborers got big pay increases, then the company (to maximize profit) decided to lay off the Karens in the front office?

Another thought: with all the money to be made in "infrastructure" it wouldn't surprise me if some of the smaller companies made a strategic decision to go "balls to the wall" for a few years then either sell or close their business, and the owner retire early.

If they do that, it makes perfect sense to fire all the front-office Karens to maximize profits and let the owner do the mundane HR stuff (or outsource it to the lowest bidder).

Might be a lot of unemployed Brandon voters soon (unless Karen wants to learn how to code, I mean pour concrete), which is the opposite of what the regime wants.....

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"History shows again and again how nature points out the folly of man." -- Blue Oyster Cult "Godzilla"
Shadowmask
Posts: 1302
Incept: 2021-05-24

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Americans are already fat enough to survive food shortages. No need to eat yourselves into the size of a small moon. If you think you're going to starve in the next couple of years, there won't be any medical care for your diabetes/heart attack/stroke either.
Twainfan2
Posts: 353
Incept: 2018-12-04

MN
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Don't forget the other tried and true solution for inflation (or a bad economy): war. The way things are going with Russia, China and others... they could just kick off a major war.

There some here the post about Trump having done good things but as Karl keeps pointing out, he was a complete and total disaster that should be rotting on the end of a rope like many before him.
Boredfree
Posts: 70
Incept: 2021-09-15

western slope colorado
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Late last winter we ran out of propane, and rather than fill the tank with expensive winter-priced gas we got the minimum ammount. We figured on filling in August when propane is cheaper. HAHA.

$1.80 a gallon, ouch! Same price we paid when propane was 'expensive'.

We finished building our house (is a home ever finished? ) right as covid hit. We were lucky!

I do electrical work and the cost of materials has gotten crazy. This past summer I was in the local Ace Hardware looking to buy a 100 foot hand roll of 12/2. $105 which was about $40 more than I was used to spending. I said screw it, I'll go to Home Depot 'cause they always have the cheapest wire... $117 there, Holy feces!

Obviously, the Ace wire had been purchased pre-hyper inflation, the Home depot after. Ace has since caught up as I had to buy a couple receptacle boxes, a metal 4 square and a single gang remodel box: $18! At Home depot probably would be $7.

Yeah, inflation is going to spank us all.

I'm very glad for the junk pile I've accumulated over the years. My partner doesn't even give me grief about it anymore as it has saved the day more than once.

Locally a food bank truck comes up from Denver and regularly distributes food, with no questions asked. I wonder how many families need this? I'm guessing it would surprise me.

And a final observation; the local Shopper came out yesterday, it has obits. Usually 2 to 4, yesterday there were 12! I've seen a couple editions with obits like that since the jabs started. I don't think I've ever seen more than 6 in a week for the 20 years I've lived in the area until the vaxx.




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The problem is most people want to point a finger rather than their thumb when dealing with challenges.
Calrissian
Posts: 52
Incept: 2021-04-12

London, UK
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Blanca - What do you do to avoid the loss of purchasing power by the dollar?
--

Physical assets, but then the Govt' could tax you on property/land... or anything.

There is no 'full escape'... only partial.
Whitehat
Posts: 6400
Incept: 2017-06-27

Elsewhere
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Do not be in any kind of substitution business which is defined as something that people can decide to do without by simply not engaging, finding alternate providers, doing themselves or discounting.

Many people hack these types of economic shocks by cutting out spending on something as simple as going out to eat or dong their own repairs.

Even in a place where it is rather expensive to drive (fuel costs and tolls) a person can take a relatively long drive to a nicer place, bring his own food and have a great time saving tens and hundreds over going to local attractions and businesses where spending became a habit.

Purchase bulk food for home preparation for the cost of one average meal out and inflation literally means nothing.

This is only brought up to show that those who lose during inflation are goods and service providers who cannot pass on their costs.

The working class consumer has a lot of options, and many are very good at simply shutting down to basics.

One wonders how long the government and special worker classes can carry the optional economy. My prediction that this is not their end of party. The seeds are planted though, and it will be in about six or seven years when the rest of citizens realize that they are being pinged good and hard to pay for them. This when we run this cycle again and realize that we created deficits in many venues to kick the can down the road for these classes and the trade-offs become real.

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smiley

"Better to reign in Hell, than serve in Heaven," Satan's monologue in the first book of John Milton's Paradise Lost
Ndp
Posts: 34
Incept: 2021-04-21


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Thanks to the Biden regime we all know that inflation is a good thing. It signifies strong demand and a healthy, growing economy. People are ready to spend on all those discretionary purchases they'd been putting off. You know, things like food, gasoline, and heating oil. Superfluous stuff. Just take a few more bong hits and it will all make sense again.
Bagbalm
Posts: 6256
Incept: 2009-03-19

Just North of Detroit
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Greenacr: "Regarding Appliances. My son is a manufacturing supervisor for Whirlpool in Findlay, Ohio. That factory has over 1.2 M dishwasher orders on backorder due to the chip shortage and other supply chain issues........ They are apparently getting ready to raise prices again."

And yet I see nobody considering producing a retro dishwasher or washer, etc, etc, with a simple dial selector switch and motor driven timer.
Cmoledor
Posts: 413
Incept: 2021-04-13

Akron Ohio FEMA region 5
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I see zero way out of it.

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The whole world is one big ****ing scam
Why are you giving a vulgarity warning here? Our genial host is an advocate of both skull****ing and sodomy via rusty chainsaw. Credit to Rollformer
Dingleberry
Posts: 127
Incept: 2011-11-06

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I try to look on the bright side.

Fools do not learn from experience. Fools learn from pain, if they ever learn at all.

My spouse worries about what will happen with our beloved nation as it appears to be on the express train to hell. I say this has been going on a long time, particularly since 2008 but really since 1913. We are picking up steam now, both economically and socially. The social buffonnery can only be made possible by the economic buffoonery. Which I why I am a proponent of the gold standard and the imperfect financial discipline therein, but I digress.

My hope is the pain (both economic and otherwise) will be so severe that it causes even those who clamor for policies leading to their own economic enslavement and eventual destruction come to their senses, or at least shut up and don't vote. I think the pain will come faster than the policies being implemented.

You SJWs, karens, etc. want illogical, unscientific jab mandates? Get ready to pay. NOW.
You also want to go "green" and outright violate the laws of physics, economics, etc.? Get ready to pay. NOW.

Virtue signaling has a price. Perhaps the fed should put that in their basket of "goods". You have entire generations and groups who value that (karens, SJWs, millennials) more than anything else in their lives. Our economic house in on fire, and they want to pour gas on it.

If you gonna be dumb.....you gotta be tough.
--Hillbilly proverb.

Jpg
Posts: 563
Incept: 2009-03-23

MI
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bagbalm wrote..
And yet I see nobody considering producing a retro dishwasher or washer, etc, etc, with a simple dial selector switch and motor driven timer.

That would seem an obvious choice, but would the EPA allow it?
Mikebrandt
Posts: 34
Incept: 2018-03-23

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My prediction? Pain! - Clubber Lang
Peterm99
Posts: 8693
Incept: 2009-03-21

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Greenacr wrote..
. . . Whirlpool in Findlay, Ohio. That factory has over 1.2 M dishwasher orders on backorder due to the chip shortage . . .
Been hearing LOTS about "chip shortage" issues, some of which don't make sense to me.

For example, if I'm a dishwasher manufacturer, I would think that I'd much rather sell some dishwashers without a whole bunch of bells and whistles that the chips are used for than to sell zero dishwashers because I can't get the chips.

I expect that consumers probably feel the same way about purchasing things. I don't believe it's just me, but if I were in the market for for a dishwasher, I would MUCH rather buy one with fewer bells and whistles (much less to go wrong) at a cheaper price than one larded up with IMO very stupid and totally superfluous features, e.g., why would I need a dishwasher to send a message to my phone that it just finished the second rinse cycle? Ditto for the bells and whistles on cars and damn near everything else.

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". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwells imaginings falls into place." - Fred Reed
Alphaomega
Posts: 109
Incept: 2009-12-05

Bakersfield
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Remember, though, government is on it! Social Security is going to see its biggest increase in decades! Surely, that will solve the problem, right?

Sarcasm aside, I see a lot of people choosing between food on the table and buying government mandated health care.
Bzelbob
Posts: 110
Incept: 2021-09-12

Jacksonville
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@Boredfree
Quote:
Locally a food bank truck comes up from Denver and regularly distributes food, with no questions asked. I wonder how many families need this? I'm guessing it would surprise me.

I think it would indeed. At least it surprised me when I found out about my local area.

I've been told that Lutheran Social Services, here in Jax feeds hundreds (if not thousands) of people every week and have lunch assistance in 15 or so local schools.
I've seen news stories about other major cities where *thousands* of cars line up for food.

In other words, there are a lot of people who are way closer to the edge than we realize. As they are chiseled down by rising costs it will get ugly.

In February this year we had an incident where a man apparently was refused from selling his blood (sold it too many times already?) and was walking into our local Publix supermarket cursing and raging.
He ended up leaving when they threatened to call the cops. Apparently same guy had a stand off with cops a couple of days later in his apartment complex and died in the resulting shootout.

Look at your local paper's arrest section and see how many people are getting busted. That gives you some barometer of lives that are spiraling downwards.

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"Threats are illogical. And payment is usually expensive." - Sarek of Vulcan
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