It’s All About Consequences

We have been thrown into a world that is going under. And suddenly it strikes me what all of the issues we face have in common: Consequences.

Freedom is inevitably tied to consequences. Decisions are tied to consequences. Choices are tied to consequences. And what we see today is that everyone wants freedom, make decisions and choose what they want without consequences.

But the consequences are not going away.

You cannot take away the weapons from law-abiding citizens and not suffer the consequences of thugs and thieves exploiting this opportunity.

You cannot defund the police and then be shocked when the consequence is more assault and criminal activity.

You cannot cheapen life by pushing abortion for free and at any time and not suffer the consequence of a lack of respect for life.

You cannot choose to change your gender when born a male and then compete against females without consequences. The other female athletes will suffer the consequences from your decision.

You cannot choose to halt energy production and not suffer the consequences of higher fuel prices and shortages.

You cannot choose to have all of your drugs produced outside of your nation and then suffer the consequences when that nation invades Taiwan(coming soon).

You cannot tell automakers that they must build vehicles that achieve an insane MPG average and not suffer the consequences of a sudden drop in demand as the vehicles underperform.

You cannot print money, borrow money and run the debt up to astronomical levels and nut suffer the consequences when rates rise and the purchasing power of your currency collapses.

The consequences are coming. They will demand tough choices are made. And if you elected individuals based on their liberalism, skin color or sex, there will be consequences for not electing the most qualified and fit individuals for those positions.

You should be prepared to suffer the consequences.

Every choice has consequences. So think before you choose. Or suffer the consequences for the poor choices.

Inflation is Rising and Packaging is Shrinking

The Double Whammy of Inflation and Shrinkflation Are Just Getting Started

In a steep acceleration for prices where many people live, FRED is gracious enough to show us the rate of inflation for June 2021 along with a chart dating back well before 1970.

Source: https://research.stlouisfed.org/publications/page1-econ/2021/07/15/inflation-expectations-the-phillips-curve-and-the-feds-dual-mandate?utm_medium=email&utm_campaign=202108%20Research%20Newsletter&utm_content=202108%20Research%20Newsletter+CID_921402a9d24e9c41b5beabca068bd6cc&utm_source=Research%20newsletter&utm_term=Page%20One%20Economics%20essay

Ironies

Ironically, the story linked above justifies higher inflation than zero to prevent deflation(prices falling) yet if you look at the chart image, deflation has rarely been an issue over the last fifty years(2010).

Shrinkflation: What You Think You See May Not Be What You Get

Pictured below are two Tillamook Ice Cream containers. The product on the store shelves offered both containers for the same price: $5.99. That translates to an increase of 14.2% in price. Because the containers shrank and the prices are the same we call this Shrinkflation. And it stinks.

It stinks because unless you look carefully you might not notice the differences.

Shrinkflation: Same Price but a smaller Container. At least it has the same great taste, right?

Have you looked closely at your shredded cheeses lately? Choose carefully. While many are still 8 ounces(Two Cups) more and more are down to 7 ounces (or less).

Packages across the board are shrinking and this hides the real inflation we are seeing every day as they hold prices the same but you get less.

Hiding the inflation does all consumers a disservice. If the inflation is hidden from us, then we as consumers are not getting a clear perception of what our currency can and cannot buy.

Your dollars are losing their purchasing power. And at 5% or higher inflation, they will be losing that purchasing power faster than anyone has witnessed since the 1980s.

Unless you are getting salary increases to keep up with inflation, you and your family are going to be falling behind economically.

“Adjusted for inflation, hourly compensation fell 2.7 percent in the second quarter, data released by the Bureau of Labor Statistics on the nonfarm business sector showed Tuesday.” Source: Breitbart

Conclusion:

Choosing a rate of inflation at 2% or higher and calling your currency stable is simply false. Sooner or later the flames of inflation will jump the perceived control of the Fed and burh through the economy creating havoc and harm.

The US Dollar needs to be tied to a stable form of money such as gold, and interest rates need to be allowed to rise and fall as supply and demand dictate.

The damage we are doing to our economic well being will not be reversed any time soon and the cures for the damage are likely to accelerate the damage as we have seen in years past.

Do You Function In A Seasonally Adjusted World?

Seasonally Adjusted Data: Does it Help?

Last Friday (August 6,2021) the Bureau of Labor Statistics (BLS) released their preliminary jobs data for July and it was a doozy. The BLS reported that 943,000 jobs were added to the economy in July. 2021.

Sounds pretty impressive right? Too good to be true? Well, it really is too good to be true. Worse, it’s a lie.

Work in The Real Economy

In the real world where people get up and go to work and get a check for their labors is not seasonally adjusted. Fortunately, the BLS also shares that data(but no one else seems to notice it). Without the seasonal adjustments, the economy lost 133,000 jobs in July.

Let me repeat that: There were 133,000 fewer jobs earning pay in July than in June.

Seasonal Adjustments

Trying to think of what other aspects of our lives have seasonal adjustments I simply could not come up with any. We have seen that gasoline prices tend to rise in the summer and fall towards winter, but I’ve yet to hear any seasonal adjustments applied to the gas price to make these changes seem more palatable for us.

How Much Is This Seasonal Adjustment?

Non-Farm Payroll For July
NSASAAdjustment
2016-9733711344
2017-11032281331
2018-11641491313
2019-10581931251
202060617261120
2021-1339431076
Comparison of Job Numbers Adjustment 2016-2021

Million Plus Jobs Added Every July

As you can see in the table above, the BLS adds more than 1 million jobs every July. The jobs must be taken away during other months when we actually have created jobs. Does this lead to better decisions made by those that use this data? It’s hard for me to see how that is possible when the whole objective is meant to gauge the health of the US economy.

In our situation for July, we would have to lose more than 1 million jobs in July to even get close to showing no job growth. I find that simply stunning. Even in a terribly July, we’d still find solace that we were still adding jobs to the economy with the Seasonally Adjusted NFP (although we’d be lying to ourselves).

Using Unadjusted Numbers Paints a Different Picture

Would you have a different picture of the economy if we used the real data? Let’s look at this potential headline if we used the real data:

“July NFP Loses 133,000 Jobs Despite Low Interest Rates and States Re-Opening”

I think it speaks for itself. Don’t you? Somewhere, George Orwell is smiling knowing that he was right.

Corporate Profit Growth Continues to Sink

Corporate profit growth is an excellent indicator of the health of an economy. After all, the reason one is in business is to generally grow profits.

As I have written in years past Know Profit No Growth (No Profits No Growth)

For the 10 years ending the first quarter of 2021, profit growth has fallen to 3.6% annually. Compare that to the ten years ending the first quarter of 2011 and you see just how poor we are doing: 10%.

Think about that. With all of the Fed easing, corporate tax cuts, ultra low interest rates and government giving out money, we have 1/3 of the growth of the previous decade.

So is the Fed keeping us afloat, or are they the cause of what ails us. I know what I believe. Below is an image of the rate of profit growth annually for the ten years ending in the year listed (first quarter each year). And for kicks, I’ve included the numbers of what the Fed balance sheet was along the way.

The Federal Reserve Bank: Pumping Fuel onto the Bonfire of Inflation

We are in very uncertain times.  And they are becoming more uncertain.  The Federal Reserve Bank(FRB) just raised interest rates .25% and has stated it is their objective to raise rates perhaps 3 times in 2017, in an effort to effectively curb inflation.

And while that may seem to make sense based on the way both the FRB has worked in the past, and what we have been told about inflation and how it works, these actions, perversely, are going to have the opposite effect this time around.  Should I be correct, then the raising rates will actually fuel inflation, which will force more rate hikes, and then even more inflation. Continue reading


Worsening Economic Conditions: Where’s the Growth?

Today’s GDP report paints a bleak picture.  GDP for the first quarter was revised down to 0.8%.  The second quarter of 2016 came out at 1.2%, and will likely be revised lower.

Here is what they also released, but are not talking about:

Corporate profits before and after taxes have also been revised back to the first quarter of 2013.  And it is bleak.

Remember that businesses do not go into business just to sell you goods and services.  They do so to sell you goods and services to generate profits.

Would you trudge off to work every day to earn less than you did last year? And less than you did two years ago?  Or would you make some changes? Continue reading


Goodbye Ted Cruz

I could have supported Cruz in the beginning.  I am a firm believer in the US Constitution and believe 99% of or social and economic problems disappear by strictly following it.

Cruz had the opportunity to show his true character and the more I heard the more frazzled his belief seemed to me.

I am not fooled.  Trump is not the answer to what ails us.  But he is the best hope for a connecting road to the right path.  Because you have to destroy the power structure that has been in the Republican Party for all these decades that have sold us out left and right.

With a clear and consistent set of principles, the Democrats would fade off into history.  They have no principles other than calling everything hate and enabling class warfare.

So I do not expect Trump to the Promised Land.

That is up to you.  If you continue to support the Congressmen and Senators you always have, then NOTHING changes.

Vote out Ryan for starters.

Vote against the rest of those that compromised us to where we are today.  Even if they do not lose this election they need to be scared as hell that they will lose the next.  And for Representatives, that is just 2 years and six months away.

Send a clear message.  The frustration does not just rest ay 1600 Pennsylvania Avenue.

It’s the whole damn lot of them.


Why Aren’t You Getting That Raise?

Janet Yellen and the Federal Reserve Bank have a problem.  The economy is weakening by the most basic of measurements and yet, they have continued to tell us things are getting better.

The most basic of measurements of employee productivity clearly show otherwise.

The amount of profit earned after taxes annually per employee on behalf of businesses has fallen to a six year low.  For how long overall will American businesses attempt to expand if they are generating less profit per employee? Continue reading