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FRED
04-21-08, 04:07 PM
http://www.itulip.com/images/gas-station-sign.jpgInflation in America - Part I: Five signs of inflation, from rising prices, to shrinking candy bars, to increased fees

How to avoid an inflation-induced household budget crisis that may be creeping up on you now

by Eric Janszen (iTulip.com)

Inflation is unfamiliar to Americans who are not old enough to remember the horrors of disco. Not since the 1970s has America seen the kind of price inflation that is rampant today, in all its many forms. In the first part of our inflation primer Inflation in America we give you the basics. Like a frog heating slowly in a pot of water, if you’re not aware of how inflation works its corrosive effects on your budget you may find yourself financially cooked.

For over a decade you have seen high, often double-digit, annual inflation rates in college tuitions, housing prices, and health insurance. More recently you’ve witnessed gasoline, heating oil, natural gas, and food price inflation. Soon you will see prices go up at the local Made-in-China big box mart, thanks to rising wage rates and a strengthening currency in China.

The primary cause of our inflation is the depreciating dollar, now off more than 50% against the euro over the past several years. We will go into that sorry process in Part II of our series. In this part we reveal stealth inflation and its impact on the quality of your life and your household budget, and what you can do to protect yourself.

Inflation: Level versus rate, what is versus what shall be

Inflation Sign #1: High and rising prices. Inflation is not only higher prices but high and rapidly rising prices. Understanding the difference is key to understanding the nature and process of inflation. A recent Harper’s Magazine article by Kevin Phillips "Numbers Racket" ($ubscription) (http://www.harpers.org/archive/2008/05/page/0001) argues that the true annual inflation rate in the first quarter of 2008 was closer to 12% than the official 4% reported as the government’s consumer price index (CPI-U). Twelve percent is a very high inflation rate by any standard, and when it comes to inflation the rate of change in prices is more important than a high versus low but stable price level. Here’s why.

Let’s start by looking at the impact of a high inflation rate on a household budget. At a 12% annual rate of inflation income earned in December one year and saved has 12% less purchasing power by the following December. You can see this in gasoline prices. A gallon of regular gasoline in the US cost $2.88 at the start of 2007 and $3.39 by mid-April this year. That means the $50 that purchased 17 gallons of gasoline a year ago buys only 14.5 gallons today. If your ride gets 24 miles per gallon, as the average US car does, a year ago $50 took you 408 miles but only 348 miles today, or one less round trip daily commute for the average commuter. That’s what “loss of purchasing power” means; the same dollars earned from your labor purchase fewer goods and services than before. You are working just as hard but you can afford less, at least with cash. Your credit may expand to fill in the goods and services affordability gap, and with it your debt, and that is why the current inflation is not hitting households as hard today as in the 1970s.


http://www.itulip.com/images/inflatiocredit.gif

In the two recessions of the 1970s, consumer credit growth peaked about six
months before the CPI. Consumer credit declined through the recession and inflation
after. During the most recent recession in 2001 both consumer credit and CPI inflation
increased in tandem during and declined after the recession. At this writing both
inflation and consumer credit are moderating. However, during the 2001 period the
US dollar was not weak and in a period of structural readjustment as it has been
since 2001. Consumer credit is likely moderating due to the credit crunch that is
spreading across the financial system while a weakening dollar continues to
push energy prices up and inflation through the economy.


As goods and services prices are rising the US economy is slowing. Jobs are beginning to dry up. Competition for the remaining jobs prevents workers from to demanding salary increases. Rising household expenses and stagnant wages result in a household cash flow squeeze.

The relief valve? For consumers with the best credit the result of more borrowing to cover expenses is increased debt and reduced savings. With prices of goods and services rising while incomes stay flat, households attempt to make up the difference in the loss of purchasing power by borrowing more to purchase the same quantity and quality of goods and services as in the past – to maintain the material quality of life to which they have become accustomed. Households drain savings and increase household debt as inflation cuts into household cash flow.

If you are not careful to adjust to inflationary conditions you may find yourself with more debt than you can handle and not enough savings for your future needs even if you remain employed and earning the same salary as before.

Danger Signs

Rising inflation is slow and subtle. Like a frog heating in a pan of water, you need to be aware of the following signs that inflation is cooking your household budget. If you have not increased the frequency of travel, eating out, or other spending over the past six months but your savings account is dwindling and your credit card bills are rising, you may be on a path to an inflation-induced household budget crisis.

There is no painless way to cope with inflation and get your budget back on track. The steps you can take are much like those you’d take if you decided to take a pay cut and economize. What makes adaptation to inflation tricky is that your income may be flat or even rising – but not as fast as price inflation is rising around you.

To manage the impact of inflation on your budget short term, target those items in your budget that you can control and are your largest expenses. For most Americans that is transportation, food and groceries, utilities, and entertainment.
One week gas rule: Set a cut-off price for filling up the tank once a week and only drive as far as you can travel on that tank of gas
Take public transportation: Grab a train or bus when you can
Carpool to work with friends: It's more fun than you think
Clip joint avoidance: Set a cut-off price for entrees at trendy, over-priced restaurants
Eat out less, cook at home more: Home cooked food is better for you anywayInflation’s impact on business: Your local restaurant

Have you noticed prices on the menu going up at your local restaurant even though it's not as crowded? To a business like a restaurant that cannot increase exports like IBM or Cisco can to take advantage of a falling dollar to boost revenues, inflation means higher input costs resulting in less positive cash flow and declining real profits. Here’s what is happening to your local eatery as a result of today's inflation.

Let’s say in April 2008 the restaurant's monthly gross revenues are $100,000 and expenses $70,000, so gross profits are $30K for the month. The owners take $10,000 as personal income and add the remaining $20,000 to the cash account to pay taxes and other expenses later. If that cash account held $40,000 at the end of March at the start of May it holds $60,000. Payments for raw ingredients, labor, and other ongoing expenses in May will come out of this cash account and also out of cash flow from sales.

Now lets dial in the 12% annual inflation. The purchasing power of the $60,000 balance in that account is declining 1% per month, eating away at it like termites, bit by bit turning last month's profits into less purchasing power to buy materials and labor for the following month to run the business. The owners will find that over a year the cash account has dwindled even though revenue appears to be as robust as before. What is happening is that input costs the business are rising faster than the output prices and revenues, the prices of plates of food and glasses of wine. Through this insidious process, the business is gradually going cash-flow negative. The restaurant must either lower costs or raise prices, or both, or fail as a business.

At first, to avoid price hikes that will deter customers management may respond to inflation by trying to lower unit costs (cost per plate of food) by substituting cheaper for higher cost ingredients. It’s a gamble that customers are less likely to be deterred by marginally lower quality than marginally higher prices. Portions may also shrink. You will start to notice fewer shrimp in the shrimp egg foo young at your favorite local Chinese take-out joint.

In spite of these cost reductions, eventually your local restaurant is forced to raise prices to cover rising input costs. Unit volumes decrease because customers’ incomes are not rising to cover the added cost of items on the menu. Customers will also notice the cheaper ingredients and the restaurant’s food quality reputation will suffer. Management tries to lower fixed expenses (versus per plate of food unit costs) by reducing staff. Customers experience this as slowness and crankiness among the remaining overburdened wait staff.

If your wait person is cranky and unresponsive, count how many tables they are covering before passing judgment. These days it's probably too many.

This is how a business goes out of business in an inflationary recession. In an inflationary recession the most profitable operations, if they have maintained a large cash cushion and especially if they hedged inflation in their cash account with sound investments, can survive by letting inflation grind down competing businesses with weaker balance sheets by forcing them to raise prices and reduce product and service quality. By not raising prices and taking the profit hit, the stronger competing company steals the weaker company’s customers. If they have enough cash to keep it up, it's a matter of time before the stronger business has enough of the weaker business's customers that the weaker business fails.

Then guess what the surviving company gets to do? That’s right: raise prices. This is part of the dynamic of an inflation cycle.


Inflation: More than high prices


Rising prices is inflation sign #1. But four-dollar gasoline and $25 entrees at a restaurant where they were $15 two years ago is only one sign of inflation. Watch for these as well.



http://www.itulip.com/images/bfinflation.gif


Inflation Sign #2: Smaller sizes, volumes and portions


Food makers are starting to reduce the size of items like candy bars and cutting back on the number of chips in a bag of chips. Expect food that fits into a box or a bag to decline in volume. Notice that bag of corn chips that used to be full is now one quarter empty, that jug of laundry detergent that used to be good for 30 loads will now do 24, and so on.

The way to defend against this form of inflation is to note the per-unit costs at the grocery store versus the per-package price.


http://www.itulip.com/images/cheaper.gif

Inflation Sign #3: Substitution of lower cost and quality ingredients


This inflation sign is the most subtle of all. Unless you have been going to the same store or restaurant for a long period of time you won’t not notice the change. Using cheap versus expensive tequila in your margarita, for example, or regular antibiotics fed chicken versus organic chicken like it says on the menu.



http://www.itulip.com/images/linewaiting.jpg

Inflation Sign #4: Poor service due to cutbacks in personnel


Long lines can be a sign of inflation. As businesses cut service staff to reduce personnel costs, waiting times rise. Over time you may notice it takes longer to find someone to help you at the local Home Depot, or you are waiting longer on the phone to speak with technical support, or the experts you talk to turn out to not be so expert as you are put through layers of less expensive and lesser trained personnel before you get to talk to the one high cost expert who actually knows what they are talking about.

You will also notice sales people becoming more assertive. They will try to sell you more expensive products and will try to add on options.


http://www.itulip.com/images/servicefees.gif

Inflation Sign #5: Fees, fees, fees


As costs rise, towed behind many once reasonably and simply priced products or services you will find a giant load of new fees. Checked out your bank statement lately? Your cable bill? Your cell phone bill? It pays to look at these carefully every month as most service providers are not required by consumer law to notify you when a new fee is added. You may be surprised to find many fees large and small hitched up to a service that was sold to you at a fair starting price. Look at them now.

Conclusion

Inflation is more than higher prices, it is also a lower quantity and quality of goods and services for the same price, lower quality services, and new fees.

What is causing inflation? The falling dollar. Our the second installment of our Inflation in America series we explain how the weakening dollar is creating cost-push inflation. In our third part of the series we address the question, Will the dollar appreciate and US inflation abate? Only structural change will cause the dollar to strengthen and end the weakening dollar inflation cycle.

This article as PDF file. (http://www.itulip.com/PDFs/Inflation_in_America_PartI.pdf)

See also:

Dual Cycles of Demand Destruction and the Economic Face Plant (http://www.itulip.com/forums/showthread.php?p=33121#post33121)

iTulip Select (http://www.itulip.com/forums/showthread.php?t=1032): The Investment Thesis for the Next Cycle™
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Chief Tomahawk
04-21-08, 09:15 PM
It's been interesting to watch prices at stores adjust. I think CostCo has been on the front end of price increases, meaning they have raised rather than eat the increase to them. Some small diners I frequent have been much slower to raise, if at all. I imagine that will change soon. These price increases will make it a long summer and I'm sure the political campaigns will be stuck with having to acknowledge (:eek:) them.

Anyone else perplexed :confused: by Larry Kudlow's bemoaning of the 'American Peso'? He was the guy calling for "shock & awe" Fed rate cuts two months ago. Now look what it's wrought.

jtabeb
04-21-08, 10:53 PM
Fred, very nice piece.

I have one specific question for You or EJ.

A lot of us have limited 401K choices, typically Treasuries, foreign stock fund, domestic stock fund. Most of the plans I've seen offer these choices at least, and some far more than that.

If we use these three areas as a starting point. Where do you put your money in this increasingly inflationary environment?

Do you stand by your "stocks go down" (nominally)?

Do you agree with Hudson from your last interview "take it like a man but loose no nominal values in T-Bills"

Or, do you see this as a time when inflation gets so high that every hedge (including stocks) goes up at least in nominal price.

What's your guys' call? (In nominal terms, cause our choices are our choices and we can't change the choices we are given from our employers.)

As for REAL Terms, that's what a IRA and Gold and Silver are for.

So just to reiterate, frame this question only in terms of captive capital held hostage.
(YOu have to Pick one, or a combination of T-Bills, Domestic Stock fund, or foreign stock fund, but you can't choose outside of these area's. Just like in most 401Ks)

Thanks

JT

P.S. Can't wait for Part II

jtabeb
04-21-08, 10:56 PM
It's been interesting to watch prices at stores adjust. I think CostCo has been on the front end of price increases, meaning they have raised rather than eat the increase to them. Some small diners I frequent have been much slower to raise, if at all. I imagine that will change soon. These price increases will make it a long summer and I'm sure the political campaigns will be stuck with having to acknowledge (:eek:) them.

Anyone else perplexed :confused: by Larry Kudlow's bemoaning of the 'American Peso'? He was the guy calling for "shock & awe" Fed rate cuts two months ago. Now look what it's wrought.


Just call it CRAMERITES, having people see how stupid you are by watching what you said on you-tube a month ago vs what you are saying now.

Contemptuous
04-22-08, 03:20 AM
Jtabeb -

<< Or, do you see this as a time when inflation gets so high that every hedge (including stocks) goes up at least in nominal price. >>

This one is closest to Doug Noland's call in his most recent comments. Massive Short Squeeze due to a coordinated Central Bank "put". I'm betting this one of your depicted scenarios is the closest to what actually plays out. A fantasyland of levitating values across all hard assets. Those avoiding this rebound who think they are in search of "fundamental values" miss the most important part of the theme, that there is (almost) no such thing in 2008-2009 as "going to cash". Real estate is anybody's guess. Oh, and Mish's deflation call goes to the back of the classroom.

necron99
04-22-08, 09:10 AM
I haven't posted in a long time because I've been too busy struggling to hold onto my job, like the overworked waiters in your article here. But I definitely wanted to compliment you on this piece. I am typically impressed with the stuff I read here at iTulip, but this article is outstanding and (if I can spare the time) I will send it out to all my friends. Succinct, practical and useful, clear and mostly free of jargon. Well-written and well done! I'm eager to read the other installments.

I should point out that one of my other favorite blogs, the "Cunning Realist", has a recurring topic of "The Inflation Chronicles", where he solicits his readers to submit anecdotal evidence of precisely the examples you bring up here. And there's plenty of it: candy bars shrinking, service reductions, the whole gamut. "My friend went to a dentist in Tijuana to get dentures because she couldn't afford to get them from her regular dentist here."
Check out his blog comments for the inimitable humor of real people coping with the situation you describe: for example,
> "At this point it seems the sack of flour in my pantry has out performed my stock portfolio in the last 6 months."
The Cunning Realist's "Inflation Chronicles" one (http://cunningrealist.blogspot.com/2008/03/inflation-chronicles.html), two (http://cunningrealist.blogspot.com/2008/03/inflation-chronicles_24.html), three (http://cunningrealist.blogspot.com/2008/04/inflation-chronicles.html). Key quotes:
> "Because the Bear Stearns debacle created so much controversy, watch for the Fed to maintain or even increase its liquidity efforts in an attempt to effect a de facto bailout for Wall Street and obviate the need for another intervention. Remember, oil at $125 or $150 can be blamed on lots of things. An overt handout to Wall Street can't."

> "The challenge, particularly for those without much historical perspective, is to understand that the dollar falling almost every day is not normal; that oil at a new nominal and real all-time high (http://www.nytimes.com/2008/03/03/business/worldbusiness/03cnd-oil.html?ex=1362286800&en=50b6611134fc9cf6&ei=5088&partner=rssnyt&emc=rss) was not inevitable; that gold just under $1000 is not a meaningless curiosity." [Ed.: Gold fell several weeks after he posted that, but he also predicted its fall shortly beforehand. This guy's sharp. --necron99] "Policymakers who've failed need us to think this is all business as usual. ... Remember, the Fed and the White House need you to get used to all this. Habituation is crucial, so when you've been paying $3.50 at the pump for months and it "plunges" to $3.40 for a few weeks (right before an election, say) you'll feel grateful."
Expect to hear both the incumbent politicians, and the talking heads on political shows, downplay the abnormality of the stuff that Fred describes in the main article. Oh, it's just an overdue correction... prices rise all the time... gas is over $4 because there was (**gasp** (http://cunningrealist.blogspot.com/2008/03/excuses-excuses.html)) bad weather in the North Sea this month... candy-bar makes have to earn a living too y'know!

ax
04-22-08, 03:51 PM
I actually wrote Kudlow with that very same question....still waiting for a response. He wasn't a "stong dollar" guy 3 months ago.

BlackVoid
04-22-08, 05:15 PM
It is not just a falling dollar. It is the Limits of Growth.

The Outback Oracle
04-22-08, 05:24 PM
Inflation in this (hidden) form has been going on in our products from China for about 5 years. For example we import a particular folding chair. When we first imported the chair the wall thickness of the Aluminium tubing was 1.4mm. Next year it became 1.2mm. Then another year or so it got down to 1.0mm and finally to 0.9mm. This was always done without our knowledge. Finally we managed to get the thickness back to 1.0mm. While all this spec reduction was happening the ticket price remained relatively stable!
Now of course our FOB prices are rising at about an annual rate of 25 -40%. This will feed through to the economy over the next 6 months or so.
My point, I guess, is that, as far as China is concerned I think we have exhausted all the normal methods of trying to hide the inflation, so from now on all cost increases of any kind will feed straight through to the price.

Nicolasd
04-22-08, 10:21 PM
from Fred/EJ :Inflation Sign #4: Poor service due to cutbacks in personnel

As a corolary to sign #4 , I think that unemployement will rise , and competition for the remaining available jobs will also rise. People will start accepting lower qualification jobs to generate some income . In turn they will have lower incomes yielding to increases in debt default, feeding back to the debt crisis.

As far as disco times are concerned , they were great. I started chasing chicks right about then :p .Roller skates ,Pepsi shoes & all.

Contemptuous
04-22-08, 11:01 PM
Nice of you to grace us with your (permanently lugubrious and blackly pessimistic) presence Necron99. We have indeed not seen you around here in a while.

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Chief Tomahawk
04-23-08, 12:08 AM
I actually wrote Kudlow with that very same question....still waiting for a response. He wasn't a "stong dollar" guy 3 months ago.

Why am I not surprised? I used to go to his blog and read the comments left by those for & against. The supporters left early last fall, which left a shed full of critics. So Larry removed the ability of visitors to leave comments about 6 months ago. So much for free speech; that and Larry couldn't take the heat.

By the way, I was back in CostCo today and I could swear the prices on the LCD TVs have been raised. These have been the big ticket eye catchers positioned just inside the door for forever and a day. For years folks have been used to technology prices dropping as time passes to move old stock. Price increases on old stock is going to hit English speakers like an out-of-the-blue immersion in French. :(

Chief Tomahawk
04-23-08, 12:21 AM
Just call it CRAMERITES, having people see how stupid you are by watching what you said on you-tube a month ago vs what you are saying now.

Yes, he's had a few. I read his autobiography and still recall the part where he said he resorted to sleeping in his car with a gun in one hand and his Boy Scout hatchet in the other. That's got to be CNBC anchor material!

necron99
04-23-08, 12:44 AM
Do I really need to quote Lily Tomlin on you? "No matter how cynical you get, it's nearly impossible to keep up."



Nice of you to grace us with your (permanently lugubrious and blackly pessimistic) presence Necron99. We have indeed not seen you around here in a while.

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qwerty
04-23-08, 01:33 PM
"A recent Harper’s Magazine article by Kevin Phillips "Numbers Racket" ($ubscription) argues that the true annual inflation rate in the first quarter of 2008 was closer to 12% than the official 4% reported as the government’s consumer price index (CPI-U)."

You might have included a reference to the fact that Philips lifted the 12% number from John Williams' work on Shadow Government Statistics (http://www.shadowstats.com/alternate) and whom the article cites for a lot of the rationale behind it.

There is also an intermediate figure of around 7% depending on how William's sets the starting point for unwinding methodological changes.

Gnosis
04-23-08, 02:18 PM
Price increases on old stock is going to hit English speakers like an out-of-the-blue immersion in French. :(

Yeah, like excuse my french.....:o

jimmygu3
04-23-08, 04:22 PM
To manage the impact of inflation on your budget short term, target those items in your budget that you can control and are your largest expenses. For most Americans that is transportation, food and groceries, utilities, and entertainment.
One week gas rule: Set a cut-off price for filling up the tank once a week and only drive as far as you can travel on that tank of gas
Take public transportation: Grab a train or bus when you can
Carpool to work with friends: It's more fun than you think
Clip joint avoidance: Set a cut-off price for entrees at trendy, over-priced restaurants
Eat out less, cook at home more: Home cooked food is better for you anywayInflation’s impact on business: Your local restaurant


Another thing to do when dining out is to share an entree. Portion sizes at many restaurants are still huge. This would also help the 64% of Americans who are overweight or obese (http://usgovinfo.about.com/cs/healthmedical/a/hhsobesity.htm).


At first, to avoid price hikes that will deter customers management may respond to inflation by trying to lower unit costs (cost per plate of food) by substituting cheaper for higher cost ingredients. It’s a gamble that customers are less likely to be deterred by marginally lower quality than marginally higher prices. Portions may also shrink. You will start to notice fewer shrimp in the shrimp egg foo young at your favorite local Chinese take-out joint.


Likewise, restaurants can offer "half entrees" for, say, 40% less than the regular portion. Instead of simply raising the price of large entrees from $14.99 to $16.99, they could also add "light appetite selections" for $9.99. They wouldn't have to cut quality or reduce margins, and customers could afford to dine out more often.

ocelotl
04-23-08, 09:23 PM
Reducing of sizes, quality or standards is just the beginning.

Hiding price inflation is a difficult task to attain during a long period, specially when the price inflation grows and stays for a long period. After a while trying to hide it, and in view of the protests it generates, Seller has to give up and announce the typical announce of the second stage of a growing price inflation:



Due to continuing increases in our costs, we are forced to increase our final prices so we can continue serving our costumers with the quality that they ask. Thanks for keeping is as your choice for business

The first time it sounds as if the seller is struggling, second time begins to raise concerns about how long and/or how much are price hikes going to continue... After a while it becomes an everyday thing and people not only protests, it also gets surprised and anxious to know how big is the next hike going to be.

The third stage, when hyperinflation begins to kick, begins at the time the next denomination bill is released to circulation. In Mexico, the 10,000 old pesos Matias Romero was withdrawn from circulation in the 50's because it was scarcely used, when it got back in 1978, people realized Mexican Government was not intending to reduce the price inflation rate, reason that was confirmed with the change from the American Bank Note bill, to the Banxico green Lazaro Cárdenas one, released in 1981.

Stopping a high price inflation rate when it gets out of control is very difficult, since no increases in bank rates can reduce its growth rhythm. It needs a coordinated effort from both the ruling government and the whole of population, and even then, it can take a full decade, as in the case of Mexico, or a movement to a hard asset based currency, as the Rentenmark.

When people experiences an explosive price inflation rate for an extended period of time, people gets more conscious of it, gets to detect it faster, because people develops a "memory of prices", and every time somebody changes the look of a price list, instantly people checks down to see the amount of price hikes, and how long it took to go from one hike to the next.

When the economy that suffered the hyperinflation recovers, people fears hyperinflation, and the exigence for price stability climbs to the top levels (Examples: Actual Germany, Brazil and Mexico). As far as I remember, nobody has given importance when a particular month shows a slight price deflation (-0.1% to -0.25%), and in my particular opinion, in an stable economy such a price reduction is not really important when it shows just every now and then and not in an extended period of time.

metalman
04-23-08, 11:23 PM
Reducing of sizes, quality or standards is just the beginning.

Hiding price inflation is a difficult task to attain during a long period, specially when the price inflation grows and stays for a long period. After a while trying to hide it, and in view of the protests it generates, Seller has to give up and announce the typical announce of the second stage of a growing price inflation:



The first time it sounds as if the seller is struggling, second time begins to raise concerns about how long and/or how much are price hikes going to continue... After a while it becomes an everyday thing and people not only protests, it also gets surprised and anxious to know how big is the next hike going to be.

The third stage, when hyperinflation begins to kick, begins at the time the next denomination bill is released to circulation. In Mexico, the 10,000 old pesos Matias Romero was withdrawn from circulation in the 50's because it was scarcely used, when it got back in 1978, people realized Mexican Government was not intending to reduce the price inflation rate, reason that was confirmed with the change from the American Bank Note bill, to the Banxico green Lazaro Cárdenas one, released in 1981.

Stopping a high price inflation rate when it gets out of control is very difficult, since no increases in bank rates can reduce its growth rhythm. It needs a coordinated effort from both the ruling government and the whole of population, and even then, it can take a full decade, as in the case of Mexico, or a movement to a hard asset based currency, as the Rentenmark.

When people experiences an explosive price inflation rate for an extended period of time, people gets more conscious of it, gets to detect it faster, because people develops a "memory of prices", and every time somebody changes the look of a price list, instantly people checks down to see the amount of price hikes, and how long it took to go from one hike to the next.

When the economy that suffered the hyperinflation recovers, people fears hyperinflation, and the exigence for price stability climbs to the top levels (Examples: Actual Germany, Brazil and Mexico). As far as I remember, nobody has given importance when a particular month shows a slight price deflation (-0.1% to -0.25%), and in my particular opinion, in an stable economy such a price reduction is not really important when it shows just every now and then and not in an extended period of time.

your excellent reports from first hand experience remind me of... Can the U.S.A. have a "Peso Problem"?
(http://www.itulip.com/faceofinflation.htm)
from a few years back.

you read it? what do you think? can it happen to the usa? or rather... is it happening? gracias!

ocelotl
04-24-08, 01:50 AM
your excellent reports from first hand experience remind me of... Can the U.S.A. have a "Peso Problem"?
(http://www.itulip.com/faceofinflation.htm)
from a few years back.

you read it? what do you think? can it happen to the usa? or rather... is it happening? gracias!


I do use it as reference to explain some US issues to people around me and my answer to it was my first post here, now that you mention it...
Can the U.S.A. have a "Peso Problem"? (http://www.itulip.com/forums/showthread.php?p=30891#post30891) :o

* Edit *

Oh, and I do prefer Herradura Reposado, or Cazadores Reposado, but just a "caballito".

metalman
04-24-08, 10:53 AM
I do use it as reference to explain some US issues to people around me and my answer to it was my first post here, now that you mention it...
Can the U.S.A. have a "Peso Problem"? (http://www.itulip.com/forums/showthread.php?p=30891#post30891) :o

* Edit *

Oh, and I do prefer Herradura Reposado, or Cazadores Reposado, but just a "caballito".

for those who don't know, he means...

http://www.beveragewarehouse.com/images/products/1426.jpg

best. tequila. on. earth.

FRED
04-24-08, 11:30 AM
Restaurants Feel Sting Of Surging Costs, Debt (http://online.wsj.com/article/SB120900163110240285.html?mod=hpp_us_pageone)
April 24, 2008 (Jeffrey McCracken and Janet Adamy - WSJ)

Cheesecake Factory, Ruby Tuesday, Ruth's Chris, Morton's, McCormick & Schmick's, Landry's Restaurants, OSI Restaurant Partners

When you serve 1.1 million eggs a week, even a tiny price increase can pinch. So when egg prices tripled for casual-dining restaurant chains Bakers Square and the Village Inn over the past two years, the result was especially painful. Pricier eggs and other foods added $9 million in annual costs. This month, the chains' owner, Denver-based Vicorp Restaurants Inc., filed for bankruptcy-court protection. more... (http://online.wsj.com/article/SB120900163110240285.html?mod=hpp_us_pageone)

AntiSpin: Adding further evidence to our position that comparing this recession to any previous one is foolhardy, in previous recessions wait staff jobs at restaurants provided an employment safety net for millions of workers. How many hundreds of thousands of ex-dot com employees wound up waiting tables to make ends meet while they searched for other jobs? Refugees from the housing bubble will have no such outlet. What will happen to them while they search for employment?

If they are young, they will move back in with their parents.

If they are middle aged, they will burn through their savings and tap their 401k plans.

If they are older, they will retire.

Chris
04-24-08, 11:39 AM
I consider the UK as the second verse in this sorry song. From the UK Telegraph:


http://www.telegraph.co.uk/core/i/t.gif Food fraud warning from consumer watchdog

British shoppers are being conned out of £7 billion a year by unscrupulous producers who are dressing up cheap food as top quality fare, it has been claimed.

A new study estimates that up to 10 per cent of food on the shelves of Britain’s shops is not what it seems.

Battery farm eggs are being sold as free range, low quality meat labelled organic and farmed fish marketed as being wild, according to research published by consumer watchdog Which? today.

Which? also points to increasing evidence that some products are being actively tampered with to disguise them as premium produce, for example ordinary olive oil is dyed dark green so that it looks like extra virgin oil.
The watchdog also raises concerns that genetically-modified (GM) ingredients could find their way into British shops without being declared, through rice, soya or cooking oils.

A spokeswoman for Which? said: “The level of food fraud in the UK has been estimated at about 10 per cent, or £7 billion a year, but the true extent is impossible to gauge.

“Food fraud is not always obvious. It is not easy for consumers to spot when a premium product has been substituted or mixed with a cheaper one, or when a label lies about its origin.

“Apart from health risks, the most serious effect of food fraud on consumers is financial - paying £10 for what you believe to be an organic, free-range chicken that is actually a battery-farmed bird that you could have bought for £2 leaves you considerably out of pocket.”
Some of Britain’s biggest supermarkets have previously been found to be selling mislabelled food.

Last year Tesco was found to be selling 'corn fed’ chickens that were actually raised on a different, cheaper, diet.

The supermarket giant apologised and said it was due to an “accidental mistake” by a farmer.

An investigation by the Food Standards Agency (FSA) found that one in 10 “wild” sea bass and sea bream were actually farmed, and one in seven “wild” salmon.

In 2006, the FSA found that 46 per cent of basmati rice samples contained cheaper varieties of rice.

A follow up investigation in 2006 found 16 per cent of samples had been tampered with. Similar adulteration was found in arabica coffee, pure orange juice and extra virgin olive oil.

Vodka is also found to be counterfeited, leading to safety fears for drinkers.
Philip Barlow, chairman of the Food Fraud Task Force, said: “Food safety is of paramount importance and everyone expects that the food they obtain is of the highest quality, which in most cases it is.

“However, there are always a few individuals who will, for personal gain, try to pass off suspect food as meeting required standards.”

The FSA has called for a tougher approach to food fraud, including more random testing and more prosecutions being publicised more.

Which? asked the four big supermarket chains what checks they made to try to prevent food fraud. Asda, Morrisons, Sainsbury’s and Tesco all said that they regularly audit and visit suppliers and send produce samples to independent laboratories for testing.



http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/04/24/nfood124.xml

c1ue
04-25-08, 08:02 PM
Well, fortunately we have plenty of both historical and present day examples to draw from:

1) Meat injected with antibiotics to make it 'fresh' longer
2) Meat dyed red to seem fresher
3) Cardboard inserted into dumplings as filler
4) Hamburger beef composed of 50% or less actual cow product
5) Substitution of oils with lower quality/different type oils (i.e. 90% olive)
6) Butter with canola oil added
7) Potatoes nitrated to keep them from sprouting for much longer
8) Milk from powder mixed with fresh
9) Egg substitutes. Need I say more?
10) Juices with ever lowering percentages of actual juice

I can't wait for the rats in the deviled meats.

jk
04-26-08, 05:28 PM
from the ny times
Recession Diet Just One Way to Tighten Belt

Stung by rising gasoline and food prices (http://topics.nytimes.com/top/reference/timestopics/subjects/f/food_prices/index.html?inline=nyt-classifier), Americans are finding creative ways to cut costs on routine items like groceries and clothing, forcing retailers, restaurants and manufacturers to decode the tastes of a suddenly thrifty public.

Spending data and interviews around the country show that middle- and working-class consumers are starting to switch from name brands to cheaper alternatives, to eat in instead of dining out and to fly at unusual hours to shave dollars off airfares.

Though seemingly small, the daily trade-offs they are making — more pasta and less red meat, more video rentals and fewer movie tickets — amount to an important shift in consumer behavior.

In Ohio, Holly Levitsky is replacing the Lucky Charms cereal in her kitchen with Millville Marshmallows and Stars, a less expensive store brand. In New Hampshire, George Goulet is no longer booking hotel rooms at the Hilton, favoring the lower-cost Hampton Inn. And in Michigan, Jennifer Olden is buying Gain laundry detergent instead of the full-price Tide.
Behind the belt-tightening — and brand-swapping — is the collision of several economic forces that are pinching people’s budgets or, at least, leaving them in little mood to splurge.

The price of household necessities has surged, with milk topping $4 a gallon in many stores and regular gasoline closing in on $3.60 a gallon nationwide.

Home prices are sliding, wages are stagnant, job losses are growing and the Standard & Poor’s 500-stock index, a broad measure of stock performance, is down 6 percent in the last year. So consumers are going on a recession diet.
Burt Flickinger, a longtime retail consultant, said the last time he saw such significant changes in consumer buying patterns was the late 1970s, when runaway inflation prompted Americans to “switch from red meat to pork to poultry to pasta — then to peanut butter and jelly.”

“It hasn’t gotten to human food mixed with pet food yet,” he said, “but it is certainly headed in that direction.”

etc.

[emphasis added-jk]


http://www.nytimes.com/2008/04/27/business/27spend.html?hp

Slimprofits
04-27-08, 01:02 PM
“It hasn’t gotten to human food mixed with pet food yet,” he said, “but it is certainly headed in that direction.”

etc.

[emphasis added-jk]


http://www.nytimes.com/2008/04/27/business/27spend.html?hp

Just when the anti-dry cat and dog food movement was picking up steam, this dollar crash is going to assure that most people miss the boat.

Finster
04-28-08, 01:16 PM
Well, fortunately we have plenty of both historical and present day examples to draw from:

1) Meat injected with antibiotics to make it 'fresh' longer
2) Meat dyed red to seem fresher
3) Cardboard inserted into dumplings as filler
4) Hamburger beef composed of 50% or less actual cow product
5) Substitution of oils with lower quality/different type oils (i.e. 90% olive)
6) Butter with canola oil added
7) Potatoes nitrated to keep them from sprouting for much longer
8) Milk from powder mixed with fresh
9) Egg substitutes. Need I say more?
10) Juices with ever lowering percentages of actual juice

I can't wait for the rats in the deviled meats.

11) The 13-ounce 'pound' of coffee
12) GMO & irradiated foods

We could go on, but that last one is a favorite of mine. Forget about all the debate about whether this stuff is safe, as good for you as the non-GMO, non-irradiated food ... it doesn't matter. The bottom line is that if you want the same corn or tomatoes or whatever as before, you have to pay a lot more. That's inflation, so even at the same price these techniques are as good as subterfuges to make inflation less obvious.

Now I wonder ... given that the BLS discounts price increases in many products due to ostensible "quality improvements" under its hedonics program, does it also apply a markup for quality ... uhm ... shortcuts?

jtabeb
04-28-08, 03:43 PM
11) The 13-ounce 'pound' of coffee
12) GMO & irradiated foods

We could go on, but that last one is a favorite of mine. Forget about all the debate about whether this stuff is safe, as good for you as the non-GMO, non-irradiated food ... it doesn't matter. The bottom line is that if you want the same corn or tomatoes or whatever as before, you have to pay a lot more. That's inflation, so even at the same price these techniques are as good as subterfuges to make inflation less obvious.

Now I wonder ... given that the BLS discounts price increases in many products due to ostensible "quality improvements" under its hedonics program, does it also apply a markup for quality ... uhm ... shortcuts?

Finster, what to DO?

How do you protect your assets here?

Stocks US, Stocks overseas, Bonds US, Bonds Overseas?

What to do??

Advice?

Finster
04-29-08, 08:38 AM
Finster, what to DO?

How do you protect your assets here?

Stocks US, Stocks overseas, Bonds US, Bonds Overseas?

What to do??

Advice?


So what's your take here Finster? Cash, Stocks, Bonds, Real Estate (my 401K won't let me do commodities) so of these 4 bad choices, which is the LEAST BAD for this environment?

Thanks

The question we'd all like to know the answer to! And you nailed my sentiment pretty well. You got a bunch of choices that all have a pretty bad rap, so which is the least bad?

This is epitomized in the stocks-versus-cash conundrum. A darn good case can be made that stocks are going down (as per EJ). And cash? That means US dollars ... not exactly the prettiest picture themselves.

Bonds? Near-generational-high prices (low yields). The poor outlook for everything else is one reason commodities have been doing so well.

You don't say what options you do have in your 401k, and I don't know what's best anyway. But there are some things to consider. You don't have to have a huge stake in coms for them to do you some good. That may be especially true after they've had such a run-up. So what about your outside accounts? If you can manage even 5%-10% of your 401k, there you go. If not, do you have access to ETFs in your 401k? There are now a number that give you various ways into coms. DJP, GSP, DBC CEF, IAU, SLV, IGE, GDX, MOO are just a few. There are traditional mutual funds that do similar things, like PCRDX. You also mention real estate ... there are also some good ETFs and traditional mutual funds that invest in REITs and other real-estate venues. I personally am cautiously optimistic on this beaten-down sector.

There isn't really any one-size-fits-all advice anyway. A lot depends on your individual situation, e.g. your time frame, what other assets you have, whether and how much debt you have, etceteras. For someone with debt, paying it down should be one of the first things under consideration for marginal dollars. After that, I wouldn't feel adequately protected if I was restricted only to stocks, bonds, and cash, but within that universe, and given all the uncertainties we face, I wouldn't try to choose any one of the categories of US stocks, foreign stocks, US bonds, and foreign bonds, but would have at least some of each. Keeping in mind the individual situation caveat, an investor could do far worse than to follow the KISS principle and just put a quarter in each. That may sound somewhat milquetoast (because it is!), but given that you open your question with the word "protect", presumably safety and capital preservation (allowing for inflation) is paramount to you. Not to mention that in an environment like this, that's not a bad attitude to take ...

jtabeb
04-29-08, 11:26 AM
Thanks, Finster.

I'm just pissed that I have to put so much money in my 401K or I will get killed in taxes. I am lucky enough to have been able to put all those tax savings into PM's. So my portfolio is about 60% PMs (the real stuff you can roll around in the bed on), 30% cash (410K funds) and about 10% Energy/PM/ commodity stocks (IRA). I just hate having this captive money held hostage in my 401K but I found out that I can take a loan out against my balance and pay myself back with interest w/o any tax penalty, so I think that is what I'm going to do.

One thing you can't say about the enviornment now is that it is "boreing".:rolleyes:

bartonhall77
04-29-08, 03:11 PM
"...A darn good case can be made that stocks are going down (as per EJ)."

Is this still true? In spite of a boatload of negative news in MSM on foreclosures, oil prices, inflation, etc. the stock markets are holding their own or rising. Is there just too much money (domestic and foreign) chasing too few opportunities for the markets to drop?

BiscayneSunrise
04-29-08, 07:01 PM
Depending on which index you may want to use. Equities in the US bottomed in mid January, retested lows in mid March and are up-trending again.

Unknown whether this is a short term rally or an actual reversal and the first leg of the next bull market. But my guess is equities will continue to rally short term with gold and other commodities weakening as dollar continues to strengthen.

The decision to re-enter the PM trade remains unanswered at this juncture.

montrosedan
04-29-08, 09:44 PM
There is no inflation in America, just inflated consumption. Check out this link.

http://www.mindfully.org/Sustainability/Americans-Consume-24percent.htm

When was the last time you saw a skinny person in Walmart! Americans just need to go on a diet, quit buying billions of dollars of diet pills, walk/cycle more, let the kids ride the school bus or walk to school, drive a car more than one year old, quit buying so much unnecessary stuff, save for retirement and....quit complaining and GET A LIFE.

metalman
04-29-08, 10:53 PM
There is no inflation in America, just inflated consumption. Check out this link.

http://www.mindfully.org/Sustainability/Americans-Consume-24percent.htm

When was the last time you saw a skinny person in Walmart! Americans just need to go on a diet, quit buying billions of dollars of diet pills, walk/cycle more, let the kids ride the school bus or walk to school, drive a car more than one year old, quit buying so much unnecessary stuff, save for retirement and....quit complaining and GET A LIFE.

what are you trying to do, man? kill the economy?!?! what if everyone listened to you? shsssss!

can't you see what's happening? mr market is putting americans on a diet. but he's putting poor people in egypt etc on a starvation diet.

rather than tell folks to stop buying crap and complaining how much it costs you ought to go tell them to go mish's site where there's no inflation at all. you can eat and buy as much gas as you want.

problem solved.

raja
04-30-08, 06:39 PM
I wouldn't try to choose any one of the categories of US stocks, foreign stocks, US bonds, and foreign bonds, but would have at least some of each.


This is good advice . . . as long as the market doesn't crash. As you said, "...A darn good case can be made that stocks are going down (as per EJ)."


bartonhall77: Is this still true? In spite of a boatload of negative news in MSM on foreclosures, oil prices, inflation, etc. the stock markets are holding their own or rising. Is there just too much money (domestic and foreign) chasing too few opportunities for the markets to drop?I'm wondering that, too.
You place your bets and take your chances.
I'm betting on a crash . . . we'll see.
Right now, I'm getting slammed on my shorts :eek:

jtabeb
05-01-08, 07:22 PM
This is good advice . . . as long as the market doesn't crash. As you said, "...A darn good case can be made that stocks are going down (as per EJ)."

I'm wondering that, too.
You place your bets and take your chances.
I'm betting on a crash . . . we'll see.
Right now, I'm getting slammed on my shorts :eek:


Cash is safer than shorting, you'll probabally pull your shorts due to pressure from leverage JUST as the market rolls over. Or you can be brave (foolhardy maybe too).

Leverage kills during a deleverageing process, If you get forced out you loose the ability to play later. At least cash lets you do that.

GRG55
05-02-08, 12:04 PM
http://www.itulip.com/images/gas-station-sign.jpgInflation in America - Part I: Five signs of inflation, from rising prices, to shrinking candy bars, to increased fees


Back in North America for a short spell. Filled the pick-up truck with regular grade gasoline yesterday afternoon at an Esso station (Exxon subsidiary) in southern Alberta. Paid Cdn $1.255 per litre. After volume conversion and currency adjustment (0.98 US to a Loonie) that's equivalent to US $4.66 per gallon. Diesel is even more expensive.

So ya'll don't get any sympathy from these parts if your fuel hits US $4.00. :p

After all Alberta is the place that's killing ducks by the hundreds so we can export the black stuff to you, while we pay more. Much more.

How long is that likely to last? And how is the differential likely to be resolved? Comments and thoughts?



Dead ducks dent Alberta reputation



Not just an ecological disaster, but a PR one, too




Calgary Herald



Published: Friday, May 02, 2008
A dead duck with oil oozing from its tiny carcass is as far from a Disney mascot as the province could ask for; especially now, when it's launching a massive public relations campaign to sell the world on Alberta's oilsands.



But it's a potent symbol of the public relations problems facing northern Alberta and the rampant oilsands development, expected to triple by 2015. Perhaps 500 dead waterfowl will be the catalyst the province needs to finally make environmental protection a higher priority.



The ecological disaster is devastating for everyone concerned, including the oil industry, about to face off with U.S. legislators over the acceptance of non-conventional crude. The ducks, migrating over the oilsands, landed on a Syncrude tailings pond...



...The "tragedy" -- and that's how Prime Minister Stephen Harper described the event -- could well be the tipping point in the court of public opinion regarding the province's environmental record and its tarnished, dirty-oil image...



...Alberta's massive oilsands development is under attack internationally because of the carbon dioxide emissions burned in order to separate the sticky bitumen from the soil. Now this...
http://www.canada.com/calgaryherald/news/story.html?id=12e071eb-a5b9-4cd5-8311-d825045052a5&k=5287

FRED
05-02-08, 01:25 PM
Back in North America for a short spell. Filled the pick-up truck with regular grade gasoline yesterday afternoon at an Esso station (Exxon subsidiary) in southern Alberta. Paid Cdn $1.255 per litre. After volume conversion and currency adjustment (0.98 US to a Loonie) that's equivalent to US $4.66 per gallon. Diesel is even more expensive.

So ya'll don't get any sympathy from these parts if your fuel hits US $4.00. :p

After all Alberta is the place that's killing ducks by the hundreds so we can export the black stuff to you, while we pay more. Much more.

How long is that likely to last? And how is the differential likely to be resolved? Comments and thoughts?



Dead ducks dent Alberta reputation



Not just an ecological disaster, but a PR one, too




Calgary Herald



Published: Friday, May 02, 2008
A dead duck with oil oozing from its tiny carcass is as far from a Disney mascot as the province could ask for; especially now, when it's launching a massive public relations campaign to sell the world on Alberta's oilsands.



But it's a potent symbol of the public relations problems facing northern Alberta and the rampant oilsands development, expected to triple by 2015. Perhaps 500 dead waterfowl will be the catalyst the province needs to finally make environmental protection a higher priority.



The ecological disaster is devastating for everyone concerned, including the oil industry, about to face off with U.S. legislators over the acceptance of non-conventional crude. The ducks, migrating over the oilsands, landed on a Syncrude tailings pond...



...The "tragedy" -- and that's how Prime Minister Stephen Harper described the event -- could well be the tipping point in the court of public opinion regarding the province's environmental record and its tarnished, dirty-oil image...



...Alberta's massive oilsands development is under attack internationally because of the carbon dioxide emissions burned in order to separate the sticky bitumen from the soil. Now this...
http://www.canada.com/calgaryherald/news/story.html?id=12e071eb-a5b9-4cd5-8311-d825045052a5&k=5287

Canadians are so generously sending their oil to the US, we shouldn't complain about the relatively low prices here. But we will.

bill
05-02-08, 01:51 PM
http://www.world-nuclear-news.org/EE-New_study_of_Albertas_nuclear_energy_options_31030 8.html
New study of Alberta's nuclear energy options
31 March 2008

INL associate director Bill Rogers described the collaboration to the Edmonton Journal as "a marriage made in heaven." He said that although no budget had been announced for the collaboration, potentially any of the INL's 3800 staff could be drafted as needed into the Alberta project. Rogers said that "the US is dependent on Alberta for energy security," noting Alberta's "essential role as the biggest source of growing American oil and natural gas imports." He said that Alberta stands out as a reliable and stable supplier in a world where the US faces "nationalization of resources in countries that are hostile to the US."
.
.
.
Various proposals have been made to use nuclear power to produce steam for extraction of oil from Alberta's oilsand deposits and electricity also for the major infrastructure involved. At present a lot of natural gas is used - up to 30 cubic metres per barrel of oil. The gas is used as an energy source to make steam to liquefy the bitumen, enabling its separation, and to generate electricity for mining and treatment. It is also a raw material for hydrogen to break down the long-chain hydrocarbons to yield synthetic crude oil (about 5 kg is used per barrel).

Flexibile deployment

One problem related to the provision of steam for mining is that a nuclear plant is a long-life fixture, and mining of oilsands proceeds across the landscape, giving rise to very long steam transmission lines and consequent loss of efficiency. Therefore, smaller reactors, with capacities of some 100 MW, could be more suitable for individual projects, given the limitations of supplying steam over more than 25 km.

The INL has designed and constructed 52 reactors of varying capacities since its establishment in 1949 as the National Reactor Testing Station. The INL could use its past experience to help develop a small-sized reactor specifically for producing steam for the extraction of oil from Alberta's oilsands. Such a reactor could operate for some ten years to provide the necessary steam needed to exploit a particular area of oilsands, while larger reactors could provide the electricity required to refine the oil extracted.

santafe2
05-05-08, 03:26 AM
There is no inflation in America, just inflated consumption. Check out this link.

http://www.mindfully.org/Sustainability/Americans-Consume-24percent.htm

When was the last time you saw a skinny person in Walmart! Americans just need to go on a diet, quit buying billions of dollars of diet pills, walk/cycle more, let the kids ride the school bus or walk to school, drive a car more than one year old, quit buying so much unnecessary stuff, save for retirement and....quit complaining and GET A LIFE.

Hum...how did we become the North American whipping boys for energy consumption? Canada must consume 30% more energy per capita than the US. It must be their deceptively sweet temperament and dry sense of humor that keeps them from being viewed as the energy bullies we all know they are.

And just in case you're French and feeling great about your energy use, it's up 30% in the last 25 years while ours is flat. Italy, up 36%. England, up 11%. Spain, up 75%. Mexico, up 18%. Brazil, up 67%. Saudi Arabia, up 41%. Israel, up 44%. South Africa, up 18%. Australia, up 48%. China, up 143%. Hong Kong, up 135%. India, up 115%. Japan, up 47%. South Korea, up 282%. Bangladesh, up 220%, (ok I'm just playing here - don't get up in my grill over this one).

I'm not saying the US shouldn't re-design our living to use a lot less energy per capita, just that it's not a US problem, it's a world wide problem. And, quit shopping in Walmart.

dbarberic
05-29-08, 08:59 PM
So where is part II?

metalman
05-29-08, 11:13 PM
So where is part II?

was wondering the same...

GRG55
05-29-08, 11:22 PM
was wondering the same...

I heard a rumour that EJ asked Bernanke to write the introduction for Part II, but Ben said no deal as long as "inflation expectations are well anchored".

metalman
05-29-08, 11:45 PM
I heard a rumour that EJ asked Bernanke to write the introduction for Part II, but Ben said no deal as long as "inflation expectations are well anchored".

all i wanna know is when to sell my metals. these down days are scary! :eek::eek::eek:

Slimprofits
06-20-08, 02:13 PM
Could it be that the flooding put a stop on any possibility of inflation slowing down in 2009?

Flooding to inflate grocery bill across the board (http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080619/BUSINESS01/806190376/1030)



By wiping out corn and soybean crops across Iowa, Illinois and other states, the flood is driving up prices that were already at historic highs and increasing the cost of feed for cattle, hogs and poultry.

Economists say that will force livestock farms to cut back on production even more than they were, and that will eventually lead to higher prices for beef, pork, chicken, milk and eggs.

"I have no choice: going broke or increase prices," said Heinz Kramer, who expects to have to charge more for the pork and beef that he processes at a family-owned company in La Porte City.

Pork prices could be up as much as 30 percent next year because of production cutbacks, said John Lawrence, an economist at Iowa State University. Prices of beef and poultry products are likely to be at least 10 percent higher by the end of this year, he said.

"The higher the corn prices go today the higher meat prices, milk and egg prices will go a year from now," he said.


Hey at least we've got this going for us:

It's quiet in the tropics. There are no threat areas to discuss, and none of the models are forecasting tropical storm formation in the next seven days. (http://www.wunderground.com/blog/JeffMasters/show.html)

bart
06-20-08, 02:42 PM
Could it be that the flooding put a stop on any possibility of inflation slowing down in 2009?

Flooding to inflate grocery bill across the board (http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080619/BUSINESS01/806190376/1030)



Hey at least we've got this going for us:

It's quiet in the tropics. There are no threat areas to discuss, and none of the models are forecasting tropical storm formation in the next seven days. (http://www.wunderground.com/blog/JeffMasters/show.html)


My current best guess:

http://www.nowandfutures.com/images/predict_inflation.png

Jim Nickerson
06-20-08, 02:44 PM
Quote:
<TABLE cellSpacing=0 cellPadding=6 width="100%" border=0><TBODY><TR><TD class=alt2 style="BORDER-RIGHT: 1px inset; BORDER-TOP: 1px inset; BORDER-LEFT: 1px inset; BORDER-BOTTOM: 1px inset">By wiping out corn and soybean crops across Iowa, Illinois and other states, the flood is driving up prices that were already at historic highs and increasing the cost of feed for cattle, hogs and poultry.

Economists say that will force livestock farms to cut back on production even more than they were, and that will eventually lead to higher prices for beef, pork, chicken, milk and eggs.

"I have no choice: going broke or increase prices," said Heinz Kramer, who expects to have to charge more for the pork and beef that he processes at a family-owned company in La Porte City.

Pork prices could be up as much as 30 percent next year because of production cutbacks, said John Lawrence, an economist at Iowa State University. Prices of beef and poultry products are likely to be at least 10 percent higher by the end of this year, he said.

"The higher the corn prices go today the higher meat prices, milk and egg prices will go a year from now," he said.
</TD></TR></TBODY></TABLE>

Could it be that the flooding put a stop on any possibility of inflation slowing down in 2009?

Flooding to inflate grocery bill across the board (http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080619/BUSINESS01/806190376/1030)



Hey at least we've got this going for us:

It's quiet in the tropics. There are no threat areas to discuss, and none of the models are forecasting tropical storm formation in the next seven days. (http://www.wunderground.com/blog/JeffMasters/show.html)

Well at least we'll have some ethanol that will make going to the market cheaper than otherwise to buy corn-fed products that will be more expensive than otherwise. The "otherwise" refers to what would be elected officials that see beyond their benefits and the next election.

FRED
06-22-08, 03:56 PM
Quote:
<TABLE cellSpacing=0 cellPadding=6 width="100%" border=0><TBODY><TR><TD class=alt2 style="BORDER-RIGHT: 1px inset; BORDER-TOP: 1px inset; BORDER-LEFT: 1px inset; BORDER-BOTTOM: 1px inset">By wiping out corn and soybean crops across Iowa, Illinois and other states, the flood is driving up prices that were already at historic highs and increasing the cost of feed for cattle, hogs and poultry.

Economists say that will force livestock farms to cut back on production even more than they were, and that will eventually lead to higher prices for beef, pork, chicken, milk and eggs.

"I have no choice: going broke or increase prices," said Heinz Kramer, who expects to have to charge more for the pork and beef that he processes at a family-owned company in La Porte City.

Pork prices could be up as much as 30 percent next year because of production cutbacks, said John Lawrence, an economist at Iowa State University. Prices of beef and poultry products are likely to be at least 10 percent higher by the end of this year, he said.

"The higher the corn prices go today the higher meat prices, milk and egg prices will go a year from now," he said.
</TD></TR></TBODY></TABLE>


Well at least we'll have some ethanol that will make going to the market cheaper than otherwise to buy corn-fed products that will be more expensive than otherwise. The "otherwise" refers to what would be elected officials that see beyond their benefits and the next election.

New Tropicana! Now With Less Orange Juice! (http://consumerist.com/tag/grocery-shrink-ray/?i=5008042&t=new-tropicana-now-with-less-orange-juice)

Reader Linda is unimpressed with Tropicana's new "easy pour pitcher" because it means she'll be getting 7 oz less orange juice for the same price. So, she called them up and gave them a piece of her mind. more... (http://consumerist.com/tag/grocery-shrink-ray/?i=5008042&t=new-tropicana-now-with-less-orange-juice)

pescamaaan
08-25-08, 11:37 AM
read this article today in the wsj and it reminded me of this thread...the subtle signs of inflation:

http://online.wsj.com/article/SB121945357145165595.html?mod=googlenews_wsj


Hershey (http://online.wsj.com/quotes/main.html?type=djn&symbol=hsy) Co. is substituting vegetable oil for a portion of the cocoa butter traditionally used in some of its chocolates. Spice maker McCormick (http://online.wsj.com/quotes/main.html?type=djn&symbol=mkc) & Co. is now supplying food companies with cheaper spices and new flavor blends, such as Mexican oregano instead of pricier Mediterranean oregano, and garlic concentrate instead of heavier (and costlier to ship) garlic cloves.

c1ue
08-25-08, 12:51 PM
http://www.newser.com/story/34783/midwest-awaits-bumper-corn-crop.html


America's farmers are on track to deliver the second-biggest corn harvest ever despite June floods, according to the Department of Agriculture.

It is amusing now that the 'shortage' has morphed into the 2nd largest carn harvest ever.

Yet another example of crappy MSM reporting.

From another place which I cannot find now - the farmers evidently just replanted. They were pissed at having to do the extra work, but it was no big deal otherwise.

mooncliff
08-24-09, 08:03 PM
However, even branded chains have been quietly closing outlets, shedding staff and "re-engineering" meals with smaller portions or cheaper ingredients, according to the British Hospitality Association. Industry experts said the restaurant business was experiencing its toughest time since the 1980s.
http://www.independent.co.uk/life-style/food-and-drink/news/crisis-hits-restaurants-as-diners-decide-to-stay-home-1776485.html

metalman
08-24-09, 10:57 PM
However, even branded chains have been quietly closing outlets, shedding staff and "re-engineering" meals with smaller portions or cheaper ingredients, according to the British Hospitality Association. Industry experts said the restaurant business was experiencing its toughest time since the 1980s.
http://www.independent.co.uk/life-style/food-and-drink/news/crisis-hits-restaurants-as-diners-decide-to-stay-home-1776485.html

good catch... posting it on the fire econ thread... (http://www.itulip.com/forums/showthread.php?p=118220&posted=1#post118220)

BiscayneSunrise
02-12-13, 09:29 AM
Beam Inc says this move is to keep up with consumer demand but since liquor only comes in fifths or quart sizes, it is a roundabout way to reduce product size.

http://www.chicagotribune.com/business/breaking/chi-makers-mark-water-20130211,0,499092.story (http://www.chicagotribune.com/business/breaking/chi-makers-mark-water-20130211,0,499092.story)


4594

Maker's Mark lowering proof to meet demand

By Samantha BomkampTribune staff reporter3:57 p.m. CST, February 11, 2013


Maker's Mark announced it is reducing the amount of alcohol in the spirit to keep pace with rapidly increasing consumer demand.

In an email to its fans, representatives of the brand said the entire bourbon category is "exploding" and demand for Maker's Mark is growing even faster. Some customers have even reported empty shelves in their local stores, it said.

After looking at "all possible solutions," the total alcohol by volume of Maker's Mark is being reduced by 3 percent. Representatives said the change will allow it to maintain the same taste while making sure there's "enough Maker's Mark to go around." It's working to expand its distillery and production capacity, too.

Maker's Mark, made by Deerfield-based Beam Inc., said it's done extensive testing to ensure the same taste. It says bourbon drinkers couldn't tell the difference. It also underscored the fact that nothing else in the production process has changed.

"In other words, we've made sure we didn't screw up your whisky," the note said.

Rob Samuels, chief operating officer and grandson of Maker's Mark Founder Bill Samuels, Sr., said this is a permanent decision that won’t be reversed when demand for bourbon slows down. Samuels said that bourbon has gone from the slowest growing spirits category to the fastest over the last 18 months, driven by growth overseas and demand from younger drinkers. An average bottle of Maker’s Mark takes six and half years to produce from start to finish, and since the company doesn’t buy or trade whiskey, it’s been impossible to keep up.

The first bottle of Maker's Mark, with its signature red wax closure, was produced in 1958.

Beam is the country's second-largest spirits company by volume. It also makes Jim Beam, Sauza tequila and Pinnacle vodka. It's still dwarfed by industry-leading Diageo, the London-based maker of Smirnoff, Tanqueray, Captain Morgan and Johnnie Walker.

It's a tough time to take a risk with one of its oldest and most popular brands. Beam has promised that 25 percent of sales will come from new products, a difficult goal to attain but a critical one for investor confidence.The move met some backlash on social media sites, where some said they would boycott the bourbon if the company went ahead with its plans.

Many also complained that they'd rather see an increase in its price than a decrease in the alcohol. But observers say that by raising the price, Beam would have hurt itself by positioning Maker's Mark to compete against its own higher end brands like Basil Hayden's.

sbomkamp@tribune.com | Twitter: @SamWillTravel

Copyright © 2013 Chicago Tribune Company, LLC

don
02-12-13, 11:05 AM
Sobering news . . .

shiny!
02-12-13, 11:20 AM
Sobering news . . .

Oh... OUCH!

BiscayneSunrise
02-12-13, 01:15 PM
Sobering news . . .

Good one. ;_DU

BadJuju
02-12-13, 01:48 PM
Sobering news . . .

;_TU

don
02-12-13, 03:05 PM
Good one. ;_DU

I'll drink to that ;_Y

lektrode
02-12-13, 05:38 PM
Originally Posted by BiscayneSunrise Good one. ;_DU




I'll drink to that ;_Y

well.... even tho its somewhat early to 'head for the track' - anybody know what time it is????


<iframe src="http://www.youtube.com/embed/BPCjC543llU" allowfullscreen="" frameborder="0" height="315" width="560"></iframe>

bart
02-12-13, 05:50 PM
Sobering news . . .


Short pink elephants...

lektrode
02-12-13, 05:59 PM
Short pink elephants...

heh?

bart
02-12-13, 06:19 PM
heh?

Sober people don't see pink elephants, so I'm shorting the "stock".... guess I need to up my meds. ;-)

lektrode
02-12-13, 06:34 PM
Sober people don't see pink elephants, so I'm shorting the "stock".... guess I need to up my meds. ;-)

or switch to johnny walker...
;)

its getting downright nasty, isnt it Mr B?
its bad enuf when they dilute our money - never mind lie about it - or start calling 14oz a 'pint' - but when they start waterin down the booze, now they really pushin their luck

this ones getting around - as in: good news travels fast, but bad news travels at the speed of light (http://nation.time.com/2013/02/12/makers-mark-waters-down-its-whisky-and-anger-rises/):



In an interview with TIME, Maker’s Mark president Bill Samuels Jr. — whose father created the bourbon’s unique recipe in 1954 using red-winter wheat instead of rye — insisted that drinkers won’t notice the difference. The idea originated with Samuels’ son, Maker’s Mark chief operating officer Rob Samuels. (The company is still family run, although it’s owned by Beam, Inc., which also owns Jim Beam bourbon and Courvoisier cognac.) When Rob suggested the change last year, Bill Jr. said, he was slow to agree. “Rob asked me about six months ago, ‘What would you think about a proof reduction?’”


what makes me think he's the beancounter of the clan....

Milton Kuo
02-12-13, 07:00 PM
Sobering news . . .

Is there still any doubt about the inflation/deflation argument? Heck, they're even starting to water down liquor. That's all the proof we need. :)

bart
02-12-13, 07:10 PM
or switch to johnny walker...
;)


Or Everclear... ;-)

its getting downright nasty, isnt it Mr B?
its bad enuf when they dilute our money - never mind lie about it - or start calling 14oz a 'pint' - but when they start waterin down the booze, now they really pushin their luck
...


It actually wouldn't surprise me to see a large return of the concept of bathtub gin ( http://en.wikipedia.org/wiki/Bathtub_gin ) over the next few years.

lektrode
02-12-13, 07:40 PM
It actually wouldn't surprise me to see a large return of the concept of bathtub gin ( http://en.wikipedia.org/wiki/Bathtub_gin ) over the next few years.

along with the everclear - tis already a boomin home enterprise (http://dsc.discovery.com/tv-shows/moonshiners), once agin!

jk
02-13-13, 12:28 PM
Is there still any doubt about the inflation/deflation argument? Heck, they're even starting to water down liquor. That's all the proof we need. :)
specifically from 90 proof down to 84.

jmdpet
10-29-14, 04:07 PM
This company just published a food price data set that's based on actual observations throughout the country. You can browse down to the individual picture taken in the store.

https://data.premise.com/indicators/usa/