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Democrats Against Hard Work

Posted by V the K at 7:35 pm - May 7, 2015.
Filed under: Economy

Democrat Senator Cory Booker is outraged that some people have to work 50 hours a week to get ahead in the world.

A single parent of two children would need to work 50 hours a week at a minimum-wage job in the U.S. to earn 50% of the nation’s net median household income, the organization’s international equivalent for the poverty line. “That’s just wrong.” – Cory Booker

Working 50 hours a week is injustice to Cory Booker?

“Have you ever had a f#cking real job?” asks Ace at the link.

Recently, I had a conversation with my son, who was frustrated by his inability to move up as rapidly as he would like. I had to explain to him that hiring an employee is making an investment; for an employer to hire someone even at minimum wage is roughly equivalent, in terms of cost, to buying a higher-end pickup truck. Before an employer makes that kind of investment, they want some assurance that the investment is going to pay off; which is why they want things like credentials and references. As an indicator of intellect or ability, a college degree is meaningless. However, it does show an employer that you are capable of starting and finishing a long-term task.

The Cory Bookers of the world don’t get any of this. Everyone is entitled to whatever they think is a “living wage,” whether they provide living wage value to an employer or not.

Face it, when you looked at the protesters in Baltimore or Ferguson… who would want to hire them? Bitter, angry, entitled, often barely coherent, and likely to fly into a rage at the slightest perception that they are not getting enough.

(Once Again) Obama Helps Big Corporations Screw American Workers

Posted by V the K at 10:12 am - March 26, 2015.
Filed under: Economy

While everyone was distracted talking about the First Lady’s hairdo, the Obama Administration quietly took some ‘Executive Action’ to help large corporations replace American workers with cheap foreign labor.

Obama intends to make it easier to bring more foreign guest workers to the United States — likely at significant cost to workers already here — by loosening the rules governing something known as the L-1B visa program. Under the program, a multinational company with offices in the United States can move workers from abroad to live and work in the U.S. for as long as five years in what is known as an intra-company transfer. There are almost no rules concerning what those workers can be paid, so there is no barrier to a company firing American employees and bringing in workers from foreign facilities to replace them at much lower pay.

Where in the hell did anyone get the idea that the Democrat Party was the friend of the working man (and woman)?

 

Player 2 Has Entered the Game

Posted by V the K at 9:41 am - March 23, 2015.
Filed under: Economy,Tea Party,Team Sequester

Ted Cruz announced he is running for president, which comes as a surprise to no one. I like Ted Cruz a lot, but I am wary of ideologically driven men who run for president before completing a single term in the senate. That has never worked out well for us as a country.

The Democrats are attacking Ted Cruz as the architect of the Government “shutdown” that they claim “cost the economy $24 Billion.” To me, and others who can process information in a rational way, this actually makes the case for Ted Cruz or someone like him. When Democrats make the attack that Government spending is necessary to sustain the economy, they are admitting that the economy is dysfunctional. If the economy requires trillions of dollars in deficit spending to keep from collapsing, something is deeply wrong with it.

And if you think that constantly running up Trillions of dollars in debt is a sustainable economic model, I know an adult pre-school in Brooklyn who will gladly accept your Visa card.

Seattle Leftists Encounter Cause and Effect

Posted by V the K at 5:46 pm - March 16, 2015.
Filed under: Economy

Progressive left Utopia Seattle raised it’s minimum wage to $15 an hour because most of its voters are selfish and economically illiterate. As of April 1st of this year, a $15 per hour minimum wage that will begin to be phased in over the next 3-6 years depending on the size of the business. However, there are going to be a lot fewer people in the category of “People who have jobs in the city of Seattle” by the time all businesses are subject to the new wage.

Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming: Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.

In addition to restaurants closing, hotels are also cutting staff and raising room rates. The full force of the wage requirement is a few years off. Businesses like restaurants with razor thin profit margins are the canaries in this particular economic coal mine.

Shock: Big banker, up to no good, would rather not be audited

Posted by Jeff (ILoveCapitalism) at 9:51 am - February 27, 2015.
Filed under: Depression 2.0,Economy,Socialism in America

Refresher: The Federal Reserve Bank is not a government agency. It is the world’s largest private bank. Government has given it special privileges to basically:

  • counterfeit money (i.e., create it from thin air);
  • fix key prices in the economy (interest rates);
  • tax Americans indirectly (by creating inflation/money and financing government with the proceeds);
  • goose the financial markets for the proverbial “one percent” – which includes government officials themselves;
  • bail out irresponsible/incompetent banks – and (via measures of “regulation”) prevent up-and-coming banks from challenging them;
  • generally plan the markets (create bubbles, followed of course by crises);
  • plan the number of crappy, part-time jobs that Obama’s economy can create for the little people;
  • and escape the Freedom of Information Act.

So, from The Hill’s coverage of Janet Yellen’s testimony to Congress on Wednesday:

The biggest challenge to the Fed’s structure is the growing movement to Audit the Fed via legislation from Sen. Rand Paul (R-Ky.)…

A GOP-controlled Congress has given the bill its best chances yet of passage, and that renewed interest led Yellen to deliver her most spirited opposition yet.

“I want to be completely clear,” she said. “I strongly oppose Audit the Fed.”

Surprise, surprise.

Hat tip, ZH.

The Banker Suicides – update

Posted by Jeff (ILoveCapitalism) at 6:28 pm - February 16, 2015.
Filed under: Debt Crisis,Economy

I previously noted (here and here) how Zero Hedge has been tracking the strange run of “suicides” among the world’s mid-level bankers in the last couple of years. Scare quotes because the circumstances are mysterious in many of the cases. And because banks and financial markets have been doing great all this time, right?

Here’s the update.

  • In the end, 2014 saw 36 of these deaths. (ZH gives the list. Any pattern?)
  • The trend continues in 2015, with four mid-level banker deaths, so far.
  • They include yet another ABN Amro executive – this one well-known as a “cheerful” boyfriend of hot models – and yet another JPMorgan guy – this one who said openly on LinkedIn, “I am very good and creative with data manipulation…and can…provide senior managers what is needed before asked to do so.”

As I’ve said before: Whether these deaths are murders (to cover up something?) or genuine suicides by the despondent, either way they suggest a world financial system that is worse off than what is generally known.

Hey Liz: Here’s why you are a socialist

Posted by Jeff (ILoveCapitalism) at 9:45 pm - February 11, 2015.
Filed under: Academia,Economy,Leftist Nutjobs,Socialism in America

Picking this up from V’s post of a week or two ago, Elizabeth Warren does not understand why people think she’s a socialist.

(Please, I need a moment to stop giggling. It’s as if President Obama were to say he does not understand why people think he’s a liar. Air gasp. OK, I think I can go on.) – Warren said:

I just don’t know where [people] get that [idea of her being a socialist]. You know, look at the issues. I mean really, let’s take a look at minimum wage — I just believe nobody should work full time and live in poverty…Student loans: I don’t think the U.S. government should be making tens of billions of dollars in profits off the backs of our students, which is what the current student loan system is doing…

Never mind that Warren proposes the U.S. government to *lose* tens of billions of dollars on student loans. Let’s go straight to Kevin Williamson, defining socialism:

The current Random House Dictionary definition of “socialism” is serviceable but dated: “a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.”…

[Dated, because] It should read “ownership -or- control” rather than “ownership -and- control.” As we have seen in the cases of enterprises such as Fannie Mae and Freddie Mac, it is entirely possible for government economic planners to intervene deeply (and, in this familiar case, catastrophically) in the economy while maintaining private economic forms…

A more complete definition of socialism incorporates two criteria: The first is that socialism entails the public provision of non-public goods. The second is the use of central planning to implement that policy.

And that, Liz, is why you are a socialist.

  1. You want the public purse to pay for *private* goods (goods that benefit the individual primarily, if not exclusively). For just one example, you want government to fund special young people on a costly, but often low-benefit, multi-year jaunt that we politely call “college”.
  2. And you believe in a planned economy. For just one example, you want government to dictate the minimum wage at which a worker may offer her work (or else you will not permit any employer to give her work).

For the record: I don’t and I don’t. So, I’m not.

Fauxcahontas at work

You know the saying “There are no accidents”. First, consider how the Left’s beloved fake-Native American, Elizabeth Warren, is an unusually wealthy member of Congress – probably worth over $6 million. Courtesy of ZH:

Next, consider how the Left’s beloved fake-Native American, Elizabeth Warren, opposes a bill to audit the Federal Reserve Bank.

I say the 2 things are connected. You see, Elizabeth Warren is a phony. That doesn’t only mean that she has repeatedly lied about her racial (non-)heritage for personal gain. It also means that she lies about being a populist who would support the little guy against Big Banking.

For the last 6 1/2 years, the Fed – the privately-owned, biggest bank of them all – has (in accordance with Obama’s wishes) pumped boatloads of newly-created cash into our financial markets, to make financial bubbles that benefit “the one percent” – who include the top earners of Big Government and Big Banking (plus Big Government’s general deficits being financed). And Elizabeth Warren has no real problem with any of that. She does claim to oppose it. But her actions tell another story.

If she really opposed it, she’d be leading the charge to get the Fed audited. Instead, Rand Paul leads the charge (and Ron Paul before him) – while she carps, or puts up obstacles. “Follow the money.”

Unrelated follow-up: After noting in early December that holiday spending was off to a weak start, I should note that indeed, December consumer spending plunged by the most since 2009, as people’s incomes stagnated. At least by *conventional* economic wisdom, that means a bad economy – and shouldn’t be happening.

Socialists Get What They Had Coming to Them

Posted by V the K at 8:57 am - February 3, 2015.
Filed under: Economy

San Francisco has raised its minimum wag to $15 an hour, which is what many on the left want, (although leftist icon Liz Warren thinks $22 would be better.) Well, thanks to San Francisco’s progressive politics, a lot of employees at a certain bookstore will now be making $0 an hour.

In November, San Francisco voters overwhelmingly passed a measure that will increase the minimum wage within the city to $15 per hour by 2018.  Although all of us at Borderlands support the concept of a living wage in principal and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage.  Consequently we will be closing our doors no later than March 31st.  The cafe will continue to operate until at least the end of this year.

If only someone had warned them that raising the minimum wage would result in the loss of jobs and the closing of small local businesses.  But I suppose you would have to be some kind of magical genius to foresee such completely unexpected consequences.

 

Get out the popcorn: Greece is bringin’ the drama

Posted by Jeff (ILoveCapitalism) at 6:07 pm - January 25, 2015.
Filed under: Debt Crisis,Economy,Leftist Nutjobs,Politics abroad

As AP reports, Greece has just gone (further) to the left by voting in their “Syriza” party. With 60% of the vote counted, Syriza leads with 36%, a blowout by Greece’s fragmented / multi-party standard.

Flounder of Delta House was reached for comment and said, “Oh boy, is this great!” Why would he? Because Syriza is a delightful mixture of the sane and the insane.

First, their key campaign plank has been to provoke a new crisis over Greece’s debt to the rest of Europe, including no small chance that Greece would default and/or leave the Euro currency. And that’s the sane part.

It’s sane, because Greece had entered the Euro under false pretenses and then borrowed far more than Greece can ever repay. Syriza is right that Greece’s debt problem is serious, and right that Greece’s solution may well be to default honestly and return to its former currency (the drachma), so that (after devaluation) Greece can be competitive in world markets. (Correction: Officially, Syriza wants to remain in the Euro. It’s just that no one else believes they can, if they’re serious about getting a haircut on Greece’s debt.)

The insane part is that Syriza calls their plans “an end to austerity”, “leaving austerity behind”, and so forth. The implication would be that, these last few years, Greece has buckled down and made painful, deep cuts to its public-sector spending. Yeah, except they haven’t.

When I last checked in 2013, Greece had still not made significant cuts to government spending after years of crisis and supposed austerity. (Update: tradingeconomics.com figures say that Greece did cut spending in 2010-2012 and has already started to reverse the cuts. In 2014, Greece’s spending was near its all-time high from 2009.)

As I’ve explained before, “austerity” is just the Left’s code word to mean “We aren’t being allowed to spend wildly enough!” If government stays as big as ever – if government has merely a small pause or slowing of its growth – the Left screams about the horrible austerity.

Likewise, “ending austerity” is the Left’s code to mean they get to grow government again and basically have it consume the rest of the economy (whatever it doesn’t own already). That is what the Greeks just voted in. A party that (wisely) wants to provoke a crisis over Greece’s debt; so that it can (stupidly) have even moar of the high-spending, Big Government policies that bankrupted Greece in the first place.

Something tells me the Greeks are about to find out what austerity really is.

A Slow Clap for the Social Justice Warriors

Posted by V the K at 8:03 pm - January 5, 2015.
Filed under: Economy

Michigan’s Republican legislature and Republican governor just raised the state’s minimum wage because it was just easier to cave into progessivism than to explain to voters why raising the minimum wage was a bad idea. (And, besides, big business likes the minimum wage because it eliminates smaller competitors.)

As a result, a non-profit restaurant that helped struggling people at the bottom of the safety net is closing its doors and laying off its employees.

Mr. Mosley’s popular restaurant was a nonprofit and served as a training tool for participants in Life Challenge of Michigan, a nondenominational, faith-based organization he directs. Life Challenge, Mr. Mosley told me, is a refuge for people who have “bottomed out,” often due to alcohol and substance abuse. After a six-month period of detox and spiritual education, the program shifts to focus on practical skills, like building a budget, finding a job, and keeping a daily routine.

That’s what the restaurant helped provide. The staff at Tastes of Life was made up of recovering addicts, recently incarcerated individuals and others who would have a hard time landing a job elsewhere. Mr. Mosley explained that on-the-job offenses for which an employee would have been “gone that day” in a traditional work setting were instead used as training opportunities at Tastes of Life.

The restaurant had lost money in the past, and Mr. Mosley subsidized the operation through Life Challenge. But with the higher wage costs, the arrangement was no longer feasible, and Tastes of Life closed on Sept. 28. (The news was first reported in the Hillsdale Collegian.)

Yeah, raisin’ the minimum wage; real compassionate of you social justice warriors.

The NYTimes Solves the Economy

Posted by V the K at 10:51 am - January 5, 2015.
Filed under: Economy

The New York Times praises Government spending as the panacea for all that ails the economy.

On the front of today’s New York Times business section is a remarkable—or should I say remarkably unremarkable—news article whose entire premise, unchallenged in the course of 1,341 words and input from 10 sources, is that more government spending is a very good thing because it leads to more government jobs and therefore helps the economy. Hooray!

Increased Government spending does in fact cause growth in GDP — because Government spending is a *component* of the GDP. Which is like saying “I made 80,000 last year, but I ran up 20,000 in credit card debt, therefore, I made 100,000 dollars last year.”

But, according to the economists at the New York Times, confiscating the earnings of productive people and lavishing them on the unproductive via a Government intermediary is the ideal path to economic growth and prosperity and Government can grow indefinitely without any adverse consequences.

I can’t shake the feeling that this system may have been tried elsewhere.

(more…)

In Defense of the Megabanks

Megabanks like JP Morgan Chase and CitiGroup got a big, fat wad of corporate welfare from the Republicans in the #CRomnibus spending bill that passed this weekend; a provision that allows them to gamble on risky derivatives with taxpayers on the hook to cover their losses. But John Hinderaker at Powerline makes a decent case that the megabanks are actually scapegoats for the failed Progressive Policies of Clinton, Bush, and Obama.

For years, my friends in the banking industry told me that the federal government was forcing them to make bad loans. Mortgages were not the only such bad loans, but while they were the largest, they were also the least problematic from the banks’ standpoint, since the taxpayers, through Fannie Mae and Freddy Mac, stood ready to buy them and assume the risk. The financial collapse of 2008 and the recession that followed were caused primarily by liberal policies enforced by the federal government that went back to the Carter administration.

The TARP bailouts, Hinderaker says, were actually just DC politicians paying back the banks for the bad policies they had forced on them; and the megabanks paid them back anyway; unlike Democrat crony-operatives like Jamie Gorelick and Franklin Raines who made tens of millions on subprime mortgages and got to keep every penny.

Hinderaker wonders what the implications are in this crony corporatist conundrum are in terms of a presidential bid in 2016 for Democrat senator Liz Warren; whose attacks on Wall Street banks have made her the darling of the progressive left. Yet, if she runs, can she count on the millions of dollars in donations from Wall Street bankers that Democrats always get. (Answer: Of course she can; those campaign contributions aren’t looked at as support for political philosophy, they’re bribes and extortion payments to politicians who could destroy the bankers at will.)

I note some Republicans relish the thought of a Liz Warren candidacy. They think there’s no way Americans would elect a far-left radical senator with a sketchy background to the presidency. Recent history says otherwise.

Distracting Americans – from the economy?

If it isn’t Michael Brown or Elizabeth Lauten, it’s Eric Garner(*) or Trayvon Martin or some other media frenzy. In other words, our media “treats” us to a series of frenzies; frenzies that are stupid because – apart from many of the media claims dissolving under scrutiny – there are more important things for the nation to notice.

I’m beginning to think it’s deliberate. For one thing, over the years I’ve seen how the frenzies get nourished (or prevented) by various political fixers, special interests and even government agencies. For another thing, it’s common sense: if the phrase “powerful people” means anything, then certain people have the power to promote (or block) certain media stories to suit their interests.

Finally, whenever you’re confronted with vicious nonsense, you should ask the question “Who benefits?” And again, the series of stupid frenzies does a job: it blots out public notice and discussion of nationally-important topics. It especially blots out discussion of the scandals/failures of the Obama administration.

And that could be Gruber, the IRS scandal, Obamacare, the NSA’s blanket/warrantless spying, Fast and Furious, vote fraud, unconstitutional rule-by-decree, or any number of failures (Iraq/ISIS) for which a Republican president would be crucified. But I think the most glaring problem where President Obama needs a distraction is: his terrible economy.

And now for a little news on the economy. Black Friday retail sales were a disaster by conventional measures. According to the National Retail Federation, sales during the four-day Thanksgiving holiday period plunged by 11% (from $57.4 billion a year ago, to $50.9 billion).

NRF’s CEO Matt Shay offered an absurd explanation – he claimed that sales were down because of (1) Teh Interwebs and (2) an improving economy:

He also attributed the declines to better online offerings and an improving economy where “people don’t feel the same psychological need to rush out and get the great deal that weekend, particularly if they expected to be more deals,” he said.

But Cyber Monday was also weak. And Shay implies that, if sales had not declined (or had even been up), that would have been a sign of a *bad* economy…Riiiiiiiight.

A more sensible explanation is that Americans have less money to spend, because they are struggling to cover basic necessities:

…the Journal analyzed Labor Department data on 2013 out-of-pocket spending for the middle 60% of the population by income — households earning between about $18,000 and $95,000 a year, before taxes.

The data show they are losing ground. Overall spending for the group rose by about 2.3% over the six-year period from 2007, even as inflation totaled about 12%. At the same time, income for the group stagnated, rising less than half a percent…

There it is. The WSJ analysis did not look at 2014, but I can assure you, trends continued in 2014 (aside from our very recent decline in oil/gas prices). In Obama’s bad economy, people struggle more than ever just to cover food, rent and health care: (more…)

Explaining Obama’s economy

Posted by Jeff (ILoveCapitalism) at 2:18 pm - December 2, 2014.
Filed under: Depression 2.0,Economy,Politics abroad

Readers of GP’s Economy category know that I like to write about how money-printing, now called “Quantitative Easing” (QE), actually drags on the economy (rather than stimulating it). In the long run, QE is just a ripoff to inflate asset bubbles for the Point-One Percent – and stick the rest of the economy with the fallout.

The topic is obscure, but it explains much of what has gone wrong in the U.S. economy as well as Europe, Japan, etc. (Overgrowth of the State explains the rest.) But today, I’ll spare you my verbiage and refer you to Pater Tenebrarum’s. Key passage:

When central banks or commercial banks add new money to the money supply, not one iota of real wealth is created…

However, monetary pumping does disturb the finely tuned dynamic processes [of the economy], as it distorts interest rates and prices. Economic calculation is then falsified and malinvestment invariably ensues. Have the housing bubbles in e.g. Spain and the US not shown this quite clearly?…The emergence of such illusory profits leads to the consumption of capital..

Eventually it turns out that companies actually lack the funds to maintain their real capital. This is what we mean when we refer to the pool of real funding being under pressure: the capital structure has been damaged. Actors in the economy need to…”repair” [the economy's real capital]…Then the economy is in “recession”, but this is really a healing process. It takes time to heal.

Additional money printing actively sabotages this healing process. It achieves nothing but even more impoverishment in the end, especially if it succeeds in igniting another boom by redistributing existing wealth and spurring more capital-consuming activities…

Inflationism is apparently more popular than ever. It doesn’t seem to matter how often and how consistently it fails to produce the desired results, there are always more people in the world who have an epiphany about saving the economy by printing money…[until] the economy has become so structurally damaged…that if banks indeed were to lend out more money [as the money-printers desire], they would be almost guaranteed to lose most of it.

If you have the patience, Read The Whole Thing.

Addendum: By the way, the Swiss don’t get it, after all. Last Sunday, 78% of Swiss voters were against having a sound currency. (Updates my earlier post, Do The Swiss Get It?)

UPDATE: The Japanese people suffer from their latest version of QE, even as their Nikkei stock index sits at seven-year highs. In the end, the U.S. will fare no better (and probably worse).

What’s the deficit, really?

In October 2013, I noted that the U.S. national debt leapt over $300 billion – the day after they raised the debt ceiling. It went from $16.75 trillion to $17.08 trillion, just days after President Obama had publicly lied that “…raising the debt ceiling…is not raising our debt. This does not add a dime to our debt.”

Update: Today, the U.S. national debt is about $18.01 trillion (or as this post is being written, $18,005,549,328,561.45).

$18 trillion! Up from $10.63 trillion when Obama took office on January 21, 2009. The Obama administration is 70% of the way to doubling the U.S. national debt – and still has two years to run!

But here’s the fishy part. Officially, the U.S. budget deficit for FY2014 was only $483 billion. If that’s true, our debt should have gone up a lot less. It should be just over $17.5 trillion.

There are two basic ways to measure the deficit.

  1. The official number: What the government budget states as revenue minus spending.
  2. The reality check: What the government had to borrow, to actually pay its bills.

Let’s take a look at the second one. I don’t have the exact numbers for the U.S. national debt for FY2014′s beginning vs. ending. But it should be obvious that, with the debt increasing by about $1 trillion from late October 2013 to end of November 2014, the real FY2014 deficit (covering twelve months from start of October 2013 to end of September 2014) had to be something larger than $483 billion. Otherwise, the FY2015 deficit would have to be $500 billion in just the last two months alone; and it isn’t.

So if an Obama supporter tries to say “The Dear Leader has reduced the deficit to $483 billion!”, you say: Then why did the national debt rise by roughly a trillion, over that same period? BALONEY.

Meanwhile, the Obama administration has found yet another way of lying to us. I’m becoming convinced that all of the ‘headline’ statistics put out by this administration are manipulated to the point where they’re a fraud, at least partly.

Weekend Nostalgia: Looking Back on Black Friday 1996

Posted by V the K at 9:52 am - November 30, 2014.
Filed under: Economy

1996 — When you could buy a State-of-the-Art computing machine with a 1.6 GB hard drive and 16MB of RAM for a mere $2400. (CRT Monitor not included.)

B3nvSZHCAAA9nKr

Technology has gotten significantly better and cheaper over the past decade — mainly because the Government has kept their greedy, power-grubbing hands from regulating it and let the Free Enterprise System work its magic.

The Big Mac Index

Posted by Jeff (ILoveCapitalism) at 11:22 am - November 24, 2014.
Filed under: Economy,Food,Free Enterprise

Some people consider the price of a McDonald’s “Big Mac” to be a reality check for what is happening to consumer prices. Why?

  • Fast food is widely consumed, outside “the one percent”. A Big Mac may be a price that real people pay often.
  • The price reflects not only food costs, but also costs for hourly labor and benefits, commercial real estate, transportation, energy, manufacturing equipment and packaging.
  • Until a few years ago, changes in the price of a Big Mac tracked changes in the government CPI (Consumer Price Index) fairly well.

In recent years, Big Macs have gone up rather more than the CPI. Why? Several different explanations could be put forward. The least likely explanation is that McDonald’s has suddenly become inefficient at making Big Macs.

Another possible explanation is that the government keeps toying with how it calculates CPI, looking for ways to understate consumer price inflation. That is, to hide it. Which is in the government’s direct, financial interest: that way, the government can make smaller inflation adjustments to Social Security, income tax brackets, inflation-indexed bonds, etc. Plus the political optics are better.

Courtesy of Forbes, Big Mac Index Shows Official CPI Underreports Inflation:

What is the graph saying?

  • In 1996, the average Big Mac cost $2.36.
  • Going by the government CPI (and assuming Big Macs are still a good reality check), the average Big Mac in 2013 should have cost $3.49.
  • But it really cost $4.33, which is a lot more. (The price virtually doubled in 17 years; and of the increase, nearly half is “unexpected” by the CPI.)
  • The increase started in the early Naughties, but more of it is recent, in the last six years.

So, whom do you believe? Our noble government which always looks out for you? Or your lyin’ eyes, when you go to buy a Big Mac?

I believe my eyes. I’m more likely to to hit Starbucks or In-N-Out Burger than McDonald’s; but in all 3 cases, I’m always a little shocked at how their prices have gone up from 10, 5 or even just 1-2 years ago. Poor people, who may eat at fast-food restaurants often, must really feel it.

Bonus question: Why would things have changed in the last six years? Who has been in charge of the government – that is, both the CPI calculation, and our general economic policies?

Obama Redistributing Wealth to the Super-Wealthy

Posted by V the K at 8:01 am - November 17, 2014.
Filed under: Economy

For wealthy bankers and other well-connected cronies in the top 1% of the top 1%, the Obama years have been quite good indeed, and the billionares and nine-figure millionaires are eagerly snapping up the trophies of conspicuous consumption.

The wealth of the top 1 percent grew an average of 3.9 percent a year from 1986 to 2012, though the top one-hundredth of that 1 percent saw its wealth grow about twice as fast. The 16,000 families in that tiptop category — those with fortunes of at least $111 million — have seen their share of national wealth nearly double since 2002, to 11.2 percent.

Demand for billionaires’ most coveted jet, the $65 million G650 from Gulfstream, is so strong that some G650 owners are now flipping their planes for millions of dollars in profit just months after buying them. Bernie Ecclestone, the Formula One auto-racing promoter and billionaire, flipped his for about $72 million last fall — just weeks after he received it.

Sales of personal, V.I.P. jetliners are also strong. Boeing has received several orders from individuals for its 777-300ER (which normally carries 400 passengers) and its even bigger 747-800.

For decades, a rising tide lifted all yachts. Now, it is mainly lifting megayachts. Sales and orders of boats longer than 300 feet are at or near a record high.

With $85 Billion in borrowed and printed money a month blowing into the stock market, those who are in a position to catch some of that money are doing quite well. Meanwhile, at the other end of the income scale, news is not so good for people who make or build things for a living. the Middle Class is really taking a pounding in the chops under the leadership of ‘The Lightworker.’ and the “party of the working man.”

Since the Senate Democratic Class of 2008 took control, the average real income of the poorest one-fifth of American families has declined every year, falling to $15,534 in 2012 from $16,962 in 2008 (the 2013 data will be released Sept. 16). The average real income of the lowest quintile of Americans is now below the level it was in 1968, the year when the War on Poverty began its spending surge.

The next-highest income quintile, often referred to as the working class, has also experienced a continuous decline in real income since January 2009. The average income of these Americans has fallen 6.5% and is now $1,182 lower than it was when President Reagan left office.

The third quintile—America’s middle class—has seen its average income decline to $62,464 from $65,672. More than half of this decline has occurred since the recovery officially began in the second quarter of 2009

A cynic might wonder if Democrat policies are specifically designed to worsen income inequalities, while Democrat rhetoric is designed to reap political benefit from the growing inequality.

ISIS to U.S.: It’s on

Posted by Jeff (ILoveCapitalism) at 5:54 pm - November 14, 2014.
Filed under: Economy,Iraq,National Security

As noted today on Zero Hedge and The Telegraph, ISIS has released some details of its plans for a gold-backed currency:

What does this mean? As I’ve tried to explain before, the U.S. dollar has been the center of world trade and finance since the end of WW2. Oil, among other things, has been traded in dollars. So other countries need dollars (e.g., before they can buy oil). When they invest in bonds, they also like U.S. Treasury bonds.

All that has let the U.S. get away with running large deficits (both trade deficit and fiscal deficit). Other countries send us real goods in exchange for our paper (or electronic) dollars and Treasury bonds. That is why Walmart and Target have been able to supply cheap goods to Americans, all these years.

ISIS is saying, forget that! ISIS will exclude the dollar from its own financial system, and probably from its dealings with other countries. Remember, if these guys are successful, they will sell (or control) a lot of oil. If successful, they will be wealthy and important. Now they’re saying that their financial system will be founded on precious metals – i.e., NOT on the U.S. dollar or the U.S. Treasury bond. I feel certain that, if they aren’t doing so already, ISIS will also be trading oil only in non-U.S. currencies like the Euro or yen, and/or in gold.

If ISIS succeeds as a country, then, it’s another step in the world’s process of “de-dollarization”, or removing the U.S. dollar as the centerpiece of the world system. Although it is arguably an understandable and well-justified act, it is not a friendly act: ISIS is taking aim at (what they perceive to be) the heart of U.S. prosperity and power in the world.

I expect that the alarm bells in Washington are ringing a bit louder. At a minimum, look for President Obama to escalate his rhetoric against ISIS, with bipartisan support. (Which will mean, in the Democrats’ case, going against their own anti-U.S. / pro-Islam instincts; but they will.)